DECISION MAKING

DECISION MAKING

1. Decision defin: conscious (voluntary, deliberate), irrevocable (lost resources even change mind later) allocation of resources to achieve a desired objective

2. engineer: design alternatives to choose from, predict performance of alternatives, assist making best decision,

3. fields

   • Prescriptive
     • how decision maker SHOULD chose
     • P assessment, max expected value, decision theory
     • Mgmt. Science
     • Rational: decision is consistent with info, values, logic
   • Descriptive
     • how decision maker ACTUALLY choose
     • psychology of judgement, decision making, behaviour studies, observations, biases
     • Psychology
     • Irrational: decision violate consistency

4. decision making process

   • Overview
     • Frame
       • values & objectives (wants & needs)
         • used to judge relative merits of alternatives
         • qualitative & quatitative
         • *Value Hierarchy
           • scales
             • natural scales: everyone the same
             • Constructed scale: personal
       • Alternatives & Choices (options)
         • cross out alternative: not meet "must have" criteria
         • *Strategy Table
           • develop major alternatives
       • Information (what u known & how well u know it)
         • impact at least 1 objective
       • Payoffs & consequences (risks & opportunities, what they mean to u)
         • *Payoff matrix
           • Access Alternatives against Objectives
             • classify desirable & undesirable objectives
         • *Expected value matrix
           • incorporate uncertainty (probability)
         • *Swing weight
         • *9,3,1,0 scoring process
       • Decision criteria (method)
       • Modelling
         • Analysis
           • *sensitivity analysis
       • Define decision context
         • address the right problem/ decision, decision ownership (who assign resources), feasibility (enough time, resources for analysis?)
         • *Hierarchy Tool (pyramid)

5. Multi-objective decision