DECISION MAKING

Cards (26)

  • Decision making is the process of deciding about something important, especially in a group of people or in an organization
  • 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
  • The decision-making process is a consultative affair done by a committee of professionals to drive better functioning of any organization
  • 7 STEPS TO EFFECTIVE DECISION MAKING
    Step 1: Identify the decision
    Step 2: Gather relevant information
    Step 3: Identify the alternatives
    Step 4: Weigh the evidence
    Step 5: Choose among alternatives
    Step 6: Take action
    Step 7: Review your decision & its consequences
  • Decision making skills focus on research, collecting & analyzing data, and making a correct judgment for an effective & efficient end result
  • In business, employees must possess good decision-making skills to select the best possible solution for any company problem, ensuring smooth business processes
  • Good decision-making skills increase efficiency, improve processes, and help grow business revenue
  • Strong decision-making helps solve problems promptly and creates a leadership position for the decision-makers
  • Strong decisions should be impartial and devoid of any emotional influences that might make us overlook shortcomings
  • Types of Decision Making:
    • Analytical: based on collecting information, analyzing data & taking a calculated decision
    • Directive: based on processes & rules, focused on the end goal
    • Conceptual: considers how other people will be impacted by the decision
    • Behavioral: driven by the nature, attitude, or behavior of a person
  • 5 WAYS TO IMPROVE YOUR DECISION MAKING SKILLS AS A LEADER
    1.GATHER RELEVANT INFO
    2. THINK ECONOMICALLY
    3. ALLOW DISTRACTIONS
    4. BE AWARE OF YOUR PERSONAL BIASES
    5. FORGIVE YOURSELF FOR PAST MISTAKES
    1. Qualitative evaluation - This term refers to evaluation of alternatives using intuition and subjective judgment. 2. Quantitative evaluation - This term refers to the evaluation of alternatives using any technique in a group classified as rational and analytical.
  • 1.INVENTORY MODELSInventory models consist of several types all designed to help the engineer manager makes decisions regarding inventory. They are as follows:1.1 Economic Order Quantity Model (EOQ) - this one is used to 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.1.2 Production Order Quantity Model - this is an economic order quantity technique applied to production orders,
  • 1.3 Back Order Inventory Model - this is an inventory model used for planned shortages.
  • 1.4 Quantity Discount Model - an inventory model used to minimize the total cost when quantity discounts are offered by suppliers.
  • QUEUING THEORY - The queuing theory is one that describes how to determine the number of service units that will minimize both customer waiting time and cost of service.
  • 3. NETWORK MODELS - These are models where large complex tasks are broken into smaller segments that can be managed independently.
    1. The Program Evaluation Review Technique (PERT) managers to schedule, monitor, and control large and complex projects by employing three time a techniques which enables engineer estimates for each activity.
  • 2. The Critical Path Method (CPM) - this a network technique using only one time factor per activity that enables engineer managers to schedule, monitor, and control large and complex projects.
  • FORECASTING - It is a technique that uses historical data as inputs to make informed estimates that are predictivein determining the direction of future trends. Businesses utilize forecasting to determine how to allocate their budgets or plan for anticipated expenses for an upcoming period of time.
  • 5. REGRESSION ANALYSIS - The regression model is a forecasting method that examines the association between two or more variables. It uses data from various periods to predict future events.
  • Regression analysis may be simple or multiple depending on the number of independent variables present. When one independent variables is involved, it is called simple regression; when two or more independent variables are involved, it is called multiple regression.
  • 6. SIMULATION - Simulation is a model constructed to represent reality, on which conclusions about real-life problems can be used. It is a highly sophisticated tool by means of which the decision marker develops a mathematical model of the system under consideration.Simulation does not guarantee an optimum solution, but it can evaluate the alternatives fed into the process by the decision-maker.
  • 7. LINEAR PROGRAMMING - Linear programming is a quantitative technique that is used to produce an optimum solution within the bounds imposed by constrains upon the decision. Linear programming is very useful as a decision- making tool when supply and demand limitations at plants, warehouse, or market areas are constraints upon the system.
  • 8. SAMPLING THEORY - Sampling theory is a quantitative technique where samples of population are statistically determined to be used for a number of processes, such as quality control and marketing research. When data gathering is expensive, sampling provides an alternative. Sampling, in effect, save time and money.
  • 9. STATISTICAL DECISION THEORY - Decision theory refers to the "rational way to conceptualize, analyze, and solve problems in situations involving limited, or partial information about the decision environment.Statistical Decision theory is concerned with the making of decisions when in the presence of statistical knowledge (data) which sheds light on some of the uncertainties involved in the decision problem.