Module 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 according to Nickels and others
conditions for making a decision
In order to make a decision you:
- must have at least two (2) choices from which to choose (to do or not to do)
- must involve something that is achievable
- must have the power to decide
the way of making choices by establishing a decision, collecting data, and analyzing alternative resolutions.
decision making
Decisions need to be taken at ______________ in an organization. They are often produced at _____________ of the management process.
different levels, different stages
If certain resources must be used, someone must make a ____________ authorizing certain persons to appropriate such resources.
decision
The __________________ is responsible for decision-making.
engineering manager
For executives, it is understandable to make _____________ at times. As soon as they are identified, the wise manager will __________ them.
incorrect choices, correct
The bigger issue is the manager who cannot or do not want to make decisions. Delaney concludes that this type of managers are ________ and “______________________”.
dangerous, should be removed from their position as soon as possible
The higher the level of management, the ___________________ the decision-making becomes.
greater and more complex
Rational decision-making, according to David H. Holt, is a process involving which steps?
- Diagnose problem
- Analyze environment
- Develop viable alternatives
- Evaluate alternatives
- Make a choice
- Implement decision
- Evaluate and adapt decision results
An expert once said “_____________________ is tantamount to having a problem half-solved.”
identification of the problem
A ___________ exist when there is a difference between an actual situation and a desired situation.
problem
The objective of ___________________ is the identification of constraints, which may be spelled out as either internal or external limitations.
environmental analysis
Example of internal limitations
- Limited Funds available for the purchase of equipment.
- Limited training on the part of employees.
- Ill-designed facilities.
Examples of external limitations
- Patents are controlled by other organization.
- A very limited market for the company’s products and services exist.
- Strict enforcement of local zoning regulations.
The environment consists of which two major concerns?
- Internal
- External
refers to organizational activities within a firm that surrounds decision-making.
internal environment
refers to factors that are outside of the organization and not usually under top management’s short-run supervision.
external environment
a procedure for developing viable alternatives
- Prepare a list of alternative solutions.
- Determine the viability of each solutions.
- Revise the list by striking out those which are not viable.
the engineering firm and the internal environment in decision making
- Organizational Aspects
- Marketing Aspects
- Personnel Aspects
- Production Aspects
- Financial Aspects
the engineering firm and its external environment
- government
- labor unions
- suppliers
- banks
- public
- competitors
- clients
- engineers
An ______________________ is required after the viability of the alternatives has been determined and a revised list has been made.
assessment of the remaining alternatives
How the alternatives would be assessed depends on the _________________, the _____________, and the ______________________.
nature of the problem, company’s objectives, nature of the provided alternatives
refers to the practice of choosing between alternatives that constitute possible solutions to a problem.
Choice-making
To make the selection process easier, the alternatives can be ranked from best to worst on the basis of some factors like _______, _________, or ________.
benefit, cost, risk
Implementation follows after a decision has been made. This is important, otherwise the decision-making will be an _______________.
empty gesture
refers to carrying out the decision so that the objectives sought will be achieved.
Implementation
In order to ensure performance and to provide information for future decisions, it is therefore necessary for the manager to use ___________________.
control and feedback mechanisms
refers to the 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 originally specified.
Feedback
refers to steps taken to ensure that the tasks conducted adhere to the intended activities or set goals.
Control
In this last stage of decision-making process, the engineer manager will find out whether or not the desired outcome was accomplished. If the desired outcome is obtained, it is safe to conclude that the decision taken was ____________.
successful
In decision-making, the engineer manager is faced with problems which may either be simple or complex. To provide him with some guide, he must be familiar with which approaches?
- Qualitative evaluation
- Quantitative evaluation
refers to the assessment using intuition and subjective judgement for alternatives.
Qualitative Evaluation
Stevenson states that managers tend to use the qualitative approach when:
- The problem is fairly simple.
- The problem is familiar.
- The costs involved are not great/ low cost.
- Immediate decisions are needed.
refers to the evaluation of alternatives using any technique in a group classified as rational and analytical.
Quantitative Evaluation
The main aim of the quantitative method is to make an optimal decision in a situation where the probability of all outcomes is uncertain, using _______________________.
mathematical and statistical models
the types of quantitative techniques which may be useful in decision-making
- Inventory models
- Queuing theory
- Network models
- Forecasting
- Regression analysis
- Simulation
- Linear programming
- Sampling theory
- Statistical decision theory
designed to help the engineer manager make decisions regarding inventory
inventory models
types of inventory models
- Economic order quantity model
- Production order quantity model
- Back order inventory model
- Quantity discount model
This type of inventory model is used to calculate the number of items that should be ordered atone 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
theory that describes how to determine the number of service units that will minimize both customer waiting time and cost service.
queuing theory
applicable to companies where waiting lines are common situation
queuing theory
The aim of this theory is to minimize such waiting periods and also reduce investments on such expenses.
queuing theory
These are models in which large, complex tasks are divided into smaller segments that can be independently managed in order to avoid wasting time, energy and money.
network models
This technique aims to solve this by creating strong network structures for work.
network models
the two most prominent network models
- The Program Evaluation Review Technique (PERT)
- The Critical Path Method (CPM)
A technique that helps
engineers and executives to plan, track and manage large and complex projects by using three time estimates for each task.
The Program Evaluation Review Technique (PERT)
this is a network technique using only one time factor per activity that enables engineer managers to schedule, monitor, and control large and complex projects.
The Critical Path Method (CPM)
may be defined as “the collection of past and current information to make predictions about the future”.
Forecasting
a method of forecasting which examines the relation between two or more variables. To forecast future events, it utilizes data from previous times.
regression model
Regression analysis may be simple or multiple depending on the number of independent variables present. When one independent variable is involved, it is called ________________; when two or more independent variables are involved, it is called ______________________.
simple regression, multiple regression
a model constructed to represent reality, on which conclusions about real-life problems can be used.
Simulation
a highly sophisticated tool by means of which the decision maker develops a mathematical model of system under consideration.
Simulation
a quantitative approach that is used to generate an optimal solution within the limits imposed on the decision by constraints.
Linear programming
very useful as a decision-making mechanism when the system is limited by supply and demand constraints in factories, warehouses, or business areas.
Linear programming
a quantitative approach in which population samples are statistically calculated to be used for a variety of processes, such as quality control and marketing research.
theory of sampling
refers to the ‘logical way of conceptualizing, evaluating and solving problems in situations involving minimal or partial decision-environment knowledge.
Decision theory
The objective of the ________________ is to revise and update the initial evaluations of the probabilities of the event generated by the alternative solutions.
Bayesian analysis
If the decision-maker is able to assign probabilities to the different events, it becomes possible to use the probabilistic decision rule, called the _______________.
Bayes criterion
When dealing with a loss table, the Bayes criterion chooses the alternative decision with the ________________, or the ____________________.
highest expected payoff, minimum expected loss
