Seven Steps of Problem Solving

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Discuss the seven steps in problem solving. Give a practical example of how you could apply these seven steps in making a decision and solving a problem.

The goal of a good problem-solving process is to make individuals and organizations more "conflict-friendly" and "conflict-competent". Understand the interests of everyone involved so that solution(s) are satisfying to all parties.

The seven steps to problem solving and effective decision-making are:

1. Identify and clearly define the problem. Problems are obstacles in the way of goals. Be specific in describing what is not working. Remember, people might have different views of what the problem is. Understand everyone’s interests so that the solution(s) are satisfying to all parties.

Example: Hospital has a deficit cash flow of $125k, bad debt totaling $1.36M for 91 to over 360 days, a generous “safety stock” inventory practice with poor internal controls, and increasing losses in revenue and operating income. Problem: Cash flow deficit and an inability to cover payroll.

2. Brainstorm to determine set of alternative solutions. Let ideas flow without judging them.

-Defer pension plan contributions to increase available cash. -Sell off bad debt and coordinate a collections effort to obtain outstanding patient receivables. -Assess and reduce inventory levels immediately.

-Temporarily halt Accounts Payable to conserve cash.
-Execute a temporary staff pay reduction to reduce outgoing cash.

3. Determine the criteria or criterion that will be used to evaluate the alternatives. Problems that involve identifying the best solutions with respect to one criterion is as single–criterion decision problem while multiple problems with more than one criterion are multi-criterion decision problems.

Example: Deferred pension plan contributions will result in a swift cash flow savings that will immediately impact current cash flow. Outgoing cash immediately reduced through halting accounts...
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