decision making

programmed decisions

occur often so rules are generally already in place (guidelines, SOPs, checklists), ensures tasks are performed smoothly

non programmed decisions

occur infrequently so rules cannot be used to help guide decisions, managers must rely on their experience, benchmarking, and intuitions

decision making environments

the conditions under which decisions are made in organizations, certainty, risk, or uncertainty

certainty environment

“I can get reliable information,” using JIT inventory to manufacture only the amount ordered

risk

“I know the probability estimates,” based on last year’s sales

uncertainty

“I don’t know,” fashion designer has no information to project the likelihood of the demand for skirt lengths, use external data and try to make an educated guess

responsibility for decision making

different types of decisions are made at different levels in the organizational hierarchy

top manager decisions

make nonprogrammed decisions, risky, and uncertain decisions, likely climbed the ladder and gained better intuition over time

middle manager decisions

task of transforming nonprogrammed decisions into programmed ones and transforming risky decisions into less risky or more certain ones

low level manager decisions

make more programmed and certain decisions because they are low stakes

rational decision making model (classical) purpose

keeps decision maker focused on facts and logic, helps guard against incorrect assumptions and pitfalls

what is rational decision making aimed at

obtaining complete and perfect information, reducing uncertainty, evaluating all information rationally and logically

barriers to rational decision making

bounded reality, organizational politics, changing environment

bounded reality

limited capacity to assimilate and understand all the information necessary to optimize due to cognitive ability, time constraint, and imperfect information, so we construct simplified models that extract essential features which do not capture the full complexity of the situation and the alternatives

bounded reality satisficing

searching for satisfactory solutions, costs and time factors are key considerations as organizations decide whether to satisfice or optimize

organizational politics

actions carried out for the purpose of acquiring, developing, and using power to influence the outcomes of decisions, can get in the way of the optimal decision

changing environment

decision makers may be in an environment where they face many new and interlinked situations, while this model assumes that conditions remain stable, information needed to make a decision either remains incomplete or is constantly changing

rational decision making model

define the problem, establish decision criteria, weight the criteria, generate possible alternatives, evaluate alternatives, compute optimal solutions