DECISION MAKING NOTES
INTRODUCTION
People at all levels of the enterprise must constantly make decision and solve problems. Decision making and
problem solving are important parts of a manager job. Decision may be of
nature:
- How profit should be invested
- Which employee should be assigned a particular task
Whether the problem is larger or small, it is usually the manager
who has to confront it , and decide what to take.
Types of Problem and Decision
Managers will make different types of decision under different
circumstance and the information available when making a decision will vary.
- Programmed
Programmed decision are those that are made in accordance with some
habit , rule or procedure . Every organization has written or
unwritten policies that simplify decision making in recurring
situation . Programmed decisions are used for dealing with complex
as well as with uncomplicated issues. If a problem recurs and if its
component elements can be defined, predicted and analyzed, then it
may be a candidate for programmed decision making. Programmed
decision limits the decision maker’s freedom because the
organization rather than the individuals decide what to do.
However, the policies, rules and procedure of
which we make decision makers of the time needed to work out new
solution to every problem, then allow the decision maker to devote
attention to other important activities.
- Non- programmed decision are those that deal with unusual or unique
problem ; problems which have not come up often enough to be covered
by a\a policy or it is so important that it deserves special
treatment , it must be handled
by a non –programmed decision e.g. decisions on: - Allocation of resources
- Society relation
- Falling product lines
Most management training programs try to improve a manager ability to
make nonprogrammed decision – usually by trying to teach them to make
decision reasonably.
TOOLS FOR DECISION MAKING
The following is a summary of decision and the traditional and modern
tools used.
THE DECISION MAKING PROCESS
It involves six basic steps
Step1: define the problem as an idea to be acted upon
This step involves an accurate assessment of the problem so that
management does not treat mere symptoms. This step should result in a
statement of the desired results
Step 2: Develop alternative solution
Alternative are the possible course of action, only one of which may
ultimately be chosen is need to have as many alternative as possible
Step 3: Gather information pertinent to alternative
Once alternative have been identified the next step in decision making
is to collect information. The main information for decision making are
existing rules , procedure available facts , research feasibility studies ,
simulation , opinion of advisers , experience ,
public and forecast
Step 4: consider constraints and evaluate problems
At this step the manger eliminates some alternative because of
constraints. Constraints may be either from external e.g. custom
organization charters , limited money and personnel , organization
policies , procedure , rules , higher level managers , laws and
political consideration , the public competitors actions, labour unions
, the education of potential employees , society and economy . The most
common method of evaluation include: risk analysis, cost benefit
analysis decision trees
Step 5: Alternative Selection
This step involves selection of alternative from those that have been
proposed and not eliminated. It is the most difficult and managers should take into account the effects of the decision.
Step: 6 follow –up
Involves implementation of the decision reached in step 5 above. It
requires that the appropriate action be carried out. It may involve
appropriating funds, assigning personnel, hiring new personnel, erring
for work space, or purchase of equipment real estate supplies or inventory
