problem solving and decision making interrelation
when do you need to meet your objectives
you have a problem
better you can develop plans before they occur
fewer problems you will have
the more time you have to take advantage of opportunities and respond to competitive threats
problem: exist whenever ob
management function problem solving and decision making
When Planning
Make decisions about objectives and when, where and how they will be met
When Organizing
Make decisions about what to delegate and how to coordinate the departments resources
When Staffing
Must decide whom to hire and how to train and evalua
three decision making styles
reflexive: quick "shooting from the hit"
reflective: Takes plenty of time to make decisions gathering considerable information and analyzing several alternatives.
consistent-Tend to make decisions without either rushing or wasting time. They know when the
the decision making model
(6 steps process for arriving at a decision)
Classifying and defining the problem or opportunity
Setting objectives and criteria
Generating creative and innovative alternatives
4. Analyzing alternatives and selecting the most feasible
Planning and impleme
decision making structure: programmed decisions
Programmed decisions: those that arise in recurring or routine situations, the decision maker should use decision rules or organizational policies and procedures to make the decision
Examples:
Recording inventory every time stock reaches a specified level
non programmed decisions
Nonprogrammed decisions: Significant decisions that arise in nonrecurring and nonroutine situations, the decisions maker should use the decision making model
Examples:
Selecting a new product to sell
Entering new products
Opening a new facility
decision making conditions
Certainty:
You know the outcome of each alternative in advance
Risk:
You do not know the exact outcome of each alternative in advance
Can assign probabilities to each outcome
Uncertainty:
Lack of information or knowledge makes the outcome of each alternat
decision making types
Two primary types of decisions using decision making model: rational decision & bounded rational decision
Rational Decision
Use optimizing selecting best possible alternative)
Bounded Rational Decision
Use satisficing selecting the first alternative that
Potential Advantage and Disadvantage of Using Group Decision
advantages
Better quality decisions:
Groups usually do a better job solving complex problems than the best individual in the group
More information, alternatives, creativity and innovation:
A group of people usually has more of these important factors
Bet
setting objectives
Setting Objectives
Helps managers make better decisions as it increases commitment
States when the decision should be accomplished
Teams are good at setting objectives and standards
setting criteria
Setting Criteria
You should specify the criteria for choosing an alternative solution to a problem as they set the level of performance
Criteria: Standards that an alternative must meet to be selected as the decision that will accomplish the objective
types of criteria
Must"
Have to be met in order for an alternative to be acceptable
"Want"
Desirable but not necessary for the alternative to be acceptable
creativity and innovation
Creativity: Way of thinking that generates new ideas
Innovation: Is the implementation of a new idea
creativity and innovation killers
It's impossible" "it can't be done."
"We've never done it." "Has anyone else tried it?"
"It won't work in our department(company/industry)."
"It costs too much." "It isn't in the budget."
"Let's form a committee.
three stages of creative process
Preparation
Define problem by getting others opinions and ideas
Look for new angles use imagination & creation
Incubation and illumination
After generating alternatives
Take a break, sleep on the problem
Evaluation
Before implementing a solution
Evaluate
generating alternatives
Brainstorming: Process of suggesting many possible alternatives without evaluation
Synectics: Process of generating novel alternatives through role playing and fantasizing
Nominal Grouping: Process of generating and evaluating alternatives using a structu
generating alternatives cont
Consensus Mapping: Process of developing group agreement on a solution to a problem
The Delphi Technique: Involves using a series of confidential questionnaires to refine a solution
quantitative techniques
Break-Even Analysis: allows calculation of the volume of sales or revenue that will result in a profit
Capital Budgeting: Used to analyze alternative investments in assets, such as machines and the make-or-buy and rent/lease -or-buy decisions
Linear Progr
The Kepner-Tregoe Method Exhibit 4-9
Technique for comparing alternatives using the criteria selected in step 2 of the decision making model
Step 1: Assess each alternative with regard to the "must" criteria
Step 2: Rate the importance of each "want" criterion on a scale of 1 to 10
Step 3: D
cost benefit, pros and cons and institution
Cost-benefit Analysis: Whether the benefit to be gained from an alternative is worth its cost
Pros and Cons: Identify the advantages which can be considered benefits and the disadvantages which can be considered the cost of each alternative
Intuition: Use
vrooms 5 leadership styles
Decide
As the leader of the group, make the decision alone
Consult Individuals
Describe the problem to individual group members, get information and suggestions
Consult Groups
Hold a group meeting and describe the problem to the group, get information and
summary learning outcomes and answers
Explain the relationship among objectives, problem solving, and decision making.
Managers are responsible for setting and achieving organizational objectives. When managers do not meet objectives, a problem results. When a problem exists, decisions must b
Describe the differences between programmed and nonprogrammed decisions and among the conditions of certainty, uncertainty, and risk.
Programmed decisions are recurrent, routine, and nonsignificant. Nonprogrammed decisions are nonrecurring, nonroutine, and significant. The difference in decision-making conditions is based on the degree of certainty of the outcome of the decision. Under
Describe when to use rational versus bounded rational decision making and group versus individual decision making.
Use rational decision making with a group when faced with a nonprogrammed decision with high risk or uncertainty. Use bounded rational decision making and make an individual decision when faced with a programmed decision with low risk or certainty. Howeve
State the difference between an objective and "must" and "want" criteria.
An objective is the end result you want to achieve when making the decision. "Must" criteria are the requirements that an alternative must meet to be selected. "Want" criteria are desirable but are not necessary for an alternative to be selected.
State the difference between creativity and innovation.
Creativity is a way of thinking that generates new ideas. Innovation is the implementation of new ideas for products and processes.
List and explain the three stages in the creative process.
1) preparation�developing familiarity with the problem;
(2) incubation and illumination�taking a break from the problem and perhaps getting an idea for the solution;
(3) evaluation�making sure the idea will work
Describe the differences among quantitative techniques, the Kepner-Tregoe method, and cost-benefit analysis for analyzing and selecting an alternative.
Quantitative techniques and the Kepner-Tregoe method are management science approaches; cost-benefit analysis is not. Quantitative methods use math to objectively select the alternative with the highest value. The Kepner-Tregoe method uses math, with some