DECISION MAKING AND

PROBLEM SOLVING
GENERAL OBJECTIVE
At the end of this lecture/discussion,
students should express an
understanding on problem solving and
decision making.
SPECIFIC OBJECTIVES

• At the end of this lecture/discussion,

students should be able to;
Define decision making.
State the types of decision making.
Outline the steps involved in decision
making process.
Cont’d
State the factors influencing decision
making.
Define problem solving.
Outline the problem solving process.
State the obstacles in problem solving.
INTRODUCTION
• Decision making is a daily activity for
any human being.
• There is no exception about that. When it
comes to business organizations, decision
making is a habit and a process as well.
Cont’d
Effective and successful decisions make
profit to the company and unsuccessful
ones losses.
Therefore, corporate decision making
process is the most critical process in any
organization.
Cont’d
In decision making process, we choose
course of action from a few possible
alternatives.
In the process of decision making, we
may use many tools, techniques and
perceptions.
Cont’d
• On the other hand, Problem solving is an
art and there are no universal approaches
one can take to solving problems.
Definition
Decision making is the cognitive process
resulting in the selection of a course of
action among several alternatives.
Types of decision making
• Mechanistic decision;
• This one is routine and repetitive in
nature.
• Occurs in a situation with a limited
number of decision variables, where the
outcome of each alternative is known.
Cont’d
Solve problems by habitual response,
standard operating procedures or lyrical
routines.
• Tools used for this type are:
•Charts ,lists, matrices, decision and trees.
•Useful in daily routine and scheduled
activities.
Cont’d
•Analytical decision;
• Involves a problem with a large number
of decision variables, where the outcomes
of each decision’s alternative can be
computed.
•Computation techniques used include
linear programming, network analysis,
inventory recorder model, queuing theory,
statistical analysis and so forth.
Cont’d
•Judgemental decision;
involves a problem with a limited number
of decision variables, but the outcomes of
decision alternatives are known.
Good judgement is needed to increase the
possibility of desired outcomes. These types
are of decision are useful in in marketing,
investment and to solve personnel problems.
Cont’d
•Adaptive decisions;
• Involve a problem with a large number of
decision variables, where
outcomes are not predictable.
Because of uncertainty of such problems,
decision makers are not able to agree on
their nature or on decision strategies.
Cont’d
Such ill structured problems usually
require the contributions of many people
with diverse technical backgrounds.
Strategies have to be modified to
accommodate new development in
technology and environment e.g research
findings.
Cont’d
• Involves a problem with a limited number
of decision variables, but the outcomes of
decision alternatives are known.
Good judgement is needed to increase
the possibility of desired outcomes.
These types are of decision are useful in
in marketing, investment and to solve
personnel problems.
Another classification of managerial
decision making
Strategic decisions made by top
executives that commit valuable agency
resources to achieve major long term
goals.
Administrative decisions are those made
by middle level managers to resolve
unusual problem and develop innovative
methods for improving agency function.
Cont’d
Operational decisions are routine
decisions governing day to day events that
have been delegated to first level
managers and are made according to
prescribed rules, regulations and
instructions.
Steps involved in decision making
Identifying and Diagnosing Problems:
 The first step in the decision-making
process is the clear identification of
opportunities or the diagnosis of problems
that require a decision.
Cont’d
• Discrepancies between actual and desired
conditions alert a manager to a potential
opportunity or problem.
Cont’d
 Identifying Objectives:
Objectives reflect the results the
organization wants to attain.
Objectives are often referred to as targets
or standards.
Cont’d
• Objectives can be expressed for long
spans of time (years or decades) or for
short spans of time (hours, days or
months).
Cont’d
Long-range objectives usually direct
much of the strategic decision making of
the organization, while short-range
objectives usually guide operational
decision-making.
Regardless of the time frame, objectives
will guide the ensuing decision-making
process.
Cont’d
• Generating Alternatives:
Once an opportunity has been
identified or a problem diagnosed
correctly, a manager develops various
ways to achieve objectives and solve
the problem.
Cont’d
This step requires creativity and
imagination.
 In generating alternatives, the manager
must keep in mind the goals and
objectives that he or she is trying to
achieve.
Cont’d
Ideally several different alternatives will
emerge. In this way, the manager
increases the likelihood that many good
alternative courses of action will be
considered and evaluated.
Cont’d
Ideally several different alternatives will
emerge.
In this way, the manager increases the
likelihood that many good alternative
courses of action will be considered and
evaluated.
Cont’d
• Evaluating Alternatives
The fourth step in the process involves
determining the value or adequacy of the
alternatives generated.
Cont’d
Which solution is the best?
Fundamental to this step is the ability to
assess the value or relative advantages
and disadvantages of each alternative
under consideration.
The result should be a ranking of the
alternatives
Cont’d
The Act of Choice
Decision making is commonly associated
with making the final choice.
 Although choosing an alternative would
seem to be a straight forward proposition,
simply consider all the alternatives and
select the one that best solves the
problem.
Cont’d
Because the best decisions are often
based on careful judgments, making a
good decision involves carefully
examining all the facts, determining
whether sufficient information is
available, and finally selecting the best
alternative.
Cont’d
• Implementing;
When decisions involve taking action or
making changes, choosing ways to put
these actions or changes into effect
becomes an essential managerial task. The
keys to effective implementation are:
Cont’d
• Sensitivity to those who will be affected
by the decision and
 Proper planning consideration of the
resources necessary to carry out the
decision.
Cont’d
• Those who will be affected by the
decision must understand the choice and
why it was made, that is, the decision
must be accepted and supported by the
people who are responsible for its
implementation.
Cont’d
These needs can be met by involving
employees in the early stages of the
decision process so that they will be
motivated and committed to its successful
implementation.
Cont’d
• Monitoring and Evaluating;
No decision-making process is complete
until the impact of the decision has been
evaluated.
 Managers must observe the impact of
the decision as objectively as possible and
take further corrective action if it becomes
necessary.
Cont’d
Monitoring the decision is useful
whether the feedback is positive or
negative.
Positive feedback indicates that the
decision is working and that it should be
continued and perhaps applied elsewhere
in the organization.
Cont’d
Negative feedback indicates either that
the implementation requires more time,
resources, effort, or planning than
originally thought or that the decision was
a poor one and needs to be re-examined.
Factors influencing decision making

• Personal factors like interpersonal

relationships and conscious of what
people want
 Organizational factors such as events in
the organization, knowledge from
research and development and
expectations of individuals or supervisors.
Cont’d
Command or authority in fear of
offending the people in authority hence
complying.
Information wrong information may
lead to wrong decision making.
Advice and communication lack of
communication and wrong advice may
lead to poor decision.
PROBLEM SOLVING
Definition
Problem-solving is a mental process that
involves discovering, analyzing and
solving problems.
Steps involved in problem solving
• Identifying the Problem: While it
may seem like an obvious step,
identifying the problem is not always
as simple as it sounds.
Cont’d
• In some cases, people might mistakenly
identify the wrong source of a problem,
which will make attempts to solve it
inefficient or even useless.
Cont’d
• Defining the Problem;
• After the problem has been identified, it is
important to fully define the problem so
that it can be solved.
Cont’d
• Forming a Strategy;
 The next step is to develop a strategy to
solve the problem. The approach used will
vary depending upon the situation and the
individual's unique preferences.
Cont’d
Organizing Information;
 Before coming up with a solution, we
need to first organize the available
information.
What do we know about the problem?
What do we not know?
Cont’d
The more information that is available,
the better prepared we will be to come up
with an accurate solution.
Allocating Resources:
Of course, we don't always have
unlimited money, time and other
resources to solve a problem.
Cont’d
 Before you begin to solve a problem,
you need to determine how high priority it
is.
If it is an important problem, it is
probably worth allocating more resources
to solving it.
Cont’d
If, however, it is a fairly unimportant
problem, then you do not want to spend
too much of your available resources into
coming up with a solution.
Cont’d
Monitoring Progress;
 Effective problem-solvers tend to
monitor their progress as they work
towards a solution.
If they are not making good progress
toward reaching their goal, they will re-
evaluate their approach or look for new
strategies.
Cont’d
Evaluating the Results;
 After a solution has been reached, it is
important to evaluate the results to
determine if it is the best possible solution
to the problem.
 This evaluation might be immediate, or
it can be delayed.
Obstacles in problem solving;
Lack of resources
 Limited time
 Scarce information sources
Inadequate data
Personality or attitude of supervisors to solve
problem
 Stress
ASSIGNMENT
• Discuss five (5) challenges faced by decision makers in
an organization.