Decision Making 2.
Identify the objectives or criteria for choosing a
Middle Managers- Tactical Decision Making
● Don’t need for the approval of top management
because there are problems that is needed to
be solve immediately.
Decision Making
● Chief role of the operations manager
● It his duty to come up with a decision to his/her
department only.
● It has a considerable influence such degree to
which the goal and objectives of the
organization is achieved
Role of management
● Plan, organize, direct, control/evaluate
▪ Requires/makes decisions
Note: If the come-up decision won’t work the business
will fall
Steps in Decision Making Process
1. Identify the Correct Problem
● There are problems in business because there
are objectives that is needed to achieve, if not
then the problems will arise
Correct Problem
✔ Identification of correct problems does not
assured/leads to correct solution or does not
always give us a correct solution
Wrong Problem
✔ Identification of wrong problems do not lead to
a solution
Note: The person who identify the correct problem are
the person who is directly involved in the process
Focal point of Decision-making process
✔ The identification of problems
Note: Correct decisions does not always lead to a
solution
solution
Objective and criteria
● Gives us focus or direction to come up a right
decision
● Basis for coming up alternatives
● Actually, lead you to a solution
Note: Every second in production is important
Note: The longer you dwell on the identification of
problem the higher the chance of having many
problems
3. Develop Alternatives
● Alternatives can be a solution to a problem but
we cannot know which alternative will be
possible to attain the right solution
4. Analyze and Compare Each alternative
✔ Comparing alternatives should be free from bias
Make a payoff table
Positive Negative What effect will
Results Results emerge if this will
be implemented?
Alternative 1
Alternative 2
Alternative 3
Alternative 4
Alternative 5
5. Select the best Alternative
6. Implement the chosen alternative
● Ways: testing or using
7. Monitor the result to ensure that the desired output
or results are achieved
● if don’t work g back to the previous steps
 Causes of Poor Decisions 1. RISK
❖ an environment in which certain future events
1. Bounded Rationality has probable outcome
Limitation in decision making caused by: ❖ If you can’t take the risk you will never know
the solution
a. Cost

▪ refers to the monetary resources managing the

money 2. CERTAINTY
❖ an environment in which certain parameters
b. Time have known value
❖ Parameters-Gauge
▪ Important in the operation
▪ Numbers/Quantifiable
▪ Every second in production is important

c. Availability of information
3. UNCERTAINTY
▪ Information should be available to make a good
❖ an environment in which it is impossible to
comparison of alternatives
assess the likelihood of future events
d. Human
a. There may be parameters which is unknown or
▪ capability of a person to attack and solve the incomplete
problems
b. A parameters late upon submission
e. Technology
c. A parameters are not available
▪ skills
d. a parameter is wrong
Note: If these five factors are limited then it is a
problem of a business and will also lead to different
problems DECISIONS UNDER UNCERTAINTY

1. MAXIMIN –choose the alternative with the best of

2. SUB OPTIMIZATION
⮚ the result of different department each
attempting to arrive at a decision which is
optimum for that department only.
⮚ There are also department who rely on the
things which are done by other departments in
making their own right decisions
the worst possible payoff
2. MAXIMAX- choose the alternative with the best
possible payoff
3. LAPLACE- choose the alternative with the best
average payoff of any of the alternatives
4. MINIMAX REGRET- choose the alternative that has
least of the worst regret.

Decision Environment

Uncertainty Risk Certainty

Can be converted Taking the

to certainty risk