DECISION

MAKING
PREPARED BY: ENGR. LUVISMINDA D. MARCELO
AGENDA
Decision Making as a Management
Responsibility

What is Decision Making?

The Decision-Making Process

Approaches in Solving Problems

Quantitative Models for Decision Making

 EMPLOYEES ARE
MOTIVATED BY:

DECISION MAKING AS A
MANAGEMENT
RESPONSIBILITY
WHAT IS DECISION MAKING?

DECISION-MAKING may be defined

as “as the process of identifying
and choosing alternative courses
of action in a manner appropriate
to the demands of the situation.”
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
INTERNAL LIMITATIONS
LIMITED FUNDS available for the purchase of equipment

LIMITED TRAINING on the part of employees

ILL-DESIGNED FACILITIES

EXTERNAL LIMITATIONS
PATENTS are controlled by other organizations

A very limited market for the company’s products and services exists.

Strict enforcement of local zoning regulations.

 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
This is made possible by using a procedure with the following steps:

1 2 3

Prepare a list of alternative Determine the viability of Revise the list by striking out
solutions each solutions those which are not viable.
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
WHAT IS CHOICE MAKING?

CHOICE MAKING refers to

the process of selecting
among alternatives
representing potential
solutions to a problem.
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
WHAT IS
IMPLEMENTATION?
IMPLEMENTATION refers to
carrying out the decision so that
the objectives sought will be
achieved.
 4. DEVELOP 5. EVALUATE
VIABLE ALTERNATIVES
ALTERNATIVES

3. ARTICULATE 6. MAKE A
PROBLEM OR CHOICE
OPPORTUNITY

2. ANALYZE 7. IMPLEMENT
ENVIRONMENT DECISION

8. EVALUATE AND
1. DIAGNOSE ADAPT DECISION
PROBLEM RESULT

DECISION MAKING
PROCESS
Evaluate and Adapt Decision Results

Important for the manager to use control and feedback

mechanisms to ensure results and to provide information for
future decisions.
Feedback refers to the process which requires checking at each stage of the process
to assure that the alternatives generated, the criteria used in the evaluation, and
the solution selected for implementation are in keeping with the goals and
objectives originally specified.

Control refers to actions made to ensure that activities performed match the
desired activities or goals, that have been set.
APPROACHES IN SOLVING
PROBLEMS

In decision-making, the engineer manager is faced

with problems which may either be simple or
complex. To provide him/her with some guide,
he/she must be familiar with the following
approaches:

1. QUALITATIVE EVALUATION

2. QUANTITATIVE EVALUATION
QUALITATIVE EVALUATION
Steveson states that managers tend to use the qualitative approach when:

1. The problem is fairly simple.

2. The problem is familiar.
3. The cost involved is not great.
4. Immediate decisions are needed.

QUANTITATIVE EVALUATION
This term refers to the evaluation of alternatives using any technique
in a group classified as rational and analytical. The types of
quantitative techniques which may be useful in decision-making are
as follows:

1. Inventory models 6. Simulation

2. Queuing theory 7. Linear programming
3. Network models 8. Sampling theory
4. Forecasting 9. Statistical decision theory
5. Regression analysis
INVENTORY MODELS

Inventory models consists of several types all designed to help the engineer manager
make decisions regarding inventory. They are as follows:
1. ECONOMIC ORDER QUANTITY MODEL
2. PRODUCTION ORDER QUANTITY MODEL
3. BACKORDER INVENTORY MODEL
4. QUANTITY DISCOUNT MODEL

QUEUING THEORY
The queuing theory is one that describes how to determine the number of
service units that will minimize both customer waiting time and cost of service.
NETWORK MODELS

These are models where large complex tasks are broken into smaller segments that can
be managed independently. The two most prominent network models are:
1. THE PROGRAM EVALUATION REVIEW TECHNIQUE(PERT) – a technique that
enables engineer managers to schedule, monitor, and control large and
complex projects by employing three-time estimates for each activity.

2. THE CRITICAL PATH METHOD(CPM) – this is a network technique using only

one time factor per activity that enables engineer managers to schedule,
monitor, and control large and complex projects.

FORECASTING
Forecasting may be defined as “the collection of past and current information to
make predictions about the future.”
REGRESSION ANALYSIS

The regression model is a forecasting method that examines the association between
two or more variables. It uses data from previous to predict future events.

SIMULATION

Simulation is a model constructed to represent reality, on which conclusions

about real-life problems can be used.

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

Decision theory refers to the “rational way to conceptualize, analyze, and solve
problems in situations involving limited, or partial information about the decision
environment.
Thank You