Centurion University of

Technology and Management,

Bhubaneswar .

Topic:
various theory concept in decision
making process

Subject: Management Principles & application

Guided by: Professor Prabodh Kumara Nanda

Name: Abhipsapriyadarshini Jena

Registration number:200415140028
Branch: B.Com
Introduction:
Decision making is a process a Process to arrive at a decision,
the process by which an individual of organization selects one
position or action from several alternatives.

Concept of decision making:

1. The decision indicates that there are various options and
that the most necessary options have been selected to
solve the problem or achieve the expected results. .
2. 2. The existence of alternatives indicates that the decision
maker has the freedom to choose an option of his or her
choice through which his or her intentions are served.
3. 3. Decisions may not be entirely rational but can be
judgmental and emotional in which the value of personal
choice and the value of the decision maker play an
important role.
4. Decision-making, as well as other management processes,
is goaldirected This indicates that the decision maker is
trying to achieve some results by making a decision

Decision-making:
Decision-making is an essential component of the management
process and fills the life of a manager in decision-making.
Managers see decision-making as their central task because
they are constantly choosing what to do, who to do, when to do,
where to do and how to do. This is at a stage where key
decisions are made about organizational goals, major planning,
policies, procedures, rules etc. Decision making is both a
management and organizational process.d organizational
process.process.
Decision environments:
There are 3 different conditions. For problem-solving decisions; they
are certainty, risks uncertainty.
Certainty: Certain environment exists when information is sufficient
to predict the results.
Risk: Decision makers when lack Complete certainty regarding the
result of Various course of action.
Uncertainty: uncertain environment exists when managers have little
information on hand that they cannot even assign probabilities to
various alternatives.

Types of problems & Decisions:

Structured Problem: The decision makers goal is clear. The Problem is
Familiars and in Formation about the problem is easily defined and
complete. Ex- when Customer returns a purchase to a store.
Program decision: it is a policy. Which is guideline for making
decision.
unstructured problems: it is a problem that are new or unusual and
for which in Formation is incomplete. ex-writing a news report.
Non-programmed Decisions: The non-programmed decisions in
management with unusual problem. They are encountered in a very
non-Frequent manner.

Process of decision making:

Step 1: Identify the decision: You realize that you need to make a
decision. Try to clearly dene the nature of the decision you must
make.
Step 2: Gather relevant information: Collect some pertinent
information before you make your decision: what information is
needed, the best sources of information, and how to get it.
Step 3: Identify the alternatives: As you collect information, you will
probably identify several possible paths of action, or alternatives .
Step 4: Weigh the evidence : Evaluate whether the need identified in
Step 1 would be met or resolved through the use of each alternative.

Step 5: Choose among alternatives: Once you have weighed all the
evidence, you are ready to select the alternative that seems to be the
best one for you.

Step 6: Take action: You’re now ready to take some positive action by
beginning to implement the alternative you chose in Step 5.

Step 7: Review your decision : In this step, consider the results of your
decision and evaluate whether or not it has resolved the need you
identified in Step 1.

Decision Making with Quantitative Tools:

Decision trees: A decision tree shows a complete picture of a potential
decision and allows a manager to graph alternative decision paths
Decision trees are a useful way to analyze hiring, marketing,
investments, equipment purchases, pricing, and similar decisions that
involve a progression of smaller decisions. Generally, decision trees are
used to evaluate decisions under conditions of risk.
Payback analysis: Payback analysis comes in handy if a manager needs
to decide whether to purchase a piece of equipment.
Simulations: simulation is a broad term indicating any type of activity
that attempts to imitate an existing system or situation in a simplified
manner.
Techniques used in decision making:
Brainstorming: brainstorming is the oldest and best-known technique
for stimulating creative thinking.
Synectics: Synectics is a more recent and formalized creativity
technique for the generation of alternative solutions.
Nominal Grouping: nominal grouping differs from both brainstorming
and synectics in two important ways