Module 9-Decision Making Student W23 PDF

Module 9 Improving Decision Making 1  Module 9 – Decision Making What are the different types of decisions? How does the decision-making process work? What are the considerations for making quality decisions? 2 ...

Module 9 Improving Decision Making 1  Module 9 – Decision Making What are the different types of decisions? How does the decision-making process work? What are the considerations for making quality decisions? 2  3 Business Value of Improved Decision Making Possible to measure value of improved decision making Decisions made at all levels of the firm – Some are common, routine, and numerous – Although value of improving any single decision may be small, improving hundreds of thousands of “small” decisions adds up to large annual value for the business Copyright © 2020 Pearson Education Ltd.  4 Example: Business Value of Enhanced Decision Making Example Decision Value Decision # of Annual Estimated Annual Maker Decisions Value to Firm Allocate support to most Accounts 12 $100,000 $1,200,000 valuable customers manager Predict call center daily demand Call Center 4 150,000 600,000 management Decide parts inventory level Inventory 365 5,000 1,825,000 daily manager Identify competitive bids from Senior 1 2,000,000 2,000,000 major suppliers management Schedule production to fill Manufacturin 150 10,000 1,500,000 orders g manager Copyright © 2020 Pearson Education Ltd.  5 Types of Decisions Structured – Repetitive and routine – Involve definite procedure for handling them so do not have to be treated as new Semi-structured – Only part of problem has clear-cut answer provided by accepted procedure Unstructured – Decision maker must provide judgment to solve problem – Novel, important, nonroutine – Not well-understood or agreed-upon procedure for making them Copyright © 2020 Pearson Education Ltd.  6 Information Requirements of Key Decision-Making Groups in a Firm Copyright © 2020 Pearson Education Ltd.  7 The Decision-Making Process Stages 1. Intelligence – Discovering, identifying, and understanding the problems occurring in the organization 2. Design – Identifying and exploring various solutions 3. Choice – Choosing among solution alternatives 4. Implementation – Making chosen alternative work and monitoring how well solution is working Copyright © 2020 Pearson Education Ltd.  8 Stages in Decision Making What if the solution doesn’t work? Return to an earlier stage in the decision- making process and repeat it. Copyright © 2020 Pearson Education Ltd.  9 High-Velocity Automated Decision Making Humans eliminated Decision-making process captured by computer algorithms Predefined range of acceptable solutions Decisions made faster than managers can monitor and control E.g., Google search: The Google algorithm decides which display ads appear on screens in milliseconds, Copyright © 2020 Pearson Education Ltd.  10 Quality of Decisions and Decision Making Accuracy - Decision reflects reality Comprehensiveness - Decision reflects a full consideration of the facts and circumstances Fairness - Decision reflects concerns of interested parties Speed (efficiency) -Decision making is efficient with respect to time and resources of interested parties Coherence - Decision reflects a rational process which can be explained to others Due process – decision is the result of a known process which can be appealed to a higher authority Copyright © 2020 Pearson Education Ltd.  11 Learning Objectives Covered Module 9 – Decision Making Describe the different types of decisions Explain how the decision-making process work Describe the considerations for making quality decisions Copyright © 2020 Pearson Education Ltd. Quick Review – True or False Repetitive and routine decisions are referred to as ‘Semi-structured’ decisions. The CEO of Rubber Ducky Inc. decided the company will enter the emerging market for Rubber Swans. This is a structured decision. When the CEO of Rubber Ducky Inc. implemented his decision to enter the rubber swan market, this was the sixth and final stage of the decision making process. If the CEO’s decision didn’t seem to work, he could go back to an earlier part of the decision process to evaluate what can be changed.  Quick Review – True or False For High-Velocity Automated decision making the range of acceptable solutions must be random. Google search uses High-Velocity Automated Decision Making. For high quality decisions, accuracy is important. Accuracy means the decision reflects a rational process which can be explained to others. Fairness in high quality decisions reflects the concerns of interested parties.