Decision Making in Engineering

Management

Abstract:
planning. A discussion of the origins of management science leads into one
on modeling, the five-step process of management science, and the process
We treat several important issues for effective knowledge management and
of engineering problem solving.
development of corresponding support systems and tools where the target
group is comprised mainly of engineers. The analysis presented here is a
synthesis of results of activities engaged in by the author for Infineon over a
number of years. These activities included extensive development of
databases and workflow tools for engineering purposes, primarily using
Lotus Notes as a platform.

1 INTRODUCTION

Engineering Management is a specialized form of management that is

concerned with the application of engineering principles to business
practice. Engineering management is a career that brings together the
technological problem-solving savvy of engineering and the organizational,
administrative, and planning abilities of management in order to oversee
complex enterprises from conception to completion.
Example areas of engineering are product development, manufacturing,
construction, design engineering, technology, production, or any other field
that employs personnel who perform an engineering function.
Decision making is an essential part of planning. Decision making and
problem solving are used in all management functions, although usually (Figure 1)
they are considered a part of the planning phase. This presents information
on decision making and how it relates to the first management function of
2 Models of decision-making know the consequences of implementing each alternative have a well
organised set of preferences for these consequences; and have the
Various views and theories of decision-making may be found in the computational ability to compare consequences and to determine
literature. The following list of views, supporting theories and models is
based upon categorisations provided by Keen and Scott Morton (1978),
Huber (1981), and Das and Teng (1999). Das and Teng’s list is, by itself, a
meta-classification. The last two items mentioned in the list below, namely
naturalistic decision-making and the multiple perspectives approach, are
relatively new and did not appear in the mentioned categorisations.
 The rational model 2.2 The Model of bounded rationality
 model of bounded rationality
 The organisational procedures view satisficing.Alternatives are searched for and evaluated sequentially. If an
alternative satisfies certainimplicitly or explicitly stated minimum criteria, it
 The political view is said to “satisfice” and the searchis terminated. The process of searching
 incrementalist view might be made easier by the identification ofregularities in the task
environment. human rational behaviour is shaped by a scissors whose
two blades are the structure of task environments and the computational
2.1 The rational model capabilities of the actor.” These scissors cut the problem space into a much
The rational manager view assumes a rational and completely informed smaller area that is feasible to search.
decision-maker(“economic man”)as described neoclassical microeconomic
theory around the middle of the previous century. The process of rational
decision-making comprises a number of steps, such as those given by 2.3 The organisational procedures view
Simon (1977)
• Intelligence: finding occasions for making a decision
The organisational procedures view seeks to understand decisions as the
• Design: inventing, developing and analysing possible courses of action output of standard operating procedures invoked by organisational subunits.
contributedto this theory. Huber names this view the “program model,”
• Choice: selecting a particular course of action from those available and
indicating that the decisions are pre-programmed in existing procedures as
• Review: assessing past choices. well as the routinised thinking of thepeople involved. Das and Teng refer to
it as the “avoidance mode” which viewsdecision-making as a systematic
In classical or perfect rationality, methods of decision analysis are used to
process aimed at maintaining the status quo at the costof innovation. On the
attach numericalvalues or utilities to each of the alternatives during the
other hand, Krabuanrat and Phelps regard this view in apositive light,
“choice” phase. The alternativewith the highest utility (or maximum
namely as the use of codified.
subjective expected utility) is selected. When usingthe rational model in this
fashion, it is assumed that managers :
• know of all possible alternative
2.4 The political view
The political view sees decision-making as a personalised bargaining
process, driven by theagendas of participants rather than rational processes.
People differ on the organisation’sgoals, values and the relevance of
information. The decision-making process never ends,but remains a
continuous battle between different coalitions. After one group wins a
roundof the battle, other parties might regroup or become even more
determined to win the nextround. Influence and power is wielded in a
deliberate manner and to further self-interest.The goals of the coalitions are
defined by self-interest rather than by what is good for the organisation as a
whole.
2.5 The incrementalist view
The logical incrementalist view involves a step-by-step process of
incremental actions andkeeps the strategy open to adjustment. Under
Lindblom’s disjointed incrementalism muddling through marginal, feasible
changes are made, working from the status quoto solve existing problems
rather than towards goals. Other researchers describe a process.
3 Types Of decision Making In Engineering Mangmeant
 Progammed Decision
 UnProgrammed Decision
3.1 Progammed Decision
Programmed decisions are those that a manager has encountered and made
in the past. The decision the manager made was correct because she used
the assistance of company policies, computations or a set of decision-
making guidelines. In addition to being well structured with predetermined
rules regarding the decision-making process, programmed decisions may
also be repetitive or routine as their outcome was successful in the past. It
generally does not take a manager as long to come to a conclusion when
faced with a business-related programmed decision because the challenge
faced is not new. As a result, programmed decisions allow a manager to
make streamlined and consistently effective choices.
Examples of Programmed Decisions:
Individuals naturally make programmed decisions on a daily basis. For
example, in an emergency, most people automatically decide to call 9-1-1.
From a business perspective, a company may create a standard routine for
handling technical issues, customer service problems or disciplinary
matters. An employee’s duties may become routine with repetition, like the
process a mechanic uses to troubleshoot problems with a customer’s car.
3.2 Unprogrammed Decisions
Unprogrammed decisions involve scenarios that are new or novel and for
which there are no proven answers to use as a guide. In such a case, a
manager must make a decision that is unique to the situation and results in a
tailored solution. Unprogrammed decisions generally take longer to make
because of all the variables an individual must weigh; and the fact that the
information available is incomplete, so a manager cannot easily anticipate
the outcome of his decision.
Examples of Unprogrammed Decisions
An individual may make an unprogrammed decision when she visits a new
restaurant, is unfamiliar with the menu and the menu is in a language she
does not understand. In the business world, the makers of the earliest
personal computers had to make unprogrammed decisions regarding the
type of marketing to use to attract customers who possibly had never used a
computer in the past. Fast-food companies also had to make an
unprogrammed decision regarding consumer concerns about high fat
contents and lack of healthy menu options.
4 Inputs from decision makers
In this section, interviews with a number of decision-makers are discussed.
Insightswere gained regarding the way the interviewees make decisions,
influence decision-makingaround them, and how their decision-making is
supported by technology.
4.1 Information collection
Informal interviews were held with six prominent decision-makers. These
included peoplefrom government, from a parastatal as well as from private
companies. The decisionmakers were at levels of seniority ranging from
Director to Chief Executive Officer (CEO).Of the six people, five were
male and one female. All were graduates (including 3 PhDs) with
qualifications mostly in the pure or applied sciences. Each decision-maker
discussedsome cases of decision-making that they were involved in, using
these cases to illustratetheir own views on decision-making. The context of
each decision-maker and extracts fromthe discussion are provided in
sequence.
4.2 The first decision-maker, DM1
DM1 has studied in the natural sciences and is perceived to be a structured,
analyticalthinker. The discussion with DM1 revolved around DM1’s
experiences as a businessunit manager, where decision-making was at an
executive level, impacting a businessunit. Also discussed was the
implementation of strategic decision support processes andtools in DM1’s
previous work environments, namely in a parastatal and in
government.Here, DM1 was involved in processes where stakeholders had
to be influenced and insome instances trained in structured decision-
making. The following comments reflect thedifficulties experienced with
implementing structured decision-making in a context where senior
decision-makers were involved:
• Although there is a need for improved decision-making in government,
there is no
stated demand for a more rational approach.
• The usefulness of Think Tools
is to develop understanding of how issues influence
each other. This often leads to the problem being presented differently and
differentor new solutions surfacing.
• A number of attempts to use Think Tools in the governmental
environment failedbecause roleplayers were not interested in a process that
would neutralise their ownpower play.
• Politically powerful people most often make decisions intuitively and
might be embarrassed to have the real influences on their decision-making
exposed. They arethus wary of structured descriptions of problems. Many
also have short attentionspans and are not willing to endure the grind of
creating the Compatibility Matrixin Think Tools, for example.
• Politicians make decisions to favour their own position, rather than aiming
to makegood decisions.
4.3 The second decision-maker, DM2
DM2 has qualifications in the natural sciences and currently holds a senior
position ata government department. One of DM2’s roles is to shape the
development process ofnational government strategies in order to achieve
acceptance thereof. DM2 is adept atsensing and analysing the organisational
and political environment, and is also able toapply appropriate decision-
making theories and strategies to the context at hand.
following comments were made by DM2
• Being effective is not the same as being “right.” Rather, one needs to
understandthe pond in which one is swimming. A strategic decision-maker
should be aware ofhis/her environment rather than focusing on the use of
tools. A senior bureaucratis a sensing organism.
• The function of information is in making the case. Information is a
weapon thatshould be packaged convincingly.
• One needs to look at and respond to what is in a manager’s head, and not
just focuson the facts.
4.4 The third decision-maker, DM3
DM3 holds qualifications in the applied mathematical sciences. DM3 is a
process-orientedperson who uses a structured mental approach, and is also
guided by intuition and values.
As CEO of a company, DM3’s decision-making roles include the
structuring of the companyand its relationships with other companies. DM3
often facilitates meetings within oroutside the work context. Comments
from DM3 include the following:
• There are two issues that bedevil the decision process. The one is
uncertainty andthe other is the difference in value systems among the
people who have to makedecisions jointly.
• When facilitating grou2p decision-making, sensitivity to people’s value
systems ismore helpful than the use of tools.
4.5 The fourth decision-maker, DM4
DM4 performed mainly a marketing and businessdevelopment role, and is
currently involved with competence development in a ones.
knowledgeorganisation. DM4 likes to assimilate various theories, and has
had exposure to a numberof decision-making theories. Reflections by DM4
include the following:
• Large organisations tend to feed upon themselves. They do things, because
they dothings, because they do things. . .
• The decision-making context needs to be taken into account when
supporting decision-making. For example, a marketing situation requires
use of the client’s frame ofreference as a basis. When facilitating group
decision-making, one should encourage appropriate.
• In DM4’s current organisation, staff have often proven themselves to be
scientificallyclever, but culturally and socially inept when dealing with
clients from other regions or backgrounds.
4.6 The fifth decision-maker, DM5
DM5’s current role is to influence stakeholders who make
strategicdecisions about the incubator and to support and guide the
companies in the incubator.
DM5 is also involved in the development and marketing of a decision
support tool throughone of the incubator companies. Key characteristics of
DM5’s decision-making style arean intuitive approach and being
comfortable with taking and managing risks. DM5 sharedthe following
insights:
• DM5’s decision-making style is intuitive. A situation is explored and
decisions takenat the last possible moment, remaining open to new
information as long as possible.
• Operational decisions are based on an educated gut feel and experience.
Strategic decisions require a more creative process and are shaped while
being thoughtthrough.
• If a decision has a 60% chance of success, one needs to manage the 40%
that mightmake it fail. One needs to distinguish real risks from perceived
• The value of a decision support tool is that it can free up one’s mind by
taking careof the issues that can be automated or that are well defined
already.
• DM5 is an advocate of self-help decision support tools.
4.7 The sixth decision-maker, DM6
DM6 is the CEO of a parastatal and has studied mathematics, physics and
statistics. DM6has a background in R&D management in commercial as
well as academic environments.
DM6 is a rational decision-maker whose decisions and arguments are based
on the rules oflogic, and believes that an argument must be defensible in a
logical manner. DM6 sharedthe following:
• DM6’s arguments are the result of personal analysis as well as those of
other people.Arguments are written out in prose, to see that they are
plausible. Stories andanecdotes are used if it is believed that the targeted
audience will be able to relateto the story.
• Most people are rational and want to engage with issues that transcend the
day-today operational concerns.
• Messiness in the decision environment is reduced by asking: What creates
noise?One of the origins of noise is irrational opinion. One needs to define
the boundariesof a problem situation: if there are too many dependencies
you have to choose asubset of them, and either ignore the rest or assume
you cannot change it.
• One should distinguish between decisions that are made on scientific
ground.
5 Insights into the process of decision-making
The decision-making process of several of the decision-makers may be
described broadly ashaving two phases: a divergent, exploratory phase and
a convergent phase where the focusis to reduce the number of alternatives
and then make the decision. This is similar to thedecision process described
in Russo and Schoemake consisting of expansive andconvergent phases:
The divergent phase is described as a creative phase where
alternativesolutions are generated. One of the decision-makers referred to
the strategy of taskingfour different people to analyse the same problem.
Another approach is to ask differentbusiness units to scope a solution in
isolation or to use multi-disciplinary teams that havedifferent perspectives
to interact with each other. Personal style and background alsoplays a role.
Some decision-makers acknowledge the role of the subconscious in order
todevelop new solutions; others refer to this process as being intuitive.
(Figure 2)
6 TOOLS FOR DECISION MAKING
6.1 Categories of Decision Making
Decision making can be discussed conveniently in three categories: decision
making under certainty, under risk, and under uncertainty. The payoff table,
or decision matrix, shown in Table
will help in this discussion. Our decision will be made among some number
m of alternatives, identified as There may be more than one future state of
nature.The model allowsfor ndifferent futures These future states of nature
may not be equally likely but each state willhave some known or unknown
probability of occurrence Since the future must take on one ofthe nvalues
of the sum of the nvalues of must be 1.0.The outcomeor payoff, or benefit
gained will depend on both the alternative chosen and thefuture state of
nature that occurs. For example, if you choose alternative and state of
nature takes place as it will with probability the payoff will be outcome A
full payoff table willcontain m times n possible outcomes.
(Figure 3)
6.2 Decision Making under Certainty
Decision making under certaintyimplies that we are certain of the future
state of nature (or weassume that we are). (In our model, this means that the
probability of future is 1.0, and allother futures have zero probability.) The
solution, naturally, is to choose the alternative that gives
us the most favorable outcome Although this may seem like a trivial
exercise, there are manyproblems that are so complex that sophisticated
mathematical techniques are needed to find the best solution.
6.3 Decision Making under Risk
Nature of Risk. In decision making under riskone assumes that there exist a
number of possible future states of nature. Each has a known (or assumed)
probability of occurring, and there may not be one future state that results in
the best outcome for all alternatives Examples of future states and their
probabilities are as follows:
• Alternative weather ( weather) will affect the profitability of alternative
construction schedules; here, the probabilities of rain and of good weather
can beestimated from historical data.
• Alternative economic futures (boom or bust) determine the relative
profitability of conservative versus high-risk investment strategy; here, the
assumed probabilities of different economic futures might be based on the
judgment of a panel of economists.
(Figure 4)
Conclusion Online Sources
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