DECISION-MAKING

Managers of all kinds and types, including the engineer manager, are primarily tasked to provide
leadership in the quest for the attainment of the organization’s objectives. If he is to become
effective, he must learn the intricacies of decision making. Many times, he will confronted by
situations where he will he have to choose among various options. Whatever his choice, it will
have effects, immediate or otherwise, in the operation of this organization.

Decision-Making as a Management Responsibility

 Decision must be made at various levels in the work place.

 Decision-making is a responsibility of an engineer manager. The wise manager will
correct them as soon as they are identified.
 Managers must strive to choose a decision option as correctly as possible.
 The higher the management level, the more complicated decision making becomes.

What is Decision-Making?

May be defined as “the process of identifying and choosing alternative courses of action in a
manner appropriate to the demands of the situation”.

The definition indicates that the engineer manager must adapt a certain procedure designed to
determine the best option available to solve certain problems.

Decisions are made at various management levels (top, middle, and lower levels) and at various
management functions (planning, organizing, leading, and controlling). Decision-making
according to Nickels and others, “is the heart of all management functions”.

The Decision-Making Process

Rational decision-making, according to David H. Holt, is a process involving the following

steps:

Diagnose problem

If a manager wants to make an intelligent decision, his first move must be to identify the
problem. If the manager fails in this aspect, it is almost impossible to succeed in the subsequent
steps.

Analyze environment
The environment where the organization is situated plays a very significant role in the success or
failure of such an organization. It is therefore, very important that an analysis of the environment
be undertaken.

The objectives of environmental analysis is the identification of constraints, which may be

spelled out as either internal or external limitations.

Example of internal limitations are as follows:

Limited funds available for the purchase of equipment.

Limited training on the part of employees.

Ill-designed facilities.

Example of external limitations are as follows:

Patents are controlled by other organizations.

A very limited market for the company’s products and service exists.

Strict enforcement of local zoning regulations.

Develop viable alternatives

Oftentimes, problem may be solved by any of the solutions offered. The best among the
alternative solutions must be considered by management. This is made possible by using a
procedure with the following steps;

Prepare a list of alternative solutions.

Determine the viability of each solutions.

Revise the list by striking out those which are not viable.

Evaluate alternatives

After determining the viability o the alternatives and a revised list has been made, an evaluation
of the remaining alternatives is necessary. This is important because the next step involves
making a choice. Proper evaluation makes choosing the right solution less difficult.

Make a choice

After the alternatives have been evaluated, the decision-maker must now be ready to make a
choice. This is the point where he must be convinced that all the previous steps were correctly
undertaken.
Choice-making refers to the process of selecting among alternatives representing potential
solution to a problem. At this point, Webber advises that “particular effort should be made to
identify all significant consequences of each choice”.

To make the selection process easier, the alternatives can be ranked from best to worst on the
basis of some factors like benefit, cost, or risk.

Implement decision

After a decision has been made, implementation follows. This is necessary, or decision-making
will be an exercise in futility.

Implementation refers to carrying out the decision so that the objectives sought will be achieved.
To make implementation effective, a plan must be advised.

At this stage, the resources must be made available so that the decision may be properly
implemented.

Evaluate and adapt decision results

In implementing the decision, the result expected may or may not happen. It is, therefore,
important for the manager to use control and feedback mechanisms to ensure results and to
provide information for future decisions.

Feedback refers to the process which requires at each stage of the process to assure that the
alternatives generated, the criteria used in evaluation, and the solution selected for
implementation are in keeping with the goals and objectives originally specified.

Control refers to action made to ensure that activities performed match the desired activities or
goals that have been set.

In this last stage of the decision-making process, the engineer manager will find out whether or
not the desired result is achieved.

Approaches in Solving Problems

In decision-making, the engineer manager is faced with problems which may either be simple or
complex. To provide him with some guide, he must be familiar with the following approaches:

Qualitative Evaluation - this term refers to evaluation of alternatives using intuition and
subjective judgment. Stevenson states that managers tend to use the qualitative approach when:

The problem is fairly simple.

The problem is familiar.

The costs involve are not great.

Immediate decision are needed.

Quantitative Evaluation - this term refers to the evaluation of alternatives using any technique
in a group classified as rational and analytical.

Quantitative Models for Decision-Making

Inventory Models – consists of several types all designed to help the engineer manager make
decisions regarding inventory.

Queuing Theory – is one that describes how to determine the number of service units that will
minimize both customer waiting time and cost of service.

Network Models – these are models were large complex tasks are broken into smaller segments
that can be managed independently. The two (2) most prominent network models are:

The Program Evaluation Review Technique (PERT) – a technique which enables engineer
managers to schedule, monitor, and control large and complex projects by employing three time
estimates for each activity.

The Critical Path Method (CPM) – this is a network technique using only one time factor per
activity that enables engineer managers to schedule, monitor, and control large and complex
projects.

Forecasting – may be defined as “the collection of past and current information to make
predictions about the future”.

Regression Analysis – the regression model is a forecasting method that examines the
association between two or more variables. It uses data from previous periods to predict future
events.

Simulation – is a model constructed to represent reality, on which conclusions about real-life

problems can be used. It is a highly sophisticated tool by means of which the decision maker
develops a mathematical model of the system under consideration.

Linear Programming – is a quantitative technique that is used to produce an optimum solution

within the bounds imposed by constraints upon the decision. Linear programming is very useful
as a decision-making tool when supply and demand limitations at plants, warehouse, or market
areas are constraints upon the system.

Sampling Theory – is a quantitative technique where samples of populations are statistically

determined to be used for a number of processes, such as quality control and marketing research.
Statistical Decision Theory – refers to the “rational way to conceptualize, analyze, and solve
problems in situations involving limited, or partial information about the decision environment”.