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    Boston International College MBA II Trimester Emerging Concept of Management

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    Umesh Sah
    This document discusses emerging concepts in management and decision theory. It outlines six steps in decision theory: defining the problem, listing alternatives and outcomes, identifying payoffs, selecting a decision model, and making a decision. It also describes types of decision environments, criteria for decision making like maximax and maximin, and uses examples to illustrate concepts like payoff tables and regret tables. Overall, the key points covered are tools and strategies for structured decision making under conditions of risk and uncertainty.

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    Boston International College MBA II Trimester Emerging Concept of Management

    Uploaded by

    Umesh Sah
    23 views14 pages
    This document discusses emerging concepts in management and decision theory. It outlines six steps in decision theory: defining the problem, listing alternatives and outcomes, identifying payoffs, selecting a decision model, and making a decision. It also describes types of decision environments, criteria for decision making like maximax and maximin, and uses examples to illustrate concepts like payoff tables and regret tables. Overall, the key points covered are tools and strategies for structured decision making under conditions of risk and uncertainty.

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    hoe we take decesion

    Original Title

    Decision Theory

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    This document discusses emerging concepts in management and decision theory. It outlines six steps in decision theory: defining the problem, listing alternatives and outcomes, identifying payoffs, selecting a decision model, and making a decision. It also describes types of decision environments, criteria for decision making like maximax and maximin, and uses examples to illustrate concepts like payoff tables and regret tables. Overall, the key points covered are tools and strategies for structured decision making under conditions of risk and uncertainty.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    23 views14 pages

    Boston International College MBA II Trimester Emerging Concept of Management

    Uploaded by

    Umesh Sah
    This document discusses emerging concepts in management and decision theory. It outlines six steps in decision theory: defining the problem, listing alternatives and outcomes, identifying payoffs, selecting a decision model, and making a decision. It also describes types of decision environments, criteria for decision making like maximax and maximin, and uses examples to illustrate concepts like payoff tables and regret tables. Overall, the key points covered are tools and strategies for structured decision making under conditions of risk and uncertainty.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
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    Boston International College

    MBA II Trimester
    Emerging Concept of management
     Minimizing the time and cost of Organization’s
    Operation

     Increasing the efficiency of organization

     Delegation will be easier and more effective

     Make Organization Success


    The Six Steps in Decision Theory

     Clearly define the problem at hand


     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
    • A state of nature is an actual event that may occur in the future.
    • A payoff table is a means of organizing a decision situation,
    presenting the payoffs from different decisions given the various
    states of nature.

    Payoff Table
    Types of Decision-Making Environments

    • Type 1: Decision-making under certainty


    – decision-maker knows with certainty the consequences of
    every alternative or decision choice
    • Decision-making under uncertainty (without probability)
    – The decision-maker does not know the probabilities of the
    various outcomes.
    Decision situation: An investor wants to decide which of the three property to buy.

    Decision-Making Criteria:
    Maximax, Maximin, Minimax, Minimax Regret
    In the maximax criterion the decision maker selects the decision that
    will result in the maximum of maximum payoffs; an optimistic
    criterion.

    Payoff Table Illustrating a Maximax Decision


    In the maximin criterion the decision maker selects the decision that
    will reflect the maximum of the minimum payoffs; a pessimistic
    criterion.

    Payoff Table Illustrating a Maximin Decision


    Regret is the difference between the payoff from the best decision and all
    other decision payoffs.
    The decision maker attempts to avoid regret by selecting the decision
    alternative that minimizes the maximum regret.

    Regret Table Illustrating the Minimax Regret Decision


    - The equal likelihood ( or Laplace) criterion multiplies the decision
    payoff for each state of nature by an equal weight, thus assuming that
    the states of nature are equally likely to occur.

    Decision Values
    Apartment building $50,000(.5) + 30,000(.5) = 40,000
    Office building $100,000(.5) - 40,000(.5) = 30,000
    Warehouse $30,000(.5) + 10,000(.5) = 20,000
    - A dominant decision is one that has a better payoff than another
    decision under each state of nature.
    - The appropriate criterion is dependent on the “risk” personality and
    philosophy of the decision maker.
    Criterion Decision (Purchase)
    Maximax Office building
    Maximin Apartment building
    Minimax regret Apartment building
    Equal liklihood Apartment building
     Time –consuming Process

     Individual Domination

     Ambiguous Responsibility

     Not a perfect theory.

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