CSC 350 Learning Management Systems COMSATS Institute of

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CSC 350: Learning Management Systems COMSATS Institute of Information Technology (Virtual Campus)

CSC 350: Learning Management Systems COMSATS Institute of Information Technology (Virtual Campus)

Lecture # 6 Making Decisions 2

Lecture # 6 Making Decisions 2

Review of the Previous Lecture 1. 2. 3. 4. General characteristics of planning Different

Review of the Previous Lecture 1. 2. 3. 4. General characteristics of planning Different types of plans Major steps of the planning process Relationship between planning and organizational objectives 5. Management by objectives (MBO) program 6. Types of planning tools 3

Topics of Discussion 1. Understanding the term decision 2. Understanding rational decision-making process 3.

Topics of Discussion 1. Understanding the term decision 2. Understanding rational decision-making process 3. Role of intuition in decision making 4. Various tools used to make decisions 5. Understanding how groups make decisions 4

FUNDAMENTALS OF DECISIONS • Definition of a Decision – Choice between two or more

FUNDAMENTALS OF DECISIONS • Definition of a Decision – Choice between two or more available alternatives • Definition of Decision Making – Process of choosing the best alternative for reaching objectives 5

Types of Decisions 6

Types of Decisions 6

Types of Decisions • Programmed Decision – Routine and repetitive – Structured, planned –

Types of Decisions • Programmed Decision – Routine and repetitive – Structured, planned – Made according to established guidelines • Nonprogrammed Decision – One-time, nonroutine, unique – Less structured than programmed decisions 7

Types of Decisions 8

Types of Decisions 8

Responsibility for Making Organizational Decisions 9

Responsibility for Making Organizational Decisions 9

Elements of the Decision Situation • Decision Makers – Individuals or Groups who actually

Elements of the Decision Situation • Decision Makers – Individuals or Groups who actually make the choice among the alternatives – Orientations • • Receptive Exploitative Hoarding Marketing-Oriented 10

Elements of the Decision Situation • Goals to be Served – Should be organization’s

Elements of the Decision Situation • Goals to be Served – Should be organization’s objectives • Relevant Alternatives – Feasible for solving existing problem & implementation • Ordering of Alternatives – Ranking most desirable to least desirable • Choice of Alternatives – Actual choice among available alternatives 11

RATIONAL DECISION-MAKING PROCESS 12

RATIONAL DECISION-MAKING PROCESS 12

RATIONAL DECISION-MAKING PROCESS • Step 1 – Identifying an Existing Problem – Only after

RATIONAL DECISION-MAKING PROCESS • Step 1 – Identifying an Existing Problem – Only after identifying the barriers is management able to take the steps necessary to eliminate them – Barnard’s sources of input for identifying problems: • Orders issued by supervisors • Situations relayed by employees • Normal activity of managers themselves 13

RATIONAL DECISION-MAKING PROCESS • Step 2 – Listing Alternative Solutions 14

RATIONAL DECISION-MAKING PROCESS • Step 2 – Listing Alternative Solutions 14

RATIONAL DECISION-MAKING PROCESS • Step 3 – Selecting the Most Beneficial Alternative – List

RATIONAL DECISION-MAKING PROCESS • Step 3 – Selecting the Most Beneficial Alternative – List as accurately as possible potential effects and impact of each alternative – Assign probability factor to each potential effect – Compare each alternative's expected effects and respective probabilities of those effects 15

RATIONAL DECISION-MAKING PROCESS • Step 4 – Implementing the Chosen Alternative – Put the

RATIONAL DECISION-MAKING PROCESS • Step 4 – Implementing the Chosen Alternative – Put the chosen alternative into action 16

RATIONAL DECISION-MAKING PROCESS • Step 5 – Gathering Problem-Related Feedback – Gather the feedback

RATIONAL DECISION-MAKING PROCESS • Step 5 – Gathering Problem-Related Feedback – Gather the feedback to determine the effect of the implemented alternative on the problem – If problem is not solved, managers need to seek out and implement another alternative 17

Bounded Rationality • Herbert Simon Theory: – Managers are bounded in terms of time,

Bounded Rationality • Herbert Simon Theory: – Managers are bounded in terms of time, computational power, and knowledge when making decisions – Managers often “satisfice, ” meaning they make a decision that is just “good enough” 18

DECISION MAKING & INTUITION • Intuition: – An individual’s inborn ability to synthesize information

DECISION MAKING & INTUITION • Intuition: – An individual’s inborn ability to synthesize information quickly and effectively • Decision-Making Heuristics and Biases: – Heuristics – Simple rules of thumb to make decisions – Biases – Making decisions based on rules of thumb and in so doing introducing flaws/decision-making biases 19

Decision-Making Biases 20

Decision-Making Biases 20

DECISION-MAKING TOOLS • Probability Theory EV = I x P – Expected Value of

DECISION-MAKING TOOLS • Probability Theory EV = I x P – Expected Value of an alternative is the Income the alternative will produce, multiplied by its Probability of producing that income • Decision Trees – Graphic decision-making tool used to evaluate decisions involving a series of steps 21

Decision Trees 22

Decision Trees 22

GROUP DECISION MAKING • Advantages: – More and better alternatives – Draw on collective

GROUP DECISION MAKING • Advantages: – More and better alternatives – Draw on collective experiences and knowledge – Individuals tend to buy in to decisions when they have had input to the decision – Group members tend to identify decisions as their own and have a feeling of ownership 23

GROUP DECISION MAKING • Disadvantages: – Takes longer for groups to make decisions –

GROUP DECISION MAKING • Disadvantages: – Takes longer for groups to make decisions – Costs increase because of the additional time of people involved in the group – Lower-quality decisions if group members’ focus is on relationships and friendships among themselves – Groupthink – negative impact of group decision making 24

Group Decision-Making Processes Brainstorming: 25

Group Decision-Making Processes Brainstorming: 25

Group Decision-Making Processes • Nominal Group Technique: – Each group member writes down ideas

Group Decision-Making Processes • Nominal Group Technique: – Each group member writes down ideas on decision or problem being discussed – Each member presents his/her ideas orally – Entire group discusses ideas simultaneously – Secret ballot vote is taken – Idea with most votes is adopted and implemented 26

Group Decision-Making Processes • Delphi Technique: – Problem is identified – Group members offer

Group Decision-Making Processes • Delphi Technique: – Problem is identified – Group members offer solutions through anonymous questionnaire responses – Responses are compiled and sent out to all group members – Individual group members select solution – Process repeats until consensus solution is reached 27

Evaluation of Group Decision-Making Processes • Advantages: – Brainstorming • Many useful ideas are

Evaluation of Group Decision-Making Processes • Advantages: – Brainstorming • Many useful ideas are possible – Nominal Group Technique • Input can be offered without fear of retribution – Delphi Technique • Ideas gathered from individuals geographically separated from one another 28

Evaluation of Group Decision-Making Processes • Disadvantages: – Brainstorming • Time wasted on impractical

Evaluation of Group Decision-Making Processes • Disadvantages: – Brainstorming • Time wasted on impractical ideas – Nominal Group Technique • Cannot discern why individuals voted the way they did – Delphi Technique • Unable to ask questions of one another 29

Conclusions Ø Think of the sum-up and listen to me carefully. 30

Conclusions Ø Think of the sum-up and listen to me carefully. 30

Thank You 31

Thank You 31