Decision Making

Decision Making

1. Decision Trees

   • Visual aids to structure and solve sequential decision problems
     • Types of Nodes
       • Decision nodes - represented by squares (□)
       • Chance nodes - represented by circles (Ο)
       • Terminal nodes - represented by triangles (optional)
     • Example

2. Fishbone Diagram

   • Cause and Effect Diagram
   • Is used to investigate a problem, exploring, identifying, and displaying the possible causes.
     • Purpose
       • To identify the relationship between the effects in a given situation and all of the possible causes
       • To find problem sources/solutions
     • Categories
       • Faculties
       • Materials
       • Equipment
       • Methods
     • Example

3. Making the “right decisions” help a business to achieve its aims and objectives

4. Choices nearly always exist

5. Decision making is also necessary to solve problems

6. All decisions involve risk

7. Risk may be minimised by collecting accurate data and using decision making models

8. Types of Decisions

   • Programmed and Non-programmed
   • Strategic, tactical or operational

9. Restrictions

   • Internal constraints: Availability of finance Existing company policy People’s behavior or abilities
   • External constraints: Government and legislation Competitors’ behavior Lack of technology The economic environment

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