Approaches of Decision Making PDF

# Approaches of Decision Making Multiple Approaches to an Art Problem Education Presentation in Pink Yellow ## Decision Making - In decision making, the manager is faced with problems, which may either be simple or complex. ## To Provide Guidance - The manager must be familiar with the following...

# Approaches of Decision Making Multiple Approaches to an Art Problem Education Presentation in Pink Yellow ## Decision Making - In decision making, the manager is faced with problems, which may either be simple or complex. ## To Provide Guidance - The manager must be familiar with the following approaches: ### 1. Qualitative Evaluation - This term refers to evaluation of alternatives using intuition and subjective judgment. - Managers tend to use the qualitative approach when: - the problem is fairly simple. - the problem is familiar. - the costs involved are not great. - immediate decisions are needed. ### 2. Quantitative Evaluation - This term refers to the evaluation of alternatives using any technique in a group classified as rational and analytical. ## Types of Quantitative Techniques ### Inventory Models - Inventory models consist of several types all designed to help the manager make decisions regarding inventory. - Inventory models include: - **Economic Order Quantity Model**: Used to calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing orders and carrying the items in inventory - **Production Order Quantity Model**: An economic order quantity technique applied to production orders - **Back Order Inventory Model**: An inventory model used for planned shortage. - **Quantity Discount Model**: An inventory model used to minimize the total cost when suppliers offer quantity discounts. ### Queuing Theory - Queuing theory describes how to determine the number of service units that will minimize both customers waiting time and cost of service. ### Network Models - Network models are models where large complex tasks are broken down into smaller segments that can be managed independently. - The two most prominent network models are: ## Program Evaluation Review Technique (PERT) - PERT is a technique that enables managers to schedule, monitor, and control large and complex projects by employing PERT times which are the estimated times for the completion of activities. - **Optimistic Time Estimate**: Refers to the time an activity may be completed under the best conditions. - **Most Likely Time Estimate**: Refers to the time an activity may be completed under normal conditions. - **Pessimistic Time Estimate**: Refers to the time an activity may be completed under worst possible conditions. ### Critical Path Method (CPM) - CPM is a network technique using only one time factor per activity that enables managers to schedule, monitor, and control large & complex projects. - The critical path is the potential path to completion of a project. ### Forecasting - Forecasting is used when managers make decisions that will have implications in the future. ### Regression Analysis - Regression analysis is a forecasting method that examines the association between two or more variables. - It uses data from the past to predict future events. - Regression analysis may be ***simple*** or ***multiple*** depending on the number of independent variables present. ### Simulation - Simulation is a model constructed to represent reality, on which conclusions about real-life problems can be based. - Simulation is a highly sophisticated tool by means of which the decision maker develops a mathematical model of the system under consideration. ### Linear Programming - Linear programming is a quantitative technique that is used to produce an ***optimum solution*** within the bounds imposed by constraints upon the decision. ### Sampling Theory - Sampling theory is a quantitative technique where samples of populations are statistically determined to be used for a number of processes such as quality control and marketing research. ### Statistical Decision Theory - Statistical decision theory is the rational way to conceptualize, analyze, and solve problems in situations involving limited or partial information about the decision environment. ## Thank You!