DECISION THEORY

WHAT IS DECISION ?
• Act or process of deciding /choice
finalisaction
• Resolution made after consideration.
• Settlement of a Question.
Why it is important to a manager ?
• It is a primary responsibility
• Decision may involve
» Allocating recourses
» Appointing people
» Investing capital
» Introducing new product
 Stage of decision.
• Past :-In which problem developed.
• Present :-developing the alternative and
finalizing the choice.
• Future :-Result will be know, evaluation
 Decision Models
Three phase decision model :-
Henry mintzberg

Phase 1 Phase 2 Phase 3

Identification Development Selection
1.Judgement
1.Recognition 1.Search 2.Analysis
2.Diagonsis 2.Design 3.Bargaining
 Economic man model

Set goals or
Define problem Select
Best
Alternative

Discover
Symtoms Action or
Implement
Decision

Develop Determine
all all
alternative outcomes

Develop criteria
 Administrative man model or
bounded rationaility model
set goal
unacceptable

Imply programme
Set goal Establish
To identify Appraise
Or Level of
Define problem aspiration
Feasible feasiable alteranitave
alternative alternative
identified acceptable
No
feasiable act
alternative
identified

Adjust
level of
Appraise case of
aspiration
Aspiration level
attainment
 Implicit favourite model
Or Gamesman model

Compare and Identify Establish

Set goal Identify implicit Rank implicit Confirmation Decision rule
favourate Rejected Emdidate Or criteria
alteranitave

Decision rule
Justified implicit
Favors

Announcement

act
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