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LESSSSOONN 5
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Objectives
Define what is decision making.
Describe the eight steps in the decision
making process.
Explain the types of decision making.
Discuss the types of making condition.
A decision is a choice
among possible
alternatives action.
DECISION MAKING
 is a process which begins
with problem identification
and ends with the evaluation of
implemented solution.
Manager are constantly called
upon to make decision in order to
solve problems.
Ex. Decrease in income
THE DECISION-MAKING
PROCESS ACCORDING
TO ROBBINS AND
COULTER.
1. Identify the problem.
2.Identify the decision criteria.
3.Allocate weights to the criteria.
4.Develop Alternatives.
5.Analyze the altenatives.
6.Select an alternatives.
7.Implement the chosen
8.Evaluate Decision Effectiveness.
TYPES OF PROBLEM AND DECISIONS
1.Structured Problems
• Have a Clear Goals
• Are Familiar
• Are easily and completely defined
TYPES OF PROBLEM AND DECISIONS
2.Programmed Decision
- A repetitive decision that can be
handled by a routine approach.
TYPES OF PROGRAMMED DECISION
• A Procedure
-A series of interrelated steps to respond to
a structured problem.
• A Rule
-An explicit statement that limits what a
manager or employee can or cannot do
TYPES OF PROGRAMMED DECISION
• A Policy
- A series of interrelated steps to respond to
a structured problem.
PROBLEM AND DECISION (cont’d)
3. Unstructured Problems
- Problems are new or unusual ; information is
ambiguous or incomplete
4. Non programmed Decision
-Decision are unique and nonrecurring ; they
require custom-made solutions
DECISION-MAKING CONDITIONS
 Certainty
- An accurate decisions possible because
the outcome of every alternative is known
 Risk
- Decision maker estimates the likelihood of
outcomes that result from the choice of
particular alternatives.
DECISION-MAKING CONDITIONS
 Uncertainty
- Limited information prevents estimation of
outcome probabilities ; may force managers
to rely on intuition , hunches, and “ gut
feelings”.
DECISION-MAKING CONDITIONS
• Maximax : the optimistic manager’s choice
to maximize the maximum payoff.
• Maximin : the pessimistic manager’s choice
to maximize the minimum payoff.
• Minimax : the manager’s choice to minimize
his maximum regret.
Thank You So
Much!