types of managerial decision - b,e, (cs/it) dr.k.baranidharan, sri sairam institute of technology,...

8/12/2019 Types of Managerial Decision - B,E, (cs/IT) Dr.K.Baranidharan, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI

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Prepared by :

Dr. K. BARANIDHARAN

PROF.MBASRI SAIRAM INSTITUTE OF TECHNOLOGY

CHENNAI

ENGINEERING ECONOMICS

AND

FINANCIAL ACCOUNTING

Sri Sairam Institute of Technology 2


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EngineeringEconomics& Financial

Accounting

Eefa

33 August 2014


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Types of Managerial decision

making


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Basic

Basic decisions are those which are unique,one-time decisions involving long-range

commitments of relative permanence or

duration, or those involving large investments. Examples of basic decisions in a business firm

include plant location, organization structure,

wage negotiations, product line, etc. In otherwords, most top management policy decisions

can be considered as basic decisions.


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Routine Routine decisions are at the opposite extreme from basic

decisions. They are the everyday, highly repetitive,management decisions which by themselves have little

impact on the overall organization.However, taken together,

routine decisions play a tremendously important role in the

success of an organization. Examples of, routine' decisions are an accountant's decision

on a new entry, a production supervisors decision to

appoint a new worker, and a salesperson's decision on what

territory to cover. Obviously, a very large proportion of thedecisions made in an organization are of the routine variety.

However, the exact proportion of basic to routine types

depends on the level of the organization which the decisions

are made.


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. Programmed and Non-programmed

Decisions

programmed Decisions

The difference between Programmed (routine,repetitive) decisions and Non-programmed (unique,

one-shot) decisions. While programmed decisions are typically handled

through structured or bureaucratic techniques(standard operating procedures),

non-programmed decisions must be made by managersusing available information and their own judgement.As is often the case with managers, however, decisionsare made under the pressure of time.


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Mechanistic

If a decision is a routine and repetitive in nature

it is called mechanistic decision.

The number of variables in decision making are

relatively limited.

There are clear cut alternative for taking

mechanistic decisions and each alternative has

a well defined outcome.

Example: if I know how many computers gets

sold in a computer exhibition (from my

experience, I have been participating in the

Industrial exhibition for the last

.


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Analytical Complex nature, they have large number of

variables. But the outcome of each alternative can be

computed.

The problem pertain to engineering, production,maintenance, project management, fall under this

category.

These are complex in nature Yet, they can be solved.

OR and Management Science provide an array of

tools and techniques such as linear programming,

inventory models, queuing theory, PERT/CPM to

determine optimal solutions.


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Judgemental

Limited number of decision variableand each decision alternatives has

unknown outcomes, it is called a

judgemental decision.

Manager take judgemental decisions

while dealing with problems in most ofthe functional areas of management

such a personnel, marketing,

production, R&D etc


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Adaptive

There are large number of decisionsvariables with lot of uncertainty over the

outcomes, it is a case of adaptive decision.

Even managers find it difficult to reach aconsensus on decision strategies.

Such decisions cannot be structured for

easy solutions.

Managers of diverse technical skills are

normally required to handle such decisions.

C i Ri k U i A bi i


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Certainty, Risk, Uncertainty, Ambiguity

Certainty all the information the decision maker needs is fully available

Risk decision has clear-cut goals good information is available future outcomes associated with each alternative are subject to

chance

Uncertainty managers know which goals they wish to achieve information about alternatives and future events is incomplete managers may have to come up with creative approaches to

alternatives

Ambiguity by far the most difficult decision situation goals to be achieved or the problem to be solved is unclear alternatives are difficult to define

information about outcomes is unavailable


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types of managerial decision - b,e, (cs/it) dr.k.baranidharan, sri sairam institute of technology,...

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