Techniques of decision making

• Traditional techniques• Modern techniques

Techniques of decision making

• Traditional techniques:– Programmed decision making• Habits• Operating procedures• Organizational structure

– Non- Programmed decision making• Non repetitive problems• Judge & solve through intuition & creativity• Non scientific method of decision making• Perception of manager towards problem

Programmed decision making

• Three generally accepted traditional techniques for making programmed decisions are:

• Habits• Operating procedures• Organization structure

• Habits: habits are the way in which problems are solved according to pre-defined nation. Manager s do not apply scientific techniques to solved problems . by solving it in that manner . It does not required much of thinking and initiative

• Operating procedure : operating procedure are organizational habits. The guide decison-maker in solving organizational problems in predefined manner . They are more forma habit

• Organizational structure : it is a well defined structure of authority-responsibility relationship . each person each person know his position in the organization, his authority to make decision, the extent to which it can be delegated to subordinate ,the communication channel, the person to whom he has to report etc . Which help in solve programmed problem.

Modern techniques

• Modern techniques use mathematical models to solve business problems . They apply scientific and rational decision-making process to arrive at the optimum solution.

Modern techniques for making programmed decisions

• Break-even techniques: it helps managers analyses the economics feasibility of proposal . For any level of out put , the amount of profit can be ascertained which server as acceptance/rejection criterion of the proposal

• Inventory model : it order to reduce these costs ,firm keep minimum inventory in store and order fresh inventory when they need .

• Linear programming : it aims to maximize profits or missing cost by combining two variables which involves best use of recourses.

• Simulation : this techniques is used to create artificial models of real life situation to study the impact of different variables on that situation

• Probability theory : probability that sales will increase if expenditure on advertisement is answered through probability theory .

• Decision tree : it is diagrammatic representation of future event that will occur when decision are made under different plans

• Queuing theory : this techniques describes the features of queuing situation where service is provide to people unite waiting in a queue

• Gaming theory : this theory was developed by von neumann morgenstrn .iy helps business organizations face their competitors .

• Network theory : it involves breaking up the project into smaller activity

• Modern Techniques: Programmed decision making:– Break even technique– Inventory model– Linear programming– Simulation– Probability theory– Decision tree– Queuing theory– Gaming theory– Network theory ( PERT/ CPM- project evaluation

review techniques/ critical path method)

• Modern Techniques: Programmed decision making:– Break even technique– Inventory model– Linear programming– Simulation– Probability theory– Decision tree– Queuing theory– Gaming theory– Network theory ( PERT/ CPM- project evaluation

review techniques/ critical path method)