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• Is the process of choosing the best alternative for reaching objectives.

• It is the most basic and fundamental of all managerial functions.
• The way an executive acts or decides the course of action from among various alternatives is an


• The simplest way to make a decision is to flip a coin or let some other chance system determine
the choice. It is just simple unless the outcome of the decisions are equally desirable.
• Desirability points up the need for a 1.)purpose and 2.) criteria for measuring or comparing the
desirability of alternatives in relation to the purpose. However , the process becomes difficult
when we are talking future values and it’s conflict. Each alternative may have both desirable and
undesirable aspects.
• The final desirability of alternatives is the product of the relative benefit and the probability of
attainment. “The course of action that maximizes the final desirability is the rational decisions .”
• The sophistication of decision making depends on the level of knowledge within the area and
the complexity of the decisions to be made.
• If we find values and criteria clear and straightforward, data are readily obtainable, future values
are quite predictable and risks are fairly clear, decision making seems scientific, mathematical
and almost automatic.
• But if cases where criteria and values are vague and often take several forms whose
comparability is difficult to establish, then judgment is the device by which we balance off
conflicting values, assess risk and select a course of action that have the greatest net desirability;
in this attempt we use scientific methodology to the maximum and judgment to the minimum.


• DECISION MAKING UNDER CERTAINTY – in this kind of situation one need to consider only one
relevant payoff for each of a possible alternatives or strategies. And the probability
of occurrence of the stated payoff is presumed to be 1.0. The decision criterion is simply
to select the alternative with the best payoff.
• DECISION MAKING UNDER RISK – refers to the condition where there are a number of
possible alternatives and the decision
maker knows the probability of occurrence of each. He depends on past experience to
provide guides for the probabilities. And the decision criterion used is the expected or
probability-weighted payoff.
• DECISION MAKING UNDER UNCERTAINTY – a decision making when the probabilities of
occurrence of the various alternatives or states of nature are not known and there is no basis
in past experience for estimating the probabilities of occurence.
• DECISION MAKING UNDER CONFLICT – occurs when the decision maker must take account of
the actions of a competitor or opponent

• Programmed and non-programmed;

• routine and strategic- often used by executive level decision;
• tactical(policy) and operational-translate strategic decisions into action;
• organizational and personal decisions- differ in the number of ways ;
• major and minor decisions ;
• individual and group decisions

- is the process by which goods and services are created.


- deals with decision making related to production processes

- its associated with design and control of production systems.
- developed largely in the factory
* equipment design and selection
* indirect labor cost control
* production and inventory control and quality control

A Generalized Descriptive Model of Production

A. Inputs
- material, parts, paperwork forms, etc.
B. Outputs
-products, chemicals, service to customers or patients,

Model of Production has an information system and a decision maker . See Figure 5 represents
production system.

Figure 5. The Diagram of a generalized production system. Note: There are interconnections between
all combinations of operation b through f, although only those originating at b are shown.

 If we are speaking of a high volume, standardized, fabricated part, the operations may be placed
in sequence and interconnected by conveying equipment. The storage would take place on the
conveyors themselves, and decision rules are first in- first out
For example:
In a supermarket, products are received and stored on display shelves.
Continuous Versus Intermittent Models

A. Continuous models are represented in practice by production and assembly lines, large-scale office
operations processing forms
by a standard procedure, continuous flow chemical operations, etc.

B. Intermittent models those facilities must be flexible enough to handle a wide variety of products and
services, or where the basic nature of the activity imposes change of important characteristics of the
input (change in product design

Problems of Production Management

Two major types of decisions:

A. Long-run Decision – design of the system

1. Selection and design of products
2. Selection of equipment and processes
3. Production design of items processed
4. Job design
5. Location of the system
6. Facility layout

B. Short- run decision – operation and control system

1. Inventory and production control
2. Maintenance and reliability of the system
3. Quality control
4. Labor control
5. Cost control and improvement