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An essence to problem solving

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Decision Making
the process of responding to a problem by searching
and selecting a solution or course of action.

There are basically two kinds of decision that are called
upon to make:

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Types of Problems and Decisions
Structured problems
* Involve clear goals.
*Are familiar (have occurred
before)
*Are easily and completely
defined- information about the
problem is available and complete.

Programmed decision
*A repetitive decision the can be handled by a
routine approach.

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Unstructured problems
* Problems that are new or unusual and for which
information is ambiguous or incomplete.
* Problems that will require custom-made
solutions.

Non-programmed decisions
* Decision that are unique and non-recurring.
* Decision that generate unique responses.
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Vitals of Decision making process
Policy
a general guideline for making a decision about a
problem.
Procedure
* A series of interrelated steps that decision maker
can use to respond ( applying a policy) to a problem.
Rule
* an explicit statement that limits what can or cannot
be done.
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The Decision-
Making Process
Define the
Problem
Evaluate
Alternatives
Implement the
chosen Alternative
Gather facts and
develop
alternatives.
Select the best
alternative.
Follow up and
evaluate the chosen
alternative.
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Decision Making Process
Identifying Problem
Identifying Decision Criteria
Allocating Weights to the Criteria
Developing Alternatives
Analyzing Alternatives
Select Alternatives.
Implement Alternatives.
Evaluating decisions effectiveness.
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Step 1: Identifying the Problem
* A problem becomes a problem when
someone becomes aware of it.
* there is always a pressure to solve the
problem.
* the person must have the authority,
information, or resources needed to solve
the problem.

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Step 2: Identify the Decision Criteria
Decision criteria are factors that are
important ( relevant) to resolving the
problem.
* Costs that will be incurred (investment
required).
* Risks likely to be encountered ( chance
of failure).
* Outcomes that are desired ( growth of
the firm).
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Step 3: Allocating Weights to the
Criteria

Decision criteria is of equal importance:
* Assigning a weight to each item.
* Places the items in the correct priority
order of their importance in the decision
making process.

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Step 4: Developing Alternatives

Identifying viable alternatives.
* Alternatives are listed ( without
evaluation) that can resolve the problem.

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Step 5 :Analyzing alternatives

Appraising each alternatives
strengths and weaknesses
* An alternatives appraisal is based
on its ability to resolve the issues
identified


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Step 6: Selecting the alternative
Choosing the best
alternative
* The alternative with the
highest total weight is chosen.

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Step 7: Implementing the
Alternative

Putting the decision to and gaining
comment from those whose will carry
out the decision.

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Step 8: Evaluating the decisions
effectiveness
The soundness of the decision
is judged by its outcomes.
* How effectively was the problem
resolved by outcomes resulting from
the chosen alternatives?
* if the problem was not resolve, what
went wrong?
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Intuition

* It is making decisions on the
basis of experience, feelings, and
accumulated judgment.
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Decision Making Conditions
Certainty
* A situation in which someone can make
an accurate decision because the
outcome of every alternative choice is
known.
Risk
* A situation in which the someone is able
to estimate the likelihood (probability) of
outcomes that result from the choice of
particular alternatives.
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Uncertainty
* limited information prevents estimation of
outcome probabilities for alternatives
associated with the problem and may force to
rely on intuition, hunches, and gut feelings.
# Maximax: The optimistic persons choice to
maximize the maximum outcome.
# Maximin: The pessimistic persons choice to
maximize the minimum outcome.
# Minimax: The choice to minimize maximum
regret.

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Types of Decision Makers
* Directive
# Use minimal information and consider few
alternatives.
* Analytic
# Make careful decisions in unique situations.
* Conceptual
# Maintain a broad outlook and consider many
alternatives in making decisions.
* Behavioral
# Avoid conflict by working well with others and
being receptive to suggestions.

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Scanning the situationidentifying a signal that a
decision should be made.

Classify the decision as routine, apply the
appropriate decision rule; as non-programmed,
begin comprehensive problem solving.

Monitor and follow-up as necessary.
Rational (Logical) Decision Model
Steps
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Trends in Decision Making

The pace of decision
making is accelerating:
more decisions to make
and have less time to make them.
Complex streams of decisions
Sources of decision complexity
Perceptual and behavioral decision traps
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Multiple criteria to be satisfied by a decision.
Intangibles that often determine decision
alternatives.
Risk and uncertainty about decision alternatives.
Long-term implications of the effects of the
choice of a particular alternative.
Interdisciplinary input increases the number of
persons to be consulted before a decision is made.

Dealing with Complex Streams
of Decisions
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Pooled decision making increases the
number of persons playing a part in the decision
process.
Value judgments by differing participants
in the process create disagreement over
whether a decision is right or wrong, good or
bad, and ethical or unethical.
Unintended consequences occur because
the results of purposeful actions cannot always
be predicted.
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Guidelines for effective
decision making
Categorical interpretation- the problem should be
defined properly.
Application of limiting factor- limiting factor
should be taken into account in order to analyze
Adequate information- more quantity of reliable
information leads to effective decision making.
Considering other views- various views at the
same point are taken into account for quality
decision.
Timeliness- decision should be ,made at proper
time to meet the competitive advantages.


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Techniques improving decision
making
Brainstorming idea generation for decision
making.
Nominal group technique (NGT)- problem
outlined, presentation of solution in written form,
discussion over written solutions, and final
decision.
Delphi technique- decision made on the basis of
questionnaire filled by the respondents.
Consensus mapping- decision made on the basis
of the report presented by the representative of
each group after
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