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DECISIONS

– Process of identifying problems and opportunities and

resolving them
– Is a choice made from available alternatives
– May be difficult to make
– Made amid changing factors
DECISION – Information may be unclear
MAKING – May have to deal with conflicting points of view

DECISION MAKING WHY SHOULD ENGINEERS BE

– It is defined as the selection of a course of action from among
alternatives; it is at the core of planning.
– A plan cannot be said to exist unless a decision–a commitment of
resources, direction, or reputation–has been made.
– Managers sometime see decision making as their central job
because they must constantly choose what is to be done, who is
to do it, and when, where, and occasionally even how it will be
done.
CONCERNED WITH DECISION MAKING
– Will be facing numerous and challenging
decisions in the workplace
– Crtitical thinking is essential
– Should possess knowledge, information and
skills in decision making activities

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TYPES OF DECISIONS CONDITIONS THAT AFFECT THE POSSIBILITY

OF DECISION FAILURE
1. Programmed decisions: situations that occur
often enough to enable decision rules to be
developed
2. Nonprogrammed decisions: are made in
response to situations that are unique, are
poorly defined and largely unstructured. Many
involve strategic planning

SELECTING A DECISION MAKING MODEL

– Depends on the manager’s personal preference

– Whether the decision is programmed or non- STEPS IN RATIONAL
programmed DECISION MAKING
– Extent to which the decision is characterized by
risk, uncertainty, or ambiguity

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The Decision Making Process 1. Diagnose the Problem

1. Diagnose problem 5. Make a choice A problem exists A certain production company
Corporation has one of its manufacturing
2. Analyze environment 6. Implement decision when there is a plants operating on a single-shift 5-day
week. The plant is operating at its full
3. Identifying 7. Evaluate and adapt difference capacity (28,000 units/week) without the
Alternatives and the decision results between an actual use of overtime or extra-shift operation.
Limiting Factor situation and a
The company has received an order to
produce extra 4,000 units per week
4. Evaluate alternatives desired situation. beyond the current single-shift maximum
capacity. Several options are available
to the company.

2. Analyze the Environment The Engineering Firm

– The environment where the organization is situated plays a INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT
very significant role in the success or failure of such an – Organizational Aspects – structures, policies, – Government
rules, regulations, etc.
organization. There are two components of environment : – Clients
– Marketing Aspects- product strategy,
– Internal environment refers to organizational activities within a firm promotion strategy, etc. – Competitors
that surrounds decision making – Personnel Aspects- recruitment practices, – Public
incentive systems, etc. – Banks
– External environment-refers to variables that are outside the – Production aspects- plant facility layout,
– Suppliers
organization and not typically within the short-run control of top inventory, etc.
management – Financial Aspects- liquidity, profitability, etc.
– Labor Unions
– Leading to external environment--
DECISION

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3. Identifying Alternatives and the Limiting Factor 4. Evaluation of Alternatives

– The ability to develop alternatives (by ingenuity, research, and common - This is the point of ultimate decision making, although
sense), is often as important as being able to select correctly among them.
decisions must also be made in the other steps of planning—in
– The manager needs help in this situation, as well as assistance in choosing selecting goals, in choosing critical premises, and even in
the best alternative, is found in the concept of the limiting or strategic factor.
selecting alternatives.
– A limiting factor is something that stands in the way of accomplishing a
desired objective. - Because of complexities in evaluating alternatives, newer
– The principle of the limiting factor states that, by recognizing and methodologies and applications and analysis are needed:
overcoming those factors that stand critically in the way of a goal, the best • Advantages/ Disadvantages or Strengths / Weaknesses
alternative course of action can be selected
• Cost-Benefit Analysis (C.B.A.)
• Decision Trees

Example 1 Example 2
Alternatives Advantages Disadvantages Cost – Benefit
Analysis o Strengths: internal factors which make it possible to exploit external
1. Contact a skilled - Hiring skilled tradesmen outside the plant Costs:
tradesman from outside - Fast solution to remedy the problem may be an issue with the union.
- One day production disruption
Benefits : opportunities and defend against threats.
the plant to repair the
press immediately.
- Parts replacement means enhance efficiency. - Four days of production disruption.
o Weaknesses: internal factors which may block an exploitation of
2. Repair the press using
new parts.
- Avoidance of hiring outside workers, as project
cost includes vendors who will do the installation
- An additional production cost to each unit
will be incurred as three process steps handled external opportunities and render the company vulnerable to
external threats
- As the press becomes reliable, a possibility of by the ton press will be outsourced. Cost:
eliminating the trouble-shooting job from the Benefits:
stamping operation.
3. Repair the press (using
either new and old parts) - Elimination of two steps in the process, making
- A risky option since it is technically ambitious
- Uncertain as to how well it would work and o Opportunities: external factors which, if well managed, can
reinforce the position of the product in the market.
and at the same time the ton press completes three steps at once. how long it would take. Cost:
- Will utilize less operator (three fewer) each - Two weeks production disruption Benefits:
install a new, more shift - Three months to be operational.

o Threats: external factors which, if managed poorly, can weaken the

complex die to
supplement the die

position of the product in the market.

currently used to stamp
out plates.

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Example 3 5. Make a Choice

As a manager of a funding firm you – Choice making refers to the process of selecting
need to decide between two stocks to
purchase for a short-term investment
among alternatives representing potential solutions
of one year. An economist at the to a problem.
company has predicted returns for the
two stocks under four economic – At a point, Webber advises that “ particular effort
conditions: recession, stability, should be made to identify all significant
moderate growth, and boom. Table
shown presents the predicted one- consequences of each choice.”
year return of a $1,000 investment in
each stock under each economic
condition.

6. Implement the Decision 7. Evaluate and Adapt Decision Results

Implementation refers to carrying out the decisions so Feedback refers to the process which requires
that the objectives sought will be achieved. To make checking at each stage of the process to assure that
implementation effective, a plan must be devised. the alternatives generated, the criteria used in
evaluation, and the solution selected for
implementation are in keeping with the goals and
objectives originally specified.

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Autocratic Decision Making

“I Decide”
Group Decision
a process by which group decisions are
Making Process
made by the leader alone, based on the
information the leader possesses.

Consultative Decision Making Democratic Decision Making

“I Decide With Inputs From You” “One Vote, One Decision”
a process by which the leader solicit a strategy by which decisions are made
inputs from group members to come up by the group members based on majority-
for a better decision of his own. rule voting.

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ADVANTAGES AND DISADVANTAGES TAKEAWAY

Works from a broad ₓ Slow. o Utilize past information to update both current beliefs and
knowledge based. ₓ Creates intragroup conflict. future predictions
Decision is accepted by ₓ Potential for groupthink o Draw unbiased insights from available data
members. and group polarization.
o Learn the skill through time and experience
Decision is highly ₓ Certain members, such as
critiqued. leaders, may dominate the
Aspects of the problem decision-making process.
can be divided among
group members.

“MAKING GOOD
DECISIONS IS A CRUCIAL
SKILL SET AT EVERY
LEVEL.”
PETER DRUCKER