2. Likewise, the production department has to decide whether to manufacture all of the electrical components or to subcontract to other firms. It is necessary to distinguish, at the outset, between the environment as an objective entity and the manager’s perception of the environment. levels of management in order to take effective decisions. Information, as required at different levels of manage­ment can be classified as operational, tactical and strategic. True, “participation in problem solving by organisational members should increase their receptiveness to the chosen alternative.”. In addition, there can be dozens of factors involved and affected by the problem. The core activities of Oil India Ltd. would be exploration, drilling, refining and distribution. In other words, what should be done? Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes. Strategic decisions on the other hand are relatively more difficult. and Other Details. In fact, choosing the best alternative in terms of facilities, satisfactoriness and affordable consequences is the real crux (or the essence) of the decision-making process. In fact, Simon’s view of the modern manager is different from the views of other writers on management. A management information system collects and processes data (information) and provides it to managers at all levels who use it for decision making, planning, program implementation, and control. Moreover, since there are always additional alternatives waiting to be discovered, the process of generating alternatives could conceivably go on forever. Finally, a post deci­sion observation should be made to determine how successful the decision was in solving the original problem. Dear Friends, I … When making a decision managers have a purpose. “Planning involves the most significant and far-reaching decisions a manager can make. The decision maker may be unable to weigh and evaluate large numbers of alternatives and criteria. Therefore, to enable managers to take good quality decisions, it is very important to provide them with the right kind of information. Problems handled/ decisions made. Essentially, Simon suggests that people may try to be rational decision makers but that their rationality has limits. Simulation is a technique that imitates the operation of a real-world process or system over time. Act) and the economic viability of setting up a Second Mumbai Airport. In the process of decision-making, we may use many tools, techniques, and perceptions. Information System for Managerial Decision Making : Information System for Managerial Decision Making Many Organization are also tapping versatility and power of Computers by designing and developing systems tailored to meet the specific needs. Use your judgment principles and decision-making criteria to evaluate each alternative. Similarly, the financial manager has to decide whether to invest in a new plant or to lease. Organisa­tional decisions are made under three con­ditions, viz., certainly, risk and uncertainty. In a decision-making process, we choose one course of action from a few possible alternatives. That is, decisions are made within the context of, and influenced by, the objective or set of objectives defined by the decision maker. Problems act as barriers to the achievement of organisation goals. He only recognizes the very important fact that more often than not, decisions are balanced with the cost (measured in terms of time and money) of making it. Write down the different stages in decision making. According to Simon modern managers act within bounded rationality. One of the alternatives that was identified previously (the second or third choice) could be adopted. Five rules can guide you toward high-velocity decision-making: 1. Similarly, when inventory of raw materials occurs. It would be a new decision. Most basic heuristic programs would be based on pure 'trial-error' methods. Efficiency may be reinterpreted as the ratio of output to inputs. The normative model of decision-making considers constraints that may arise in making decisions, such as time, complexity, uncertainty, and inadequacy of resources. The Nature of Decision Making 3. By the term ‘relative uniqueness’ he means the degree to which a problem or decision (1) has been seen before; (2) occurs frequently and at regular intervals; and (3) has been solved or resolved in a satisfactory manner. As implementation of solution proceeds, organisation members should be able to modify the solution based on what they learn during implementation. If the decision involves where to build a multi-crore rupee office building, a great deal of time and expertise will be devoted to identifying the best locations. Do not work well in real-time systems however, it may work in a dynamic system being in equilibrium. It may be stressed at this stage that the differences among those who make decision, those who implement them and those who must live on them should not be minimised. By whom? The central feature of the principle of bounded rationality is Simon’s contention that the so-called ‘administrative man’ does not follow an exhaustive process of evaluation of the options open to find a course of action that is satisfactory or good enough. As managers “we will make different types of decisions under different circumstances. In general managers simply do not give themselves sufficient time to consider the situation and do an effective job of problem formulation. In the case of the manager who must choose a site for a new plant, some of the minimum requirements for the site may be that it must be within 500 meters of a railroad spur and within 2 kilometers of a major highway, be located in a community of at least 40,000 people, and cost less than Rs. Decision-making variable not clearly defined. The satisfying concept suggests that she or he will select this site even though further searching might reveal a better one. Identification of Resources and Constraints. Disclaimer 8. Its purpose is However, there are certain weaknesses of the group decision-making process. Otherwise it may cease to exist. This complexity arises from the complexity and dynamism of today’s organisations and their environments. A second advantage of this method is that “the presence of several group members also means that more alternative solutions may be proposed and a great number of proposed solution can be analysed.”. Some of the important types of information that are required at different levels of management are as follows: A more functional classification of information is on the basis of types of decisions. For example, the Dean of the Faculty of Indian Institute of Management, Calcutta, must decide how to allocate funds among such competing needs as travel, phone services, secretarial support, and so on. Consider effect of system behavior over time. 7. A management information system is an advanced system to manage a company’s or an institution’s information system. When making a decision managers are faced with alternatives. Asian Journal of Technology & Management Research [ISSN: 2249 –0892] Vol. An increasing number of Managers rely on computers and information system to make decision. How Good should the Decisions Be? Decision making is the developing concepts leading to the selection of a course of action among variations. More often than not it is simply assessed that the nature of a managerial problem is obvious to all concerned. When choosing a supplier, we will usually dose on the basis of price and past performance. Simulation techniques can be used to assist management decision making, where analytical methods are either not available or cannot be applied. The process starts with supervisory managers meeting as a group to analyse a problem or opportunity and develop alternative solutions. Effective and successful decisions result in profits, while unsuccessful ones cause losses. In a like manner the listing of constraints “alerts the decision maker to the important stumbling blocks affecting a solution so that they can be avoided.” Furthermore, “organisations sometimes confront situations in which the absence of a specific resource or the existence of a particular constraint is a significant problem itself.”. In group decision-making, various individuals in a group take part in collaborative decision-making. In most real-life situations managers adopt a shortcut approach and thus fail to arrive at the best solution. 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