| “DECISION MAKING MODELS” Mr. Usman wishes to buy a new and expensive cellular phone. He searches internet, and consults with his friends and relatives to get some information about the latest models in the market. After one week, he decides to purchase Apple iPhone. While at the store, the salesman explains and proves that he can buy much better phone within the same budget if he goes for Black Berry Torch. Black Berry Torch gives better value for money with respect to performance, design, advance features and warranties. Relying on the available information, Mr. Usman finally decides to buy Apple iPhone. In the light of above scenario answer the following questions.
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Rational Decision making
“A decision –making model that describes how individuals should behave in order to maximize some outcomes”
Steps in Rational Decision- making model
Ø Define the problem.
Ø Identify the decision criteria
Ø Allocate weight to the criteria
Ø Develop the alternatives
Ø Evaluate the alternatives
Ø Select the best alternative
Ø The optimizing decision maker is rational. He or she makes consistent, value maximizing choices within specified constraints.
The Rational Model
Step1: Define the problem
¨ A problem is a discrepancy between an existing and a desired state of affair.
Many poor decisions can be traced to the decision maker overlooking a problem or defining the wrong problem.
¨ Step2: Identify the decision criteria important to solving the problem.
The decision maker determines what is relevant in making the decision. Any factors not identified in this step are considered irrelevant to the decision maker. This brings in the decision maker s interest, value and similar personal preferences
¨ Steps 3 Weight the previously identified criteria in order to give them the correct priority in the decision.
¨ Step4: Generate possible alternatives that could succeed in resolving the problem.
¨ Step5: Rating each alternative on each criterion.
Critically analyze and evaluate each alternative.
The strengths and weaknesses of each alternative become evident as they are compared with the criteria and weight established in the second and third steps.
¨ Steps 6: The final step is to compute the optimal decision
¨ Evaluation each alternative against the weighted criteria and selecting the alternative with the highest total score.
| Q.2: In your opinion, what other decision making models can be applied by Mr. Usman for such purpose?(10) |
Answer
Ø Intuitive Decision-Making
“An unconscious process created out of distilled experience”
1. Intuitive decision-making has recently come out of the closet and into some respectability.
2. What is intuitive decision making?
· It is an unconscious process crated out of distilled experience. it operates in complement with rational analysis.
· Some consider it a form of extrasensory power of sixth sense.
3. Research on chess playing provides an excellent example of how intuition work.
· The experience of expert allows him or her to recognize the pattern in situation and draw upon previously learned information associated with pattern to quickly arrive at a decision choice.
· The result is the intuitive decision maker can decide rapidly with what appears to be very limited information.
· Eight conditions when people are most like to use intuitive decision making
1. When a high level of uncertainty exists
2. When there is little precedent to draw on
3. When variable are less scientifically predictable
4. When facts are limited
5. When facts do not clearly point the way to go
6. When analytical data are of little use
7. When there are several plausible alternative solutions to choose from with arguments for each
8. When time is limited and there in pressure to come up with the right decision
Although intuitive decision making has gained in respectability, don’t expect people especially in North America ,Great Britain, and other cultures where rational analysis is the other culture where rational analysis the approved way of making decision –to acknowledge they are using it. Rational analysis is considered more socially desirable in these cultures.
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