Chapter 2 Decision Making.pptx

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Decision Making

Lemos, Justin

Miguel, Noruel JanCapote, Jerick Jay

Quiñones, Khen



DECISION MAKING

manager of all kinds and types,

including the engineering managerare primarily tasks to provideleadership in the quest for attainment

of the organizations objective.



Decision making as a management responsibilitydecision must be made at various level in thework place they are also made at the variousstages in the management process.

What is decision making?Decision making may be defined as the processof identifying and choosing alternative coursesod action in a manner appropriate to the demandod the situation.



he decision making process

Diagnose the problem!nalyze environment

!rticulate problem or opportunityDevelop viable alternatives"valuate alternatives#ake a choice$mplement decision"valuate and !dapt decision result



Diagnose %roblem

$f a manager wants to make an intelligentdecision, his first move mist be to identifythe problem. $f the manager fails in theaspect, it is almost impossible to succeed inthe subsequent steps .



!nalyze the environmenthe environment where the organization is situated plays very

significant role in the success or failure of such an organizational.

"&ample of $nternal 'imitation(.) 'imited funds available for the purchase of equipment*.) 'imited training in the part of employees+.) $$$ designed facilities"&ample of "&ternal 'imitation

(.) %atent are controlled by other organization*.) ! very limited market for the company-s products and servicee&ist+.) trict enforcement of local zoning regulation.



/omponent of the environment consist of two

major concern 0$nternal 1 "&ternal2

Internal – The internal environmentrefers to organizational activities with a

rm that surrounds decision making.

External – The external environment

refers to variable that are outside theorganization and not typically within theshort run control of top management.



Develop

ViableAlternatives



Develop Viable Alternatives

• The best among the alternativesolutions.



Procedures

1. Prepare a list of alternati e solutions.!. "etermine the ia#ility of each solutions.

$. %e ise the list #y striking out those &hichare not ia#le.



Example:

'n engineering firm has a pro#lem ofincreasing its output #y $(). *his is theresult of a ne& agreement #et&een the firman+ one of its clients.



lternative !ourses of ction"1. mpro e the capacity of the firm #y

hiring more &orkers an+ #uil+inga++itional facilities/

!. 0ecure the ser ices ofsu#contractors/

$. uy the nee+e+ a++itional output from

another firm/2. 0top ser ing some of the company3scustomers/ an+

4. "elay ser icing some clients.



EvaluateAlternatives



Evaluate Alternatives

#each alternative must be analyzedand evaluated in terms of its value$cost$ and risk characteristics.% &'ouder



Example:

'n engineer manager is face+ &ith apro#lem of choosing #et&een threeapplicants to fill up a lone acancy for a

5unior engineer. 6e &ill ha e to set upcertain criteria for e aluating the applicants.



Evaluation #(eet

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#aking a choice



Implement decisions◦ 4efers to carrying out the decision so

that ob6ective sought will beachieved.

◦ To make an implementatione7ective$ a plan must be devised.



"valuate and adapt decision results◦ 4eedback

he process which requires checking at each stage

of the process.◦ /ontrol

3efers to the action made to ensure that activities performed match the desired activity or goal.



pproaches in solving problem◦ 8ualitative evaluation◦ 8uantitative evaluation



8ualitative evaluation7Evaluation of alternatives using

intuition and sub6ective 6udgment.

The problem is fairly simple. The problem is familiar.

The cost involved are not great.Immediate decisions are needed.



8uantitative evaluation◦ 4efers to the evaluation of

alternatives using any techni9ue in agroup classi ed as rational oranalytical.



8uantitative models for decisionmaking◦ Inventory models◦ 8ueuing theory◦ :etwork models◦

;orecasting◦ 4egression analysis◦ 'imulation◦

<inear programming◦ 'ampling theory◦ 'tatistical decision theory



Inventory models◦ Economic order 9uantity model◦ Production order 9uantity model◦ =ack order inventory model◦ 8uantity discount model



Queuing Theory



Net or! "o#els

The two most prominent network modelsare"$% &rogra' Re(aluation Re(ie Techni)ue

*&ERT+ &which enables engineer managers toschedule$ monitor$ and control large andcomplex pro6ects by employing three timeestimates for each activity.

,% -ritical &ath "etho# *-&"+. using onlyone time factor per activity that enables theengineer managers to schedule$ control$ andcontrol large and complex pro6ects



/orecasting

& de ned as the collection of past andcurrent information to makepredictions about the future.



Regression 0nalysis

Is a forecasting method that examinesthe association between two or morevariables.It uses a data from previous periods topredict future events.'imple 4egression& one independent

variable involved3ultiple 4egression& two or moreindependent involved



1i'ulation

!onstructed to represent$ reality$ on whichconclusion about real&life problems can beused.

It is highly sophisticated tool by means ofwhich the decisions maker develops amathematical model of the system underconstruction.(oes not guarantee an optimum solution$but it can evaluate the alternative fed intothe process by the decision&maker.



2inear &rogra''ing

Is a 9uantitative techni9ue that isused to produce an optimum solutionwithin the bounds imposed byconstraints upon the decision.



1a'pling Theory

9uantitative techni9ue wheresamples of population are statisticaldetermined to be used for a numberof process$ such as 9uality controland marketing research.



1tatistical 3ecision. Theory

4efers to the rational way toconceptualize, analyze, andsolve problems in situationsinvolving limited or partialinformation about the decisionenvironment .



1u''ary

Chapter 2 Decision Making.pptx

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