Learning Managerial Decision Making Process Learning Guide

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Rationale

Learning Objects and Outcomes

Teaching and Learning Resources

An Overview ofDecision Making
Quantitative and Qualitative Factors in Decision Making
The Managerial Decision-MakingProcess
Rational Decision Making
Values forDecision Making
Eclectic Approaches to Decision Making
The Psychology of Decision Making
The Sociology of Decision Making
The Social Psychology of Decision Making
Political Aspects of Decision Making
Strategic Decision Perspectives
Strategic Decision Success

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The Cuban Missile Crisis and the Iranian Hostage Crisis
The Chrysler Bailout Decision and the Challenger Disaster
General Motors and Philip Morris
The Walt Disney Company

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The Managerial Decision Making Process

Rationale

Decision Making is the cognitive process leading to the selection of a course of action among alternatives. Every decision making process produces a final choice. It can be an action or an opinion. It begins when we need to do something but we do not know what. Therefore, decision making is a reasoning process which can be rational or irrational, and can be based on explicit assumptions or tacit assumptions.

Common examples include shopping, deciding what to eat, when to sleep, and deciding whom or what to vote for in an election or referendum.

Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore, we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to affect the action.

Structured rational decision making is an important part of all science-based professions, where specialists apply their knowledge in a given area to making informed decisions. For example, medical decision making often involves making a diagnosis and selecting an appropriate treatment. Some research using naturalistic methods shows, however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts use intuitive decision making rather than structured approaches, following a recognition primed decision approach to fit a set of indicators into the expert's experience and immediately arrive at a satisfactory course of action without weighing alternatives.

Due to the large number of considerations involved in many decisions, computer-based decision support systems have been developed to assist decision makers in considering the implications of various courses of thinking. They can help reduce the risk of human errors.

See also

External links
- Sources of Power: How people make decisions, -Klein, G. (1998), MIT Press, Cambridge, MA
- Society for Medical Decision Making
- How to make better decisions From MindTools.com
- Decisions A systematic structure.
- Decision Theater - Helping policy makers in their decision making process through the use of visualization, simulation and collaboration tools.
- A research group on intuition & decision making
- Emotional and Decision Making Lab, Carnegie Mellon, EDM Lab
- General Morphological Analysis: A General Method for Non-Quantified Modelling From the Swedish Morphological Society
- Strategic Decision Support using Computerised Morphological Analysis
- Myers, I. (1962) Introduction to Type: A description of the theory and applications of the Myers-Briggs type indicator, Consulting Psychologists Press, Palo Alto Ca., 1962.
- The de Borda Institute - Emerson, P J. Beyond the Tyranny of the Majority, a comparison of the more common voting procedures used in both decision making and elections.
- Decision Analysis in Health Care - An online course from George Mason University providing free lectures and tools for decision making in health care.
- Medical Decision Making
- Random Choice - An online tool for making random decisions.
- Cognitive Decision-Making - Interdisciplinary book about cognition and decision-making (read introduction online)
- Two-stage decision-making
- Nick Sevdalis
Some important research journals

Learning Objectives and Outcomes

This is a non-taught unit designed for self-directed study by those intending to enhance their professional or managerial competence, knowledge, understanding, and skills in business finance.

Knowledge

After completing the course, student will understand

Skills

After completing the course, student will be able to

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In operations research, specifically in decision analysis, a decision tree is a decision support tool that uses a graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. A decision tree is used to identify the strategy most likely to reach a goal. Another use of trees is as a descriptive means for calculating conditional probabilities.

Larger Map

In data mining and machine learning, a Decision Tree is a predictive model; that is, a mapping from observations about an item to conclusions about its target value. More descriptive names for such tree models are classification tree (discrete outcome) or regression tree (continuous outcome). In these tree structures, leaves represent classifications and branches represent conjunctions of features that lead to those classifications [1]. The machine learning technique for inducing a decision tree from data is called decision tree learning, or (colloquially) decision trees.

Activity

Decision Trees

Image: Furnham Park Rugby Club have some difficult decisions to make both
on and off the pitch. Copyright: Ibon san Martin

Tutorial

Quantitative and Qualitative Factors in Decision Making

Readings

Larger Map

The Critical Path Method, abbreviated CPM, or critical path analysis, is a mathematically based algorithm for scheduling a set of project activities. It is a very important tool for effective project management.

It was developed in the 1950s in a joint venture between DuPont Corporation and Remington Rand Corporation for managing plant maintenance projects. Today, it is commonly used with all forms of projects, including construction, software development, research projects, product development, engineering, and plant maintenance, among others. Any project with interdependent activities can apply this method of scheduling.

The essential technique for using CPM is to construct a model of the project that includes the following:

A list of all activities required to complete the project (also known as Work breakdown structure),
The time (duration) that each activity will take to completion, and
The dependencies between the activities.

Using these values, CPM calculates the starting and ending times for each activity, determines which activities are critical to the completion of a project (called the critical path), and reveals those activities with "float time" (are less critical). In project management, a critical path is the sequence of project network activities with the longest overall duration, determining the shortest time possible to complete the project. Any delay of an activity on the critical path directly impacts the planned project completion date (i.e. there is no float on the critical path). A project can have several, parallel near critical paths. An additional parallel path through the network with the total durations shorter than the critical path is called a sub-critical or non-critical path.

These results allow managers to prioritize activities for the effective management of project completion. Originally, the critical path method considered only logical dependencies between terminal elements. Since then, it has been expanded to allow for the inclusion of resources related to each activity. This capability allows for the exploration of a related concept called the critical chain, which determines the project duration from both time and resource dependencies.

Since project schedules change on a regular basis, CPM allows continuous monitoring of the schedule, allows the project manager to track the critical activities, and ensures that non-critical activities do not interfere with the critical ones. In addition, the method can easily incorporate the concepts of stochastic predictions, using the Program Evaluation and Review Technique (PERT) and event chain methodology.

Currently, there are several software solutions available in industry that use the CPM method of scheduling, see list of project management software. However, the method was developed and used (for decades) without the aid of computers (with pencil and paper).

There are drawbacks of this technique, as estimations are used to calculate times: if one mistake is made, the whole analysis could be flawed, causing major upset in the organisation of a project