Ch 4 Flashcards
8 Steps to Decision Making
- Identify the problem
- Establish criteria factors
- Rank the importance on a
numbered scale - Identify suitable solutions
- Analyze solutions
- Choose the best solution
- Execute the best solution
- Evaluate the performance of the solution
Types of Decision Making Problems
- Structured Problems
- Unstructured Problems
Structured Problems
-straightforward, typical problems
-the goal of the decision maker is clear, the problem is familiar, and the information is complete
-confronted by lower level managers
-handle by using a programmed decision
Unstructured Problems
-atypical, new or unusual problems
-the problem is not routine, and information is ambiguous or incomplete
-confronted by top level managers
-handled by a non programmed decision
2 Types of Decisions
- Programmed Decision
- Non-programmed Decision
Programmed Decision
-a repetitive problem handled with the usual routine approach
-relatively, typical simple problems which rely on previous solutions
-used to handle structured problems
-guides used to make programmed decisions:
-procedures
-rules
-policy
-made by lower managers
Non-programmed Decision
-unique, non repetitive problem handled with a custom made solution for that particular situation
-used to handle unstructured problems
-made by top managers
3 Approaches To Make Decisions
- rational decision making
- bounded rationality
- intuition and managerial decision making
rational decision making
describes choices that are consistent and value maximizing within specified constraints
bounded rationality
making decisions that are rational within the limits of a mangers ability to process information
satisfice
accepting solutions that are good enough
intuitive decision making
on the basis of experience, feelings, and accumulated judgment
3 Decision Making Conditions Managers Face
- certainty
- risk
- uncertainty
certainty
situation where accurate decision is made because all outcomes are known
risk
situation in which a decision maker is able to estimate the likelihood of certain outcomes
uncertainty
situation where neither certainty nor reasonable probability estimates are available
Pros for group decisions
- more complete information available
- more alternatives
- increased acceptance of a solution
- greater legitimacy
Cons for group decisions
- time consuming
- can be dominated by a minority
- creates pressures to conform
- clouds responsibility
3 ways to improve group decision making
- brainstorming
- nominal group technique
- electronic meetings
brainstorming
idea generating process that encourages any and all alternatives while withholding any criticism
nominal group technique
restricts discussion during the decision making process
electronic meetings
combination of nominal group where participants are linked by computer to send comments, vote, etc. with anonymity, speed, and honesty
