Decision Making

Principles of Decision Making

A major mistake can lead
to major problem but a
right decision will provide
a continuous growth of
success.

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 What is Decision
Making?
It is defined as the “process of
identifying and choosing
alternative courses of action in
a manner appropriate to the
demands of situation”.

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 What Is Rational Steps to Rational Decision
Decision Making? Making:
1. Define the problem
A systematic process of 2. Establish decision criteria
defining problems, 3. Weigh decision criteria
evaluating alternatives, and 4. Generate alternatives
choosing optimal 5. Evaluate alternatives
solutions. 6. Select the best
alternatives
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1. Define the problem - a failure to identify the problem clearly
can derail the entire process.
2. Establish Decision Criteria - In this step, the decision maker
needs to determine what is relevant in making the decision.
3. Weigh Decision Criteria - Because the criteria identified will
seldom be equally important, you will need to weight the criteria to
create the correct priority in the decision.
4. Generate Alternatives - Once you have identified the issue and
gathered relevant information, now it is time to list potential options
for how to decide what to do.
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5. EvaluateAlternatives -After creating a somewhat full list of possible
alternatives, each alternative can be evaluated.

6. Select the BestAlternative -After a careful evaluation of alternatives,

you must choose a solution.

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 Approaches and theories in solving problems
Qualitative- it uses intuition and is subjective.
According to Stevenson, managers tend to use this
when:
1. The problem is simple
2. The problem is familiar
3. Problem seems to have low cost effect in company
4. Immediate decisions are needed
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 Approaches and theories in solving problems

Quantitative- this refers to the evaluation of

alternatives using different techniques in
group classified as rational and analytical.

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Quantitative Techniques
 Inventory models
Inventory model is a mathematical model that helps business
in determining the optimum level of inventories that should
be maintained in a production process, managing frequency
of ordering, deciding on quantity of goods or raw materials to
be stored, tracking flow of supply of raw materials and goods
to provide uninterrupted service to customers without any
delay in delivery.
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Quantitative Techniques

 Queuing theory- is the mathematical study of the

congestion and delays of waiting in line. Queuing theory
examines every component of waiting in line to be served,
including the arrival process, service process, number of
servers, number of system places, and the number of
customers—which might be people, data packets, cars.

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Quantitative Techniques
 Forecasting-is a technique that uses historical data as
inputs to make informed estimates that are predictive in
determining the direction of future trends.

 Regression analysis- is a set of statistical methods used

for the estimation of relationships between a dependent
variable and one or more independent variables.

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Quantitative Techniques

 Simulation- Simulation statistics is using artificially

generate data in order to test out a hypothesis or statistical
method.

 Linear programming- is mathematical modeling

technique in which a linear function is maximized or
minimized when subjected to various constraints.
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Quantitative Techniques
 Sampling theory- is the field of statistics that is
involved. with the collection, analysis and
interpretation of data gathered from random samples
of a population under study.
 Statistical decision theory- is the science of making
optimal decisions in the face of uncertainty.

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Using Groups to Improve Decision Making
Group decision making is a type of participatory process in
which multiple individuals acting collectively, analyze
problems or situations, consider and evaluate alternative
courses of action, and select from among the alternatives a
solution or solutions.

1. BRAINSTORMING
Brainstorming involves group members verbally suggesting
ideas or alternative courses of action.
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Using Groups to Improve Decision Making
2. DIALETICAL INQUIRY
Dialetical inquiry is a group decision-making technique
that focuses on ensuring full consideration of
alternatives. Essentially, it involves dividing the group
into opposing sides, which debate the advantages and
disadvantages of proposed solutions or decisions.

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Using Groups to Improve Decision Making
3. NOMINAL GROUP TECHNIQUE
The nominal group technique is a structured decision making
process in which group members are required to compose a
comprehensive list of their ideas or proposed 28 alternatives
in writing.
4. DELPHI TECHNIQUE
The Delphi technique is a group decision-making process that
can be used by decision making groups when the individual
members are in different physical locations.
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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

ADVANTAGES:
“Two heads are better than one.”
“The more the merrier.”
1. More information
A group is better equipped as far as information is concerned.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

ADVANTAGES:
2. Diversity of views
A group always has the advantage of varied views.
3. Greater acceptability
The views expressed by a group have more acceptance than
those from an individual.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING
ADVANTAGES:
4. Expert opinions
There may be some group decisions that require expert
opinion.
5. Degree of involvement
The members of a group feel involved with a given problem.
This minimizes their resistance. It strengthens an
organization and facilitates decision-making.
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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

ADVANTAGES:
6. Encourages people’s participation
A group usually provides a platform for people to
present their ideas. Group dynamics is more likely to
draw out participation from people who may otherwise
be hesitant to talk or interact.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

DISADVANTAGES:
1. Time-consuming
A group involves several individuals. Getting them
organized, planning and coordinating their meetings
and finally reaching a solution or arriving at a decision
can be quite cumbersome.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

DISADVANTAGES:
2. Lack of onus
It is difficult to fix responsibility in a group. In an
organisation, it is often essential to fix responsibility
before a problem can be solved. It is difficult to do so if
anything goes wrong with a decision made by a group.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

DISADVANTAGES:
3. Individual domination
Although a group discussion means a collective
discussion, some people usually manage to usurp a
position of informal leadership owing to their
personality or style of participation.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING

DISADVANTAGES:
4. Compromise decisions
The need to arrive at a group decision sometimes
results in a compromise. The solution offered is not
essentially the best.

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 ADVANTAGES AND DISADVANTAGES OF GROUP
DECISION MAKING
DISADVANTAGES:
5. Expensive
Group decision-making is quite expensive in terms of time,
money, energy and man-hours.
6. Groupism
The very word has negative connotations. Some members of
a group may start harboring a feeling that they are different
from the others.
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 Thank You
Engr. Aracelle C. Mendez

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