Decision Making and

Problem Solving
OBJECTIVES

After completion of this chapter, the reader will be able to:

1 Recognize the features of a good decision.
2 Identify the role that human behavior plays and its influence in the decision-making
process.
3 Explain the steps to making a sound decision.
4 Select from the available qualitative and quantitative techniques to resolve the prob.
lems and decisions faced by a laboratory manager.

CHAPTER HIGHLIGHTS AND GLOSSARY OF KEY TERMS

I. CHARACTERISTICS OF A GOOD DECISION
Decision: A conscious choice made after evaluating the available alternatives, for the
purpose of achieving a specific result.
IL THE HUMAN ELEMENT
III. STEPS IN MAKING A SOUND DECISION
A. Recog nition
B. Investigation
C. Def i n it io n
Deviation: A one-time, random human error.
Effectual Problem: The symptom or surface sign that may hide the real cause of u
problem.
Causal Problem the root cause of the problem.
D. Identification of Alternatives
E. Solution Evaluation and Selection
F. Implementation and Follow-up
IV. DECISION-MAKING TECHNIQUES
A. Qualitative Tools
1 . Perso nal judgment
2 . So licitation of adv ice
Brainstorming: A technique used in groups whereby everyone freely and VW°
neously throws out ideas and solutions for later evaluation without regard fir ea-
lidity.
Synectics: A group whose members are brought together as a problem solving
-

team.

32
 DECISION MAKING AND PROBLEM SOLVING ❑ 33
Nominal Grouping: A highly structured timeestoilnugtioinnswah nicohnyinmd oivudiyu presented write ee dtotheir original
ideas in private, with the alternative
the group for discussion and then voted on and tallied in secret.
3, Systematic Option Review
T Chart: A technique for evaluating alternative solutions by writing down the ad-
vantages and disadvantages of each option.
B. Quantitative Tools
Operations Research: A branch of management science that specializes in quanti-
tative tools.
Probability Analysis: A procedure for measuring risk by assigning a value, ex-
pressed as a percentage, to the likelihood of a specific event occurring.
Queuing Theory: A decision-making technique that recommends the number of
servers needed to handle an unpredictable workload.
Linear Programming: A tool for allocating limited resources among competing
needs by applying mathematical values to each solution variable.
Simulation: The use of computer-designed models to imitate real-life conditions and
test different intervention strategies.
1. Probability analysis
A Priori Probability: Predictions obtained by deductions based on assumed con-
ditions.
Empirical Probability: Probability factors determined from the recording of ac-
tual events over a specific period of time.
Subjective Probability: A prediction based on the knowledge and experience of
the decision maker.
Payoff Matrix: A matrix, or chart, that compares the probability potential of the
alternatives identified.
Decision Trees: A schematic presentation that demonstrates the probabilit nts.
y poten-
tial of selecting a particular course of action at specific decision option poi
2. Queuing theory
3. Linear programming
4. Simulation

1. It should be based on a complete investigation of

the root causes and potential problems, as well as
Decision making andproblem • solving are such inte-
p encompass the obvious symptoms.
gral parts of daily life, encompassing every aspect
2. It should identify and evaluate alternative solu-
of management and personal action, that discussing
them as separate subjects may seem impossible. Be- tions
cause of their importance, however, decision-making 3. It should involve the selection of the best solution
and problem-solving skills must be given top priority. by in-depth analysis of the available information.
Without proper training and attention in this area, the 4. It should encompass an effective strategy for im-
manager and the laboratory simply muddle through,
plementing the solution.
postponing everyday decisions until they become andTthe setting
acute. Such laboratories then find themselves engulfed making decisions. iThisofchapter
priorities
m i are also
examines
crucial
n the g in
decision-
it crisis management, running from fire to fire without making and problem-solving processes within the
making any discernible progress. This c hapter ,de- framework of organizations and discusses both a step-
scribes the decision-making processof as a seriestoof eight
analytic by-step decision-making model and the tools and tech-
steps and provides a selection tools that niques available to the laboratory manager.
may improve the ability of the manager to make wise
choices.
The Human Element
Characteristics of a The human element can quickly cloud the decision-
Good Decision making process. Emotions, prejudices, peer pressure,
and personal interest can exert tremendous influence oni-
Good decisions require both careful thought and thor- o n M on the
o d e c i s i o n s h o u l d h a v e t h e choices made. These factors can never
u g h p l a n n i n g . A w e l l - m a d e
following features:
34 p MANAGEMENT OF ORGANIZATIONS
pletely eliminated, but they must be controlled. This
can be accomplished through sound management and
decision-making procedures.
Human factors are not always bad. However, they
should be recognized for what they are and given ap-
propriate consideration. Disclosure is often an effective
control method and balancing action, providing the
participants have the power and independence to con-
sider its impact and to act accordingly.
The most effective way to deal with the human ele-
ment is to turn it into an asset by using objective ana-
lytical tools to evaluate the situation and allowing the
human touch to provide the perspective and context
for selection and implementation. A model for problem
solving and associated analytic tools are presented in
the following sections. The manager must cons ider
each stage carefully and apply the available analytical
techniques to the deliberations.
Steps in Making a
Sound Decision
A model for making a decision or solving a problem
can be broken down into eight steps, as shown in
Table 4-1 and reviewed next. Each phase offers the
decision maker both a challenge and an opportunity.
By paying attention to the details of each stage, the
laboratory manager can build the framework for
choosing the correct course of action.
Recognition
Step 1 in making any decision or solving a problem is
to become aware that something is wrong and needs
the attention of the manager. This message may arrive
from many different sources—as a complaint from a
physician or employee or as a flag in the quality con -
trol data, for instance.
Recognizing a problem is not as simple as it may ap-
pear. What appears to be a problem may he only a
random occurrence, and the manager can waste a lot
of time and energy tracking down something that will
fix itself. The earlier the problem is recognized, the
sooner priorities can be set for resolving it.
Table 4-1. DECISION-MAKING AND
PROBLEM-SOLVING PROCESSES
Step 1: Recognition that there is a problem or need for the
manager's intervention
Step 2: Investigation and analysis of the cause and extent of the
problem
Step 3: Definition of the nature and boundaries of the problem
Step 4: Identification of alternative solutions
Step 5: Evaluation of each option, within the context of the
management plan and objectives for the laboratory
S tep 6: Selection of the best alternative
Step 7: Implementation of the solution
Step 8: Follow-up on the success and progress of the decision, and
institution of needed modifications
investigation
After the laboratory manager becomes a w a r e
problem, the situation must be investigat ed Ste, (.:f a
cludes collecting data, interviewing staff, a nd gam
information that may shed light on the nature and
ousness of the problem. During this f act_ gatileri..
stage, the manager should be alert to ancillary
that may have contributed to the problem but were
at first readily apparent. nct
Definition
Step 3 in the decision-making process is to d e fi ne
problem. President Lyndon Johnson once pointed gie
that'when a problem has been defined, the solutioncititni.
ten becomes obvious to all. Other authors have f on,
that formulating the correct question is 80 percent 'of the
solution. Determining the exact extent and bound, aries of
the problem enables the laboratory manager to target the
investigation toward specific objectives,
Defining the problem means determining all the is
sues and aspects of the question, including
equipment, communication, supplies, and theme svnit flow
itself. At this point, attention should be given to
ascertaining the depth of the trouble and questioning
the boundaries of the definition. Here are some qu a
tions to assist in this process:
◼ Is this only a symptom of a more serious or wide.
spread problem?
• Is It a one-time deviation from the standards ma
random human error?
◼ Is it only an effectual (surface) problem, which
must be investigated further to uncover the roma
causal problem?
The answers to these inquiries help define the na-
ture and urgency of the problem being researched
The laboratory manager can note the similarity be-
tween this step and troubleshooting procedures com-
mon in quality control and instrument malfunction in-
vestigations.
Identification of Alternatives
Determining what solutions are available to remedy
the situation is step 4 of the decision-making process.
At this stage the manager may wish to solicit advice
from other members of the staff or even assign
the problem to a committee to recommend solutions.
Although the committee system is often criticized
as being too slow and ineffective, it is one of the
best sources for ideas to resolve organizational prob-
lems.
The key at this stage is to be aware of as many alter-
native solutions as possible; the manager then has 3
range of options from which to choose. The manager
should avoid the temptation to examine each alterna -
tive in depth as it is discovered and instead wait until a
number of solutions are collected. Although some Pre'
posals can be rejected outright, considering each alit::
native as it becomes known is time -consuming.

may settle on a poor choice
_, nager simply be -
die manager
time constraints.
cose o are brought together as a troubleshooting team.
Solution Evaluation and Selection
fte , e pool of feasible solutions has been compiled,
t hor ough evaluation should be conducted (step 5) ,
3 d the best alternative selected (step 6). Some suggesr
be ruled out immediately. For those deserv
serious consideration, a variety of tools can be
ra
its can
to
select the most suitable alternative. Both quail-
m.u
'ase '
_five and quantitative techniques are discussed in the next
section.
Implementation and Follow up -
Steps 7 (implementation) and 8 (follow-up) should be
f ully integrated into the management functions and
process of the laboratory. Developing a plan to imple-
ment the final decision and devising a mechanism to
monitor compliance are part of the management func-
tions (see Chapter 1) and illustrate the central role of
decision making in the overall operations of the labo-
ratory.
Decision-Making Techniques
Techniques for evaluating decision options can be di-
vided into qualitative and quantitative methods.
Qualitative Tools
Qualitative decision-making tools involve personal
judgment, solicitation of advice, and systematic option
review.
Personal Judgment
People begin at birth to develop skills in choosing be-
tween competing options. These skills grow with ma-
turity and experience: In addition to the judgment
gained through life experience, the specific duties and
demands of the workplace and profession become fa-
miliar through formal training and career advance-
ments. This personal knowledge is a vital resource in
evaluating alternatives and making decisions.
Solicitation of Advice
Asking for opinions, organizing a committee, seeking a
consensus from colleagues and coworkers, and dele-
gating the task to staff members are all examples of so-
liciting advice and using the experience and insight of
other members of the laboratory.
Forming a group or committee to focus on a prob-
lem is one of the most common approaches to deci-
sion making. Listed next are several successful tech-
niques for collecting suggestions from a group:
■ Brainstorming. Everyone freely throws out ideas
for later evaluation without regard for validity.
CCC 2,74
DECISION MAKING AND PROBLEM SOLVING a 35
e Synectics. People with a variety of backgrounds
■ Nominal grouping. In a highly structured meet-
ing, individuals write down their original ideas
and then present them to the group. Group mem-
bers then vote on and rank-order each suggestion
secretly to discourage peer pressure and encour-
age creativity.
Delphi method. In a modification of nominal
grouping, the input and opinions of experts are
solicited on questionnaires before the meeting.
The results are then discussed and voted on
anonymously. The Delphi method is more com-
monly used in making decisions in which forecast-
ing future events or trends is important.
Systematic Option Review
Systematic option review involves prioritizing each op-
tion according to its apparent attractiveness. A T chart
is one popular format for evaluating facts and informa-
tion. This technique has been borrowed from account-
ing. The problem and proposed solution are written
down at the top of the page, a line is drawn down the
middle (hence the name T), and the advantages and
disadvantages are listed on either side of the T. This vi-
sual presentation of the proposal often clarifies the op-
portunities and risks associated with each option and
makes the selection process more objective. Table 4-2
shows a T chart for making the quantitative beta hu-
man chorionic gonadotropin a STAT test, available on
all shifts.
Quantitative Tools
Quantitative tools include both quality control (QC)
measures and financial data. One branch of manage-
ment science that specializes in providing quantitative
tools for decision making is called operations re-
search (OR). The four main areas of OR are:
◼ probability analysis. which measures risk by as-
signing a value, expressed as a percentage, to the
likelihood of a specific event occurring
◼ Queuing theory, which provides recommenda-
tions for the number of staff (phlebotomists.
clerks, technical personnel, and so on) needed to
handle an unpredictable workload
Table 4 2. CHART ANALYSIS
-
Problem: Request by ER medical staff for STAT BHCG
Proposed Solution: Train staff on 3:00-11:00 and 11:00-7:00 shifts to
perform test
Advantages Disadvantages
Satisfy patient service needs Training time
Spread of workload and productivity Lack of trained staff
Improved turnaround time Shortage of personnel
Additional trained staff $2 increase in cost of test
Educational opportunities Disruption of work flow
Increased workload of shifts
36 (3 MANAGEMENT OF ORGANIZATIONS
• Linear programming, a tool for allocating lim-
ited resources among competing needs
◼ Simulation, which designs models to imitate real-
life conditions so the different intervention scenar-
ios can be compared
OR management is the application of these quantita-
tive techniques to business situations.
Probability Analysis
Probability analysis is most useful when the manager is
faced with choosing between several different options
under conditions with significant risk or uncertainty.
An estimate of probability (F) of a certain outcome or
event happening is calculated numerically so that it
can be compared with other options.
An a priori probability is obtained by deductions
based on assumed conditions. For example, a flip of a
coin has a 50 percent probability (P = .5) of coming
up heads. However, the outcome of a single toss can-
not be predicted with absolute certainty. Similarly, the
laboratory goes to great lengths to establish normal (or
reference) ranges for its procedures and patient popu-
lation, but it cannot predict with certainty where a par-
ticular patient's results will fall before the test is run.
Delta checks, a type of statistical quality control proce-
dure, depend on comparing current results with previ-
ous tests to detect possible errors.
Empirical probability is determined by recording
actual events over a specific period of time and calcu-
lating the • number of times each event occurs. This
technique is used when the laboratory establishes QC
ranges for a new lot of reagents or controls. It may
also be used to predict turnaround time for a test,
STAT response times, and absenteeism.
Subjective probability is just that—subjective.
Based on the knowledge and experience of the indi-
vidual or group, a prediction is made of the likelihood
of an event occurring. This technique, like decision
making, is a common process. When technologists
ate asked how soon a result will be ready or how
much longer a reagent will last on an instrument, they
can usually predict the answer with fairly good accu-
racy, even though no formal study has been con -
ducted.
Two techniques have proved helpful in applying
probability analysis to business situations: the payoff
matrix and decision trees. These procedures are es-
Table 4-3. PAYOFF MATRIX ANALYSIS
Send Test Out
Volume Potential Expected Income ($)
(Tests per Month) P Income ($) (Po te ntial I nco me x Pro ba bili ty ) I ncome ($)
75 1.0 375
100 .8 500
125 .7 625
150 .3 750
pecially useful for cost-benefit analysis of different al
ternatives. In addition, the decision tree can be mod!' fled
for use as a flow chart (see Chapter 16, Laboratory
I n f o r m a t i o n S y s t e m s ) .
EXAMPLE: Financial impact of performing te sts
in-house
Laboratories must frequently decide whether to per_
form a test in-house or send it to a reference lab. A
payoff matrix (Table 4-3) and decisior) tree (Fi g
4-1) are used to determine the financial impact of
performing protein electrophoresis in the lab. He
are the known data:
◼ Empirical data: An average of 75 protein elec-
trophoresis tests are sent to reference laboratories
per month.
◼ Subjective potential: There is a 70 percent proba_
bility (P = .7) of doing 125 tests a month, as de-
termined from conversations with physicians and
complaints about turnaround times.
◼ Net profit per test
Send to reference lab: $5 per test
Perform in-house: First 75 = $2 per test; each addi-
tional test = $15 per test
◼ Analysis: The potential for profit goes up as the
volume of tests increases; however, when proba_
bility (P) is included in the equation the options
become more realistic: $900 versus $630. The
manager must obviously include other factors,
such as turnaround time and patient service
needs, in making a decision, but the tools of prob-
ability shed significant light on the impact of a
course of action on the total operations of the lab-
oratory.
Queuing Theory
Computer programs for queuing, linear programming,
and simulation are widely available. The manager,
however, should know how and when to use these
tools, which are ideally suited to the fluctuating and
unpredictable work flow of the medical laboratory.
Queuing theory was originally designed to determine
the number of airline reservation clerks needed for a
given time period and is designed to determine the
staffing requirements of a workstation with the follow-
ing operational needs:
Bring Test In House
-
Potential Expected Income ($)
(Potential Income x ProbabilitY)
375 150 150
400 525 420'
438 900 630
225 1,275 383
 DECISION MAKING AND PROBLEM SOLVING 0 37
Test Possible
Decision Performance Potential
Volume (P) Expected
Point Option Income
(rest/Month) Payoff
($) ($)
75 (1.0)
• Send Out x 375 = 375
125 (0.7) x
625 436
x
75 (1.0) =
• lnhouse 150 150
=
• 125 (0.7) 900 = 630
FIGURE 4-1. Decision-tree analysis.

1. Need for prompt service

2. Need for an adequate number of servers to meet
an urgent demand
3. Unpredictable timing of service requests
4. Unpredictable duration of service time
The input variables used by most queuing programs to
determine the appropriate staffing level of servers
(e.g., phlebotomist, technologists, instruments) include:
1. Average number of units (e.g. specimens, pa -
tients, clients) requesting or arriving for service
during a designated period of time (hour, shift,
day, test run)
2. Average number of units waiting for service
3. Average waiting time until service begins
4. Average time to process a unit
5. Maximum time acceptable to wait for results or
service
Once these parameters have been determined, they
can be entered into a queuing program for staffing
level calculations.
Linear Programming
Linear programming was designed to resolve the 101- co
lowing problems:
• Limits and restraints on the availability of re-
sources (staff, time, expenses)
◼ Constant need for decisions as to allocation of
these limited resources among competing needs
◼ Pressure to maximize income and minimize losses
Ma
nagers may not be aware that they use linear pro- r
"riming techniques subconsciously in everyday decisions.
The process of elimination and selection illustrates
the procedure. Here are some questions and variables
variables and accurately measuring their influence.
ssoctated with this type of decision:
However, as computers and computer simulation be-
◼ Does the instrument perform all the tests required,
or is additional equipment necessary?
◼ Are the throughput and turnaround time accept-
able?
◼ Is the price within the laboratory budget?
Linear programming then applies a mathematical value
to each variable to solve the problem.
EXAMPLE: Requirements for the main chemistry
analyzer
■ Turnaround time (routine processing time):
5 20 minutes for all tests including enzymes
5 10 minutes for STAT CHEM 6 (glucose, BUN.
lytes)
◼ Specimen Requirement:
5 50 ji.L per test
◼ Throughput (tests per hour):
60 samples per hours
◼ Test available:
a all routine tests
◼ Price:
Instrument = < $100.000
Cost per test = 5 S1.20
■ Analysis: By solving for each of these variables, an
informed decision can he made when these crite-
ria arc applied to each instrument being consld-
The
ered.
mputer has made possible the development of models
that closely duplicate the conditions found in real-life
settings. These models attempt to identify important
variables, which the manager can then manipulate to test
the impact of different options on the system. An
example of simulation might be a computer projection
of the impact on length of patient stay in the hospital
if CPK isoenzymes are batched and run at different
times (e.g., every 2, 4, or 8 hours) instead of on a STAT
basis.
Critics point out the difficulty of isolating all possible

Simulation
38 ❑ MANAGEMENT OF ORGANIZATIONS
come more sophisticated, they will be even more use-
ful to the manager. Used in conjunction with the other
decision-making tools, the possibilities are limitless.
By applying the tools discussed in this chapter to
the decisions and problems encountered in the med-
ical laboratory, managers can improve their chances
- mitY clauEhters from abroaa for lig.
of selecting the wisest course of action and incre
ing the efficiency of the laboratory. Th ese t. k
niques, in concert with the other techniqu es 15/1-
skills covered in Part 1, provide the laboratory i.,4rid
ager with a significant amount of knowledge thatri.
be di rected toward assuring both personal and ins"
tutional success.