decision making, engineering management
DESCRIPTION
engineering management by medinaTRANSCRIPT
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DECISION MAKING
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Decision Making- the process of identifying and choosing alternative
courses of action in a manner appropriate to the demands of the situation. - the heart of all the management function.
Decision are at various management levels. TOP , MIDDLE and LOWER LEVELS
Decision are made at various management functions. PLANNING, ORGANIZING, DIRECTING, and CONTROLLING.
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THE DECISION MAKING PROCESS Diagnose Problem Analyze environment Articulate problem or opportunity Develop viable alternatives Evaluate alternatives Make a choice Implement decision Evaluate and adapt decision results
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DIAGNOSE PROBLEM If a manager wants to make an
intelligent decision, his 1st move must be to identify the problem.
A problem exist when there is a difference between an actual situation and desired situation.
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Example : the actual situation of the firm is that it has not yet constructed the building
Example: the desired situation is the finished 25-storey building.
In this case, the actual situation is different from the desired situation
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ANALYZE THE ENVIRONMENT The objective of environmental analysis
is the identification of constraints, which may be spelled out as either internal or external limitation.* Internal limitation 1. limited funds available for the purchase of equipment. 2. limited training on the part of employees. 3. ill-designed facilities.
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• External limitation:1. Patents are controlled by other organization.2. A very limited market for the company’s products and services exists.3.Strict enforcement of local zoning regulation.
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COMPONENTS OF THE ENVIRONMENT
Internal Environment – refers to the organizational
activities within a firm that surrounds decision-making.
External Environment – refers to variables that are outside the organization and not typically within the short-run control of top management.
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DEVELOP VIABLE ALTERNATIVES The best among the alternative
solutions must be considered by management using a procedure with the ff. steps.
1. Prepare a list of alternative solutions.
2. Determine the viability of each solutions.
3. Revise the list by striking out those which are not viable.
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THE ENGINEERING FIRM AND ITS EXTERNAL ENVIRONMENT
GovernmentEngineers Labor Unions
ClientsSuppliers
Competitors Banks
Public
ENGINEERING FIRM
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The list of solutions prepared by the engineering manager shows alternative courses of action:1. improve the capacity of the firm by hiring more workers and building additional facilities.2. Secure the services of subcontractors;3. Buy the needed additional output from another firm.4. Stop serving some of the company’s customers;5. Delay servicing some clients.
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EVALUATE ALTERNATIVE How the alternatives will be evaluated
1. Depend on the nature of the problem2. The objectives of the firm3. The nature of the alternatives presented.
• Each alternative must be analyzed and evaluated in terms of its value, cost, and risk characteristics.*
• The value of the alternatives refers to benefit that can be expected
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MAKE A CHOICE Choice – Making – refers to the
process of selecting among alternatives representing potential solutions to a problem.
* To make selection process easier, the alternatives can be ranked from best to worst on the basis of some factors like benefit, cost, or risk.*
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IMPLEMENT DECISION Implementation
– refers to carrying out the decision so that the
objectives sought will be achieved.
- to make Implementation effective, a plan
must be devised.
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EVALUATE AND ADAPT DECISION RESULT
Important for the manager to use control and feedback mechanisms to ensure results and to provide information for future decisions.Feedback – refers to the process which requires checking at each stage of the process to assure that the alternatives generated.Control – refers to the actions made to ensure that activities performed match the desired activities or goals, that have been set.
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APPROACHES IN SOLVING PROBLEMS
Qualitative evaluation – refers to the evaluation of alternatives using intuition and subjective judgement. Stevenson states that managers tend to use the qualitative approach when:1. The problem is fairly simple.2. The problem is familiar.3. The costs involved are not great.4. Immediate decisions are needed.
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Example of an evaluation using the qualitative approach:A factory operates on 3 shifts with the ff. schedule:First shift - 6:00A.M. to 2:00P.M.Second shift - 2:00 P.M. to 10:00 P.M.Third shift - 10:00 P.M.to 6:00 P.M.Because of time constraints, the manager made an instant decision on who among the 1st shift workers would work overtime to man the five machines.
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Each shift consist of 200 workers/200 machines. That day the operations went smoothly until the factory manager, an industrial engineer, was notified at 1:00 P.M. that 5 of the workers assigned to the second shift could not report for work because of injuries sustained in a traffic accident while they were on their way to the factory.
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APPROACHES IN SOLVING PROBLEM
Quatitative evaluation - this term refers to the
evaluation of alternatives using any technique in a group classified as rational and analytical
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QUANTITATIVE MODELS FOR DECISION MAKING Types of quantitative techniques:
1. Inventory Models2. Queuing Theory3. Network models4. Forecasting5. Regression analysis6. Simulation7. Linear programming8. Sampling Theory9. Statistical decision theory
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QUANTITATIVE MODELS FOR DECISION MAKING
Inventory Models :1. Economic order quantity model – this one is used to calculate the number of items that should be ordered at one time.
2. Production order quantity model – this is an economic order quantity technique applied to production orders.
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QUANTITATIVE MODELS FOR DECISION MAKING* Inventory Models
3. Back order inventory model – this is an inventory model used for planned shortages.
4. Quantity discount model – an inventory model used to minimize the total cost when quantity discounts are offered by suppliers.
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QUANTITATIVE MODELS FOR DECISION MAKING
Queuing Theory – is one that describes how to determine the number of service units that will minimize both customers waiting time and cost of service.
- applicable to companies where waiting lines are a common situation.
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QUANTITATIVE MODELS FOR DECISION MAKING Network Models – these are models where
large complex tasks are broken into smaller segments that can be managed independently.
The 2 most prominent network models are:1. The Program Evaluation Review
Technique – a technique w/c enables engineer managers to schedule, monitor, and control large and complex projects by employing three time estimates for each activity.
2. The Critical Path Method – this is a network technique using only one time factor per activity that enables engineer managers to schedule,
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QUANTITATIVE MODELS FOR DECISION MAKING
Forecasting - the collection of past and current information to make predictions about the future
Regression Analysis– examines the association between 2 or more variables. It uses data from previous periods to predict future events.
Simulation – is a model constructed to represent reality, on w/c conclusions
about real-life problems can be used.
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QUANTITATIVE MODELS FOR DECISION MAKING
Linear Programming – is a quantitative technique that is used to produce an optimum solution within the bounds imposed by constraints upon the decision.
Sampling Theory – is a quantitative technique where samples of populations are statistically determined to be used for a number of processes, such as quality control and marketing research.
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QUANTITATIVE MODELS FOR DECISION MAKING
Statistical Decision-Theory- rational way to
conceptualize, analyze, and solve problems in situations involving limited, or partial information about the decision environment.