DECISION MAKING Objectives : 1. Take a quick look at the concepts of management and Decision Making. 2.

Understand Decision Types, Decision Making Process 3. Take a quick look at Decision Making Styles and Decision Making Tools, with special reference to pay off Matrix, Decision Tree and Decision Tables. 4. Take a look at Principle at Rationality and Herbert Simon Model. Introduction : MIS is crucial for Decision Making as it is the MIS, which facilitates effective and efficient decision-making, Decision are to be taken by the Manager or Management. Management, which is defined, as The process of Planning, leading, organizing and controlling the resources of an
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organization in the effective and efficient pursuit of specified organizational goals is responsible for survival, success and prosperity of organization. But in discharging its functions, it faces lot of problems in todays dynamic and fiercely competitive world. The management has to utilize the resources Human, Financial & Physical effectively, by doing right things, and efficiently by doing the things right, so that, at the end, it is able to get the things done and deliver goods/results. This involves managing the work, managing the people and managing the operations. Utilization of resources, in turn involves, exercising choices and hence the basic job of the management could be considered to be Decision Making in discharging various functions assigned to it. A Decision is a choice made from available alternatives, and as such all decisions have some impact/influence on performance of organizations.

Managers, therefore, have to develop decision-making skills, as managers are evaluated/rewarded on the basis of the importance, numbers and results of their decisions. Quality of decisions of managers reach is the yardstick of their effectiveness and of their value to the organizations. Decision Making Environment Decisions could be made under different types of environment viz., ambiguity, certainty, uncertainty and risk. An environment is ambiguous when the problem is not clear, the goal is not clear and hence the outcome is unclear. The certainty environment is one where the relationship between inputs and outputs is known and hence the result is also known. The uncertainty element is one where there is unawareness about resources, input / output relations and the outcome is uncertain or unpredictable.
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The risk environment is one where the result is unknown, it might result in profits, but it might lead to incurring losses as well. DECISION TYPES Decisions could be divided into two categories 1. Programmed Decisions 2. Non-Programmed Decisions. Programmed Decisions Routine /Structured Repetitive / Short term Definite procedure is to be followed There are laid down norms The situations are known Taken at the lower /operating levels in an organization. The techniques used for taking programmed decisions are: Habit Standard operating procedure (SOP) Organizational Hierarchy / Structure Operational Research
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Computers. Non Programmed Decisions:

The major characteristics programmed decisions are: Innovative New / Complex situations Important and critical Strategic Long term The techniques used for programmed decisions are:

of

the

non-

taking

non-

Judgment Intuition Business Acumen Creativity Complex/specially designed computer programmes Training executives

Decision making process from organizational pyramidal point of view:

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Decision making process The decision making process involves the following steps: Determine existence of problems and /or opportunities Generate alternative courses of action Important the course of action Monitor, follow-up and initiate course corrective action