decision making techniques

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Decision-Making TechniquesSubmitted to: Submitted by: Dr. Shipra Mittal Gupta Nikita Gupta Mtech(2nd sem)March 6, 20151What is decision-making?Decision-making is one of the central activities of management and is a huge part of any process of implementationGood decision making is an essential skill to become an effective leaders and for a successful careerA decision is a judgment. It is a choice between alternatives. It is rarely a choice between right and wrong. It is at best a choice between almost right and probably wrong.-Drucker.wikipedia.org/wiki/Decisionwww.merriam-webster.com/dictionary/decision

March 6, 20152The Significance of Decision MakingDecision making is the one truly distinctive characteristic of managers.Decisions made by top managers commit the total organization toward particular courses of action.Decisions made by lower levels of management implement the strategic decisions of top managers in the operating areas of the organization.Decisions invariably involve organizational change and the commitment of scarce resources.www.mindtools.comMarch 6, 20153Decision-making ProcessIdentifying a problemIdentifying decision criteriaAllocating weights to criteriaDeveloping alternativesAnalyzing alternativesSelecting an alternativeImplementing the alternativeEvaluation (of decision effectiveness) Introduction to management by L.M. Prasad

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The Decision-Making Process Allocation of Development of Problem Identification of Weights to Alternatives Identification Decision Criteria Criteria Acer Compaq My salespeople Price Reliability 10 Gateway Weight Screen size 8 need new computers HP Warranty Warranty 5 Micromedia Screen type Weight 5 NEC Reliability Price 4 Sony Screen size Screen type 3 Toshiba Analysis of Selection of an Implementation Alternatives Alternative of an Alternative Acer Acer Compaq Compaq Evaluation Gateway Gateway Gateway of Decision HP HP Effectiveness Micromedia Micromedia NEC NEC Sony Sony Toshiba Toshiba March 6, 20155Categories of DecisionsProgrammed Decisions:A decision that is repetitive and routineA definite method for its solution can be establishedDoes not have to be treated a new each time it occursProcedures are often already laid outExamples: pricing standard customer orders, determining billing dates, recording office supplies etc.www.slideshare.net

March 6, 20156Categories of DecisionsNonprogrammed Decisions:A decision that is novel (new or unique) or Ill structuredNo established methods exist, because it has never occurred before or becauseIt is too complexAre tough decisions that involve risk and uncertainty and call for entrepreneurial abilitiesSuch decisions draw heavily on the analytical abilities of the managerExamples: Moving into a new market, investing in a new unproven technology, changing strategic directionwww.slideshare.net

March 6, 20157Programmed vs. Non-programmed DecisionsCharacteristicsProgrammed decisionsNon-programmed decisionsType of problemStructuredUnstructuredManagerial levelLower levelUpper levelFrequencyRepetitiveNew,unusualInformationReadily availableAmbiguous or incompleteTime frame for solutionShortRelatively longSolution relies on Procedures,rules, and policiesJudgment and creativity

Selecting a Decision Making ModelDepends on the managers personal preferenceWhether the decision is programmed or non-programmedExtent to which the decision is characterized by risk, uncertainty, or ambiguitywww.mindtools.comMarch 6, 20159Rational Model: AssumptionsClear and unambiguous problemSingle, well-defined goalAll alternatives are knownClear preferences (ranking criteria)Constant/stable preferencesNo time or cost constraintsDecision will maximize payoffwww.slideshare.net

March 6, 201510Rational Model: CriticismNot all decisions made on rational basisMost problems, goals and preferences are not clear or well definedNot practical to know all possible alternativesTime and cost constraints exist in all practical problemsResult not maximized in most caseswww.slideshare.net

March 6, 201511Bounded Rational Model: AssumptionsLimited set of criteriaSelf-interest influences ratingsLimited no. of alternativesAlternatives are assessed one at a time till a satisficing (or good enough) alternative is foundPolitics influences acceptance and commitment of decisioneducation-portal.com/.../bounded-rationalityMarch 6, 201512Techniques For Decision-MakingNOMINAL GROUP THINK

The NGT is designed to help all team members participate and express opinions while still building team consensus

The nominal group technique is a structured decision making process in which group members are required to compose a comprehensive list of their ideas or proposed alternatives in writing

NGT is designed to help with group decision making by ensuring that all members participate fully.http://www.slideshare.net/LouzelLinejan/decision-making-by-individual-and-groupAlthough it is true that there are a great many factors that can negatively affect our ability to make decisions successfully, there are also many things that can be done to help increase our decision-making effectiveness

1. One approach that attempts to capitalise on the positive features of group decision-making, while avoiding many of the potential pitfalls, is the Nominal Group Technique (NGT). The NGT is designed to help all team members participate and express opinions while still building team consensus. In this technique, seven to ten individuals are brought together to participate in a structured exercise that includes the following steps: Team members are presented with a problem, challenge or issue. Individual team members silently and independently write down their ideas about how to tackle the problem. This is the nominal (non-interacting) phase.Each team member (one at a time, in round-robin fashion) presents an idea to the group. As each idea is offered, it is summarised and recorded on a whiteboard or wall chart, without discussion of its merits.A discussion is held in which all ideas are clarified and evaluated. The merits of the ideas are considered. Ideas are merged, eliminated, expanded and modified.Individuals silently and independently vote on each idea. This voting may involve a rating of the proposals, a rank ordering, the selection of the top two or three ideas, or the division of 10 points among alternatives. The group's decision is then derived by pooling the votes or rankings into a single preferred alternative.A revised list of the best ideas is presented to team members for discussion. If a consensus emerges, the team is finished. If not, the procedure returns to Step 2 and continues through more rounds until the best ideas are identified and agreement is reached. The nominal group technique is a quite popular means of reaching a group decision because it avoids many of the potential problems of group decision-making. For example, a decision can be reached in a reasonable amount of time without being greatly influenced by the leader's preferred position. Perhaps the strongest drawback of NGT is its high degree of structure. As a result, the group may tend to limit its discussion to a single and often highly focused issue.

13NGT follows these steps:

7-10 individuals are brought together to participate in a structured exercise that includes the following steps:

Team members are presented with a problem, challenge or issue

Individual team members silently and independently write down their ideas about how to tackle the problem.

Each team member (one at a time, in round-robin fashion) presents an idea to the group.

Individuals silently and independently vote on each idea. http://www.slideshare.net/LouzelLinejan/decision-making-by-individual-and-group

Although it is true that there are a great many factors that can negatively affect our ability to make decisions successfully, there are also many things that can be done to help increase our decision-making effectiveness

1. One approach that attempts to capitalise on the positive features of group decision-making, while avoiding many of the potential pitfalls, is the Nominal Group Technique (NGT). The NGT is designed to help all team members participate and express opinions while still building team consensus. In this technique, seven to ten individuals are brought together to participate in a structured exercise that includes the following steps: Team members are presented with a problem, challenge or issue. Individual team members silently and independently write down their ideas about how to tackle the problem. This is the nominal (non-interacting) phase.Each team member (one at a time, in round-robin fashion) presents an idea to the group. As each idea is offered, it is summarised and recorded on a whiteboard or wall chart, without discussion of its merits.A discussion is held in which all ideas are clarified and evaluated. The merits of the ideas are considered. Ideas are merged, eliminated, expanded and modified.Individuals silently and independently vote on each idea. This voting may involve a rating of the proposals, a rank ordering, the selection of the top two or three ideas, or the division of 10 points among alternatives. The group's decision is then derived by pooling the votes or rankings into a single preferred alternative.A revised list of the best ideas is presented to team members for discussion. If a consensus emerges, the team is finished. If not, the procedure returns to Step 2 and continues through more rounds until the best ideas are identified and agreement is reached. The nominal group te

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