refers to making choices among alternative courses of action—which may also include inaction. While it can be argued that management is decision making, half of the decisions made by managers, including engineer manager, within organizations fail. Therefore, increasing effectiveness in decision making is an important part of maximizing your effectiveness at work.

must be made at various levels in the workplace. They are also made at the various stages in the management process. If certain resources must be used, someone must make a decision authorizing certain persons to appropriate such resources.

is a responsibility of the engineer manager. It is understandable for managers to make wrong decision at times. The wise manager will correct them as soon as they are identified. The bigger issue is the manager who cannot or do not want to make decisions. Delaney (1982) concludes that this type of managers are dangerous and “should be removed from their position as soon as possible.”

The bigger issue is the manager who cannot or do not want to make decisions. ______concludes that this type of managers are dangerous and “should be removed from their position as soon as possible.”

must strive to choose a decision option as correctly as possible. Since they have that power, they are responsible for whatever outcome their decisions bring. The higher the management level is, the bigger and the more complicated decision-making becomes.

What is Decision-Making?

The Decision Making Process Rational decision-making, according to David Holt (1987), is a process involving the following steps:

To make an intelligent decision, the manager’s first move must be identify the problem An expert said “identification of the problem is tantamount to having the problem solved.”

What is a Problem?

The objective of environmental analysis is the identification of constraints, which may be spelled out as either internal or external limitation. Internal Limitations: ▪ Limited fund available for the purchase of equipment ▪ Limited training on the part of employees ▪ Ill-designed facilities External Limitations: ▪ Patents are controlled by other organizations ▪ A very limited market for the company’s products and service exists ▪ Strict enforcement of local zoning regulations

Internal Limitations:

External Limitations:

Expressing exactly what is wrong in the problem

Prepare a list of alternative solutions Determine the viability of each solutions Revise the list by striking out those which are not viable

This is important because the next step involves making a choice. Proper evaluation makes choosing the right solution less difficult The alternatives will be evaluated depending on the nature of the problem, objectives of the firm, and the nature of alternatives presented

Choice-making refers to the process of selecting among alternatives representing potential solutions to the problem Webber (1981) advises that particular effort should be made to identify all significant consequences of each choice

Implementation refers to carrying out the decision so that the objectives sought will be achieved At this stage, the resources must be made available so that decision may be properly implemented According to Aldag and Stearns (1991), those who will be involved must understand and accept the solution

Feedback refers to the process which requires checking at each stage of the process to assure that the alternatives generated, the criteria used in evaluation, and the solution selected for implementation are in keeping with the goals and objectives

Approaches in Solving Problems In decision-making, the engineer manager is faced with problems which may be either be simple or complex. To provide him with some guide, he must be familiar with the following approaches:

– refers to evaluation of alternatives using intuition and subjective judgment. Stevenson (1989) states that managers tend to use the qualitative approach when the problem is fairly simple, familiar, the costs involved are not great, and immediate decisions are needed.

– refers to the evaluation of alternatives using any technique in a group classified as rational and analytical.

Quantitative Models for Decision Making The types of quantitative techniques which may be useful in decision-making are as follows:

Inventory Models – consists of several types and are all designed to help the manager make decisions regarding inventory. These are as follows:

– used to calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing orders and carrying the items in inventory

– an economic order quantity technique applied to production orders.

– in this model, it is assumed that stock outs (and backordering) are allowed.

– an inventory model used to minimize the total cost when quantity discounts are offered by suppliers

– the one that describes how to determine the number of service units that will minimize both customer waiting time and cost of service. Applicable to companies where waiting line are a common situation.

– models where large complex tasks are broken into smaller segments that can be managed independently. Two most prominent network models are: ▪ Program Evaluation Review Technique (PERT) – enables managers to schedule, monitor, and control large and complex projects by employing three time estimates for each activity Critical Path Method (CPM) – using only one time factor per activity that enables managers to schedule, monitor, and control large and complex projects.

– enables managers to schedule, monitor, and control large and complex projects by employing three time estimates for each activity

– using only one time factor per activity that enables managers to schedule, monitor, and control large and complex projects.

– these are instances when managers make decisions that will have implications in the future. It is actually collecting past and current information to make predictions about the future.

– a forecasting method that examines the association of independent variables present. With one independent variable involved, it is called simple regression; when two or more independent variables are involved, it is called multiple regressions.

– a model constructed to represent reality, on which conclusions about real-life problems can be based. It is a highly sophisticated tool by means of which the decision maker develops a mathematical model of the system under consideration. This does not guarantee an optimum solution, but it can evaluate the alternatives fed into the process by the decision maker.

– a technique used to produce an optimum solution within the bounds imposed by constraint upon the decision. It is very useful as a decisionmaking tool when supply and demand limitations at plants, warehouse, or market areas are constraints upon the system

– a technique where sample of populations are statistically determined to be used for a number of processes, such as quality control and marketing research. When data gathering is expensive, sampling provides an alternative. In effect, it saves time and money.

– the rational way to conceptualize, analyse and solve problems in situations involving limited, or partial, information about the decision environment. A more elaborated explanation of decision theory is the decisionmaking process presented at the beginning of this unit. What has not been included in the discussion on the evaluation of alternatives but is very important is subjecting the alternatives to Bayesian analysis

The purpose of Bayesian analysis

When the decision maker is able to assign probabilities to the various events, the use of probabilistic decision rule, called the Bayes criterion, becomes possible. The Bayes criterion selects the decision alternative having the maximum expected payoff, or the minimum expected loss if he is working with a loss table.