principle of management

Topics: Decision making, Decision theory, Decision engineering Pages: 9 (2241 words) Published: October 10, 2013
1. Define decision and describe the steps in decision making process.

When trying to make a good decision, a person must weight the positives and negatives of each option, and consider all the alternatives. For effective decision making, a person must be able to forecast the outcome of each option as well, and based on all these items, determine which option is the best for that particular situation. Decision making is the process of choosing a solution from available alternatives. Individual at all levels and in all areas of organizations make decisions. Decisions determine how the organization solves its problems allocate resources, and accomplishes its objectives. Top level managers make decision about their organizations goals where to locate manufacturing facilities, what new markets to move into, and what products or services to offer. Middle and lower-level managers make decisions about weekly or monthly production schedules, problem that arise, pay raises and disciplining employees. Some decisions are critical and can have a major impact on personal and organizational lives. Other decisions are more routine but still require that we select an appropriate course if actions.

Step 1: Define the Problem

Problem definition is crucial for making a good decision. This step identifies

root causes, 
limiting assumptions, 
system and organizational boundaries and interfaces, and 
any stakeholder issues. 

A good problem definition expresses the issue in a clear, one-sentence  statement that describes both the initial conditions and the desired conditions. Everybody involved in the decision-making process needs to agree on a written problem definition before proceeding.

Step 2: Determine Requirements

Any acceptable solution to the problem must meet the requirements. Requirements describe what the solution to the problem must do.

Step 3: Establish Goals

Goals are broad statements of intent and desirable programmatic values. Examples might be: reduce weight, lower costs, lower health risk, etc. Goals go beyond the minimum essential must have’s (i.e. requirements) to wants and desires. Goals should be stated positively (i.e. what something should do, not what it shouldn’t do).

Step 4: Identify Alternatives

Alternatives offer different approaches for changing the initial condition into the desired condition. Generally, the alternatives vary in their ability to meet the requirements and goals.

Step 5: Define Criteria

It is necessary to define discriminating criteria as objective measures of the goals to measure how well each alternative achieves the project goals. Each criterion should measure something important, and not depend on another criterion. Criteria must discriminate among alternatives in a meaningful way and  should be:

Complete – include all goals 
Operational – meaningful to the decision maker’s understanding of the implications of the alternatives Non-redundant – avoid double counting
Few in number – to keep the problem dimensions manageable

Step 6: Select a Decision-Making Tool

The method selection needs to be based on the complexity of the problem and the experience of the team. Generally, the simpler the method, the better. There are several decision-making tools available, they will be part of one of the next blog postings.

Step 7: Evaluate Alternatives against Criteria

Alternatives can be evaluated with quantitative methods, qualitative methods, or any combination. Criteria can be weighted and used to rank the alternatives. Both sensitivity and uncertainty analyses can be used to improve the quality of the selection process.

Step 8: Validate Solution(s) against Problem Statement

After the evaluation process has selected a pre- ferred alternative, the solution should be checked to ensure that it truly solves the problem identi- fied. Compare the original problem statement to the goals and requirements. A final solution should...
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