Decision Making , Process of decision making , Tools

1. Decision defined
 Decision is a choice made between two or more
available alternatives.
 Decision making is the process of choosing the best
alternative for reaching objectives.

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4. Steps of decision making
• Setting up of goals/objectives
• Perception of problem
• Analysis of the problem
• Developing alternative solutions
• Screening / evaluating alternatives
• Selection of best alternative
• Implementing the decision
• Feedback & control

5. Setting up goals
Goals or objectives are setup
i.e the goals that decision
makers seek to attain. These
should often be
organizational objectives.

6. Perception of the problem
“A well defined problem is half solved”
There should be clear understanding of
the problem. It is the basic and the
most important task as right answer
can only be found for right question.

7. Analysis of the problem
The problem should be thoroughly
analysed to find out the info and data
relating to the situation. The problem
should be divided into many sub
problems and each element must be
investigated thoroughly.

8. Developing alternative solutions
The decision maker should formulate
several alternative solutions for the
problem with the help of relevant
information and data.
Different alternatives are required as there
are more than one means to solve a
particular problem.

9. Screening the alternatives
The alternatives so developed should be judged
and evaluated through some decision criteria
–RISK
-COST
-TIMING
-LIMITATION OF RESOURCES

10. Selecting the best solution
Selecting an alternative requires an ability to draw
distinction between seen and unseen forces,
tangible, intangible forces between guesses and
facts.
There are various experimentation and analysis
techniques available to a manager but the final
decision will invariably be guided by his/her past
experience.

11. Implementing the decision
It involves gaining acceptance of
decision by those who are directly
influenced by it & developing a
control system to see whether the
decision is being carried out
properly.

12. Feedback & Control
Inspite of the best efforts and analysis
managers can not make best decisions so
management should receive continuous
information and evaluate them regarding
the efforts of this decision and necessary
appropriate modifications can be made.

13. The Rational Decision-Making
Process
Setting up
objective
Perception of
problem
Analysis of
problem
Develop
potential
alternatives
Analyze the
alternatives
Select the best
alternative
Implement the
decision
Establish a
control and
evaluation
system

14. Operational research
It applies the probability and sampling theory for mathematical
analysis and synthesis of a problem through the establishment of
significant relationship . The various factor of a problem are
reduced into quantitative term for mathematical measurement
& analysis.
1.Simulation 5.Queing Theory
2.Linear programming
3.Probability
4.Game Theory

15. Delphi Method
1. Individual judgements and opinions are collected in written form
from isolated experts
2. Experts do not meet together.
3. Collected judgements are sent to different participants.
4. Experts can withdraw their judgements and mix up with others.
5. Suitable for policy formulation and long frame forecasting.

16. Expert
HR
Expert
PRODUCTION &
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Expert
R&D
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MARKETING
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FINANCE

17. Decision Tree
As branches spread out in different direction from trunk of tree so any complex
problem requiring multi-stage sequential decision are better analysed through
decision tree diagram.
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18. Many different kinds of decisions must be made within
an organization such as how to manufacture a
product, how to maintain machines, how to ensure
product quality, and how to establish advantageous
relationships with customers. Because organizational
decisions are so varies, some type of rational must be
developed to stipulate who within the organization
has the responsibility for making which decisions
Conclusion