1. Management Process Model
linking management desired
processes functions conditions
Planning
Manager Communications Organizing Coordination Goals
Decision Making Leading Adaptation
Controlling

3. Models of Decision Making
Rational Model (Classical)
Complete information about alternatives
Complete information about consequences
of each alternative
Objective analysis of facts
Goal: maximize, minimize, optimize

4. Factors that affect our ability to make rational decisions
Limited cognitive capacity and time
Emotions/intuition
Framing
Information Processing Biases
all of the perceptual biases
Decision Context Biases
escalation of commitment
groupthink
org. impediments

5. Models of Decision Making: continued
Nonrational Models
Administrative Model
Bounded Rationality
Incremental Model
Intuition
Political Model

6. Limited available information Limited search for additional
Bounded Rationality
Limited available information
Limited search for additional
information
Limited cognitive capacity
“Satisficing” solutions

7. Nonprogrammed decisions
Types of Decisions
Programmed Decisions
Nonprogrammed decisions

8. Decision Making Environments
Decision making under certainty
Decision making under risk
Decision making under uncertainty

9. Decision Making Techniques
Depends on how much, and the quality of,
information available; which is a function of
The environment in which decision making is
to take place
The ability to forecast that environment

10. Forecasting Techniques
Forecasting the external environment
Economic forces
Technological forces
Sociocultural forces
Governmental forces
Forecasting the internal environment
Sales forecasting

11. Sales Forecasting Techniques
Forecasts based on what people say they will do.
Jury of Executive Opinion
Salesforce Composite
User Expectation
Forecasts based on what people are doing.
Test marketing
Forecasts based on what people have done in the past.
Time Series Analysis
Correlation analysis
Econometric Models

12. Decision Making Techniques Under Certainty
Habit
SOPs
Linear Programming
Waiting Line Analysis (Queuing Theory)

13. Decision Making Techniques under Risk
Decision Tree Analysis
Payoff Matrices

14. The true meaning of Probabilities
Objective versus Subjective probabilities
1.0 .8 .6 .4 .2
Probability
Of Success
Low Size of Commitment High
Statistical averages (Objective probabilities)
Risk Averter
Gambler

15. Decision Tree Analysis
Our Price Competitor’s Price Profits 50 30 10 55 40 25
100 80 60
High (.40)
Medium (.50)
Low (.10)
High (.10)
Medium (.60)
Low (.30)
Medium (.20)
Low (.70) 36
High
Medium
Low
49.6
Market
Do not
market
Competition
.80
No competition
.20 37 37 34
High
Low
100
Medium

16. How big of a plant to build? Depends on demand
Payoff Matrices
How big of a plant to build? Depends on demand
Decision Strategies
Small Plant
Medium Plant
Large Plant
Product Demand
Low Medium High
(.50) (.30) (.20) 30
-14
-30 30 68 28 30 68
100

17. Decision Making Techniques Under Uncertainty
Decision Matrices without probabilities
Possible States of Nature (Demand)
Alternatives , , , ,000
Labor Intensive
Labor Machine
Automated

18. Summary Decision Decision Decision Decision Decision
Type Environ Model Technique Goal
Programmed Certainty Rational Habit Maximize
SOPs Minimize
Risk Classical Calculation Optimize
Operations
Research
Non Nonrational
Programmed Uncertainty Administrative Judgement Satisfice
Political Negotiation Compromise
Intuition Inspiration Relativity

19. Group Decision Making Techniques
Ordinary
Criteria Groups Brainstorming NGT Delphi
# ideas Low Medium High High
Quality of ideas Low Medium High High
Conflict Potential High Low Medium Low
Time/Cost Medium Low Low High
Task Orientation Low High High High
Sense of Accomplishment High to Low High High Medium
Commit. To Solution High n.a Medium Low
Cohesiveness High High Medium Low