Implencmton of dion eis be communication 1 suboring sting acepance of oes oer he mates involved in the deiig _eting thee support for puting the decision int eton (64 Resale: When the decision spot into ation, ing etn TSU. These resuy mst conespod with abjectives, the ating pinto decison making pocens 00d decision has been made and implemented propery. Thus, results provig, Indication whether decision making sad its inplementton is proper 2.16.2 Rationality in decision making ‘The question of rationality in decison making bas long engaged the atention ot decision theorists. Some of them bald the view ht manger iscompletey ravonal in his decisions. Some say that he is compel ition. The thee ype of views on decision making behaviour ar based on tee models of man cconone ‘man, administrative man and social man. 18s the cavtiest model of man developed byte csi esonomists, They boleved that man is completely rational in his dessins He twops eng altemative which gives him the greatest advantage The six steps of rational desision making which we hive dered above Potay the behaviour ofexonomi msn. Bu many Wes catoe wn igre fs tat it lacs realism. These decison mating smo ths gh eens ow decisions should be made. They do ot eal pr eh scaly mae Foreampl as evsgetin ti tsa eapacity to: Gather all necessary information fora decision. ‘Mentally store this informatio. Accurately recall information any time he likes oa series of complex calculations; and Rank all consequences on the basis oftheir merits, _ | A Moreover, a man’s lye 19 this coal motive ner my gh aon aaa nrc 8 orioatna cision mAKing 18 8 infrequent dcion men ee: Tht lly atonal son mode except wen it elec wo te performance of technical tsk ministrative Man modelo aa "FBounded Rationality modet sn at it ihn istrative man Uses only inte as ns information processing ski In choosing between aerate, te aminatve ma, ving he aity to “maximize” attempts to “stisice” ie, to lok fi he one wich “pod nou” 2 Because an administrative man stsices ahr tan simizes, hs seach for slteratves is sequen or increment, Like a eccnone mane ot eired ‘0 niiate «compretensive al ensnpasng seach from the very ting to find out all possible alternatives ano erate wich of them is th be. HE ‘an search and evausteateratvesoneby ocinasquencs, tbe is lersive oes not work only then, does be edo make serch for note. ‘An administrative man's search for ateraive i guide by hi experience, He ses heurites o reduce the area his search o manageable Limits ‘Simon's administrative man model alo known as bounded rationality mod) Involves the following eight tes inthe decision making proces: obese 1. Sethe goal to be pursued or define the Le a 2. xablish appropriate criteria jude the ace 3 User te nmmow down te el ofeach niet fee lon. on wert cir jue th aocetablty je Ho feasibeslton sii hese it fa softion and bein te seach aes ePwing AP Tune ito determine ts acepnbilty 5. Ita feasible soltion is ident, elinlet se cc fo ane OI, ae eg ofl With which he og, pe ereint judge the ACEP gp tn ee rare ct Boning eee th tama sees fr ond <9 ental btbcase al betwee and our ese ofthe wl Sut Man Mode! “hs moths been develope bce oli. Frew, in pata, say tt ne ring «bund of eins eons ainsi isglded by hi seittcows ders, He is also sobjet sal pesues and influences tune cha psn on cpl of mil mangement decison Th well Known exerinet by Solomon Ash demos that his world sll tonal contort, Hs sulin seven ofseven io ine subjects Gah They wre told that thir asta compu Belo ies ll except ofthe sabes in cach ov bad re-rans wihe expeimener to iv aly wrong answers on tele o he ahs npc ls 3 Evaluation of alternatives Bs eens nin ee errata te rae 2 0 cuit tes trig me Sg ed ct peng cn sd gt ei ts e ‘the risk of technological changes, and the lity of labor Memational eel a er ex] polite need 0 be taken nto consideration. ‘There are many instances 2 eh an excellent quantitative plan was destroyed by an unforeseen war fine vrketing plan was made inoperable by along transportation strike, or rational ‘rrrowing plan was hampered by an economie recession, These illustrations poiat aetibe importance of giving attention to both quantitative and qualitative f¥stors hen comparing Despite this fact, most of the managerial decisions are made o® inf personal judgement. However, fw managerial decision can be so ascurtely ramified that judgement is unnecesay: Decision making i seldom simple. ible (iy Marginal Analysis: ‘Marginal analysis is useful to evaluate the given alternatives. Here, We compare the additonal revenues arising rom additonal costs. Where the objective sro maximize profi, this gol willbe reached, when the additional revenues and diana costs are equal, In other words, ifthe additonal revenues of «larger “uuity ae greater than its ational costs more profits can be made by producing thowe. However, ifthe additional revenues ofthe larger quantity are less than its ‘dona costs, lager profit canbe made by producing less. ‘Marginal analysis can be used by comparing factors other than costs and revenves. For example, to find the best utp of amachin, inputs could be varied ‘guns outputs until the additional input equals the additional output. This would then be th point of maximum efficieney ofthe machine i) Cost effectiveness analysis: Cost effectiveness analysis is an improvement over the marginal analysis fit analysis, The cost effectiveness analysis this means, for example, finding the least fing the greatest value for given ‘technique, It is also called cost Benef seks the best rato of benefits and cos Costly way of reaching an objective oF get ‘expenditures Init simplest terms, cos effective the best plan when the objectives are ls pei than sales, costs or profits, ess analysis isa technique for choosingmeasures of effectiveness. Ina program withthe EEnEa Objective of impr E E = ‘employee morale, for exemple,» compay can measure effectiveness tg otraninet decisions compeyey SHINE po =a sony Hens in theoreti, verifiable factor as employee tumaver, bentssm, oF VolUBe of grieve sie a6 206d by cone 2 © eae : ct meme) pect! op tn ah ‘can supplement these measurements wih such subjstive inputs the judge woawaitiepsvanerd ‘of qualified experts, " ‘The folowing are the major features ofthe con effectiveness 4. Nom programmed Dei alysis Te focuses on the results ofa program Te helps weigh the potential benef ofeach altematve agains is potenti) "inte bee oe ey cacomes of esate, mamager bre weraiServon ee, ~ Winvotves a comparison ofthe aterasvesin tems of the overall advantage 2.16.4 Types of decision of wich lie outside the organization A come rane Decision making is involved in every walk of life; itis relevant in slonsthat the are novelandoomtceng and eri ene ont, teal avilable. Since these decison ea igh ingens tooo ee longterm consequences, thse ne made by manages higher lvl to ‘organizational as wel as non-orgnizatonl content. Tht we diffrent ways in hich organizational decisions may be clasiid. One way of clssifying. these Aecisions is to group them into routine and repetitive ot non routine. In nother ‘way, these decisions ae clasified as programmed cr nonrogrimme. There me 4 Siraegic nd Tactical Decisions: further classified as strategic and tactical decison, State decisions re non routine and non-programmed while tact dram nv nen es ee cee eee ned. ba Tre distinction between strategic and tnctical deci a ‘for tactical decision may be delegated lower than a particular level in the and Koo-prasmoe! caceloen cnacizaton. Howes the inion betwen tae ti sl totes ne asa manager wuld wish eine bth ions eng ackeve 1. Progra Herbert Simon has grouped ongnictons desing capores based con the decision factors which ar taken in conerton. Thor gr er oeg land non-programimed decisions Strategie decison: npnizational objectives, eis bacon stingy wiclsa mor aon rain 2, Programmed Decisions: Stee decision cones on sm oxgniaton, Therefore leo Programmed decision a oie 2 70 ml a ign snevork of organizational policies and rs. Thaw py te Saeicdeciion 9m ge i a een rameummeaaa ole or major Pa of he cal strate dessin, fi ‘he decison v0 maa 08 cguiion 2, neontibues diet si dss yo om “ey ad ter ios ich at te extn tev, Tho joven ae sre dessins Conte is ie ee eo say when dra emer een aie eoungsin preset is exPESg eeepc raise ‘tss, hangin ese sis ‘he step isin as orale ees couse ofston olan wich pecs wrk 0 theresa krona eon ee A desited rent orbjctvet bate sou the implementation ofthe deo, est cement one to achieve o ® Acumen wish ste t xpniaton to undeake the cou of ang mks he esol iavled responsible ft binge obj, nd aller rouse tthe, commitment een « 5. Thesttgedesson i som anon rope eon whichis md aer the condo of pra gure, Th ena involved and he tomes ofthe eran catia ina inadane Thisis 0 beease stati desion sto ble inteeoneofervoamel actors whe tee gui ym and cei. ‘osc deison: ‘tial or option econ is deed oa to aytocday working of be ian stg otis and pocdres. The vio fits ce ein, treats nthe comet of well Sedan aes follows z= Decision making under diferent can Teatematve pt in aon whi devon makers making the dessin fr fare canon, The ure ‘dessin var slong aco Sconitons of ample nceriny 5 shown 4214 ‘aatcal decision relates to day-to-day operations ofthe organization and has jo be taken very frequently, The decision is mostly repetitive; for example, purchase ofa materials, asgning duties to employees et. ‘yetical decision is mostly «programmed one. The deisin is programmed casough the presription of potcics, aes, procedures, ete. Therefore, the desision canbe made within the context ofthese variables. Such presriptions provide what oo in partial case. ‘The outcome of tactical decisions of shor-emn nature and afets a atrow Fat ofthe organization. For example, purchase of raw materia in routine manner ‘will fect production department for a short peiod because raw materials are purchased very frequently inte context of welt policies, “The authority for making tactical decisions canbe delegated to lower-level managers. This is done because of two reasons 4+ First the impact of tata dsson is nzrow and of shore-tem natre. ‘Therefor, the loweeevel manages bave adequate perspective to make such decisions ‘+ Send, by delegating autho fo such decisions to lower-level managers, Jhgher-lvel manages are fe fo devote mre tne on strtege devisions ‘whieh are more important Decision making volves selon ofaterantve out ofthe several availble Srl take plein frre prio. Thus the conditions ium ranging rom conditions of perfect certainty eet Conditions of Conditions of Ccontons Peiectcenainyy complete uacerainty Figures 2.14 Decision mong comtionsy . eS etcome defies what i TPE sone ne Anos te geo ctsoes important mien TS ay ang, tee 78 OF 0g ep se shown ne ton schon. thermatvs, Inthe ansipis of deison re ely ising 4s in diferent onto respect to outcomes Outome ‘Conditions | Nature of entumes Ceranny Compe and accurate owls ofthe outcome of each heave as thre isonly ane nea ofeach alterative ‘aliple posite oaroos freachaltematve cn be identify ad prob of ezurents canbe atared 10 ech outcome, ‘lil oucoms french lave cnbe dented bat thee ‘Uneeaingy iso know fhe roti tobe atached 1 each ‘Since hr variton in the owl of tomes of arent aterates ie decisis aking codons, deco aig tay ies in each cae 1.Certainty: ‘Whea a manger knows exactly whic sie of ae wills, cums ceri ents. Tis ens thar te mage il behets mae prey ecu cisions dine afer ime, Such conden ext whe denn involves acon immediate fare, andthe manage as mad shades number of ines wid the sme rests. Under ch condone an etic mode the on it hic al fctrsare-assuned to be eat Wi he ly oe Under ac canons, does at eed to anlar he chance eet. Rie Mos oe maar orion esos aria inh nade wie edo ofa wih nein ‘cto aswel cation soca ta a reaming tts mt cli crision’s pope Amount ofsikinvlved canbe called king ten ie spokane ont nb ae en Ce romans aeetaoie enn yy ote tw 20 ns wan a ie sin foeemoretornencosseaneds eee Crestron rena ae Re ccuiewauaeceserras 1. Apsin probability pro poy bid eh ines fom assed conditions. For ean holy of ping sea! 0S wena cons ted 2 Empire Pobabiiy: Ena oii is aed on renga agers oer pid fie acne eee of ns cach ventas cca, Maagencanas tiptoe bi of ins as For example, src companies rely ope obi of des cotbisbass 4. Subjective probability: Wha te msgs oe ot en dt to ease tea rr or ence ob. may sin probly oo som ugemeat This sabjstve potable ie mage os not oven ination cae roa. Uaetainy: {fa decision inoles conto bot wih he geht infomation, ‘eat the otcme othe aie sans ray silos eis id be Speingu condo fcr Un oto ana f eat ‘ison aa have ben proposed ss posilebes er deron aig, Teste fans2. - { EE Gel rie maximas terion oping, gylient REAM criterion 1, Maisie = the maximin citerg, Maximising the inimom poss receding decision xtra seme a ce ant its viet ay pevinsexptce isnt possible or worthwhile asign any probaly tothe states of station. 1a (ges) bedesionmaker—theminin, pce PObailiycnbeassned ugh foraging te slereeet . 1 ion asining 1 toni jail. Tissttinskoown aint ron crein or Lapl een cst eae orth occurence ofeach possible sty ayes’ postulate. In this ertrion, since the probability cannot be assigned on josie toni) fey sis egal probublty is assigned each event sample 1 Decision making under uncer: “4 Assing ely hey posi fame —the insulin rterion 5 Masimasererion: sist moto decsion make vig | __ Cmler he following paver max decision ceri ia i = occurence of eves iftoecing a decision i Tadew si thinks optically about he ic tis pnp i followed manager wilt hat erative under which 7 a 5 isp oe eon oul: ning oa - s 5. 5 5 tron ease itgnoresposibllasesand ches of king oF not making 4 tice bem 8 s é 2 # on Ay 2 20 is 5 (6. Masinineriterion: a : E 2 Asan xine masini cian spay ters pessimist Aesson maker, Te manages bees tha wer posible occur. This pss are known forthe occurence ofthe natore states. Compare results inthe seecton of tat emtve hich ais eat fiourabepayad. FM slaions obtained by each ofthe fllowing criteria and recommend the techn: 7. Minimax Criterion: ‘Thisciton ast minmitontie hemi regetisdefoe) |) Maxima decision criterion she pp fr ech leave ude eve) fat feet at Ser eae ee oe ure. Iemma acesnaenteta inet sea Samet ie ot tbe nee ema a hath seraive seed doled othe bes Si vst | tn: tow te poabiliy of hapeing parca eee nn Oe wich minimizes his regret ‘tare |) Maxima decision erteion (i) Maximin deci (ii) Minimax Regret decision eiterion (iv) Equally key decison eritero criterion ‘The maximum ofeach ation is found outSate Maxims reeret A 33-6-27 | 2412-13 2120 | bea F wo) 216 [aries] was B 3523-10) 2420-4 | ats] eas 0 3333-0 | 24260 | a1a-o| anti o a | 3) “According to this rterion, the minimum ofl maximum egrets i 27 which sreaponds tothe action A, Therefore, the best ation is A, According to his eiterion, the mixin ofall maximum is 33 whi Sf Ac (Go) Eau likely decision ereion, comenponds othe ston A, Theres, the est aon ‘The expected average value fr each action is found as (G_ Masimin decision eteion eae | ape Ste Secs 3 wea) = HBOS sas Sat stay = BEDE as Soe et wing = MI aye Acting tin, emai fa mlamczy7 wih fing i eon he miu fl xg ge ae commands otha ation A, Tero. be ston, 2325 which corresponds tothe ation A, Therefore, the Bet ation is A, (Ui) Minimax Regret decision eiterion Reample 2: Decision making under ancertsiny ‘The maximum reget ofeach eto is ound ont ee i ee ents The conditional, tae Patomed yay of the four possible eer The payoff for each action event combination ar give bel a -» a>Fence of Wana Ea — Fea odin eens [nese | Post aan — —_ 2 Eien ao x w]e pe pe x B 7 7] « [# |= ¥ ‘4 z ae || z ‘ ‘Determine which elteratv shoul te busine choore, Ihe aa the (© Meximas decision riterin (i) Maximin decison eterion (0) Minima Regret decision criterion (0) Equally ely decison ceri. Solution (© Maximas decision erteron ‘The mavium ofeach alerative is oan out ere onraintr nt ne ea (a) Minima Regret decision erterion ‘The maximum regret ofeach ative io eu, Mieraatve] —_ Payoff onital was ‘iasinee S [os Ts Ts | Ra x__| 16066 [wean [aneray = Y_fiscorn | reie0 | 0200 fiocann] 22 2 [reieo | wes | mam [imo | 2 “aaive| Para onioal es | Masia Po STs] s.s x foletelsl, r ul»|l~[ | izas| eres | sats | tO ve erg ee ‘Aecordog os iter, the maxon of al mam poy 8 hin conesponds tthe ation ¥ Therefore he estan oy (W Maxinin decision terion ‘The maximum ofeach alternative found out @ag@iy ‘According to this eitso, he minim of all simu ep py-fs 52 which comesponds tothe ation X Theres aeatv is X (6) aqua key decision criterion The expected average vale fr exch leaves found ot fo = =A as ey = Seta be = S80 ns steeped esi agg es enn fa er en which coreesponds to the alterative 2 TEting ame (ih ob) 7 ovens ofacon ite 0 of LE) eae eh te ee Fay | Be Eaay “Te cxpevted mons vl foreach acon sod outs follows: Fraction A: (4x025)42.8x 05}+(0x 035)=225, Por acon B: @x 025} 05)+61 035) 09 Foracton C:@x025}(2%03)4(1035)=21 ‘The expected monetary vals of con Ais minum, Therefore the best coarse of cons Decision mating under rth probity), Table piven Blow shows the payoff of 0A B.Candtheievents ROR. he probablies of the tats of maar are respetly 03, 4g Cable ond teblate EMV and conclude which ofthe at can bcp oto as he a. a ‘the expetod moncary value (EMV) ifn ot foreach state of ate as san ee a B c soxo2-19 | -tsx02=3 [1e0x02=-28 720304 86 | 270x04-108 | 220% 04 68 60x 03180 | 750%.03-205 [490038289 7 7 308 ‘fe expected monetary vile fet Bismaximam. Therefore te best ours feet choose i B. 1.48 Decision tree analysis: * Adeciion tes gphthat es strahingmetid tilstate ever posible atone of decision. I howl the esl courses of acto, states of nate, ah ‘be robailtes associated with bests of te, This ‘Sexson agen’ ook sex much ikea dang ofa, a ce iiss cal esision es. ‘Adcision tre consist of noes, bnces palit etimates ad py Nodes are of two types, dession mode (esignated asa sguare) and chance od designated a cle). ARsratv cores of ato cist fom sson nde ‘ste main banches(decisio ances. Now tthe termi ont of eso node, thee dees fom wre hae odes rg assub-ances, The especive vlad the probabilities socared wile cores andthe chaos ees ‘shown alongside the cance tates. Alte tian ofthe chane branches ae ‘Sowa inthe expected payoff vals of bates ees: detent ad probes. nd makstage wes. A singe sage owe dion ues conditions of eve or hin of There ae basically to type of in| Ths can farther be divided ito sil st ermine decision tee involves makin 2° ®etany(no chance eens). Ina musa determine we 5ea] ‘ecnn eet Toi ra HOMER ne gS MY, |. Bas rules and corvetos followed for roving decision tee; (etal eons der aerate) aoe mad nd he ed which hey ms be made, ; (2) ent ee ren est ft at i cr ely cach decison eave Gi) Develop tre aga hong squace fein and hanes ay Thess const suring fr end moving ova ight. Thea ox denotes 8 decision pot at which te aval courses of acon at .3) ORGANISING Nature and purpose ~ Formal and informal chart ~ organization structure ~ ¢ departmentalization — organization - organization 'yPes ~ Line and staff authority - delegation of authority - central lization and Design ~ Human Resource Management — HR Planning, Recruitment, selection, Training and Development, Performance Management, Career Planning and Management. decentralization ~ Job say Organising is the process of identi attain the objectives, delegating authority, ifving and grouping the activities required to. creating responsibilities and establishing "lationships for people to work effectively Schein defines an organization as the rational coordination of the. activities of ‘number of people for the achievement of some common explicit purpose or goal, ‘ough division of labour and function and through a hierarchy ot authority and esponsibility. AS a process, organization refers the process of determining, arranging, ‘ouping and assigning the activities to be performed for the attainment of objectives. Ths, the organization isa mechanism or structure which hes the acto ities to be Performed effectively, The organization is established for the purpose of achieving ‘hebusiness objectives According to Pfifiner and Sherwood, an organization is the pattern of ways in i "hich lage numbers of people, to many to have intimate face to face contact withall Oe, and engaged in a complexity of tsk, relate themsel\ »