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Chapter 5 Decision Making - Coggle Diagram

- - - - The occasions for decision originate in 3 distinct fields:
        (a) from authoritative communications from superiors.
        (b) from cases referred for decision by subordinates.
        (c) from cases originating in the initiative of the executive
        concerned.
    - - Routine and Nonroutine Decisions.
        Routine decisions focusing on well-structured situations that recur frequently, involve standard decision procedures, and entail a minimum of uncertainty. Routine decisions usually can be delegated to lower levels to be made within established policy limits.
        Nonroutine decisions deal with unstructured situations of a novel, nonrecurring nature, often involving incomplete knowledge, high uncertainty, and the use of subjective judgment or even intuition, where no alternative can be proved to be the best possible solution to the particular problem.
- - - - 1- Decision making under certainty
        2- Under risk
        3- Under uncertainty.
      - 1- Decision making under certainty
        Decision-making under certainty implies that
        we are certain of the future state of nature (or
        we assume that we are).
        ➢ Linear Programming.
        ➢ Computer solution
      - 2- Decision Making under risk
        In decision making under risk, one assumes that
        there exist a number of possible future states of
        nature
        ➢ Expected value.
        ➢ Decision trees
        ➢ Queuing (waiting-Line) theory
      - 3- Decision Making under uncertainty
        Uncertainty occurs when there exist several (i.e., more
        than one) future states of nature Nj, but the probabilities Pj of each of these states occurring are not known.
        
        3- Decision Making under uncertainty
        4- Another decision maker may simply assume that all states of nature are equally likely (the so-called “principle of insufficient reason”), set all Pj values equal to 1.0/n, and maximize expected value based on that assumption.
        5- The fifth decision-maker may choose the alternative that has the smallest difference between the best and worst outcomes (the “minimax regret” solution).
        
        3- Decision Making under uncertainty
        Different approaches to decision making under uncertainty include the following:
        1- The optimistic decision maker may choose the alternative that offers the highest possible outcome (the “maximax” solution).
        2- The pessimist decision maker may choose the alternative whose worst outcome is “least bad” (the “maximin” solution).
        3- The third decision maker may choose a position somewhere between optimism and pessimism (“Hurwicz” approach).
  - - - The existence of computer networks, centralized databases, and user-friendly software has provided a new source of prompt, accurate data to the manager.
        ➢ Management Information Systems (MIS)
        ➢ Decision Support System (DSS)
- - - - The scientific method or scientific process is fundamental to scientific investigation and to the acquisition of new knowledge based upon physical evidence by the scientific community.
        Engineering problem solving is more applied and is different to some extent from the scientific method.