Model Building and Decision Making
A manager, whichever type of organization he/she works in, very often faces situations where he/she has to decide/choose among two or more alternative courses of action. These are called as decision making situations.
The different types of managerial decisions can be categorized in the following manner:
1. Routine/repetitive/programmable vs. non routine, non-programmable decisions;
2. Operating vs. strategic decisions.
The routine/repetitive/programmable decisions are those which can be taken care of by the manager by resorting to standard operating procedures (also called sops in managerial parlance). Such decisions the manager has to take fairly often and he/she knows the information required to facilitate them. Usually the decision maker has knowledge in the form of "this is what you do" or "this is how you process" for such decision making situations. The examples of these decisions could be processing a loan application in a financial institution and supplier selection by a materials manager in a manufacturing organization.
The non-repetitive/non-programmable/strategic decisions are those which have a fairly long term effect in any organization. Their characteristics are such that no routine methods in terms of standard operating procedures can be developed for taking care of them. The element of subjectivity/judgment in such decision making is fairly high. Since the type of problem faced by the decision maker may vary considerably from one situation to another, the information needs and the processing required to arrive at the decision may also be quite different.
The decision making process may consist, broadly of some or all of the steps as mentioned below:
1. Problem definition;
2. Identifying objectives, criteria and goals;
3. Generation/enumeration of alternative courses of action;
4. Evaluation of alternatives;
5. Selection/choosing the best alternative and
6. Implementation of the selected alternative.
All the above mentioned
The different types of managerial decisions can be categorized in the following manner:
1. Routine/repetitive/programmable vs. non routine, non-programmable decisions;
2. Operating vs. strategic decisions.
The routine/repetitive/programmable decisions are those which can be taken care of by the manager by resorting to standard operating procedures (also called sops in managerial parlance). Such decisions the manager has to take fairly often and he/she knows the information required to facilitate them. Usually the decision maker has knowledge in the form of "this is what you do" or "this is how you process" for such decision making situations. The examples of these decisions could be processing a loan application in a financial institution and supplier selection by a materials manager in a manufacturing organization.
The non-repetitive/non-programmable/strategic decisions are those which have a fairly long term effect in any organization. Their characteristics are such that no routine methods in terms of standard operating procedures can be developed for taking care of them. The element of subjectivity/judgment in such decision making is fairly high. Since the type of problem faced by the decision maker may vary considerably from one situation to another, the information needs and the processing required to arrive at the decision may also be quite different.
The decision making process may consist, broadly of some or all of the steps as mentioned below:
1. Problem definition;
2. Identifying objectives, criteria and goals;
3. Generation/enumeration of alternative courses of action;
4. Evaluation of alternatives;
5. Selection/choosing the best alternative and
6. Implementation of the selected alternative.
All the above mentioned