UNIT II Decision making Techniques.pptxx

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1. “ Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem” According t o P e ter Drucke r , "Whatever a man a ger does, he does through decision-making". 6 C’s in decision making Construct : clear picture of what must be Compile: list of requirement that must be met Collect: in f ormati o n o n alter n atives t h at m eet the requirement Compare the alternatives that meet the requirement Consider: factors that might go wrong Commit: to a decision and follow through with it

2. Decision Making Techniques 1. Brain Storming : it is a group decision making technique by which efforts are made to find a conclusion for a specific problem by gathering a list of ideas contributed by group members. Developed by Alex Osborn Criticism of ideas is not allowed People are encouraged to state publicly their ideas. 5 to 10 members are involved Encourage more and more ideas Encourage more participation.

3. 2. Delphi method in this method, a panel of experts related to a particular problem area is prepared. 15-20 experts are involved Used for forecasting future events Structured questionnaire is sent to experts via google forms, email, whatsapp etc Questions include How to improve quality of the product Wh a t a r e the c aus e s o f lo w p r oduc t ivi t y What are the causes of low motivation of employees etc

4. No face to face discussion, identity of the experts is kept secret from one another. Experts give their responses independently All responses are compiled and a summary report is made. After reviewing the results, the final results are taken as the forecasts.

5. 3. Nominal Group Decision Making: Discussion is permitted only for clarification not for criticism. Discussions are not allowed until all responses are recorded. Members silently list their ideas. Group interaction is less Group members are physically present Written vote is taken

6. 4. Marginal Cost Analysis Marginal costing is helpful in managerial decision making. This technique is also known as marginal costing as under it additional revenues from additional costs are compared. In order to find the optimum output of a machine, one can vary inputs against output until the additional input equals the additional output.

7. 5. Operations Research: Operations research has been defined as the scientific method of analysis of organizational problems to provide the executive, the needed quantitative information in making suitable decisions. Some of the managerial problems usually subjected to operations research analysis include production scheduling, inventory control, sales policies, expansion of plant etc.

8. 6. Simulation A simulation is basically an imitation, a model that imitates a real-world process or system. In business and management, decision makers are often concerned with the operating characteristics of a system. Simulated environments allow the decision maker to test out new ideas before make a complex business decision. This analysis technique lets the decision maker in manipulate different parameters, such as revenue and costs, to discover opportunities for improvement in the current operations.

9. 7. Linear Programming: Linear programming is a mathematical technique that determines the best way to use available resources. Managers use the process to help make decisions about the most efficient use of limited r esou r ce s – li k e mon e y , t i me, m a t eria l s , a n d machinery

10. 8. Decision Tree A Decision Tree Analysis is a scientific model and is often used in the decision making process of organizations. When making a decision, the management already envisages alternative ideas and solutions. By using a decision tree, the alternative solutions and possible choices are illustrated graphically as a result of which it becomes easier to make a well-informed choice. This graphic representation is characterized by a tree-like structure in which the problems in decision making can be seen in the form of a flowchart, each with branches for alternative choices.