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DECISION MAKING COURSE

DECISION MAKING COURSE. HERMAWANTO. HERMAWANTO hersusbon_2013@yahoo.com 08 2244667799. DECISION MAKING.

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DECISION MAKING COURSE

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  1. DECISION MAKING COURSE HERMAWANTO

  2. HERMAWANTO hersusbon_2013@yahoo.com 082244667799

  3. DECISION MAKING • A moment, in an ongoing process of choosing the preferred objective, evaluating alternatives for meeting an objective, at which expectation about a particular course of action impel the decision maker to select that course of action most likely to result in attaining the objective (Harrison, 1999:5)

  4. DECISION MAKING • Acts of choice between alternative courses of action designed to produce a specified result, and one made on a review of relevant information guided by explicit criteria (Harrison, 1999:5)

  5. DECISION MAKING • A concious and human process, involving both individual and social phenomena, based upon factual and value premises, which includes a choice of one behavioral activity from one or more alternatives with the intention of moving towards some desiredstate of affairs (Shull et al, 2003:6)

  6. DECISION ELEMENTS • DECISION (MAKING) BOARDS • PROBLEM(S) • DECISION OBJECTIVE(S) • CHOICES (DECISION ALTERNATIVES) • CRITERIA • UNCONTROLLABLE FACTORS • DECISION PROCESS • CHOOSEN DECISION • DECISION CONSEQUENCES

  7. BOUNDED RATIONALITY A concept used to describe the ways in which people’s capacity to process large amounts of data is limited. Sometimes called ‘limited rationality’ or subjective rationality

  8. Rational Theory of Choice • Within rational processes, choice depends on what alternatives are considered and on two guesses about the future: • The first guess is a guess about future states of the world, conditional on the choice • The second guess is a guess about how the decision maker will feel about that future world when it is experienced

  9. Rational Theory of Choice • Some versions of rational choice theory assume that all decision makers share a common set of (basic) preferences, that alternatives and their consequences are defined by the environment, and that decision makers have perfect knowledge of those alternatives and their consequences

  10. Rational Theory of Choice • Other versions recognize greater inter-actor subjectivity but nevertheless assume perfect knowledge for any particular decision—that all alternatives are known with certainty, and that all preferences relevant to the choice are known, precise, consistent, and stable.

  11. Prospect Theory • Prospect theory assumes that risky choices are made in two phases: editing and evaluation • In the editing phase a mental model of the decision situation is formed • In the evaluation phase the value of the outcomes is assessed on the basis of a value function and a weighting function, and a choice is made.

  12. The Six Steps in Decision Theory • Clearly define the objective (and the problem). • List the possible alternatives. • Identify the possible outcomes. • List the payoff or profit of each combination of alternatives and outcomes. • Select one of the mathematical decision theory models. • Apply the model and make your decision. 3-12

  13. Theories of Attention and Search • Ideas that emphasize the importance of attention are found throughout the social and behavioral sciences • In psychology, the rationing of attention is central to notions of editing, framing, and problem solving “set” • In political science, it is central to the notion of agendas

  14. Theories of Attention and Search • In sociology, it is central to the notion that many things in life are “taken as given” and serve as constraints rather than as decision alternatives • In economics, theory of search are a central concern of the study of decisions • The study of decision making is, in any way, the study of search and attention

  15. System Theory • System theory has evolved from the philosophy underpinning scientific reseacch • At the core of methodology are two sets of ideas: emergence and hierarchy, and communication and control.

  16. THE PROCESS OF DECISION MAKING (COOK & SLACK, 1991: 4-10) OBSERVE RECOGNIZE PROBLEMS SET OBJECTIVES UNDERSTAND PROBLEM DETERMINE THE OPTIONS EVALUATE OPTIONS CHOICE IMPLEMENT MONITOR

  17. THE PROCESS OF DECISION MAKING OBSERVE RECOGNIZE PROBLEMS SET OBJECTIVES UNDERSTAND PROBLEM DETERMINE CRITERIA DETERMINE THE OPTIONS EVALUATE OPTIONS USING THE CRITERIA CHOICE IMPLEMENT MONITOR

  18. EIGHT STEPS IN THE DECISION-MAKING PROCESS (NOORDENHAVEN, 1995: 23-35) RECOGNITION FORMULATION GOAL SETTING GENERATING OPTIONS EVALUATING OPTIONS THE ACT OF CHOICE IMPLEMENTATION CONTROL

  19. EIGHT STEPS IN THE DECISION-MAKING PROCESS RECOGNITION FORMULATION GOAL SETTING DETERMINING CRITERIA GENERATING OPTIONS EVALUATING OPTIONS USING THE CRITERIA THE ACT OF CHOICE IMPLEMENTATION CONTROL

  20. Six Steps in the ManagerialDecision Making Process Evaluation and Feedback Recognition of Decision Requirement Implementation of Chosen Alternative Diagnosis and Analysis of Causes Decision-Making Process Selection of Alternative Development of Alternatives

  21. Apabedaantaraproblem solvingdengandecision making?

  22. DECISION MAKING OR PROBLEM SOLVING?(COOK & SLACK, 1991: 4) • SOME WRITERS ENVISAGE PROBLEM SOLVING AS A BROAD PROCESS THAT INCLUDES DECISION MAKING ………………… • OTHER AUTHORS DEPICT THE OPPOSITE—PROBLEM SOLVING AS AN ELEMENT IN THE DECISION MAKING PROCESS ……………. • A THIRD SET OF AUTHORS TREAT DECISION MAKING AND PROBLEM SOLVING AS SYNONYMOUS AND USE BOTH TERMS TO DESCRIBE A GENERAL PROCESS OF INFORMATION GATHERING, ANALYSIS, AND CHOICE BEHAVIOR.

  23. THE RELATIONSHIP BETWEEN PROBLEM SOLVING AND DECISION MAKING(ANDERSON, SWEENEY, & WLLIAMS, 2003: 5) • DEFINE THE PROBLEM • IDENTIFY THE ALTERNATIVES • DETERMINE THE CRITERIA • EVALUATE THE ALTERNATIVES • CHOOSE AN ALTERNATIVE • IMPLEMENT THE DECISION • EVALUATE THE RESULTS DECISION MAKING PROBLEM SOLVING DECISION

  24. THE RELATIONSHIP BETWEEN PROBLEM SOLVING AND DECISION MAKING • DEFINE THE PROBLEM • IDENTIFY THE ALTERNATIVES • DETERMINE THE CRITERIA • EVALUATE THE ALTERNATIVES • CHOOSE AN ALTERNATIVE • IMPLEMENT THE DECISION • EVALUATE THE RESULTS PROBLEM SOLVING DECISION MAKING DECISION

  25. DECISION MAKING PROCESS • DEFINE THE PROBLEM • DETERMINE THE OBJECTIVE • IDENTIFY THE ALTERNATIVES • DETERMINE THE CRITERIA • EVALUATE THE ALTERNATIVES - CHOOSE THE BEST DECISION(S) • IMPLEMENT THE DECISION(S) • EVALUATE THE RESULTS DECISION MAKING

  26. A farmer in Wood County has 900 acres of land. She is going to plant each acre with corn, soybeans, or wheat. Each acre planted with corn yields a $2,000 profit; each with soybeans yields a $2,500 profit; and each with wheat yields $3,000 profit. She has 100 workers and 150 tons of fertilizer. The table below shows the requirement per acre of each of the crops. Assuming a linear relationship, determine the optimal planning mix of corn, soybeans, and wheat to miximize the profits. Corn Soybeans Wheat Labor (workers) 0.1 0.3 0.2 Fertilizer (tons) 0.2 0.1 0.4

  27. DECISION-MAKING PROCESS (ROWE & BOULGARIDES, 1992: 12-14) STIMULUS (Opportunities, feedback, threats) DECISION MAKER (Organizational and personal pressures, values) PROBLEM DEFINITION (Frame of reference, analysis of motivational biases, risk, cost, assumption) CHOOSING ALTERNATIVES (Change the problem or approach, apply creative problem solving) IMPLEMENTATION (Gaining acceptance of the decision, Evaluation and control of performance)

  28. INPUT-PROCESS-OUTPUT MODEL INPUT PROBLEM(S) OBJECTIVE DATA-INFORMAT- ION DECISION ENVI DEC. MAKER DEC. TOOLS/ METHODS …………………. …………………. PROCESS DECISION MAKING PROCESS OUTPUT DEC. RESULTS IMPLEMENT- ATION

  29. Personal Decision Framework • Personal Decision Style: • Directive • Analytical • Conceptual • Behavioral • Situation: • Programmed/non-programmed • Classical, administrative, political • Decision steps • Decision Choice: • Best Solution to Problem I m p l e m e n t a t I o n

  30. A Typical Normative Model(Teale, et al, 2003) Recognize problem Set objectives. Observe and monitor Understand problem Implement Determine options Choose Evaluate options

  31. THE VALUES INVENTORIES MODEL(ROWE & BOULGARIDES, 1992: 74-75) THEORIST [Self-oriented (thinking), technical focus] - Abstract - Influence Knowledge - Perfection IDEALIST [Self-oriented (thinking), social concern] Aesthetics - Autonomy Self-actualization - Esteem PRAGMATIST [Others-oriented (action), technical focus] Economic - Success Political - Plenty HUMANIST [Others-oriented (action), social concern] Social - Interpersonal Religious - Compassion

  32. DECISION STYLE MODEL (ROWE & BOULGARIDES, 1992: 29) Left Right Hemisphere Hemisphere (Logical) (Relational) Complexity Analytic Conceptual Leaders COGNITIVE COMPLEXITY Structure Directive Behavioral Managers Task/Technical People/Social VALUES ORIENTATION

  33. DIRECTIVE • EXPECTS RESULTS • IS AGGRESSIVE • ACTS RAPIDLY • USES RULES • USES INTUITION • N-POW, NEEDS POWER

  34. ANALYTIC • ENJOYS PROBLEM SOLVING • WANTS BEST ANSWER • WANTS CONTROL • USES CONSIDERABLE DATA • ENJOYS VARIETY • IS INNOVATIVE • USES CAREFUL ANALYSIS • N-ACH, NEEDS CHALLENGES

  35. CONCEPTUAL • IS ACHIEVEMENT-ORIENTED • HAS A BROAD OUTLOOK • IS CREATIVE • IS HUMANISTIC/ARTISTIC • INITIATIVES NEW IDEAS • IS FUTURE-ORIENTED • N-ACH, IS INDEPENDENT AND WANTS RECOGNITION

  36. BEHAVIORAL • IS SUPPORTIVE • USES PERSUASION • IS EMPATHETIC • COMMUNICATES EASILY • PREFERS MEETINGS • USES LIMITED DATA • N-AFF, NEEDS AFFILIATION

  37. MANAGER-SUBORDINATE STYLE CONFLICTS(ROWE & BOULGARIDES, 1992: 33) SUBORDINATE STYLE DIRECTIVE ANALYTIC CONCEPTUAL BEHAVIORAL DIRECTIVE NO MIN CON CON ANALYTIC MIN NO MIN CON CONCEPTUAL CON MINMIN NO BEHAVIORAL CON CON NO MIN M A N A G E R S T Y L E

  38. MENUJU ORGANISASI KELAS DUNIA RAPID INNOVATION FLEXIBILITY WASTE REDUCTION QUALITY CULTURE OF THE ENTERPRISE GOOD STRATEGIC LEADERSHIP BEHAVIOR MANAGEMENT COMPETENCE MANAGEMENT

  39. WHAT DO MANAGERS DO?(Mintzberg’s ten managerial roles) • THE INTERPERSONAL ROLES (FIGUREHEAD, LEADER, LIAISON) • THE INFORMATIONAL ROLES (MONITOR, DISSEMINATOR, SPOKESPERSON) • THE DECISION ROLES (ENTREPRENEUR, DISTURBANCE HANDLER, RESOURCE ALLOCATOR, NEGOTIATOR)

  40. MODELLING DECISIONS • (VERBAL) DESCRIPTIVE MODELS Description of what the observer perceived—subject to exclusion and aggregation • ANALOGUE MODELS Comparison of the observed situation with an analogous situation • RELATIONSHIP MODELS Influence relationships are implied between elements or events in decision situation—these relationships may be quantified

  41. FLOWCHART OF THE PROCESS OF TRANSFORMING MODEL INPUTS TO OUTPUTS(ANDERSON, SWEENEY, & WILLIAMS, 2003: 9) UNCONTROLLABLE INPUTS (ENVIRONMENTAL FACTORS) MATHEMATICAL MODEL CONTROLLABLE INPUTS (DECISION VARIABLES) OUTPUTS (PROJECTED RESULTS)

  42. McKinsey’s PROBLEM-SOLVING PROCESS MANAGING LEADERSHIP BUSINESS NEED PROBLEM INTUITION SOLUTION IMPLEMENTATION DATA ANALYZING PRESENTING

  43. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.) BUSINESS NEED • Competitive • Organizational • Financial • Operational

  44. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.) ANALYZING • Framing • Designing • Gathering • Interpreting

  45. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.) MANAGING • Team • Client • Self

  46. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.) PRESENTING • Substance • Structure

  47. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.) LEADERSHIP • Vision • Inspiration • Delegation

  48. McKinsey’s PROBLEM-SOLVING PROCESS (Cont.) IMPLEMENTATION • Dedication • Reaction • Completion • Iteration

  49. 13-49 OPERATIONS CONSULTING TOOL KIT

  50. 13-50 Operations Consulting Tool Kit: Category 1 In this scheme we have five categories of activities, starting with Problem Definition, that consultants perform and the supporting tools used to aid the consultant in performing that category Problem Definition Issue trees Customer surveys Gap analysis Employee surveys Five forces model

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