TOLENTINO, DARYL LOUIGE A. I JORVINA, MARK ANGELO R. I MATALANG, IVAN JOE M.

BSME 2B

DECISION-MAKING
 DECISION-MAKING

• Decision-making can be regarded as a problem-

solving activity yielding a solution deemed to be
optimal, or at least satisfactory. It is therefore a
process which can be more or
less rational or irrational and can be based
on explicit or tacit knowledge and beliefs. Tacit
knowledge is often used to fill the gaps in complex
decision making processes.
 Decision-making
A responsibility of the engineer manager. It is
understandable for managers to make wrong
decisions at times.
 DECISION-MAKING
What is DECISION-MAKING? The Decision- Making Process
(David H. Holt)
• The process of identifying 1. Diagnose Problem
and choosing alternative 2. Analyze Environment
courses of action in a 3. Develop Viable Alternatives
manner appropriate to the 4. Evaluate Alternatives
demands of the situation. 5. Make a Choice
6. Implement Decision
7. Evaluate and Adapt Decision Results
 Decision- Making Process

1. Diagnose Problem What is a problem?

*To identify the problem
* If the manager wants to
make an intelligent decision,
his first move must be to
identify the problem.
• A problem exists when
there is a difference
between an actual situation
and a desired situation.
 Decision- Making Process
2. Analyze Environment

*To identify the constraint

(internal limitations or
external limitations)

Internal Limitations
A. Limited funds available for
the purchase of equipment
B. Limited training on the
part of employees
C. Ill- designed facilities
Analyze Environment
External Limitations
A. Patents are controlled by
other organizations
B. Very limited market for the
company's products and
services exists
C. Strict enforcement of local
zoning regulations.
 Decision- Making Process

3. Develop Viable Alternatives

A. Prepare a list of alternative
solutions
B. B. Determine the viability of each
solutions
C. C. Revise the list by striking out
those which are not viable.
 Decision- Making Process

4. Evaluate Alternatives
*Proper evaluation makes
choosing the right solution less
difficult
 Decision- Making Process

5. Make A Choice
*The process of selecting among
alternative representing potential
solutions to a problem.
 Decision- Making Process

6. Implement Decision

* Carrying out the decision so

that the objectives sought will
be achieved.
 Decision- Making Process
7. Evaluate and Adapt Decision Results
*Manager will find out
whether or not the desired
result is achieved.
QUANTITATIVE MODELS FOR
DECISION -MAKING
1. Inventory Models
2. Queuing Theory
3. Network Models
4. Forecasting
5. Regression Analysis
6. Simulation
7. Linear Programming
8. Sampling Theory
9. Statistical Decision Theory
 QUANTITATIVE MODELS
FOR DECISION -MAKING
1. Economic Order Quality Model- this one is 2. Production Order Quality Model- this is an
used to calculate the number of items that economic order quantity technique applied to
should be ordered at one time to minimize the production orders.
total yearly cost of placing orders and carrying
the items in inventory
INVENTORY MODELS -consists of several types
all designed to help the engineer manager
make decisions regarding inventory.

4. Quantity Discount Model - an inventory 3. Back order inventory Model - this is an

model used to minimize the total cost when inventory model used for planned shortages
quantity discounts are offered by suppliers.
 QUANTITATIVE MODELS
FOR DECISION -MAKING
Queuing Theory
One that describes how to
determine the number of
service units that will minimize
both customer waiting time and
cost of service.

NETWORK MODELS
1. The Program Evaluation Review
Technique (PERT) - enables
engineer to manage schedules,
monitor and control large and
complex projects by employing
three time estimates for each
activity
QUANTITATIVE MODELS
FOR DECISION -MAKING
2. The Critical Path Method
(CPM) - this uses one time factor
per activity to that requires
engineer to schedule, monitor
and control large and complex
projects
 QUANTITATIVE MODELS
FOR DECISION -MAKING

FORECASTING
The collection of past and
current information to make
predictions about the future
 QUANTITATIVE MODELS
FOR DECISION -MAKING
REGRESSION ANALYSIS
A forecasting method that
examines the association
between two nor more variables.
It uses data from previous
periods to predict future events.
 QUANTITATIVE MODELS
FOR DECISION -MAKING
SIMULATION
A model constructed to represent reality,
on which conclusions about real life can
be used. It is highly sophisticated tool by
means of which the decision maker
develops a mathematical model of the
system under considerations.
 QUANTITATIVE MODELS
FOR DECISION -MAKING
LINEAR PROGRAMMING
A quantitative technique uses to produce
optimum solution within bounds imposed by
constraints upon decision.
It is mainly concerns with supply and demand.
 QUANTITATIVE MODELS
FOR DECISION -MAKING
SAMPLING THEORY
Quantitative technique samples of population are
statistically determined to be used for a number
processes such as quality control and marketing
research. When data gathering is expensive,
sampling provides an alternative. Sampling in effect
saves time and money.
 QUANTITATIVE MODELS
FOR DECISION -MAKING
STATISTICAL DECISION THEORY
Refers to the rational way to
conceptualize, analyze and solve
problems in situations involving limited
or partial information about the
decision environment
 THANK YOU
AND GOD BLESS
