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PROBLEM SOLVING AND DECISION MAKING

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PROBLEM SOLVING AND DECISION MAKING Powered By Docstoc
					Advesh Consultancy Services   1
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ICEBREAKER
 What is your leisure activity?
 Who , living or dead , do you most admire , and why?
 What is your greatest achievement?
 What are your positive qualities?
 If you had unlimited resources , what would you buy
  which would give you most pleasure?




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PROGRAMME OBJECTIVE
   To clarify and define the problem.
   To understand the usefulness of collaborative problem
    solving and decision making.
   To examine different decision
    making models.
   To utilize creativity in the problem solving/decision
    making process.
   To plan, practice, and problem solve with making
    decisions through case studies, role playing and group
    discussions.


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  Please write a One Sentence
                 Definition of

PROBLEM SOLVING
                      and
DECISION MAKING.




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DEFINITION –PROBLEM SOLVING
 A systematic approach to defining the problem and
 creating a vast number of possible solutions without
                judging these solutions.




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PROBLEM SOLVING
Problem solving is a cognitive processing directed at
    achieving a goal where no solution method is
           obvious to the problem solver.




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PROBLEM SOLVING
                           Problem Solving is …..
                            “….. the art of finding ways to get
                             from where you are now to where
                             you want to be (assuming you do
                             not already know how).

                            The ‘problem’, therefore, is the
                             gap between the present
                             situation and a more desirable
                             one.”
                                                 (Nolan 1989)
Is this Problem Solving?                   ?
                                   A                B
TRIPLE CONSTRAINT
PRINCIPLE
 Something is a problem if:
      it makes you late
      it increases costs
      it degrades performance.

              time                    cost



                     performance

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If none of these occur, it’s
      NOT a problem,
     just a hindrance.




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DEFINITION – DECISION MAKING
The act of narrowing down the possibilities, choosing
    a course of action, and determining the action’s
                 potential consequences.




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“It's not a
problem that we
have a problem.
It's a problem if
we don't deal
with the
problem.”
--Mary Kay
Utech

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 Problem solving is a skill, a tool and a process.


 It is a skill because once you have learnt it you can use
  it repeatedly, like the ability to ride a bicycle, add
  numbers or speak a language.
 It is a tool because it can help you solve an immediate
  problem or to achieve a goal.
 It is also a process because it involves taking a number
  of steps.

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PROBLEM SOLVING


                              Skill

                              Process

                              Tools




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WHAT SKILLS DO YOU USE IN
PROBLEM SOLVING?




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SKILL SETS IN PROBLEM SOLVING?

   • Making judgements

             • Analytical skills

                           • Decision making

   • Collecting information

            • Planning

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PROBLEM SOLVING PEOPLE?
   J   Experts.
   J   People who know the area of
       knowledge thoroughly. Solving
       problems becomes more natural.
   J   People who can think of
       alternatives even when no clear
       solutions seems apparent.




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EXPERT PROBLEM SOLVERS
 Have a better memory for relevant
 details in the problem.
 Classify problems according to their
 underlying principles.
 Use well-established procedures.
 Work forwards towards a goal
 (rather than backwards).




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   PROBLEM SOLVING REQUIREMENTS

                          Domain-dependent
 Content                                            Self-regulation
                          problem-solving
 Understanding
                          strategies



           Metacognition                           Motivation

Planning             Self-monitoring            Effort   Self-efficacy



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UNDERSTANDING THE PROCESS
‘HOW TO SOLVE IT?’

Engage : I want to and I can


       – Read the problem (and all
         information)
       – Listen
       – Learn about the situation that
         poses the problem
       – Motivation
       – Overcome panic

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UNDERSTANDING THE PROCESS
‘HOW TO SOLVE IT?

Understand the problem: define


 Put in the time to define the problem:
     – Discuss.
     – Ask questions.
     – Visualize.
     – Restate the problem in your own words.
     – Explain the problem to someone else.

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UNDERSTANDING THE PROCESS
‘HOW TO SOLVE IT?’

 Plan a procedure to solve
 the problem


       –   Prior experience.
       –   Data available.
       –   Content knowledge.
       –   Patterns.
       –   Estimation.
       –   Alternate solutions.
       –   Feasibility.
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UNDERSTANDING THE PROCESS
‘HOW TO SOLVE IT’

 Collect data & the knowledge
 required


       – A solution may be required
         based upon imperfect
         knowledge.




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UNDERSTANDING THE PROCESS:
‘HOW TO SOLVE IT?’

 Select the preferred solution: test, use and evaluate




        – Check each step
        – Can you determine clearly
          that each step is correct?
        – Can you prove that each step
          is correct?


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UNDERSTANDING THE PROCESS:
‘HOW TO SOLVE IT?’

 Reflect on the process


        –   Are you certain you solved the problem?
        –   Can you check the result and your argument?
        –   Can use alternate solutions?
        –   What did you actually do?
        –   Can you explain this to another?
        –   Can you use the result &/or method for
            another problem?

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                         DEFINE
PROBLEM SOLVING          INFORMATION/MEASURES
                         ANALYSE
                         GENERATE ALTERNATIVES
                         SELECT
                          ALTERNATIVES/DECIDE
                         IMPLEMENT




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STEP 1



                                       DEFINE




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DEFINING THE PROBELM


     Collect all the relevant information.
     Clarify background issues.
     What are the constraints?
     Are there sub-problems that can be
     dealt with separately?
     Can the problem now be
     formulated?




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PROBLEM/OPPORTUNITY
STATEMENT WORKSHEET
What is the area of concern?



What impact this problem already had? What evidence do you have that it is
really a problem worthy of attention?


What will happen if the business doesn’t address this problem?



Summarize the above information in a concise statement



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                              DEFINE PROBLEM




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STEP 2



                                       INFORMATION
                                         /MEASURES




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ACTIVITY
 Imagine that you were going to buy a house in a new
 area. List ten things that you would want to know
 about a house before you gave it serious consideration
 . Tick any of these things that you could find out from
 the agent’s information. How could you find out the
 other things?




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 Do we have all of the information and data we need?



 Collect data and digest the information.




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TYPES OF INFORMATION
 QUANTITATIVE


 QUALITATIVE




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QUANTITATIVE
 How much?
 How many?
 How frequently?
 How likely?
 How quickly?




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QUALITATIVE
 What?


 Why?


 How?




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DATA SOURCES
 Primary

 Data gathered by you directly for your purpose

 Secondary
 Gathered by others for their purpose




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PRIMARY DATA
 Give examples




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SECONDARY DATA

 Collected by other Depts

 Reference Books

 Databases

 Journals

 Published Reports

 Govt Statistics

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                              INFORMATION




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ACTIVITY 4A
 In a production line, the output of a particular
  machine has come down drastically. There was a hue
  and cry that the operator is intentionally slowing down
  production.
 What all information need to be collected before
  commencing any action?




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ACTIVITY 4B
 First batch of Vacuum Circuit Breakers supplied by a
 Company in India in the year 1981 failed miserably

 The Technical collaborators, the Manufacturers and
  the Customers were trying to resolve the issue
 What all information need to be collected?




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ACTIVITY 4C
 On a piece of paper, draw a map of the people you
 know. Put yourself in the middle and connect the
 people you know very well in the first circle. Add
 people you know through these network in the next
 layer and connect them with spokes. Do three levels.




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STEP 3



                                       ANALYSE




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ANALYZE THE PROBLEM
 Do not make the mistake of assuming you know what is
                     causing the problem
                     without an effort
             to fully investigate the problem
                    you have defined.
             Try to view the problem from a
  variety of viewpoints, not just how it affects you.
                Think about how the issue
                      affects others.
            It is essential to spend some time
               researching the problem.

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Questions to Ask When Analyzing
the Problem:
     What is the history of the problem? How long has it existed?
     How serious is the problem?
     What are the causes of the problem?
     What are the effects of the problem?
     What are the symptoms of the problem?
     What methods does the group already have for dealing with the
      problem?
     What are the limitations of those methods?
     How much freedom does the group have in gathering information
      and attempting to solve the problem?
     What obstacles keep the group from achieving the goal?
     Can the problem be divided into sub problems for definition and
      analysis

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MAKING SENSE OF NUMBERS
 Averages(Mean,Median,Mode)
 Grouping of data
 Distribution
 Trends
 Correlation
 Pie charts




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ANALYSE
   Data Analysis

    Exploring
    Generating Theories about causes
    Verifying/eliminating causes

 Process Analysis

    Exploring
    Generating Theories about causes
    Verifying/eliminating causes


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                     DATA ANALYSIS               PROCESS ANALYSIS
    EXPLORING        Examine data to discover    Understand what actually
`                    clues
                     TOOLS
                                                 happens in the process
                                                 TOOLS
                     Pareto Charts, Run          Basic flowchart,Depolyment
                     Charts, Histograms          flow charts

    GENERATING       Generate ideas about        Use the process maps to
    HYPOTHESIS       the causes                  identify areas
                     TOOLS                       TOOLS
                     Brainstorming,Cause and     Brainstorming, Value
                     Effect Diagram              Analysis

    VERIFYING        Gather additional data to   Quantify delays/lost time in
    CAUSES           verify hypothesis           various process steps
                     TOOLS                       Experiment with changes
                     Scatter Diagram,            TOOLS
                     Stratification              Process maps




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When should a fishbone diagram
be used?
 Need to study a problem/issue to determine the root
  cause?
 Want to study all the possible reasons why a process is
  beginning to have difficulties, problems, or
  breakdowns?
 Need to identify areas for data collection?
 Want to study why a process is not performing
  properly or producing the desired results



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How is a fishbone diagram
constructed?

 Draw the fishbone diagram....
 List the problem/issue to be studied in the "head of the fish".
 Label each ""bone" of the "fish". The major categories typically
  utilized are:
 The 4 M’s:
    Methods, Machines, Materials, Manpower
 The 4 P’s:
    Place, Procedure, People, Policies
 The 4 S’s:
    Surroundings, Suppliers, Systems, Skills
 Note: You may use one of the four categories suggested, combine
  them in any fashion or make up your own. The categories are to
  help you organize your ideas.

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How To Complete The 5 Whys
 1. Write down the specific problem. Writing the issue helps
 you formalize the problem and describe it completely. It
 also helps a team focus on the same problem.
 2. Ask Why the problem happens and write the answer
 down below the problem.
 3. If the answer you just provided doesn't identify the root
 cause of the problem that you wrote down in step 1, ask
 Why again and write that answer down.
 4. Loop back to step 3 until the team is in agreement that
 the problem's root cause is identified. Again, this may take
 fewer or more times than five Whys.

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5 Whys Examples
Problem Statement: Customers are unhappy because they are being shipped
products that don't meet their specifications.

1. Why are customers being shipped bad products?
 - Because manufacturing built the products to a specification that is different
from what the customer and the sales person agreed to.
2. Why did manufacturing build the products to a different specification than
that of sales?
 - Because the sales person expedites work on the shop floor by calling the
head of manufacturing directly to begin work. An error happened when the
specifications were being communicated or written down.
3. Why does the sales person call the head of manufacturing directly to start
work instead of following the procedure established in the company?
 - Because the "start work" form requires the sales director's approval before
work can begin and slows the manufacturing process (or stops it when the
director is out of the office).
4. Why does the form contain an approval for the sales director?
 - Because the sales director needs to be continually updated on sales for
discussions with the CEO.


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Verifying Causes
 Correlation
 Stratification
 Pilot Testing




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         Types of Flow Charts
   Linear Flowchart

   Deployment Flowchart

   Opportunity Flowchart




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             Linear Flowchart
  Start


Collect inputs

Draft Circular


 Type rough
                                 Retype
 Submit to A

                   No
       OK?
 Yes
                            Sign(A)            Make Copies   Distribute
 Type smooth

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   Deployment Flowchart
     A                                  B             C

Collect Input                  Type rough

                               Submit to C
   Draft
                                              NO
                                  Retype            Accept?
                                              Yes
                              Type smooth

                              Make Copies           Sign

                                 Distribute


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PROCESS                        Custome r Syste m

                                Customer pulls time-
                                                                            Cashie r Syste m

                                                                            Recieve ticket from


MAP
                                  stamped ticket                                 customer



                                                                             Stamp exit time on
                                 Customer parks car
                                                                                   ticket



                                Customer returns to                        Read indicator stamp
                                    car to leave                                  for fee



                                 Customer drives to                        Observe exact time for
                                   cashier at exit                            borderline rate



                                                                           Place ticket in storage
                                  Cashier System
                                                                                     bin



                                                                              Enter charge on
                                   Customer exits
                                                                                  register



                                                                            Accept payment and
                                                                              return change



                                                                             Raise gate arm for
                                                                              customer to exit


                                                           (End of Day )



                                                                           Accounting department
                                   Complete daily report
                                                                                gets report




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                          Value and Cycle Time Worksheet
Process Step    1     2    3      4     5     6    7    8    9   10 Total   Percentage

VALUE

Value added

Value enabled
Non value
added

TIME
Work time
Wait time
Total Time
                                            Total Value added
                                            time
                                            Percentage value added
                                            time

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Correlation Analysis
  Y                         Y                         Y




       Positive      X             Negative       X           No        X
      Correlation                 Correlation             Correlation




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Past Experience: Future Problems

     Have we ever encountered a
     problem like this before?
     Do we have all of the information and
     data we need?
     Is there any pattern to what we know?
     Can we construct a table or a picture?
     What might the solution be?
     What would assist us in getting to a
     solution?

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STEP 4



                                       GENERATE
                                        ALTERNATIVES




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Tips for Generating Alternatives
 Brainstorm
 Involve outsiders
 External Benchmarking
 Encourage members to step out of their traditional
  roles
 Ask probing questions
 Be willing to consider views differing from yours
 Revisit abandoned alternatives


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 Vertical Thinking



 Lateral Thinking




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WHAT IS VERTICLE THINKING?


     Basing our thought process on
     prior knowledge and experience.
     Using logic that relates only to our
     immediate experience.
     Constraining our creativity and
     ability to solve problems.



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WHAT IS LATERAL THINKING?


     Changing orientation and perception.
     Generating new ideas and visions.
     Exploring multiple possibilities and
       approaches.




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 Vertical Thinking is selective
 One may reach a conclusion by a valid series of steps
 Lateral Thinking is generative
 Vertical Thinking develops the ideas generated by
  Lateral Thinking




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 Time 15 minutes
 EXERCISE



 How would you divide a square
 into four equal pieces
 Give at least 6 alternatives

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 Make a
 square out
 of this

 10
 minutes
 Exercise




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         The Dog, the Goose and the Bag of Corn



The farmer takes the goose across and leaves
the dog with the corn. The farmer then goes
back across the stream and gets the corn. He
takes the goose back across with him because he
cannot leave it with the corn. He then gets the
dog and takes it across leaving it on the other
side with the corn. He then goes back across
once again, gets the goose and returns to the
other side of the stream with all safely across
and not eaten!

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Exercise
5 minutes
 You have a pile of 24 coins. 23 of them have the same
 weight. But one of them is heavier than the rest. You
 are given a scale but no weights. Your task is t identify
 the heavy coin in no more than three uses of the scale.




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Exercise
3 minutes
 A conference room contains three separate wall-
 mounted spotlights - right, left and front of stage.
 Each is controlled by its own on-off switch. These
 three switches are numbered 1, 2 and 3, but they are in
 a back-room which has no sight of the the spotlights or
 the conference room (and there are no reflections or
 shadows or mirrors, and you are alone). How do you
 identify each switch correctly - right, left, front - if you
 can only enter the back-room once


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Exercise
5 minutes
 Four men, one of whom was known to have committed
 murder, made the following statements to the police.

 Arun: Dave did it
 Dave: Tony did it
 George: I did not do it
 Tony: Dave lied when he said I did it

 If only one of these four statements is true, who was
 the guilty man?

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Exercise
5 minutes
 You are the treasurer in charge of the Royal mint,
  which produces a single type coin, the grote. There are
  ten machines producing grotes, one machine is
  producing grotes weighing one gram less than they
  should, each coin should weigh 10 grams. You have a
  set of broken scales which can be fixed to provide one
  single weigh of a single amount (no weight changes are
  allowed). Using the scales once you must identify the
  single faulty machine.
 How do you do it?

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STEP 5


                    SELECT
                     ALTERNATIVES/DECISION
                     MAKING




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Types
 Strategic Decision
 Business Decision
 Operational Decision




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ACTIVITY 5
 List three personal decisions you’ve made in the last
  one or two years.
 List three decisions you need to take in the next one
  year in your personal life.
 Classify them into Strategic , Business and
  Operational




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How are decisions made
in organizations?
 Decision making.

   The process of choosing a course of action for dealing

    with a problem or opportunity.




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DECISION MAKING
                         ENVIRONMENT
                         DECISION MAKING MODELS
                         DECISION MAKING REALITIES
                         AUTHORITIES IN DECISION
                          MAKING
                         INFLUENCING FACTORS IN
                          DECISION MAKING

                         7 Cs


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How are decisions made
in organizations?
 Decision environments include:

   Certain environments.

   Risk environments.

   Uncertain environments.




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How are decisions made
in organizations?
 Certain environments.
   Exist when information is sufficient to predict the
    results of each alternative in advance of
    implementation.
   Certainty is the ideal problem solving and decision
    making environment.




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How are decisions made
in organizations?
 Risk environments.
   Exist when decision makers lack complete certainty
    regarding the outcomes of various courses of action, but
    they can assign probabilities of occurrence.
   Probabilities can be assigned through objective
    statistical procedures or personal intuition.




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How are decisions made
in organizations?
 Uncertain environments.
    Exist when managers have so little information that they
     cannot even assign probabilities to various alternatives
     and possible outcomes.
    Uncertainty forces decision makers to rely on individual
     and group creativity to succeed in problem solving.




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How are decisions made
in organizations?
 Uncertain environments — cont.
    Also characterized by rapidly changing:
      External conditions.
      Information technology requirements.
      Personnel influencing problem and choice definitions.
   These rapid changes are also called organized anarchy.




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 Classical decision theory




 Behavioural decision theory




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What are the useful
decision making models?
 Classical decision theory.
    Views the decision maker as acting in a world of
     complete certainty.
 Behavioral decision theory.
    Accepts a world with bounded rationality and views the
     decision maker as acting only in terms of what he/she
     perceives about a given situation.




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What are the useful
decision making models?
 Behavioral decision theory.
    Recognizes that human beings operate with:
     Cognitive limitations.
     Bounded rationality.
   The behavioral decision maker:
     Faces a problem that is not clearly defined.
     Has limited knowledge of possible action alternatives and
      their consequences.
     Chooses a satisfactory alternative.




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What are the useful
decision making models?
 Classical decision theory.
    The classical decision maker:
      Faces a clearly defined problem.
      Knows all possible action alternatives and their consequences.
      Chooses the optimum alternative.
    Is often used as a model of how managers should make
    decisions.




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What are the useful
decision making models?
 Classical decision theory:
    May not fit well in a chaotic world.
    Can be used toward the bottom of many firms, even
     most high-tech firms.
 Behavioral decision theory:
    Fits with a chaotic world of uncertain conditions and
     limited information.
    Encourages satisficing decision making.




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Decision making realities

   Most decision making in organizations goes beyond
    step-by-step rational choice.
   Most decision making in organizations falls somewhere
    between the highly rational and the highly chaotic.
   Decisions must be made under risk and uncertainty.




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Decision making realities

   Decisions must be made to solve non-routine problems.
   Decisions must be made under time pressures and
    information limitations.
   Decisions should be ethical.




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How do intuition, judgment, and creativity
affect decision making?
 Intuition.

   The ability to know or recognize quickly and readily the
    possibilities of a given situation.
   A key element of decision making under risk and
    uncertainty.




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How do intuition, judgment, and creativity
affect decision making?
 Judgment
   Simplifying strategies or “rules of thumb” used to make
   decisions.
   Makes it easier to to deal with uncertainty and limited
   information.
   Can lead to systematic errors that affect the quality
   and/or ethics of decisions.




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ACTIVITY 6
 Imagine that you are driving across country to an
 important meeting that will start in an hour’s time,
 along a route you have travelled several times before.
 You are thirty miles from your destination and the
 road is clear ahead of you. You see a signpost pointing
 up to a narrow side road that you have not noticed on
 earlier journeys. It indicates 20 miles to your
 destination.



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ACTIVITY 6
1. Would you turn into the side road without further
   thoughts?
2. Ignore the side road and continue on your existing
   route?
3. Stop the vehicle, consult a map and then decide
   whether to drive up the side road? Why?




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AUTHORITY IN DECISION MAKING
 Deciding who should participate.
   Authority decisions.
     Made by the manager or team leader without involving other
      people and by using information that he/she possesses.
   Consultative decisions.
     Made by one individual after seeking input from group members.

   Group decisions.
     Made by all members of the group.




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ACTIVITY
 Give three examples of decisions that you would refer
 to a senior manager in your organisation.

 Do these decisions have anything in common?




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 Technology

 Culture

 Ethics




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How do technology, culture, and ethics influence
decision making?

 Increasingly complex problems and opportunities face
  decision makers in organizations due to various
  workplace trends.
 These workplace trends are changing the who, when,
  where, and how of decision making.




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How do technology, culture, and ethics influence
decision making?


 Information technology and decision making.
   Artificial intelligence.
     The study of how computers can be programmed to think like
      human beings.
     Will allow computers to displace many decision makers.

   Expert systems that support decision making by
    following “either-or” rules to make deductions.


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How do technology, culture, and ethics influence
decision making?

 Information technology and decision making — cont.
    Fuzzy logic and neural networks that reason inductively.
    Computer support for decision making.
      The Internet.
      Company intranets.
      Decision support software to facilitate virtual teamwork.




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How do technology, culture, and ethics
influence decision making?
 Cultural factors and decision making.
    Culture is “the way in which a group of people solves
     problems.”
    North American culture stresses decisiveness, speed,
     and the individual selection of alternatives.
    Other cultures place less emphasis on individual choice
     than on developing implementations that work.
    The most important impact of culture on decision
     making concerns which issues are elevated to the status
     of problems solvable with the firm.

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How do technology, culture, and ethics
influence decision making?
 Ethical issues and decision making.
    Ethical dilemma.
     A situation in which a person must decide whether or not to
      do something that, although personally or organizationally
      beneficial, may be considered unethical and perhaps illegal.
   Ethical dilemmas are often associated with:
     Risk and uncertainty.
     Nonroutine problem situations.




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How do technology, culture, and ethics
influence decision making?
 Ethical decision-making checklist.
    Is my action legal?
    Is it right?
    Is it beneficial?
    How would I feel if my family found out about this?
    How would I feel if my decision were printed in the local
     newspaper?




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How do technology, culture, and ethics
influence decision making?
 Suggestions for integrating ethical decision
 making into the firm.
   Develop a code of ethics and follow it.
   Establish procedures for reporting violations.
   Involve employees in identifying ethical issues.
   Monitor ethical performance.
   Reward ethical behavior.
   Publicize ethical efforts.


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How do technology, culture, and ethics
influence decision making?
 Implications of ethics for decision making.
    Morality is involved in:
       Choosing problems.
       Deciding who should be involved in making decisions.
       Estimating the impacts of decision alternatives.
       Selecting an alternative for implementation.
   Moral conduct does not arise from after-the-fact
    embarrassment.




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ACTIVITY 8
 One of the best performing employees under you was
 caught carrying one stapler belonging to the company
 at the gate.




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Six C's of Decision Making

    Construct
    Compile.
    Collect.
    Compare.
    Consider.
    Commit.



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Decision Making (Six C's)

    Construct a clear picture of
      precisely what must be decided.
    Compile a list of requirements
      that must be met.
    Collect information on
      alternatives that meet the
      requirements.


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Decision Making (Six C's)

    Compare alternatives that meet
     the requirements.
    Consider the "what might go
     wrong" factor with each
     alternative.
    Commit to              a decision and stick
     to it.


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Inherent Personal: Traps

   ã Trying too hard to play it safe.
   ã Letting fears and biases tilt your
     thinking and analysis.
   ã Getting lost in the minutia.
   ã Craving unanimous approval.
   ã Trying to make decisions which are
      outside your realm of authority.


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Inherent System: Traps

   ã Willing to begin with too little,
     inaccurate, or wrong information.
   ã Overlooking viable alternatives or
      wasting time considering alternatives
      which have no realistic prospects.
   ã Not following the six C's.
   ã Failing to clearly define the results you
     expect to achieve.
   ã Worst of all, failing to reach a decision.
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FINANCIAL TOOLS FOR
EVALUATING ALTERNATIVES
 ROI
 Payback
 Net present value
 Internal rate of return
 Breakeven analysis
 Sensitivity analysis




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ACTIVITY
 List four or five decisions you made at work/home
 regardless of their size or importance . For each
 decision, consider whether you really needed to make
 it or whether the decision could have been handled in
 some other way. Perhaps it could have been dealt with
 by someone else. Or perhaps there was not a decision
 to make at all.




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STEP 6



                                 IMPLEMENT




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IMPLEMENT
 Communicate
 Train
 Execute
 Review




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 PLAN
 DO
 CHECK
 ACT


 PDCA CYCLE




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