Programmed and nonprogrammed decision making ppt

Problem Solving and Decision Making

Problem
A situation that exists when objectives are not being met.
Problem Solving
The process of taking corrective action to meet objectives.
Decision Making
The process of selecting an alternative course of action that will solve a problem.
Managers need to make proficient decisions while performing the functions of management.
Management, Decision Making, and Problem Solving

The Relationship Among Management Functions, Decision Making, and Problem Solving
Managers need to make proficient decisions while performing the functions of management.
Steps in Problem Solving

Identify the problem

Generate ideas

Evaluate alternatives

Choose among alternatives

Implement chosen

alternative

Learn from feedback

The Decision-Making Model

A six-step model that when properly utilized increases chances of success in decision making and problem solving.
Model 4–1

Decision-Making Styles

Reflexive Style
Makes quick decisions without taking the time to get all the information that may be needed and without considering all the alternatives.
Reflective Style
Takes plenty of time to make decision, gathering considerable information and analyzing several alternatives.
Consistent
Tends to make decisions without rushing or wasting time.
Types of Decisions

Programmed Decisions
Recurring or routine situations in which the decision maker should use decision rules or organizational policies and procedures to make the decision.
Nonprogrammed Decisions
Significant and nonrecurring and nonroutine situations in which the decision maker should use the decision-making model.
Decision-Making Structure

Exhibit 4–1

Decision-Making Models

Rational Model (Classical Model)
The decision maker attempts to use optimizing, selecting the best possible alternative.
The Bounded Rationality Model
The decision maker uses satisficing, selecting the first alternative that meets the minimal criteria for solving the problem.
Which Decision Model to Use

Exhibit 4–4a

Decision-Making Conditions

Certainty
Each alternative’s outcome is known in advance.
Risk
Probabilities can be assigned to each alternative.
Uncertainty
Lack of information or knowledge makes the each alternative unpredictable such that no probabilities can be determined.
Decision-Making Conditions Continuum

Exhibit 4–4b

Potential Advantages and Disadvantages of Using Group Decision Making

Exhibit 4–3

When to Use Group or
Individual Decision Making

Exhibit 4–4c

Define the Problem or Opportunity

Distinguish Symptoms from the Cause of the Problem
List the observable and describable occurrences (symptoms) that indicate a problem exists.
Determine the cause of the problem.
Removing the cause should cause the symptoms to disappear or cease.
Symptom: Customer dissatisfaction
Cause: Poorly trained employees
Solution: Implement customer relations training program for employees
Set Objectives and Criteria

Setting Objectives
Involves establishing clear objectives that will make for better decisions.
Objectives state what the decisions should accomplish in solving a problem or taking advantage of an opportunity.
Setting Criteria
Involves setting standards that an alternative must meet to be selected as the decision that will accomplish the objective.
Generate Creative Alternatives

Innovation
The implementation of a new idea
Product innovation (new things)
Process innovation (new way of doing things)
Creativity
A way of thinking that generates new ideas
The Creative Process
Preparation
Incubation and illumination
Evaluation
Stages in the Creative Process

Exhibit 4–5

Become familiar with the problem; generate as many alternatives as possible.

Take some time before working on the problem again to gain additional insight.

Before implementing the solution, evaluate the alternative to be sure it is practical.

Characteristics of Useful Information

Timeliness
Quality (Accuracy)
Completeness (Amount)
Relevance
Exhibit 4–6

Group Decision-Making Techniques
That Foster Creativity

Exhibit 4–7

Generating Creative Alternatives

Brainstorming
The process of suggesting many possible alternatives without evaluation.
Synectics
The process of generating novel alternatives through role playing and fantasizing.
Nominal Grouping
The process of generating and evaluating alternatives using a structured voting method that includes listing, recording, clarification, ranking, discussion, and voting to select an alternative.
Generating Creative Alternatives

Consensus Mapping (Ringi)
The process of developing group agreement on a solution to a problem.
Delphi Technique
The process of using a series of confidential questionnaires posed to experts to refine a solution.
Responses That Kill Creativity

Exhibit 4–8

Analyzing the Feasibility of Alternatives

Quantitative Techniques
Break-even analysis
Capital budgeting
Payback
Discounted cash flow
Linear programming
Queuing theory
Probability theory
Cost-Benefit (Pros and Cons) Analysis

Cost-Benefit Analysis
A technique for comparing the cost and benefit of each alternative course of action using subjective intuition and judgment along with math.
The Alternative Analysis Techniques Continuum:
Exhibit 4–10

Plan, Implement, and Control

Plan
Develop a plan of action and a schedule of implementation.
Implement the Plan
Communicate and delegate for direct action.
Control
Use checkpoints to determine whether the alternative is solving the problem.
Avoid escalation of commitment to a bad alternative.
Decision Tree

Exhibit 4–11

Situational Management: Decision Making

Model 4–2a

Situational Management: Decision Making (cont’d)

Model 4–2b