DE TABLAN, Dan Alfonso M.

BSRE 3-3

PROBLEMS (DECISION-MAKING)

1. When problem becomes apparent and the engineer manager chooses to ignore it, is he
making decisions? Explain your answers.
My answer is yes, they can avoid or ignore the problem, but the management is
most likely attempting to delay making a choice. If this is the case, he will put off solving
the issue until it becomes impossible. At that time, he will consult his management to learn
what approach they favor. Then, rather than choosing the best engineering course of action,
he will make the choice that appeases his superiors. Ignoring this kind of problem is
essential because that specific engineer is responsible for the outcome. It could be any
means, but one thing is for sure it is hard to solve and that leads him/her to ignore the
problem.

2. What are components of the environment from the point of view of the decision-maker?
What do they consist of?
The components of the environment consist of two major concerns:
1. Internal – The organizational activities that surround decision-making within a
company are referred to as the internal environment. Internal Environmental
consists of organizational, Marketing, Personnel, Production, and Financial
Aspects.
2. External – The term "external environment" describes valuables that are
situated outside of the company and often beyond the immediate control of top
management. Government, engineers, labor unions, suppliers, banks, the
public, rival businesses, and clients make up the external environment.

3. Why is it important for those who will be involved in the implementation to understand
and accept the solution to the problem?
It is important because implementation is the process of putting a decision into
action to accomplish desired goals. A plan must be developed for execution to be
successful. The resources must be made accessible at this time for the decision to be fully
implemented. With this we will have feedback which is a process that calls for verification
at each level to ensure that the solutions developed, the evaluation criteria employed, and
the solution chosen for execution are in line with the initial aims and objectives. These
objectives will lead to control which refers to the measures taken to guarantee that the
actions taken correspond to the desired actions or the goals that have been established. The
engineer manager will determine whether the intended outcome is realized during this final
stage of the decision-making process. If the expected outcome is obtained, it can be
assumed that the decision was a good one.
4. What are the approaches in solving-problem?
The approaches in solving-problem
• Qualitative evaluation. This phrase describes assessing options based on judgment and
intuition. Managers frequently employ the qualitative method, according to Stevenson.

a. The problem is fairly simple.

b. The problem is familiar
c. The costs involved are not great.
d. Immediate decisions are needed.

• Quantitative evaluation. This phrase refers to the assessment of options utilizing any
method in the rational and analytical approach group.

Quantitative Models for Decision-Making

The types of quantitative techniques which may be useful in decision-making are as

follows:
a) Inventory Models consist of several types all designed to help the engineer] manager
make decisions regarding inventory. They are as follows:
• Economic order quantity model – This one is used to determine how many
products should be ordered at once to lower the overall cost of placing orders
and keeping the items in stock.
• Production order quantity model – This is a protection order mechanism that
uses economic order quantities.
• Back-order inventory model – This inventory model is employed in planned
shortage scenarios.
• Quantity discount model – an inventory model that reduces overall costs when
suppliers give quantity discounts.

b) Queueing Theory is one that explains how to figure out how many service units to
have to reduce both client's wait times and service costs. Companies, where waiting
lines are a common occurrence, can use the queueing principle. Examples include
vehicles waiting for service at a car dealership, ships and barges waiting at the harbor
for dockworkers to load and unload them, and applications waiting to run in a
computer system that manages tasks, among others.

c) Network Models. There are models that divide large, difficult activities into more
manageable, smaller portions. The two most prominent network models are:

• The Program Evaluation Review Technique (PERT) – a method that uses

three-time estimates for each task to help engineer managers organize, monitor,
and manage large and complicated projects.
 • The Critical Path Method (CPM) – Using a network technique with just one
time element per activity, engineer managers may plan, oversee, and manage
significant and intricate projects.

d) Forecasting. Engineer managers occasionally make choices that will have an impact
down the road. For instance, a manufacturing company must set up a capacity large
enough to meet client demand within the upcoming 12 months. Manpower and
facilities must therefore be acquired before activities can begin. Data on demand
requirements for the upcoming 12 months must be given to the engineering manager
for them to make more effective capacity decisions. Forecasting can be used to derive
this kind of information. The definition of forecasting is “the collection of past and
current information to make predictions about the future.”

e) Regression Analysis. A forecasting technique that looks at the correlation between two
or more variables is the regression model. It forecasts future events using information
from earlier periods. Depending on how many independent variables are available,
regression analysis can be either straightforward or complex. Simple regression occurs
when there is just one independent variable present; multiple regression occurs when
there are two or more independent variables present.

f) Simulation is a model created to reflect reality that can be utilized to draw conclusions
regarding issues in real life. It is an extremely complex instrument that the decision-
maker uses to create a mathematical model of the system under evaluation. Although
a simulation cannot ensure the best outcome, I can assess the options the decision
marker feeds into the process.

g) Linear programming is a quantitative method that creates the best possible outcome
within the limits placed on the choice. When the system is constrained by supply and
demand restrictions at factories, warehouses, or market locations, linear programming
is a highly helpful tool for making decisions.

h) Sampling theory is a quantitative method where population samples are statistically

chosen to be used in several operations, including quality assurance and market
research. Sampling offers a solution when collecting data is expensive. In practice,
sampling saves both time and money.

i) Statistical Decision theory refers to the logical approach to problem conceptualization,

analysis, and resolution when there is only partial or limited knowledge of the decision
environment. The Bayes criterion, a probabilistic decision rule, can be used when the
decision-maker can assign a probability to various events. The Bayes criteria choose
the decision option with the highest expected payout, or, if using a loss table, the lowest
predicted loss. Bayesian analysis is used to update and revise the original evaluations
of the event probabilities produced by the potential solutions. This is accomplished
with the aid of more data.