Decision Making Process: The Process Of The Decision Making Process

DECISION MAKING PROCESS

The decision making process is a sequence of certain steps which are discussed below. Before the decision making begins, it is important to specify objectives. If objectives are set, then only we start with problem identification and weighing alternatives available. A standard decision making process comprises of six steps but it is not mandatory that all steps are repeated for every decision in the organization. This process is usually followed for non programmed decisions because they are new, have environmental impact and a unique solution is to be found with lot of research. For programmed decisions, this exercise is simple because programmed decisions are routine decisions and framework within which decision is

Moreover, choice of alternatives is done only when these are available. If there is only one way of solving the problem, then there is no such need. Now a decision maker needs to find out different alternatives available to solve the problem. Several sources can be used for this purpose. For example decision maker’s own past experience (past experience takes into consideration all previous actions applied by decision maker to different sets of problems. Successful actions of past may become alternatives for future, although if problem is entirely different, the past action may not be relevant at all), past experience of others (copying the suitable actions taken by successful decision makers) and using creative techniques (mathematical modeling

Each alternative is evaluated against these limits. Those alternatives which fall short of satisfying these limits are rejected.

Grouping of alternatives: all alternatives are segregated into different groups. Groups are created on specific criteria important for decision making. a representative alternative from each group is discussed. The group which show up the best is kept and rest of the groups are discarded. The alternatives within the selected group are evaluated. This method is appropriate for taking decisions like location of plant and warehouse, distribution network etc.

After selecting the alternatives for evaluation, different evaluating criteria are chosen. Usually evaluation is done on the basis of tangible and intangible factors. Tangible factors are quantifiable and can be measured easily .These include cost, investment, profits, revenues, output etc. intangible factors are qualitative in nature and hence cannot be measured like tangible factors. These include factors like goodwill of company, environmental issues, trade union issues, displacement of locals due to setting up of plant etc. to measure intangible factors, some qualitative standards are fixed. Various techniques are used to evaluate both tangible and intangible