Decision-Making and Problem Solving
Decision-Making and Problem Solving
problem solving
Organisational Decision making
Structured problems
!nvolved goals that clear.
"re familiar#have occurred before$
"re easily and completely defined% information
about the problem is available and complete.
Programmed decision
" repetitive decision the can be handled by a
routine approach.
Problems and Decisions # cont&d$
'nstructured problems
Problems that are new or unusual and for which
information is ambiguous or incomplete.
Problems that will re(uire custom%made
solutions.
)on%programmed decisions
Decision that are uni(ue and nonrecurring.
Decision that generate uni(ue responses.
Types of Programmed Decisions
Policy
a general guideline for making a decision about a
structured problem.
Procedure
" series of interrelated steps that a manager can
use to respond # applying a policy$ to a structured
problem.
*ule
an e+plicit statement that limits what a manager
or employee can or cannot do.
Programmed vs. Non-programmed
Decisions
Characteristics Programmed
decisions
Non-programmed
decisions
Type of problem Structured 'nstructured
Managerial level ,ower level 'pper level
re!"ency *epetitive )ew-unusual
#nformation *eadily available "mbiguous or
incomplete
Time frame for
sol"tion
Short *elatively long
$ol"tion relies on Procedures-rules- and
policies
.udgment and creativity
The Decision-
Making Process
Define the
Problem
Evaluate
Alternatives
Implement
the chosen
Alternative
/ather facts and
develop
alternatives.
Select the best
alternative.
0ollow up and
evaluate the chosen
alternative.
Decision 1aking Process
Problem
" discrepancy between an e+isting and desired
state of affairs.
5haracteristics of Problems
" problem becomes a problem when a manager
becomes aware of it.
there is a pressure to solve the problem.
the manager must have the authority-
information- or resources needed to solve the
problem.
Step 6: !dentify the Decision
5riteria
5ertainty
" situation in which a manager can make an
accurate decision because the outcome of every
alternative choice is known.
*isk
" situation in which the manager is able to
estimate the likelihood #probability$ of outcomes
that result from the choice of particular
alternatives.
Decision%making 5onditions
'ncertainty
limited information prevents estimation of
outcome probabilities for alternatives associated
with the problem and may force managers or rely
on intuition- hunches- and gut feelings.
; 1a+ima+: The optimistic manager&s choice to
ma+imi2e the ma+imum payoff.
D 1a+imin: The pessimistic manager&s choice to
ma+imi2e the minimum payoff.
D 1inima+: The manager&s choice to minimi2e
ma+imum regret.
Decision%making styles
Tolerance of ambiguity
,ow tolerance:re(uire consistency and order.
@igh tolerance: multiple thoughts simultaneously.
Decision%1aking Styles
#cont&d$
Decision 1aking
F
The process of identifying and choosing alternative courses
of action to meet the demands of a situation.