Mgmt 371 Chp 9 Notes

Only available on StudyMode
  • Download(s) : 58
  • Published : March 30, 2013
Open Document
Text Preview
Chapter 9: Managerial Decision Making

Types of decisions and problems
Decision- choice made from available alternatives
Decision making- process of identifying problems and opportunities and then resolving them Programmed and Non programmed decisions
Programmed decisions- involve situations that have occurred often enough to enable decision rules to be developed and applied in the future Made in response to recurring organizational problems
Ex-types of skills required to fill certain jobs, reorder or manufacturing inventory, selection of freight routes for product deliveries Non programmed decisions- made in response to situations that are unique, poorly defined and largely unstructured, and have important consequences for the organization One primary difference between programmed and on programed decisions relates to the degree of certainty or uncertainty that managers deal with in making decisions Certainty- means that all the info the decision maker needs is fully available Managers have info on operating conditions, resource costs, or constraints and each course of action and possible outcome Risk- means that a decision has clear-cut goals and that good info is available, but the future outcomes associated with each alternative are subject to chance Uncertainty- means that managers know which goals they wish to achieve, but info about alternatives and future events is incomplete Factors that affect decisions-price, production costs, volume or future interest rates are difficult to analyze and predict Ambiguity- (most difficult decision situation)- means that the goals to be achieved or the problem to be solved in unclear, alternatives are difficult to define, and info about outcomes is unavailable Highly ambiguous situation-can create “wicked decision problem” (most difficult decision situations managers can face)- Ofter associated with conflicts over goals and decision alternatives, rapidly changing circumstances, fuzzy info, unclear links among decision elements, and inability to evaluate whether a proposed solution will work; often NO right answer

Decision Making Models: the approach managers use to make decisions usually fall into one of three types: Ideal, Rational Model: Classical Model- based on rational economic assumptions and manager beliefs about what ideal decision making should be. Managers are expected to make decision that are economically sensible and in the organization’s best economic interests-4 assumptions underlying this model: Decision maker operated to accomplish goals that are known and agreed on. Problems are precisely formulated and defined The decision maker strives for conditions of certainty, gathering complete info. All alternatives and potential results of each are calculated Criteria for evaluating alternatives are known. The decision maker selects the alternative that will maximize the economic return to the organization. The decision maker is rational and uses logic to assign values, order preferences, evaluate alternatives and make the decisions that will maximize the attainment of organizational goals. Known to be Normative: defines how a decision maker should make decisions. Does NOT describe how managers actually make decisions so much as it provides guidelines on how to reach in ideal outcome for the organization. How Managers Actually make decisions: Administrative model- considered to be descriptive, meaning that it describes how managers actually make decisions in complex situations rather that dictating how they should make decisions according to a theoretical ideal.--Recognized human and environmental limitations that affect manager’s pursuing a rational decisions making process Based on work of Herbert A Simon’s two concepts:

Bounded rationality- people have limits or boundaries on how rational they can be Satisficing- decision makers choose the first solution alternative that satisfies minimal decision criteria According to administrative model:

Decision goals...
tracking img