Decision Making and Quantitative and Qualitative Factors in Decision Making:

Decision Making

Decision making is the cognitive (outcome of mental process) process of selecting a course of action from among multiple alternatives.

Quantitative and Qualitative Factors in Decision Making:

The Quantitative Factors are:

Investment appraisal
Break-even analysis
Sales forecasting
Critical path analysis
Decision trees etc.

The Qualitative Factors are

Stakeholder analysis
SWOT( Strengths , Weaknesses, Opportunities and Threats )
etc.

Decision-making process

A) Intelligence

It is Identifying the problems occurring in an organization. MIS is the major source for the
managers to be aware of problems.

B) Design

It is the inventing, developing, and analyzing possible courses of action.

C )Choice

It is selecting a course of action from those available i-e what kind of strategies there are.

D) Implementation

It is implementing the selected course of action & its proper communication to all.

E) Monitoring

It is checking the consequences of the decision made after its implementation (qualitative as well as quantitative).


Type of Decisions

1) Structured decisions

Where problem is recurring and repetitive, the common factors can be identified in order to identify a course of action. Due to which defined set of procedure can be devised for their solution. So it leads to clearly specified inputs and outputs & objectives.

2) Un-structured decisions

When problems are non routine, critical and novel in nature, they require individual judgment, evaluation and insight varying on case-to-case basis. There is no well defined procedure for treat these problems. For such situations, predefined policy cannot be devised. However, once the problem has been figured out, a policy may be devised to handle the problem in future.

3) Semi-structured Decisions

The term is used to refer to the grey area of decisions which lie between the two extremes. Some (but not all) structured phases and often solved using standardized solution procedures and human judgment.
Similarly problems are also categorized as structured, Semi structured & unstructured.
Nature of problem determines the approach to decision making to be followed to solve it

DECISION TIME FRAMES


To study the relationship between a firm’s output decision and its costs, we distinguish between two decision’s time frames:

(1) The Short Run

It is the time frame in which the Qty of at least one factor of production is fixed. For most firms, capital, land and entrepreneurship are fixed factors of production and labor is the variable factor of production. We call the fixed factors of production, the firm’s plant. In the short run, a firm’s plant is fixed.

(2)The Long Run

It is the time frame in which the quantities of all factors of production can be varied. I.e. the long run is a period in which the firm can change its plant. To increase output in the long run, a firm is able to choose whether to change its plant as well as the quantity labor it lines.