n Making © The engineer manager’s decision-making skills will be VERY CRUCIAL to his success as a professional. ‘e A major blunder in decision-making may be sufficient to cause the destruction of any organization. Good decisions on the other hand, will provide the right environment for continuous growth and success of any organized effort.DECISION-MAKING AS A MANAGEMENT RESPONSIBILITY Decision-making ty of the engineer manager Management must strive to choose a decision option as correctly as possible . Since they have that power, they are responsible for whatever outcome their decisions bring. The bigger the management level is, the bigger and more complicated decision-making becomes. is a respon: MODELS OF DECISION-MAKING ‘Rta econ making mode! (leonomierainaliy mode! WHAT IS DECISION-MAKING? 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 engineering manager must adapt a certain procedure designed to determine the best option availabe to solve certain problems “Decision-making is the heart ofall the management functions” Nickel £ Soci! mode! F heurscienf neurocognve model)‘THE DECISION-MAKING PROCESS Rational decision-making [DIAGNOSE PROBLEM ANALYZE THE ENVIRONMENT, “identification of the problem is tantamount to having the problem half-solved." The objective of environmental analysis is the identification of constraint, which may be spelled out What is a Problem? as either internal or external limitations. anactlal situation ands desipad Situations * Limited funds available for the purchase of equipment. * Limited training on the part of employees. | | | ‘A problem exists when there is a difference between | £xample of internal limitations: | | + lll-designed facilities.Examples of external limitation + Patents are controlled by other organizations. * Avery limited market for the company's products and services: exists. * Strict enforcement of local zoning regulations. Internal Environment [INTERNAL ENVIRONMENT JOrganization Aspects | (EXTERNAL ENVIRONMENT Marketing Aspects ae ieee Personnel Aspects | Production Aspects Nay [ENVIRONMENT Financial Aspects Components of the Environment Internal environment * refers to the organizational activities within a firm that surrounds decision-making. External environment * refers to the variables that are outside the ‘organization and not typically within the short-run control of top management. External environment Government Engineers Labor Unions ENGINEERING | Clients —— Banks Competitors Banks PublicDEVELOP VIABLE ALTERNATIVE: Procedure by management: 1. Prepare a list of alternatives solutions 2. Determine the viability of each solutions 3, Revise the list by striking out those which are not viable. “Each alternative must be analyzed and evaluated in terms of its value, cost and risk characteristics.” - Souder Value of alternatives ~ Benefits that can be expected. Cost of alternative ~ Out of pocket cost, opportunity cost, follow —on cost Risk characteristics ~ Likelihood of achieving the goals of alternative Proper evaluation makes choosing the right solution less difficult. nature of the problem, objectives of the firm, and the | | How the alternatives be evaluated will depend on the | nature of alternatives presented. | | This the point where the decision-maker must be convinced that all the previous steps were correctly | undertaken | Choice-making refers to the process of selecting | among alternatives representing potential solutions to | a problem. | To make the selection processes easier, the alternative s__ can be ranked from best to worst on the basis of some factors like benefit, cost, or risk.IMPLEMENT DECISION Implementation sfefers to carrying out the decision so that the objectives sought will be achieved. To make implementation effective, a plan must be devised. Control -refers to actions made to ensure that activities performed match the desired activities or goals, that have been set. Feedback -refers to the process which requires checking 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. iagnose problem _| alyze environment \e articulate problem or y_epportunity Feedback as a Control Mechanism in the Decision-Making Process develop viable alternatives | ‘evaluate alternatives make a choice plement dee — determine steps ion — whether error evaluate results — ved 4 was made results achieved + adapt decision results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: tit 1. Qualitative evaluation 2. Quantitative evaluation. APPROACHES IN SOLVING PROBLEMS _ then Qualitative Evaluation. This term refers to evaluation of alternatives using intuition and subjective judgement. Stevenson states that managers tend to use the qualitative approach when + The problem is fairly simple. + The problem is familiar. + The cost involved are not great. + Immediate decisions are needed AahQuantitative Evaluation This term refers to the evaluation of alternatives using any technique in a group classified as rational and analytical. Quantitative Evaluation. [A factory operates on threo shifts with the ‘otlowing schedule: First shit! ~ 600 A.M. to 2:00 PM. Second shit 2.00 PM. to 10:00 PM. ‘Third chit — 20-00 PM. to 6:00 AM. Bach shift consist of 200 workers manning 200 machines. On Septomber 16, 1996, the operations ‘wont smoothly until the factory manager an indus: tril engineer, was notified at 1:00 PM. that ve of the workers assigned tothe sacond shift could not report for work boeause of injuries sustained in a ‘traffic accident while they were of air way co che factory. Because of time constraints, Be manager mado ‘an instant decision on who among the first shift work rs would work overtime to man the five machines, Ait This term refers tothe evaluation of alteratves using any technique in 2 group lasted as rations and analytic are mae wsing scientific tools and measurements. The re bbe measured oF counted, and other any person trying to Use to assess busine performance and goa setting total of 12 iets and ‘of tee projects per x. This yer our company ha 36 eiferent projects foraQUANTITATIVE MODELS FOR | INVENTORY MODELS > Inventory models consist of several types designed to help the engineer manager m decisions regarding inventory. > Amathematical model that helps business determining the optimum level of inventorie that should be maintained in production process, managing frequency ordering, deciding on quantity of goods or raw mat to be stored. tracking flow of supply of ra materials and goods to provide unintery services to customers without any del delivery The types of quantitative techniques whi may be useful in decision-making are as foll They are as follows: 1, Economic order quantity model > this one is used to calculate the number of items should be ordered at one time to minimize the tot} yearly cost of placing orders and carrying the item: inventory,». Production order quantity model » this is an economic order quantity technique appliel production orders, 4. auanty count mode > an ventory moda west minimize the ata ext when quay Ses are eter y sip «. Back order inventory model > this isan inventory model used for planned shortag QUEUING THEORY > one that describes how to determine the number of service units that will minimize customer waiting time and cost of service. > applicable to companies where waiting lines common situationNETWORKS MODELS ‘The two most prominent network models ar 1. The Program Evaluation Review Technique (PERT) 2. The Critical Path Method (CPM) The Critical Path Method (CPM) + lp you ety the actives tat must be comet an nen ord lca the miu amoust of tne wl take te complete the Tayoun sen ae ate exe atc ao The Program Evaluation Review Technique ( FORECASTING —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 x —+a model constructed to represent reality, ‘on which conclusions about real-life problems can be used —it is a highly sophisticated tool by means which the decision maker develops a mathematical model of the system under consideration. does not guarantee an optimum solution, but it can evaluate the alternatives fed into the process by the decision-maker. Regression analysis smay be simple or multiple depending on the number of independent variable present, + simple regression - one independent variable + multiple regression - two or more independent variable. LINEAR PROGRAMMING —a quantitative technique that is used to produce an optimum solution within the bounds imposed by constraints upon the decision. 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 STATISTICAL DECISION-MAKING —a quantitative technique where samples of Decision theory populations are statistically determined to be used otefers to the "rational way to for a number of process, such as quality control conceptualize, analyze, and solve problems in and marketing research. situations involving limited, or partial information about the decision environment.