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Assignment No. 3 (Decision Making)

Decision making is a core responsibility of managers at all levels. As the management level increases, decisions become more complex. There are several steps to the decision making process including diagnosing the problem, analyzing internal and external constraints, developing viable alternatives, evaluating options, making a choice, implementing the decision, and evaluating results. Managers use both qualitative and quantitative approaches to evaluate alternatives, with quantitative models including inventory, production scheduling, forecasting, and statistical techniques. The engineer manager's strong decision making skills are crucial for professional success.

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April Lyn Santos
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95 views

Assignment No. 3 (Decision Making)

Decision making is a core responsibility of managers at all levels. As the management level increases, decisions become more complex. There are several steps to the decision making process including diagnosing the problem, analyzing internal and external constraints, developing viable alternatives, evaluating options, making a choice, implementing the decision, and evaluating results. Managers use both qualitative and quantitative approaches to evaluate alternatives, with quantitative models including inventory, production scheduling, forecasting, and statistical techniques. The engineer manager's strong decision making skills are crucial for professional success.

Uploaded by

April Lyn Santos
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DECISION MAKING AS A MANAGEMENT RESPONSIBILITY

Decision making is a responsibility of the engineer manager. The higher the


management level is, the bigger and the more complicated decision making
becomes. DECISION MAKING
WHAT IS DECISION-MAKING?
 The process of identifying and choosing alternative courses of action (Managers of all kinds and types,
in a manner appropriate to the demands of the situation. including the engineer manager, are
 According to nickels et al, “it is the heart of all the management primarily t asked to provide
functions”. leadership in the quest for the
DECISION-MAKING PROCESS attainment of the organizations’s
1. Diagnose problem objectives.)
-To make an intelligent decision, the manager’s first move must be
identify the problem. DECISION MAKING AS A
-An expert said “identification of the problem is tantamount to having
the problem solved.”
MANAGEMENT RESPOSIBILITY
What is a problem?
 A problem exists when there is a difference between actual situation WHAT IS DECISION MAKING
and a desired situation.
THE DECISION MAKING PROCESS
2. Analyze environment
-The objective of environmental analysis is the identification of
constraints, which may be spelled out as either internal or external
limitation.

Internal limitations
-Limited fund available for the purchase of equipment.
-Limited training on the part of employees.
-Ill-designed facilities.
External limitations
-Patents are controlled by other organizations.
-A very limited market for the company’s products and services exists.
-Strict enforcement of local zoning regulations.

Components of environment
The internal environment refers to organizational activities within the firm that
surrounds decision-making.
The external environment refers to variables that are outside the
organization and not typically within the short-run control of top
management.
 Organizational aspects
 Marketing aspects
 Personnel aspects
 Production aspects
 Financial aspects

3. Develop 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.

4. Evaluate alternatives
-This is important because the next step involves making a choice.
Proper evaluation makes choosing the right solution less difficult.
-The alternatives will be evaluated depending on the nature of
problem, objectives of the firm, and the nature of alternatives
presented.

5. Make a choice
-Choice-making refers to the process of selecting among alternatives
representing potential solutions to a problem.
-Webber advises that particular effort should be made to identify all
significant consequences of each choice.

6. Implementing decision
-Implementation refers to carrying out the decision so that the
objectives sought will be achieved.
-At this stage, the resources must be made available so that decision
may be properly implemented.
-According to aldag and stearns, those who will be involved must
understand and accept the solution.

7. Evaluate and adapt decision results


-Feedback 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.
-Controls refers to actions made to ensure that activities performed match the desired activities or goals, that
have been set.

APPROACHES IN SOLVING PROBLEMS


Qualitative evaluation
- evaluation of alternatives using intuition and subjective judgment.
1. The problem is fairly simple.
2. The problem is familiar.
3. The costs involved are not great.
DECISION MAKING
4. Immediate decisions are needed.
(The engineer manager’s decision
Quantitative evaluation making skills will be very crucial to
-evaluation of alternatives using any technique in a group classified as his success as a professional. Good
rational and analytical
decisions, on the other hand, will
QUANTITATIVE MODELS FOR DECISION MAKING provide the right environment for
Inventory models continuous growth and success of
A. Economic order quantity model any organized effort.)
B. Production order quantity model
C. Back order inventory model
D. Quantity discount model
APPROACHES IN SOLVING
Economic order quantity model PROBLEMS
 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
QUANTITATIVE MODELS FOR
DECISION MAKING
Production order quantity model
 This is an economic order quantity technique applied to production
orders.

Back order inventory model


 This is an inventory model used for planned shortages.

Quantity discount model


 An inventory model used to minimize the total cost when quantity
discounts are offered by suppliers.

Queuing theory
 Is the one that describes how to determine the number of service
units that will minimize both customer waiting time and cost of
service.

Network model
 The program evaluation review technique (pert)
 The critical path method (cpm)
 Program evaluation review technique
 A techniques which enables engineer managers to schedule, monitor,
and control large and complex projects by employing three time
estimates for each activity.

Critical path method


 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.

Forecasting
 The collection of past and current information to make predictions
about the future.

Regression analysis
 Forecasting method that examines the association between two or
more variables. It uses data from previous periods to predict future
events.

Simulation
 Model constructed to represent reality, on which conclusions about
real-life problems can be used.

Linear programming
 It is a quantitative technique that is used to produce an optimum
solution within the bounds imposed by constraints upon the decision.

Sampling theory
 It is a quantitative technique where samples of populations are statistically determined to be used for a
number of processes, such as quality control and marketing research.

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”

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