Studied by 21 peopleManager / Engineer Manager
mainly responsible for providing leadership in the effort to achieve goals of an organization
Engineer
make choices in order to design a product or schedule an operation
Decision Making
- process of identifying and choosing alternative courses of action in every situation encountered
- heart of all management functions
- way of making choices by establishing a decision, collecting data, and analyzing alternative resolutions
at least 2 choices to choose from
involve something achievable
power to decide
conditions for making a decision (3)
Engineering Manager
responsible for decision-making
David H. Holt
he said that rational decision-making is a process involving 7 steps
Diagnose Problem
Analyze Environment
Develop Viable Alternatives
Evaluate Alternatives
Make a Choice
Implement Decision
Evaluate and Adapt Decision Results
7 steps of rational decision-making
Diagnose Problem
to make an intelligent decision, it is necessary to find the issue first
identification of the problem
is said to be tantamount to having a problem half-solved
problem
exist when there is a difference between an actual situation and a desired situation
Analyze Environment
necessary to conduct an environmental analysis to identify such constraints
limited funds
limited training
ill-designed facilities
Internal Limitations
patents controlled by other organization
limited market
strict local zoning regulations
External Limitations
Internal Environment
refers to organizations activities within a firm
External Environment
factors that are outside of the organization and not usually under top management’s short-run
Develop Viable Alternatives
the manager must consider the best one among alternative situations
Prepare a list of alternative solutions
Determine the viability of each solutions
Revise the list by striking out those which are not viable
steps for the procedure of developing viable alternatives
Evaluate Alternatives
proper assessment of remaining alternatives makes it less difficult to select the best option
alternative
must be analyzed and evaluated in terms of its value, cost, and risk characteristics
Value
refers to benefits that can be expected
Cost
refers to out-of-pocket cost
Risk Characteristics
refer to the likelihood of achieving the goals
Make a Choice
the decision-maker must now be able to make choice after the alternatives have been assessed
Choice-making
refers to tube practice of choosing between alternatives constitute possible solutions to a problem
Implement Decision
- follows after decision has been made
- a plan must be devised to make an effective implementation
Evaluate and Adapt Decision Results
predicted outcome may or may not occur in enforcing the decision
Feedback
process which requires checking at each stage of the process to assure that the alternatives generated, and solution selected for implementation are still aligned with the goals and objectives originally specified
Control
steps taken to ensure that the tasks conducted adhere to the intended activities or set goals
Qualitative Evaluation
Quantitative Evaluation/Approach
approaches in solving problems
Qualitative Evaluation
assessment using intuition and subjective judgement for alternatives
problem is simple
problem is familiar
low cost
needs immediate decisions
When is qualitative approach needed?
Quantitative Evaluation
evaluation of alternatives using any technique in a group classified as rational and analytical
to make optimal decision in a situation where the probability of all outcomes is uncertain through the use of mathematical and statistical models
when the problem is well-defined, several solutions exist, and decision outcomes are easily observable, the quantitative approach to decision-making provides the best outcomes
have the advantage of suggesting the best solution to the problem without identifying all possible alternatives
benefits of Quantitative Approach
Economic Order Quantity Model
Production Order Quality Model
Order Inventory Model
Quantity Discount Model
Inventory Models
Economic Order Quantity Model
used to calculate the number of items that should be ordered at one time
Production Order Quantity Model
economic order quantity technique applied to production orders back
Back Order Inventory Model
inventory model used for planned shortages
Quantity Discount Model
used to minimize the total cost when quantity discounts are offered by suppliers
Queuing Theory
- applicable to companies where waiting lines are common situation
- determine the number of service units that will minimize both customer waiting time and cost service
Network Models
complex tasks are divided into smaller segments that can be independently managed in order to avoid wasting time, energy, and money
Program Evaluation Review Technique (PERT)
helps engineers and executives to plan, track, and manage large and complex projects by using three time estimates for each task
Critical Path Method (CPM)
network of technique using only one time factor per activity that enables engineer managers to schedule, monitor and control complex projects
Forecasting
the collection of past and current information to make predictions about the future
Regression Analysis
a method of forecasting which examines the relation between two or more variables
Simple Regression
Multiple Regression
two kinds of Regression Analysis
Simulation
- model constructed to represent reality
- highly sophisticated tool by means of which the decision maker develops a mathematical model of system under consideration
Linear Programming
- used to generate an optimal solution within the limits imposed on the decision by constraints
- very useful as a decision-making system when the system is limited by supply and demand constraints
- not useful when the conditions are unclear or unpredictable
Sampling Theory
quantitative approach in which population sample are statistically calculated to be used for a variety of purposes
Statistical Decision Theory
logical way of conceptualizing, evaluating, and solving problems in situations involving minimal or partial decision-environment knowledge
Bayesian Analysis
its objective is to revise and update the initial evaluations of the probabilities of the event generated by the alternative solutions
Note
Flashcard