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Lecture 1-4
Quizes =10% Project =30% one sessional = 20% End term exam = 40%
Identify a real life business, social, economic, engineering, medical sciences, IT or any other area of your interest Collect data with 10 variables and 100 records for all of those ten variables. Prefer numeric data , but some of the variables could have text entries. This is the complete population you have
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Case definition: You are going to solve this problem Apply all the tools or most of these which ever you feel appropriate in relevant areas of case. If you know any other tools you may apply those also , but statpro and partly excel must be used
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Title Abstract Introduction, Case definitions Main body Findings Conclusions References bibliography Your own biography
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Identify /think which job you want to do in future Look for a company that gives job in your preferred speciality Try to find a company nearest you home Write down what area of interest you have in that company Look at their website /brochures and get to know that company as best as you can Make a write up of telephone call with thast person and talk with full confidence Set an appointment with them by calling the appropriate person in that company
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Contents
What is Decision Making? Some Definitions Kinds of Decisions Decision Making is a Recursive Process The Components of Decision Making The Effects of Quantity on Decision Making Decision Streams
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More Contents
Concepts & Definitions Approaches Information. Authoritarian Alternatives Group Criteria. Decision Making Strategies Goals Optimising Value Satisficing Preferences. Maximax Decision Quality Maximin Acceptance 9
More Contents
Decision making Procedure Identify decision and goal Getting Facts Developing Alternatives Rate each alternative Make the decision
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We all make decisions of varying importance every day, so the idea that decision making can be a rather sophisticated art is not valid Studies have shown that most people are much poorer at decision making than they An understanding of what decision making involves, together with a few effective techniques, will help produce better decisions
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think!.
Some Definitions
Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker
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Some Definitions
Decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them.
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Kinds of Decisions
Decisions whether. This is the yes/no, either/or decision that must be made before we proceed with the selection of an alternative
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Kinds of Decisions
Decisions which. These involve a choice of one or more alternatives from a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria
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Kinds of Decisions
Contingent decisions. These are decisions that have been made but put on hold until some condition is met.
For example, I have decided to buy that car if I can get it for the right price; I have decided to write that article if I can work the necessary time for it into my schedule
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Most people carry around a set of already made, contingent decisions, just waiting for the right conditions or opportunity to arise.
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Time, energy, price, availability, opportunity, encouragement--all these factors can figure into the necessary conditions that need to be met before we can act on our decision
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Most decisions are made by moving back and forth between the choice of criteria The characteristics we want our choice to meet The identification of alternatives The possibilities we can choose among
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Decision Making is a Recursive Process The alternatives available influence the criteria we apply to them, Similarly the criteria we establish influence the alternatives we will consider
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decision whether ... select criteria ... identify alternatives ... make choice
Suppose someone wants to decide, Should I get married? Notice that this is a decision whether. A linear approach to decision making would be to decide this question by weighing the reasons pro and con (what are the benefits and drawbacks of getting married) and then to move to the next part of the process,
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Decision whether ... select criteria ... identify alternatives ... make choice
The identification of criteria (supportive, easy going, competent, affectionate, etc.). Next, we would identify alternatives likely to have these criteria (Kathy, Jennifer, Michelle, Julie, etc.).
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Decision whether ... select criteria ... identify alternatives ... make choice
Finally we would evaluate each alternative according to the criteria and choose the one that best meets the criteria
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Contingent Decision
"I'll get married if I can find the right person." It will thus be influenced by the identification of alternatives, which we usually think of as a later step in the process.
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Contingent Decision
Similarly, suppose we have arrived at the "identify alternatives" stage of the process when we discover that Jennifer (one of the girls identified as an alternative) has a wonderful personality characteristic that we had not even thought of before,
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Contingent Decision
but that we now really want to have in a wife. We immediately add that characteristic to our criteria. Thus, the decision making process continues to move back and forth, around and around as it progresses in what will eventually be a linear direction but which in its actual workings is highly recursive.
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The Components of Decision Making The Decision Environment: An ideal decision environment would include all possible information, all of it accurate, and every possible alternative
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Many decision makers have a tendency to seek more information than required to make a good decision. When too much information is sought and obtained, one or more of several problems can arise. (1) A delay in the decision occurs because of the time required to obtain and process the extra information. This delay could impair the effectiveness of the decision or solution. (2) Information overload will occur. 39
In this state, so much information is available that decision-making ability actually declines because the information in its entirety can no longer be managed or assessed appropriately.
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A major problem caused by information overload is forgetfulness. When too much information is taken into memory, especially in a short period of time, some of the information (often that received early on) will be pushed out
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At the end of the day, he was not only unable to remember the first half of the seminar but he had also forgotten where he parked his car that morning
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(4) Mental fatigue occurs, which results in slower work or poor quality work. (5) Decision fatigue occurs, where the decision maker tires of making decisions.
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Often the result is fast, careless decisions or even decision paralysis--no decisions are made at all
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Decision Streams
A common misconception about decision making is that decisions are made in isolation from each other: you gather information, explore alternatives, and make a choice, without regard to anything that has gone before.
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Decision Streams
The fact is, decisions are made in a context of other decisions. The typical metaphor used to explain this is that of a stream.
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Decision Streams
There is a stream of decisions surrounding a given decision, Many decisions made earlier have led up to this decision and made it both possible and limited. Many other decisions will follow from it
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Decision Streams
We might say, then, (1) That every decision follows from previous decisions, (2) Enables many future decisions, and (3) Prevents other future decisions.
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Decision Streams
People who have trouble making decisions are sometimes trapped by the constraining nature of decision making
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Decision Streams
It is important to realize that every decision you make affects the decision stream And the collections of alternatives available to you both immediately and in the future. Decisions have far reaching consequences
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First assignment
Identify a company And at least 5 problems Prioritize these problems Give variable of data Nature of variables Group your problems in specialties like marketing, HR, finance and else Next courses of action 52
Next assigmnment
Give priority Explain relationship of variables Bring data means that you have to fill in one value for each variable And a possible solution
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This is knowledge about the decision, the effects of its alternatives, the probability of each alternative, and so forth. While substantial information is desirable, the statement that "the more information, the better" is not true.
These are the possibilities one has to choose from. Alternatives can be identified (that is, searched for and located) or even developed (created where they did not previously exist).
Merely searching for pre existing alternatives will result in less effective decision making .
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What is it you want to accomplish? Many decision makers collect a bunch of alternatives (say cars to buy or people to marry) and then ask, "Which should I choose?" without thinking first of what their goals are, what overall objective they want to achieve.
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Next time you find yourself asking, "What should I do? What should I choose?" ask yourself first, "What
Value refers to how desirable a particular outcome is, the value of the alternative, whether in dollars, satisfaction, or other benefit
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These reflect the philosophy and moral hierarchy of the decision maker. We could say that they are the decision maker's "values, We would say that personal values dictate preferences
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Some people prefer excitement to calmness, certainty to risk, efficiency to Aesthetics, quality to quantity. When one person chooses to ride the wildest roller coaster in the park and another chooses a mild ride, Both may be making good decisions, if
based on their
individual preferences.
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The quality of a decision is not related to its outcome: a good decision can have either a good or a bad outcome. A bad decision (one not based on adequate information or not reflecting the decision maker's preferences) can still have a good outcome.
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For example, if you do extensive analysis and carefully decide on a certain investment based on what you know about its risks and your preferences, Then your decision is a good one, even though you may lose money on the investment.
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Similarly, if you throw a dart at a listing of stocks and buy the one the dart hits, your decision is a bad one, even though the stock may go up in value
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Good decisions that result in bad outcomes should thus not be a cause for guilt or recrimination
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A. The decision must meet the stated objectives most thoroughly and completely. How well does the
alternative chosen meet the goals identified?
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consequences to the alternative that make that choice less desirable? We sometimes overlook this consideration in our search for thrills.
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C. The decision must take into account valuable by products or indirect advantages. A new employee
candidate may also have extra abilities not directly related to the job but valuable to the company nonetheless. These should be taken into account.
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The need to feel useful and a contributor is one of the most basic of human needs. Thus, while the new solution may be less efficient in theoretical terms, it will be much more acceptable.
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Two major approaches to decision making in an organization: The authoritarian method in which an executive figure makes a decision for the group and The group method in which the group decides what to do
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A manager makes decision based on the knowledge he can gather. He then must explain the decision to the group and gain their acceptance of it. Time breakdown for a typical operating decision is something like this:
The group shares ideas and analyses, and agrees upon a decision to implement. Studies show that the group often has values, feelings, and reactions quite
No one knows the group and its tastes and preferences as well as the group itself. And, interestingly, the time breakdown is something like this:
Group makes decision, 30 min.; Explain decision, 0 min.; gain acceptance, 0 min .
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Work harder and more energetically to implement their own idea than they would to implement an idea imposed on
them by others
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B. Time available for solving it C. Cost involved with alternative solutions D. Availability of resources, knowledge E. Personal psychology, values
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best alternative The word satisficing was coined by combining satisfactory and sufficient. For many small decisions, such as where to park, what to drink, which pen to use, which tie to wear, and so on, the satisficing strategy is perfect.
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This strategy focuses on evaluating and then choosing the alternatives based on their maximum possible payoff.
This is sometimes described as the strategy of the optimist, because favorable outcomes and high potentials are the areas of concern.
risk taking
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minimums.
the
Strategy, that of the pessimist, the worst possible outcome of each decision is considered and the
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exploit the uncertainty many people feel when they are not
Quiz shows
quite sure whether to go with a maximax strategy or a maximin one: "Okay, Mrs. Freen, you can now choose to take what
you've already won and go home, or risk losing it all and find out what's
behind door number three."
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Identify the decision to be made together with the goals it should achieve Get the facts Develop alternatives Rate each alternative Rate the risk of each alternative Make the decision
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Determine the scope and limitations of the decision. Is the new job to be permanent or temporary or is that not yet known (thus requiring another decision later)? Is the new package for the product to be put into all markets or just into a test market? How might the scope of the decision be changed--that is, what are its possible parameters?
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When thinking about the decision, be sure to include a clarification of goals: We must decide whom to hire for our new secretary, one who will be able to create an
where we can relax and get some rest from the fast pace of society.
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decision within the limits of time imposed on you and your ability to process them,
Remember that virtually every decision must be made in partial ignorance. Lack of complete information must not be allowed to paralyze your decision.
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A decision based on partial knowledge is usually better than not making the decision when a decision is really needed.
The proverb that "any
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Input from these people not only helps supply you with information and help in making the decision but it begins to
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Make a
doing nothing.
Not choosing one of the candidates or one of the building sites is in itself a decision.
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is useful or at least better than the alternatives, so it should always be consciously included in the decision making process.
The decision to do nothing
identifying available
The positive of each (money saved, time saved, added creativity or happiness to company or employees, etc.).
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The alternative that you might like best or that would in the best of all possible worlds be an obvious choice, It however, not be functional in the real world because of too much cost, time, or lack of acceptance by others
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Don't forget to include indirect factors in the rating. If you are deciding between machines X, Y, and Z and you already have an employee who knows how to operate machine Z, that fact should be
considered.
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If you are choosing an investigative team to send to Japan to look at plant sites and you have very qualified candidates A, B, and C, The fact that B is a very fast typist, a superior photographer or has some other side benefit in addition to being a qualified team member, should be considered. 95
In fact, what you put on your hobbies and interests line on your resume is quite important when you apply for a job Employers are interested in getting people with a good collection of additional abilities
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In problem solving, you hunt around for a solution that best solves a particular problem, and by such a hunt you are pretty sure that the solution will work. In decision making, however, there is always some degree of uncertainty
in any choice.
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Will Bill really work out as the new supervisor? If we decide to expand into Canada, will our sales and profits
really increase?
If you decide to marry person X or buy car Y or go to school Z, will that be the
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Risks can be rated as: Percentages, ratios, rankings, grades or in any other form that allows them to be compared.
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If you are making an individual decision, apply your preferences (which may take into account the preferences of others). Choose the path to follow, whether it includes one of the alternatives, more than one of them (a multiple decision) or the decision to choose none. Don't forget to implement the decision and then evaluate the implementation, just as you would in a problem solving experience. 100
One important item often overlooked in implementation: When explaining the decision to those involved in carrying it out or those who will be affected by it, don't just list the projected benefits. Frankly explain the risks and the drawbacks involved and tell why you believe the proposed benefits outweigh the negatives. 101
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