1. DECISION MAKING COURSE
HERMAWANTO

2. HERMAWANTO

3. DECISION MAKING
A moment, in an ongoing process of choosing the preferred objective, evaluating alternatives for meeting an objective, at which expectation about a particular course of action impel the decision maker to select that course of action most likely to result in attaining the objective (Harrison, 1999:5)

4. DECISION MAKING
Acts of choice between alternative courses of action designed to produce a specified result, and one made on a review of relevant information guided by explicit criteria (Harrison, 1999:5)

5. DECISION MAKING
A concious and human process, involving both individual and social phenomena, based upon factual and value premises, which includes a choice of one behavioral activity from one or more alternatives with the intention of moving towards some desired state of affairs (Shull et al, 2003:6)

6. DECISION ELEMENTS
DECISION (MAKING) BOARDS
PROBLEM(S)
DECISION OBJECTIVE(S)
CHOICES (DECISION ALTERNATIVES)
CRITERIA
UNCONTROLLABLE FACTORS
DECISION PROCESS
CHOOSEN DECISION
DECISION CONSEQUENCES

7. BOUNDED RATIONALITY
A concept used to describe the ways in which people’s capacity to process large amounts of data is limited.
Sometimes called ‘limited rationality’ or subjective rationality

8. Rational Theory of Choice
Within rational processes, choice depends on what alternatives are considered and on two guesses about the future:
The first guess is a guess about future states of the world, conditional on the choice
The second guess is a guess about how the decision maker will feel about that future world when it is experienced

9. Rational Theory of Choice
Some versions of rational choice theory assume that all decision makers share a common set of (basic) preferences, that alternatives and their consequences are defined by the environment, and that decision makers have perfect knowledge of those alternatives and their consequences

10. Rational Theory of Choice
Other versions recognize greater inter-actor subjectivity but nevertheless assume perfect knowledge for any particular decision—that all alternatives are known with certainty, and that all preferences relevant to the choice are known, precise, consistent, and stable.

11. Prospect Theory
Prospect theory assumes that risky choices are made in two phases: editing and evaluation
In the editing phase a mental model of the decision situation is formed
In the evaluation phase the value of the outcomes is assessed on the basis of a value function and a weighting function, and a choice is made.

12. The Six Steps in Decision Theory
Clearly define the objective (and the problem).
List the possible alternatives.
Identify the possible outcomes.
List the payoff or profit of each combination of alternatives and outcomes.
Select one of the mathematical decision theory models.
Apply the model and make your decision.
To accompany Quantitative Analysis for Management, 9e
by Render/Stair/Hanna
3-12

13. Theories of Attention and Search
Ideas that emphasize the importance of attention are found throughout the social and behavioral sciences
In psychology, the rationing of attention is central to notions of editing, framing, and problem solving “set”
In political science, it is central to the notion of agendas

14. Theories of Attention and Search
In sociology, it is central to the notion that many things in life are “taken as given” and serve as constraints rather than as decision alternatives
In economics, theory of search are a central concern of the study of decisions
The study of decision making is, in any way, the study of search and attention

15. System Theory
System theory has evolved from the philosophy underpinning scientific reseacch
At the core of methodology are two sets of ideas: emergence and hierarchy, and communication and control.

16. THE PROCESS OF DECISION MAKING
(COOK & SLACK, 1991: 4-10)
OBSERVE
RECOGNIZE PROBLEMS
SET OBJECTIVES
UNDERSTAND PROBLEM
DETERMINE THE OPTIONS
EVALUATE OPTIONS
CHOICE
IMPLEMENT
MONITOR

17. THE PROCESS OF DECISION MAKING EVALUATE OPTIONS USING THE CRITERIA
OBSERVE
RECOGNIZE PROBLEMS
SET OBJECTIVES
UNDERSTAND PROBLEM
DETERMINE CRITERIA
DETERMINE THE OPTIONS
EVALUATE OPTIONS USING THE CRITERIA
CHOICE
IMPLEMENT
MONITOR

18. EIGHT STEPS IN THE DECISION-MAKING PROCESS
(NOORDENHAVEN, 1995: 23-35)
RECOGNITION
FORMULATION
GOAL SETTING
GENERATING OPTIONS
EVALUATING OPTIONS
THE ACT OF CHOICE
IMPLEMENTATION
CONTROL

19. EVALUATING OPTIONS USING THE CRITERIA
EIGHT STEPS IN THE DECISION-MAKING PROCESS
RECOGNITION
FORMULATION
GOAL SETTING
DETERMINING CRITERIA
GENERATING OPTIONS
EVALUATING OPTIONS USING THE CRITERIA
THE ACT OF CHOICE
IMPLEMENTATION
CONTROL

20. Six Steps in the Managerial Decision Making Process
Evaluation
and
Feedback
Recognition of
Decision
Requirement
Implementation
of Chosen
Alternative
Diagnosis
and Analysis
of Causes
Decision-Making
Process
Selection of
Alternative
Development of
Alternatives

21. Apa beda antara problem solving dengan decision making?

22. DECISION MAKING OR PROBLEM SOLVING? (COOK & SLACK, 1991: 4)
SOME WRITERS ENVISAGE PROBLEM SOLVING AS A BROAD PROCESS THAT INCLUDES DECISION MAKING …………………
OTHER AUTHORS DEPICT THE OPPOSITE—PROBLEM SOLVING AS AN ELEMENT IN THE DECISION MAKING PROCESS …………….
A THIRD SET OF AUTHORS TREAT DECISION MAKING AND PROBLEM SOLVING AS SYNONYMOUS AND USE BOTH TERMS TO DESCRIBE A GENERAL PROCESS OF INFORMATION GATHERING, ANALYSIS, AND CHOICE BEHAVIOR.

23. THE RELATIONSHIP BETWEEN PROBLEM SOLVING AND DECISION MAKING (ANDERSON, SWEENEY, & WLLIAMS, 2003: 5)
DEFINE THE PROBLEM
IDENTIFY THE ALTERNATIVES
DETERMINE THE CRITERIA
EVALUATE THE ALTERNATIVES
CHOOSE AN ALTERNATIVE
IMPLEMENT THE DECISION
EVALUATE THE RESULTS
DECISION
MAKING
PROBLEM
SOLVING
DECISION

24. THE RELATIONSHIP BETWEEN PROBLEM SOLVING AND DECISION MAKING
DEFINE THE PROBLEM
IDENTIFY THE ALTERNATIVES
DETERMINE THE CRITERIA
EVALUATE THE ALTERNATIVES
CHOOSE AN ALTERNATIVE
IMPLEMENT THE DECISION
EVALUATE THE RESULTS
PROBLEM
SOLVING
DECISION
MAKING
DECISION

25. DECISION MAKING PROCESS
DEFINE THE PROBLEM
DETERMINE THE OBJECTIVE
IDENTIFY THE ALTERNATIVES
DETERMINE THE CRITERIA
EVALUATE THE ALTERNATIVES
- CHOOSE THE BEST DECISION(S)
IMPLEMENT THE DECISION(S)
EVALUATE THE RESULTS
DECISION
MAKING

26. A farmer in Wood County has 900 acres of land
A farmer in Wood County has 900 acres of land. She is going to plant each acre with corn, soybeans, or wheat. Each acre planted with corn yields a $2,000 profit; each with soybeans yields a $2,500 profit; and each with wheat yields $3,000 profit. She has 100 workers and 150 tons of fertilizer. The table below shows the requirement per acre of each of the crops. Assuming a linear relationship, determine the optimal planning mix of corn, soybeans, and wheat to miximize the profits. Corn Soybeans Wheat Labor (workers) Fertilizer (tons)

27. DECISION-MAKING PROCESS
(ROWE & BOULGARIDES, 1992: 12-14)
STIMULUS
(Opportunities, feedback, threats)
DECISION MAKER
(Organizational and personal pressures, values)
PROBLEM DEFINITION
(Frame of reference, analysis of motivational biases, risk, cost, assumption)
CHOOSING ALTERNATIVES
(Change the problem or approach, apply creative problem solving)
IMPLEMENTATION
(Gaining acceptance of the decision, Evaluation and control of performance)

28. INPUT-PROCESS-OUTPUT MODEL
PROBLEM(S)
OBJECTIVE
DATA-INFORMAT-
ION
DECISION ENVI
DEC. MAKER
DEC. TOOLS/
METHODS
………………….
PROCESS
DECISION MAKING
OUTPUT
DEC. RESULTS
IMPLEMENT-
ATION

29. Personal Decision Framework
Personal Decision Style:
Directive
Analytical
Conceptual
Behavioral
Situation:
Programmed/non-programmed
Classical, administrative, political
Decision steps
Decision Choice:
Best Solution to Problem
I m p l e m e n t a t I o n

30. A Typical Normative Model (Teale, et al, 2003)
Recognize
problem
Set objectives.
Observe and
monitor
Understand problem
Implement
Determine
options
Choose
Evaluate
options

31. THE VALUES INVENTORIES MODEL (ROWE & BOULGARIDES, 1992: 74-75)
THEORIST
[Self-oriented (thinking), technical focus]
- Abstract Influence
Knowledge Perfection
IDEALIST
[Self-oriented (thinking), social concern]
Aesthetics Autonomy
Self-actualization Esteem
PRAGMATIST
[Others-oriented (action), technical focus]
Economic Success
Political Plenty
HUMANIST
[Others-oriented (action), social concern]
Social Interpersonal
Religious - Compassion

32. DECISION STYLE MODEL (ROWE & BOULGARIDES, 1992: 29)
Left Right
Hemisphere Hemisphere
(Logical) (Relational)
Complexity Analytic Conceptual Leaders
COGNITIVE
COMPLEXITY
Structure Directive Behavioral Managers
Task/Technical People/Social
VALUES ORIENTATION

33. DIRECTIVE EXPECTS RESULTS IS AGGRESSIVE ACTS RAPIDLY USES RULES
USES INTUITION
N-POW, NEEDS POWER

34. ANALYTIC ENJOYS PROBLEM SOLVING WANTS BEST ANSWER WANTS CONTROL
USES CONSIDERABLE DATA
ENJOYS VARIETY
IS INNOVATIVE
USES CAREFUL ANALYSIS
N-ACH, NEEDS CHALLENGES

35. CONCEPTUAL IS ACHIEVEMENT-ORIENTED HAS A BROAD OUTLOOK IS CREATIVE
IS HUMANISTIC/ARTISTIC
INITIATIVES NEW IDEAS
IS FUTURE-ORIENTED
N-ACH, IS INDEPENDENT AND WANTS RECOGNITION

36. N-AFF, NEEDS AFFILIATION
BEHAVIORAL
IS SUPPORTIVE
USES PERSUASION
IS EMPATHETIC
COMMUNICATES EASILY
PREFERS MEETINGS
USES LIMITED DATA
N-AFF, NEEDS AFFILIATION

37. MANAGER-SUBORDINATE STYLE CONFLICTS (ROWE & BOULGARIDES, 1992: 33)
DIRECTIVE ANALYTIC CONCEPTUAL BEHAVIORAL
DIRECTIVE NO MIN CON CON
ANALYTIC MIN NO MIN CON
CONCEPTUAL CON MIN MIN NO
BEHAVIORAL CON CON NO MIN M A N G E R S T Y L

38. MENUJU ORGANISASI KELAS DUNIA
RAPID
INNOVATION
FLEXIBILITY
WASTE REDUCTION
QUALITY
CULTURE OF THE ENTERPRISE
GOOD STRATEGIC LEADERSHIP
BEHAVIOR
MANAGEMENT
COMPETENCE
MANAGEMENT

39. WHAT DO MANAGERS DO? (Mintzberg’s ten managerial roles)
THE INTERPERSONAL ROLES (FIGUREHEAD, LEADER, LIAISON)
THE INFORMATIONAL ROLES (MONITOR, DISSEMINATOR, SPOKESPERSON)
THE DECISION ROLES (ENTREPRENEUR, DISTURBANCE HANDLER, RESOURCE ALLOCATOR, NEGOTIATOR)

40. (VERBAL) DESCRIPTIVE MODELS
MODELLING DECISIONS
(VERBAL) DESCRIPTIVE MODELS
Description of what the observer perceived—subject to exclusion and aggregation
ANALOGUE MODELS
Comparison of the observed situation with an analogous situation
RELATIONSHIP MODELS
Influence relationships are implied between elements or events in decision situation—these relationships may be quantified

41. UNCONTROLLABLE INPUTS
FLOWCHART OF THE PROCESS OF TRANSFORMING MODEL INPUTS TO OUTPUTS (ANDERSON, SWEENEY, & WILLIAMS, 2003: 9)
UNCONTROLLABLE INPUTS
(ENVIRONMENTAL FACTORS)
MATHEMATICAL
MODEL
CONTROLLABLE
INPUTS
(DECISION
VARIABLES)
OUTPUTS
(PROJECTED
RESULTS)

42. McKinsey’s PROBLEM-SOLVING PROCESS
MANAGING
LEADERSHIP
BUSINESS
NEED
PROBLEM
INTUITION
SOLUTION
IMPLEMENTATION
DATA
ANALYZING
PRESENTING

43. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.)
BUSINESS NEED
Competitive
Organizational
Financial
Operational

44. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.)
ANALYZING
Framing
Designing
Gathering
Interpreting

45. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.)
MANAGING
Team
Client
Self

46. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.)
PRESENTING
Substance
Structure

47. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.)
LEADERSHIP
Vision
Inspiration
Delegation

48. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.)
IMPLEMENTATION
Dedication
Reaction
Completion
Iteration

49. OPERATIONS CONSULTING TOOL KIT
13-49
OPERATIONS CONSULTING TOOL KIT

50. Operations Consulting Tool Kit: Category 1
13-50
In this scheme we have five categories of activities, starting with Problem Definition, that consultants perform and the supporting tools used to aid the consultant in performing that category
Problem Definition
Issue trees
Customer surveys
Gap analysis
Employee surveys
Five forces model 12

51. Operations Consulting Tool Kit: Category 2
13-51
Operations Consulting Tool Kit: Category 2
Data Gathering
Plant tours/audits
Work sampling
Flow charts
Organizational charts 12

52. Operations Consulting Tool Kit: Category 4
13-52
Operations Consulting Tool Kit: Category 4
Cost Impact and
Payoff Analysis
Decision trees
Balanced scorecard
Stakeholder analysis 12

53. Operations Consulting Tool Kit: Category 3
13-53
Operations Consulting Tool Kit: Category 3
Data Analysis and
Solution Development
Problem analysis (SPC tools)
Bottleneck analysis
Computer simulation
Statistical tools 12

54. Operations Consulting Tool Kit: Category 5
13-54
Operations Consulting Tool Kit: Category 5
Implementation
Responsibility charts
Project management techniques 12

55. COMPARING INFORMATION AND KNOWLEDGE
INFORMATION KNOWLEDGE
PROCESSED DATA ACTIONABLE INFORMATION
SIMPLY GIVES US THE FACTS ALLOWS MAKING PREDICTIONS,
CAUSAL ASSOCIATIONS, OR
PREDICTIVE DECISIONS
ETC ETC.

56. MANAGERIAL DECISION MAKING
THE DECISION MAKER
DECISION-AIDING
THE DECISION
TOOLS
ENVIRONMENT
THE DECISION-MAKING PROCESS
THE DECISION(S)

57. THE DECISION MAKER (Basic Four Force Model)
ENVIROMENTAL
FORCES
ORGANIZATIONAL
PERSONAL
MANAGER
NEEDS
FORCES
TASK
DEMANDS

58. THE DECISION MAKING PROCESS (Harrison, 2004)
Revise
objectives
Comparing
and
Evaluating
Alternatives
Setting
Managerial
Objectives
Searching
for
Alternatives
Revise or
update
objectives
Follow-up
and
Control
Implementing
Decisions
The act of
Choice
Take
corrective
action as
necessary

59. DECISION MAKING APPROACHES
THE RATIONAL APPROACH
THE ORGANIZATIONAL APPROACH
THE POLITICAL APPROACH
THE PROCESS APPROACH

60. THE RATIONAL APPROACH
THE RATIONAL APPROACH OF DECISION MAKING IS ESSENTIALLY NORMATIVE IN THAT IT IS PRESCRIPTIVE RATHER THAN DESCRIPTIVE
PRIMARY DECISION-MAKING CRITERION IS MAXIMIZED OUTCOME

61. ORGANIZATIONAL APPROACH
THE ORGANIZATIONAL APPROACH COMBINES THE BEHAVIORAL DISCIPLINES WITH QUANTITATIVE ANALYSIS
PRIMARY DECISION-MAKING CRITERION IS SATISFICING OUTCOME

62. POLITICAL APPROACH
THE POLITICAL APPROACH’S FOUNDATION IS ALMOST TOTALLY BEHAVIORAL
ACCEPTABLE OUTCOME

63. THE PROCESS APPROACH
THE PROCESS APPROACH IS VERY SIMILAR TO THE ORGANIZATIONAL ONE, BUT THE APPROACH IS ORIENTED TOWARD LONG TERM-RESULTS AND LOOKS TOWARD GROWTH AND THE FUTURE
OBJECTIVES-ORIENTED OUTCOME AND THE OBJECTIVES ARE HIGHLY DYNAMIC

64. RIGHT DECISION AND ERROR TYPES
HIGH
QUALITY
RIGHT
DECISION
PRODUCER’S
RISK (a )
(TYPE I ERROR)
CUSTOMER’S
RISK (b )
RIGHT
DECISION
LOW
QUALITY
(TYPE II ERROR)
ACCEPTING
REJECTING

65. John Thompson’s Backyard Storage Sheds
Define problem
To manufacture or market backyard storage sheds
List alternatives
Construct a large new plant
A small plant
No plant at all
Identify outcomes
The market could be favorable or unfavorable for storage sheds
List payoffs
List the payoff for each state of nature/decision alternative combination
Select a model
Decision tables and/or trees can be used to solve the problem
Apply model and make decision
Solutions can be obtained and a sensitivity analysis used to make a decision
To accompany Quantitative Analysis for Management, 9e
by Render/Stair/Hanna
3-65

66. Decision Table for Thompson Lumber
Alternative
State of Nature
Favorable Market ($)
Unfavorable Market ($)
Construct a large plant
900,000
-300,000
Construct a small plant
400,000
-80,000
Continuing existing act
200,000
50.000
To accompany Quantitative Analysis for Management, 9e
by Render/Stair/Hanna
3-66

67. Decision Table for Thompson Lumber
Alternative
State of Nature
Favorable Market
($)
(0.50)
Unfavorable Market ($)
Construct a large plant
900,000
-400,000
Construct a small plant
450,000
-100,000
Continuing existing act
150,000
50.000
To accompany Quantitative Analysis for Management, 9e
by Render/Stair/Hanna
3-67

68. Types of Decision-Making Environments
Type 1: Decision making under certainty.
Decision maker knows with certainty the consequences of every alternative or decision choice.
Type 2: Decision making under risk.
The decision maker does know the probabilities of the various outcomes.
Decision making under uncertainty.
The decision maker does not know the probabilities of the various outcomes.
To accompany Quantitative Analysis for Management, 9e
by Render/Stair/Hanna
3-68

69. LINGKUNGAN KEPUTUSAN (FAKTOR-FAKTOR YANG UNCONTROLLABLE)
Lingkungan Keputusan dalam Kepastian
< Satu alternatif keputusan --- satu hasil
< Terdiri dari Lingkungan yang Pasti
Lingkungan Keputusan dalam Ketidakpastian
< Satu alternatif keputusan --- beberapa
kemungkinan hasil
< Terdiri dari:
Lingkungan yang Beresiko
Lingkungan yang Berkonflik
Lingkungan yang Tidak Pasti

70. ------SUKSES SELALU------