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  • Topic: Decision making, Decision theory, Risk
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Pharos University
Faculty of Financial & Administrative Sciences

Operations Management Term Research
<Decision Making + Application >
Theoretical Applied Study

Prepared by
Mohamed Salama Ali
ID: 5411064
Salma Talaat Mohamed
ID: 5411041
Supervised by:
Dr. Ola Elgeuoshy

Spring 2013
Table of Contents

Introduction
Chapter (1): Theoretical Study
1. Decision making
2. Rational and irrational decision making
3. Problem analysis vs decision making
4. Everyday techniques
5. Decision making stages
6. Decision making steps

Chapter (2): Applied Study
1. Application of Risk Analysis for Decision Making in the Oil Industry 2. Understanding “Uncertainty over Assumptions”
3. Benefits of Risk Analysis
Summary & Conclusion
References

Introduction (font 16 bold)
XXXX (font 12 normal)

Paragraph one: Introduction about the general topic(do not forget to delete this 4sentences after writing your introduction) . all these paragraphs shall be written in present or future tense

Paragraph two: Introduction about the specific issue of the topic

Paragraph three: Introduction about the application area: companies, industries, countries, countries ….etc. and how you see your topic subject in these application area

Paragraph four: Introduction about your intended objectives to be covered in this research

Chapter (1)
Theoretical Study

Decision making (decision from Latin decidere "to decide, determine," literally "to cut off," from de- "off" and caedere "to cut") can be regarded as the mental processes (cognitive process) resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice. The output can be an action or an opinion of choice. * |

Rational and irrational decision making
In economics, it is thought that if humans are rational and free to make their own decisions, then they would behave according to the rational choice theory. This theory states that people make decisions by determining the likelihood of a potential outcome, the value of the outcome and then multiplying the two. For example, with a 50% chance of winning $20 or a 10% chance of winning $10, people more likely to choose the first option.[ However, in reality, there are some factors that affect decision making abilities and cause people to make irrational decisions, one of them being availability bias. Availability bias is the tendency for some items that are more readily available in memory to be judged as more frequently occurring. For example, someone who watches a lot of movies about terrorist attacks would think the frequency of terrorism to be higher than it actually is.

Problem analysis vs decision making
It is important to differentiate between problem analysis and decision making. The concepts are completely separate from one another. Traditionally it is argued that problem analysis must be done first, so that the information gathered in that process may be used towards decision making.

Problem analysis
* Analyze performance, what should the results be against what they actually are * Problems are merely deviations from performance standards * Problem must be precisely identified and described

* Problems are caused by a change from a distinctive feature * Something can always be used to distinguish between what has and hasn't been effected by a cause * Causes to problems can be deducted from relevant changes found in analyzing the problem * Most likely cause to a problem is the one that exactly explains all the facts Decision making

* Objectives must first be established
* Objectives must be classified and placed in order of importance * Alternative actions must be developed
* The alternative must be evaluated against all the objectives * The alternative that is able to achieve all the objectives is the tentative...
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