Decision Making

and Analytics
Ms. Ushna Tasleem
Brainstorming
Decision Making

 Decision making is a process of choosing among

two or more alternative courses of action for the
purpose of attaining one or more goals.
 A decision-making process is a series of steps one
or more individuals take to determine the best
option or course of action to address a specific
problem or situation. Often, managers and
executives use the process to plan how to carry
out business initiatives or set specific actions in
motion. Ideally, a business decision is based on
the analysis of objective facts, aided by the use of
artificial intelligence (AI) or other advanced
technologies and tools.
Decision Making

According to Simon (1977), managerial decision

making is synonymous with the entire management
process.
 Consider the important managerial function of
planning. Planning involves a series of decisions:
 What should be done? When? Where? Why? How?
By whom? Managers set goals, or plan; hence,
planning implies decision making. Other
managerial functions, such as organizing and
controlling, also involve decision making.
Decision-Making
Disciplines
 Decision making is directly influenced by several
major disciplines, some of which are behavioral
and some of which are scientific in nature.
 Behavioral disciplines include anthropology, law,
philosophy, political science, psychology, social
psychology, and sociology.
 Scientific disciplines include computer science,
decision analysis, economics, engineering, the
hard sciences (e.g., biology, chemistry, physics),
management science/operations research,
mathematics, and statistics.
Char­ac­ter­is­tics of Effec­tive Man­age­ment
Deci­sion Making

Effec­tive man­age­r­i­al deci­sion mak­ing hinges on sev­er­al key

qualities:
 Ratio­nal-think­ing ensures deci­sions are based on log­i­cal
analy­sis rather than emotions.
 Process-ori­ent­ed approach­es ensure sys­tem­at­ic and thor­
ough eval­u­a­tion of options.
 Selec­tiv­i­ty ensures focus on rel­e­vant infor­ma­tion, avoid­ing
paralysis.
 Pur­po­sive deci­sion mak­ing in project man­age­ment aligns
with orga­ni­za­tion­al goals and strategies.
 Main­tain­ing a pos­i­tive out­look fos­ters cre­ativ­i­ty and
resilience in the face of challenges.
 Com­mit­ment ensures deci­sions in project man­age­ment are
fol­lowed through with ded­i­ca­tion and accountability.
 Last­ly, eval­u­a­tion allows for con­tin­u­ous improve­ment by
assess­ing out­comes and learn­ing from expe­ri­ences, there­by
enhanc­ing future deci­sion-mak­ing efficacy.
 Decision Style
•Decision style refers to how individuals think and react to problems.
•It varies based on personal values, beliefs, and the situation.
•Decision-making is not linear; people may skip steps or follow them in a different order.
Decision Style

• The psy­cho­log­i­cal style encom­pass­es deci­sions

influ­enced by emo­tions and experiences.

• Cog­ni­tive style empha­sizes ratio­nal analy­sis and

prob­lem-solv­ing skills.

• Nor­ma­tive style pri­or­i­tizes eth­i­cal prin­ci­ples and

soci­etal norms.
 Decision Makers

1. Individuals often make decisions in small organizations or at lower management levels.

•Individuals may have conflicting objectives (e.g., balancing return and risk in investments).

2. Groups handle most decisions in medium to large organizations.

•Group decisions are complex due to differing objectives and decision styles.
•Reaching consensus can be difficult in group settings.

3. Computerized tools, such as enterprise information systems (EIS), help groups collaborate
effectively and make decisions more efficiently.
Phases of the Decision-Making Process
 Decision-Making Process
1. Intelligence Phase:
1. The process begins with examining reality to identify and define a problem.

2. The decision maker also determines who owns the problem.

2. Design Phase:
1. A model representing the system is built by simplifying reality and identifying relationships
between variables.

2. The model is validated, and different solutions are identified and evaluated based on specific
criteria.

3. Choice Phase:
1. A solution is selected from the model, and its viability is tested.

4. Implementation Phase:
1. The chosen solution is implemented.

2. If the solution works, the problem is solved; if not, the process may return to an earlier phase.

 The entire process includes feedback loops, meaning at any phase, there may be a
return to a previous phase if needed. This reflects the iterative and sometimes non-linear
nature of decision making.
7 steps of the decision-
making process
7 steps of the decision-
making process
1.Articulate the Decision:
 Clearly identify the decision to be made and
ensure everyone understands the situation and
the goal.
 Precision in defining the problem is crucial for a
successful process.

2.Gather Relevant Information:

 Collect all necessary data, both internal and
external, including past experiences, market
research, and expert opinions.
7 steps of the decision-
making process
3. Identify Possible Solutions:
 Use the gathered information to brainstorm and
list potential solutions. Keep only the most viable
options.

4. Evaluate the Solutions:

 Assess each option by considering its strengths,
weaknesses, and impact on key stakeholders.
Some options may be discarded due to
challenges.
7 steps of the decision-
making process
5. Choose the Best Solution:
Select the most suitable solution based on
evaluations. In some cases, combining elements of
multiple solutions may be the best approach.

6. Implement the Solution:

 Develop a detailed plan for implementation,
assigning roles and preparing for possible
challenges.
7 steps of the decision-
making process
7. Review the Solution:
Select the most suitable solution based on
evaluations. In some cases, combining elements of
multiple solutions may be the best approach.
What is a decision-making
model?
 A decision-making model is a structured process
that helps individuals and organizations choose
the best option among several. By providing clear
guidelines, it simplifies decision-making and leads
to better outcomes.
 Models also make the process visible and easy to
communicate to all involved parties, including
managers, employees, and stakeholders. They are
useful across various situations, such as selecting
software vendors, deciding on new strategies, or
implementing changes that impact a large group.
Types of decision-making models

1. Rational model.

 Rational decision-making is the most popular

model. Logical and sequential, it focuses on listing
as many alternative courses of action as possible.
Once all options are laid out, they can be
evaluated to determine which is best. This model
often includes pros and cons for each choice, with
the options listed in order of their importance.
 A rational decision-making model typically includes these steps:

 Identify the problem or opportunity.

 Establish and weigh decision criteria.
 Collect and organize all related information.
 Analyze the situation.
 Develop a variety of options.
 Assess all options and assign a value to each one.
 Decide which option is best.
 Implement the decision.
 Evaluate the decision.
Types of decision-making models

2. Intuitive Decision-Making Model

 The intuitive decision-making model relies on

experience and accumulated knowledge rather
than formal steps. It involves an inner sense or
intuition to determine the right choice but isn't
just based on gut feelings. This model also
includes recognizing patterns and similarities from
past experiences, as well as considering the
significance of different options.
Types of decision-making models

 3. Recognition primed decision (RPD)

model. This model is a combination of rational
and intuitive decision-making. Its defining
element is that the decision-maker considers only
one option instead of weighing all. This model is
often used in situations that call for an immediate
decision.
Types of decision-making models

The RPD process involves these steps:

 Identify the problem, including all its

characteristics, problem cues, expectations and
business goals.
 Think through the plan and perform a mental
simulation to see if it works and what
modifications might be needed.
 If the plan seems satisfactory, make the final
decision and implement the plan.
Types of decision-making models

The creative decision-making model involves:

1. Collecting Information: Gathering insights and
potential solutions related to the problem.
2. Incubation Period: Stepping away from active
thinking about the problem, allowing the
unconscious mind to process the information.
3. Realization and Testing: After the incubation
period, a new insight or solution may emerge,
which is then tested and finalized.
 This model leverages the subconscious to
generate innovative solutions.
Decision-Making
Techniques
 There are var­i­ous tech­niques that improve the
qual­i­ty of deci­sion mak­ing in project man­age­
ment.
 Tech­niques of deci­sion mak­ing in man­age­ment
such as Mar­gin­al Analy­sis, SWOT Dia­grams, Deci­
sion Matrix, and Pare­to Analy­sis are effec­tive in
improv­ing deci­sion mak­ing quality.
Mar­gin­al Analysis
 Mar­gin­al analy­sis exam­ines the incre­men­tal ben­e­
fits gained from an addi­tion­al unit of a deci­sion
com­pared to its cor­re­spond­ing increase in costs.
By eval­u­at­ing the addi­tion­al ben­e­fits and costs of
each option, deci­sion-mak­ers can deter­mine the
opti­mal lev­el of a decision.

This method ensures resources are allo­cat­ed effi­
cient­ly, max­i­miz­ing ben­e­fits while min­i­miz­ing
costs, ulti­mate­ly lead­ing to bet­ter-informed and
more effec­tive deci­sion making.
SWOT Dia­gram
SWOT Dia­gram

 A SWOT dia­gram assess­es a deci­sion’s inter­nal

Strengths and Weak­ness­es, along with exter­nal
Oppor­tu­ni­ties and Threats. By eval­u­at­ing these
fac­tors, deci­sion-mak­ers gain a com­pre­hen­sive
under­stand­ing of the deci­sion’s con­text and poten­
tial outcomes.

 This analy­sis aids in iden­ti­fy­ing advan­tages,

address­ing weak­ness­es, exploit­ing oppor­tu­ni­ties,
and mit­i­gat­ing threats, guid­ing strate­gic deci­sion
mak­ing and enhanc­ing the like­li­hood of suc­cess in
project man­age­ment and achiev­ing orga­ni­za­tion­al
objectives.
Deci­sion Matrix
Deci­sion Matrix

 A Deci­sion Matrix is a tool used to sys­tem­at­i­cal­ly

com­pare mul­ti­ple options based on var­i­ous cri­te­
ria or fac­tors. It involves cre­at­ing a matrix where
each option is list­ed as rows, and cri­te­ria are list­
ed as columns. Scores or weights are assigned to
each cri­te­ri­on, and options are eval­u­at­ed against
these criteria.

 This deci­sion-mak­ing method facil­i­tates a struc­

tured com­par­i­son, allow­ing deci­sion-mak­ers to
objec­tive­ly assess and pri­or­i­tize alter­na­tives
based on their per­for­mance across mul­ti­ple
dimensions.
Pare­to Analysis
Pare­to Analysis

 Pare­to Analy­sis in man­age­ment, based on the

Pare­to Prin­ci­ple (80÷20 rule), pri­or­i­tizes issues by
iden­ti­fy­ing the most sig­nif­i­cant fac­tors con­tribut­
ing to a prob­lem. It involves ana­lyz­ing data to
deter­mine which fac­tors have the most sub­stan­
tial impact or occurrence.

 By focus­ing efforts on address­ing these vital few

fac­tors, deci­sion-mak­ers can achieve sig­nif­i­cant
improve­ments, opti­mize resource allo­ca­tion, and
enhance over­all deci­sion mak­ing effec­tive­ness in
tack­ling under­ly­ing issues.
Deci­sion Mak­ing Tools

There are var­i­ous tools and soft­ware avail­able to assist in the

deci­sion-mak­ing process. These include:
 Deci­sion trees: Used for visu­al­iz­ing deci­sion options and
outcomes.
 Spread­sheet soft­ware (e.g., Microsoft Excel): Enables
data analy­sis, mod­el­ing, and deci­sion analysis.
 Project man­age­ment soft­ware (e.g., Asana, Work­sec­
tion): Facil­i­tates col­lab­o­ra­tion and task man­age­ment for
deci­sion implementation.
 Data ana­lyt­ics tools (e.g., Tableau, Pow­er BI): Aid in
ana­lyz­ing large datasets to inform decision-making.
 Mind map­ping soft­ware (e.g., Mind­Meis­ter, XMind):
Helps visu­al­ize and orga­nize thoughts, ideas, and options
dur­ing the deci­sion-mak­ing process.
Summary:

 A process of choosing among two or more

alternative courses of action for the purpose of
attaining a goal.
 DSS : it is a system intended to support managerial
decisions in semi structured and unstructured
decision situations
 DSS were meant to be adjuncts to decision makers
 extending their capabilities
 Before building a model, decision makers should
develop a good understanding of the problem that
needs to be addressed.
 Simon’s four phases of decision making are
intelligence, design, choice, and implementation.
References

 https://
www.unicornlabs.ca/blog/decision-making-techniq
ues-and-tools-for-leaders-and-managers
 https://
worksection.com/en/blog/management-decision-m
aking.html
 Business
Intelligence and Analytics Systems for Decisi
on Support 10th Edition
Sharda Solutions Manual
 https://
issuu.com/jeffreyib64/docs/business-intelligence-a
nalytics-systems-decision-s/s/20911836