CHAPTER 2: DECISION-MAKING Flashcards
the process of identifying and choosing alternative courses of action in a manner appropriate to the demands of the situation.
Decision-making
the heart of all the management functions
Decision-making
Rational decision-making, according to _________, is a process involving the following steps
David H. Holt
identification of the problem is tantamount to having the problem half-solved.
Diagnose Problem
a difference between an actual situation and a desired situation.
Problem
identification of constraints, which may be spelled out as either internal or external limitations.
Analyze the Environment
Components of the Environment
o Internal Environment
o External Environment
organizational activities within a firm that surrounds decision-making.
Internal Environment
variables that are outside the organization and not typically within the short run control of top management.
External Environment
each alternative must be analyzed and evaluated in terms of its value, cost, and risk characteristics.
Evaluate Alternatives
Choice-making
process of selecting among alternatives representing potential solutions to a problem.
refers to carrying out the decision so that the objectives sought will be achieved. To make implementation effective, a plan must be devised.
Implementation
process which requires checking at each stage of the process to assure that the alternatives generated, the criteria used in evaluation, and the solution selected for implementation are in keeping with the goals and objectives.
Feedback
Control
actions made to ensure that activities performed match the desired activities or goals, that have been set.
evaluation of alternatives using intuition and subjective judgment.
Qualitative Evaluation
evaluation of alternatives using any technique in a group classified 118 rational and analytical.
Quantitative Evaluation
Types of Quantitative Techniques
- inventory models
- queuing theory
- network models
- forecasting
- regression analysis
- simulation
- linear programming
- sampling theory
- statistical decision theory
Calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing orders and carrying the items in inventory.
Economic order quantity model
This is an economic order quantity technique applied to production orders.
Production order quantity model
This is an inventory model used for planned shortages.
Back-order inventory model
An inventory model used to minimize the total cost when quantity discounts are offered by suppliers.
Quantity discount model
describes how to determine the number of service units that will minimize both customers waiting time and cost of service.
Queuing Theory
these are models where large complex tasks are broken into smaller segments that can be managed independently.
Network Models
to schedule, monitor, and control large and complex projects by employing three-time estimates for each activity.
The Program Evaluation Review Technique (PERT)
