decision making Flashcards
Decision Making
The process by which managers respond to opportunities
and threats that confront them by analyzing options and
making determinations about specific organizational goals
and courses of action
A decision is needed because
there is a discrepancy between an existing and a desired state of affairs.
A systematic, step-by-step process for making decisions
Identify and Verify the problem
Develop an understanding of the problem
Generate alternatives
Evaluate alternatives
Choose an alternative
Implement the plan
Control: measure and adjust
Programmed Decision
One that recurs often enough for a decision rule to be developed
Decision Rule
A statement that tells a decision-maker which alternative to choose based on the characteristics of the decision situation
Non-programmed Decision
One that recurs infrequently and for which there is no previously established decision rule
Problem Solving
A special form of non-programmed decision-making in which the issue is unique—it requires developing and evaluating alternatives
types of decisions
programmed decision
problem solving
programmed decision
decision rule
Rational Model for Nonprogrammed Decision Making
A prescriptive model of decision making that assumes the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action.
Administrative Model
A descriptive model approach to decision making that explains why decision making is inherently uncertain and risky and why managers can rarely make decisions in the manner prescribed by the classical model
Ambiguous information
Information whose meaning is not clear allowing it to be interpreted in multiple or conflicting ways
Condition of Certainty
Outcomes of each alternative are known
information condition types
Condition of Certainty
Condition of Risk
Condition of Uncertainty
Condition of Ambiguity
Condition of Risk
Certainty of an outcome is unknown but there is only enough
information to estimate probabilities of various outcomes
Condition of Uncertainty
There is insufficient information to estimate the probability
of possible outcomes
Condition of Ambiguity
Neither the problem nor the alternatives are clear.