DECISION MAKING

DECISION MAKING

• Decision making is a process of selection from a set of alternative courses of action

which is thought to fulfil the objectives of decision problem more satisfactorily than
other.
FEATURES

• Process of choosing a course of action

• Human process involving the application of intellectual abilities
• Pervasive and continuous process
• Related to environment
• Involves time dimension and time lag
• Involves actions like defining a problem and probing and analyzing the alternatives
which take place before a final choice is made.
TYPES OF DECISIONS

• Routine and Strategic Decisions

• Policy and Operating Decisions
• Organisational and Personal decisions
• Programmed and Non-programmed Decisions
PROCESS OF DECISION MAKING

• Defining the Problem

• Analysing the Problem
• Collection of Data
• Developing Alternatives
• Review of Key Factors
• Selecting the Best Alternative
• Implementing the Decision.
MODELS OF DECISION MAKING

• Rational/Normative Model
• Non Rational/Administrative Model
BOUNDED RATIONALITY

• Managers are unable to make perfectly rational decisions due to various constraints.
• Person seeks satisfactory decisions rather than optimum decisions because of time,
money and efforts constraints.
TECHNIQUES OF DECISION MAKING

• Marginal Cost Analysis

• Cost Benefit analysis
• Linear Programming
• Network analysis
• Simulation
• Probability Theory
• Decision tree
• Queuing Theory
• Game Theory
• Inventory Models