OP MAN

• Operational decision


  Choices made by an organization's managers to govern daily activities and internal processes<|>Focused on completing tasks and solving immediate problems<|>Not to be confused with strategic decisions that focus on the long-term vision and overall direction of the organization<|>Contribute to the smooth daily running of a business through their ability to maintain stability, manage resources and ensure overall business performance<|>Help meet daily challenges, maximize the efficiency of internal processes and respond to changing market needs
• Actors of the Operational Decision

  • General management
  • Operational managers
  • Field employees
  • Support services
• General management


  • Responsible for the overall vision of the organization
  • Makes strategic decisions that affect the entire company
• Operational managers


  • Responsible for implementing strategic decisions at the operational level
  • Supervise daily activities, set goals, and make decisions to achieve those goals
• Field employees


  • Carry out daily operational tasks
  • Their experience and expertise are essential in providing valuable information for decision-making
• Support services


  • Departments such as human resources, finance, and IT provide essential information and services to support operations
• Roles and responsibilities of operational managers

  1. Planning

  2. Implementation

  3. Monitoring and controlling

  4. Communication
• The operational decision-making process

  1. Identify the problem or decision to be made

  2. Collect relevant data

  3. Analyzing available options and decision making

  4. Implement the chosen plan

  5. Evaluate results
• Characteristics of decisions


  • The significant or long lasting decisions
  • The time availability and the cost of analysis
  • The degree of complexity of the decision
• Framework for decision-making


  1. Defining the problem

  2. Establish the decision criteria

  3. Formulation of a model

  4. Generating alternatives

  5. Evaluation of the alternatives

  6. Implementation and monitoring
• Defining the problem


  Enables to identify the relevant variables and the cause of the problem
• Establish the decision criteria


  Important because the criterion reflects the goals and purpose of the work efforts
• Formulation of a model


  Lies at the heart of the scientific decision-making process<|>Describes the essence of a problem or relationship by abstracting relevant variables from the real world situation<|>Used to simplify or approximate reality, so the relationships can be expressed in tangible form and studied in isolation
• Generating alternatives


  1. Alternatives are generated by varying the values of the parameters

  2. Mathematical and statistical models are particularly suitable for generating alternatives because they can be easily modified
• Evaluation of the alternatives

  1. Relatively objective in an analytical decision process because the criteria for evaluating the alternatives have been precisely defined

  2. The best alternative is the one that most closely satisfies the criteria
• Implementation and monitoring


  1. Essential for completing the managerial action

  2. The best course of action or the solution to a problem determined through a model is implemented in the business world

  3. Follow-up procedures are required to ensure about appropriate action taken, including an analysis and evaluation of the solution along with the recommendations for changes or adjustments
• Decision Methodology


  • Complete Certainty Methods
  • Risk and Uncertainty Methods
  • Extreme Uncertainty Methods
• Decision Support System


  Computer-based systems designed to aid decision-makers of any stage of the decision process in the development of alternatives and evaluation of possible course of action<|>Their purpose is to provide the information and analytical support that enables managers to better control and guide the decision process
• Break-even Analysis


  An economic model describing cost-price-volume relationships<|>Indicates at what level of output, cost and revenue are in equilibrium
• Break-Even Analysis


  1. Relationship between costs and activity level (AL) is assumed to be linear

  2. For every elemental cost, actual cost figures at different activity levels are plotted, and by 'least square analysis' a 'line of best fit' is obtained, giving a fixed cost component and a variable cost component
• Statistical models


  Statistical theory can help to control error associated with the amount of data used in the decision process<|>Decision makers utilize probabilities, which are the most basic measures of uncertainty<|>Probabilities attach a quantitative value (between 0 and 1) to the occurrence of an event
• Types of probabilities


  • Classical probabilities
  • Empirical probabilities
  • Subjective probabilities
• Decision Tree


  A schematic representation of the alternatives available to a decision maker and their possible consequences<|>Composed of nodes with branches emanating from them, where square nodes denote decision points and circular nodes denote chance events<|>Branches leaving square nodes represent alternatives, and branches leaving circular nodes represent chance events