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  • Decision Making

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    Juan Dela Cruz III
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    Decision making is central to solving many managerial problems. Managerial economics uses economic principles to analyze business and government decisions. The six step process for sound decisions includes defining the problem, setting objectives, exploring alternatives, predicting consequences, choosing an option, and conducting a sensitivity analysis, with flexibility depending on the manager's choice of analysis. While experience and intuition provide value, a thorough analysis cannot be replaced and is necessary for sound decision making.

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    Decision making is central to solving many managerial problems. Managerial economics uses economic principles to analyze business and government decisions. The six step process for sound decisions includes defining the problem, setting objectives, exploring alternatives, predicting consequences, choosing an option, and conducting a sensitivity analysis, with flexibility depending on the manager's choice of analysis. While experience and intuition provide value, a thorough analysis cannot be replaced and is necessary for sound decision making.

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    8 views1 page

    Decision Making

    Uploaded by

    Juan Dela Cruz III
    Decision making is central to solving many managerial problems. Managerial economics uses economic principles to analyze business and government decisions. The six step process for sound decisions includes defining the problem, setting objectives, exploring alternatives, predicting consequences, choosing an option, and conducting a sensitivity analysis, with flexibility depending on the manager's choice of analysis. While experience and intuition provide value, a thorough analysis cannot be replaced and is necessary for sound decision making.

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    © All Rights Reserved
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    Decision-Making Principles

    1. Decision making lies at the heart of most important problems managers


    face. Managerial economics applies the principles of economics to
    analyze business and government decisions.
    2. The prescription for sound managerial decisions involves six steps:
    (1) Define the problem; (2) determine the objective; (3) explore the
    alternatives; (4) predict the consequences; (5) make a choice; and
    (6) perform sensitivity analysis. This framework is flexible. The degree to
    which a decision is analyzed is itself a choice to be made by the manager.
    3. Experience, judgment, common sense, intuition, and rules of thumb all
    make potential contributions to the decision-making process. However,
    none of these can take the place of a sound analysis.

    From Samuelson, et. Al.

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