Iloilo Science and Technology University

EMGT 1
Engineering Management

Civil Engineering Department

College of Engineering and Architecture
2022 - 2023
2022 - 2023
OUTLINE

What is decision-making? Approaches in Problem Solving

EMGT 1 Engineering Management

Three levels of Decision-Making Models for Decision-Making

Decision-Making Process

M2: Decision-Making
 RESPONSIBILITY
2022 - 2023 What is Decision-Making?

Decision-making…
➢ It can be defined as “The
EMGT 1 Engineering Management

process of identifying and

choosing alternative courses of
action in a manner appropriate
to the demands of the situation.”

➢ According to Nickels and others,

“is the heart of all the
management functions.”

CAPACITY TO MAKE DECISION

M2: Decision Making

 RESPONSIBILITY
2022 - 2023 What is Decision-Making?

Decision-making…
➢ It can be defined as “The
EMGT 1 Engineering Management

process of identifying and

choosing alternative courses of
action in a manner appropriate
to the demands of the situation.”

➢ According to Nickels and others,

“is the heart of all the
management functions.”

CAPACITY TO MAKE DECISION

M2: Decision Making

2022 - 2023 Three levels of Decision-Making

➢ Management must strive to choose

a decision option as correctly as
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possible.
➢ Since they have that power, they are
responsible for whatever outcome
their decisions bring.
➢ The higher the management level is,
the bigger and more complicated
decision-making becomes.

M2: Decision Making

2022 - 2023 Three levels of Decision-Making

➢ The operations manager of sugar processing company received a verbal and

written request from a shift supervisor regarding the replacement of an air
conditioning unit in one of its panel room in the evaporator section. The next day,
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he received another request from another shift supervisor about the purchase of
new conveyor belt since the existing one is already inefficient. Due to budgetary
constraints, the operations manager was informed by the plant manager that he
can only purchase one of the two requested.

➢ The operations manager must not make a decision. His choice must be based on
sound arguments for he will be held accountable in the future if, in case, he had
made the wrong choice.

M2: Decision Making

2022 - 2023 Decision-Making Process

Articulate
Diagnose the Analyze the Develop Viable
Problem or
Problem environment Alternatives
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Opportunity

Evaluate and
Implement Evaluate
Adapt Decision Make a Choice
Decision Alternatives
Results

M2: Decision Making

2022 - 2023 Decision-Making Process

Diagnose the Problem

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➢ For a manager to be able to make an intelligent

decision, he should first identify the problem.
➢ The manager should first realize the need for
which a decision is to be made
➢ If the manager fails in this aspect, it is almost
impossible to succeed in the subsequent steps.

M2: Decision Making

2022 - 2023 Decision-Making Process

Analyze Environment
Components of the Environment:
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1. Internet Environment – refers to organizational activities

within a firm that surrounds decision-making.

2. External environment – refers to variables that are outside

the organization and not typically within the short-run
control of top management

M2: Decision Making

2022 - 2023 Decision-Making Process

Develop Viable Alternatives

After diagnosing the problem and The best solution is chosen using the following
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knowing the factors that affects it, steps:

the next step will be developing
possible solutions to that certain
problem.
1 List the alternative
solutions

The best solution to the

identified problem should be
2 Determine the viability of
each solutions

considered by the management.

3
Revise the list by
eliminating those that are
not viable

M2: Decision Making

2022 - 2023 Decision-Making Process

Evaluate Alternatives Make a Choice

This step enables the management to This is where the decision-maker
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evaluate the revised list of solution in the makes the best choice after evaluating
previous step. the list of solutions.
This is where the management decides This step will evaluate if all the
if the solutions are doable, effective, and previous steps were correctly
will not incur excessive costs. undertaken.
The alternatives can be ranked from
best to worst based on the benefit and
risk to make the selection process easier

M2: Decision Making

2022 - 2023 Decision-Making Process
Implement Decision
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This step refers to carrying out
the decision so that the problems
can be successfully addressed.
M2: Decision Making
Evaluate and Adapt Decision
Results
The expected results from the implemented
decision may or may not be achieved.
Hence, the manager should use control and
feedback mechanisms to ensure the
successful results and provide information for
future decisions.
2022 - 2023 Decision-Making Process

Evaluate and Adapt Decision Results

• Refers to actions made to ensure that

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CONTROL activities performed match the desired

activities or goals that have been set.

• Refers to the process which requires

checking at each stage of the process to
assure that the alternatives generated, the
FEEDBACK
criteria used in evaluation, and the solution
selected for implementation are keeping with
the goals and objectives originally specified.

M2: Decision Making

2022 - 2023 Approaches in Solving Problems

The problems that an engineer manager could encounter may either be simple or
complex. Hence, there are several approaches that may be used to address a
specific problem.
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Qualitative Evaluation Quantitative Evaluation

• Evaluation of alternatives using
intuition and subjective judgment.
• This is used when problems are:
✓Fairly Simple
✓Familiar
✓Does not involve great costs
✓Immediate decisions are needed
• Refers to alternatives that are
classified as rational and
analytical.
• This evaluation method yields
numerical indices gathered
primarily from formal (objective)
methods of data collection,
systematic and controlled
observation, and a prescribed
research design.

M2: Decision Making

2022 - 2023 Models for Decision-making

Inventory Network Queuing

Models Models Theory
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QUANTITATIVE Regression
MODELS IN Forecasting Simulation
analysis
DECISION-MAKING

Statistical
Linear Sampling
Decision
Programming Theory
Theory

M2: Decision Making

2022 - 2023 Models for Decision-making

Consists of several types that are designed to help

Inventory
the engineering manager make decisions regarding
Models
inventory.
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Economic order • 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
quantity model in inventory.

Production order • Economic order quantity technique that is applied to

quantity model production orders.

Back order
• Inventory model used for planned shortages
inventory model

Quantity discount • Used to minimize the total cost when quantity discounts
model are offered by suppliers

M2: Decision Making

2022 - 2023 Models for Decision-making

Describes how to determine the number of service

Queuing
units that will minimize both customer waiting time
Theory
and cost of service
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The queuing theory is applicable to companies

where waiting lines are a common situations

EXAMPLE: Customers
Output
Arrival
Queue Server

M2: Decision Making

2022 - 2023 Models for Decision-making

These are models where large complex tasks are

Network
broken into smaller segments that can be managed
Models
independently.
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Program • A technique which enables an engineer manager to

Evaluation schedule, monitor, and control large and complex
Review projects by employing three time estimates for
Technique each activity.

• A network technique using only one time factor per

Critical Path activity that enables engineer managers to
Method schedule, monitor, and control large and complex
projects

M2: Decision Making

2022 - 2023 Models for Decision-making

This tool is used by many businesses to help in

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budgeting, planning, and estimating future growth.

Forecasting

This step is used to predict the future outcomes

based on past events and management insight.

M2: Decision Making

2022 - 2023 Models for Decision-making

This is a forecasting method that examines the

Regression
association between two or more variables. It uses
analysis
date from previous period to predict future events
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Simple • One independent variable is involved

Regression

Multiple • Two or more independent variables are

Regression involved

M2: Decision Making

2022 - 2023 Models for Decision-making

Simulation
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This model is constructed to represent reality, on

which conclusions about real-life problems can be
used

This is a highly sophisticated tool by means of which

the decision maker develops a mathematical model
of the system under consideration

M2: Decision Making

2022 - 2023 Models for Decision-making

Linear programming is
Linear
Programming A quantitative technique very useful as a
that is used to produce decision making tool
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an optimum solution when supply and

within the bounds demand limitations at
imposed by constraints plants, warehouse, or
upon the decision. market areas are
constraints upon the
system

M2: Decision Making

2022 - 2023 Models for Decision-making

This is a quantitative technique where samples of

Sampling populations are statistically determined to be used
Theory for a number of processes, such as quality control
and marketing research
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Reduces the cost when data gathering technique is

expensive.

Sample

Population Sampling

M2: Decision Making

2022 - 2023 Models for Decision-making

Statistical Refers to the “rational Statistical decision

Decision
Theory way to conceptualize, theory focuses on the
analyze, and solve investigation of
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problems in situations decision making when

involving limited, or uncertainty can be
partial information reduced by
about the decision information acquired
environment. through experiments.

M2: Decision Making

Iloilo Science and Technology University

¡Gracias!
Civil Engineering Department
College of Engineering and Architecture
2022 - 2023