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Chapter 11

Chapter 11 Decision Making.docx

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Department
Business
Course
BU288
Professor
Marc Hurwitz
Semester
Winter

Description
WEEK 6CHAPTER 111CHAPTER 11 DECISION MAKINGWHAT IS DECISION MAKING Decisionmaking is the process of developing a commitment to some course of action Three things are noteworthy about this definition 1Decision making involves making a choice among several action alternatives 2Decision making is a process we want to know how this decision was reached3Involves a commitment of resources A problem exists when a gap is perceived between some existing state and some desired stateWellStructured Problems A problem for which the existing state is clear the desired state is clear and how to get from one state to the other is fairly obvious Problems are simple and solutions arouse little controversy because these problems are repetitive and familiar Program A standardized way of solving a problem IllStructured ProblemsA problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown Illstructured problems are generally unique they are unusual and have not been encountered beforecomplex and involve a high degree of uncertainty The decision makers must resort to nonprogrammed decisions making This simply means that they are likely to gather more information and be more selfconsciously analytical in their approachcan entail high risk and stimulate strong political consideration The rational decisionmaking process Identify ProblemSearch for relevant informationdevelop alternative solutions to the problemevaluate alternative solutionschoose best solutionsimplement chosen solutionmonitor and evaluate chosen solution THE COMPLEAT DECISION MAKERA RATIONAL DECISIONMAKING MODEL Perfect versus Bounded Rationality Perfect Rationality A decision strategy that is completely informed perfectly logical and oriented toward economic gainCan gather information about problems and solutions without cost and is thus completely informed Is perfectly logicalif solution A is preferred over solution B and B is preferred over C then A is necessarily preferable to CHas only one criterion for decisionmakingeconomic gain Do not exist in real decision makers Bounded rationality A decision strategy that relies on limited information and that reflects time constraints and political consideration Such as the need to please others in the organizationFraming Aspects of the presentation of info about a problem they are assumed by decision makers
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