Is a decision that is unique and nonrecurring and requires a custom made solution?

A choice among two or more alternatives

1) Organization's Goals

2) Where to locate manufacturing facilities

3) What new markets to move into

Top-level managers make decisions about:

1) Production schedules

2) Product quality problems

3) Pay raises

4) Employee discipline

Middle and lower-level managers made decisions about:

1) Identifying a Problem

2) Identifying Decision Criteria

3) Allocating Weights to the Criteria

4) Developing Alternatives

5) Analyzing Alternatives

6) Selecting an Alternatives

7) Implementing the Alternatives

7 steps of the decision making process

An obstacle that makes it difficult to achieve a desired goal or purpose

Criteria that define what's important or relevant to resolving a problem

Describes choices that are logical and consistent and maximize value

Decisoin making that's rational, but limited (bounded) by an individual's ability to process information

Accept solutions that are "good enough"

An increased commitment to a previous decision despite evidence it may have been wrong

intuitive decision making

Making decision on the basis of experience, feelings, and accumulated judgement

Evidence-based management (EBMgt)

Evidence-based management (EBMgt)

the systematic use of the best available evidence to improve management practice

Straightforward, familiar, and easily defined problems

A repetitive decision that can be handled by a routine aproach

A series of sequential steps used to respond to a well-structured problem

An explicit statement that tells managers what can or cannot be done

A guideline for making decisions

Problems that are new or unusual and for which information is ambiguous or incomplete

Unique and nonrecurring decisions that require a custom-made solution

A situation in which a manager can make accurate decisions because all outcomes are known

A situation in which the decision maker is able to estimate the likelihood of certain outcomes

A situation in which a decision  maker has neither certainty nor reasonable probability estimates available

Decision style characterized by a person's preference for using external data and facts and processing this information through rational, logical thinking

Decision style characterized by a person's preference for internal sources of information and processing this information with internal insights, feelings, and hunches

Rules of thumb that managers use to simplify decision making

1) Rational Decision Making

2) Bounded rationality

3) Intuitive decision marketing

4) Evidence based management

4 perspectives on how management make decisions`

1) Decision maker is fully objective and logical
2) Problem faced is clear and unambiguous
3) Decision maker knows all possible alternatives/consequences
4) Decision are made in the best interest of the organization

Assumptions of Rationality

1) Subconscious Mental Processing
2) Values or ethics-based decisions
3) Experience-based decisions
4) Affect-initiated decisions
5) Cognitive-based decisions

Subconscious Mental Processing

Managers use data from subconscious mind to help them make decisions

Values or Ethics-based decisions

Managers make decisions based on ethical values or culture

Experience-based decisions

Managers make decisions based on their past experiences

Affect-initiated decisions

Managers make decisions based on feelings or emotions

Cognitive-based decisions

Managers make decisions based on skills, knowledge, and training

1) decision maker's expertise and judgement
2) evaluated external evidence
3) opinions, preferences, and values of those who have a stake in the decision
4) relevant internal factors

four essential elements of Evidence-Based Management (EBMgt)

1) Programmed decisions
2) nonprogrammed decisions

two different types of decisions

Decision type used to handle a structured problem

Decision type used to handle an unstructured problem

1) procedure
2) rule
3) policy

Three types of programmed decisions

Only difficulty of applying a procedure to a structured problem

1) simple to follow
2) ensure consistency

Rules are frequently used as a programmed decision because:

Establishes general parameters for the decision maker rather than specifically stating what should or should not be done

Typically contain an ambiguous term that leaves interpretation up to the decision maker

Lower-level managers mostly rely on this type of decision making to confront routine and familiar problems.

Decision making type used as managers move up the organizational hierarchy, and the problems become more unstructured.

managerial level using programmed decisions

managerial level using nonprogrammed decisions

Frequency of programmed decisions

Frequency of nonprogrammed decisions

Information for programmed decisions

Information for nonprogrammed decisions

Goals for programmed decisions are:

Goals for nonprogrammed decisions are:

Time frame for a solution to a programmed decisions

Time frame for a solution to a nonprogrammed decision

Procedures, rules, and policies

Programmed decision solution relies on:

Nonprogrammed decision solution relies on:

1) Certainty
2) Risk
3) Uncertainty

When making decisions, a manager faces three different conditions:

Under _______, Managers have historical data from past personal experiences or secondary information that lets them assign probabilities to different alternatives.

Maximizing the maximum possible payoff

Maximizing the minimum possible payoff

1) Linear Thinking Style
2) Nonlinear Thinking Style

1) Source of information usually used
2) Whether you process information in a linear or nonlinear way

Thinking style reflects two things:

Help make sense of complex, uncertain, and ambiguous information

1) Overconfidence
2) Immediate Gratification
3) Anchoring Effect
4) Selective Perception
5) Confirmation
6) Framing
7) Availability
8) Representation
9) Randomness
10) Sunk Costs
11) Self-serving
12) Hindsight

12 common decision errors and biases managers make

When decision makers tend to think they know more than they do or hold unrealistically positive views of themselves and their performance

Immediate Gratification bias

Decision Makers who tend to want immediate rewards and to avoid immediate costs

Decision makers fixate on initial information as a starting point and then, once set, fail to adequately adjust for subsequent information

Selective Perception bias

When decision makers selectively organize and interpret events based on their biased perceptions

Decision makers who seek out information that reaffirms their past choices and discount information that contradicts past judgment

When decision makers select and highlight certain aspects of a situation while excluding others

Happens when decision makers tend to remember events that are most recent and vivid in memory

When decision makers assess the likelihood of an event based on how closely it resembles other events or sets of events

Reflects the actions of decision makers who try to create meaning out of random events

Occurs when decision makers forget that current choices can't correct the past

Decision makers who are quick to take credit for their successes and to blame failure on outside factors

Tendency for decision makers to falsely believe that they would have accurately predicted the outcome of an event once that outcome is actually known.

1) Decision-making approach
2) Type of problem
3) Decision-making condition
4) Decision-making style

The decision-making process is affected by four factors:

What is consistent decision

Is the decision you are making a programmed or Nonprogrammed decision?

Is a situation in which a decision maker can make accurate decisions because all outcomes are known?

Which term best describe decisions that are novel unstructured and generally based on criteria that are not well defined?