Professional Documents
Culture Documents
Group 1
Jean Lei Aguilar
Rochmel B. Banania
Christian Dale A. Dasco
Chester F. Mendaro
Robin B. Reynoso
BSCE-III
Introduction
Introduction
Decision-making as a Management
Responsibility
Decision-making as a Management
Responsibility
Decision-making is a responsibility of the
engineer manager. It is understandable to
make wrong decision at times. The wise
manager will correct them as soon as they
are identified. The bigger issue is the
manager who cannot or do not want to
make decisions. Delaney concludes that
this type of managers are dangerous and
should be removed from their position as
soon as possible.
Decision-making as a Management
Responsibility
Management must strive to choose a
decision option as correctly as possible.
The higher the management level is, the
bigger and more complicated decisionmaking becomes.
What is Decision-making?
What is Decision-making?
1. Diagnose Problem
1. Diagnose Problem
What is a problem?
A problem exists when there is a difference
between an actual situation and desired
situation.
EXTERNAL
ENVIRONMENT
DECISION
like
liquidity,
EXTERNAL
ENVIRONMENT
Fig. 1
Clients
Competitors
Labor Unions
ENGINEERING
FIRM
Public
Suppliers
Banks
Fig. 2
4. Evaluate Alternatives
After determining the viability of the
alternatives and a revised list has been
made, an evaluation of the remaining
alternatives is necessary. This is important
because the next step involves making a
choice. Proper evaluation makes choosing
the right solution less difficult.
The value of the alternatives refers to
benefits that can be expected.
4. Evaluate Alternatives
The cost of the alternative refers to out-ofpocket costs, opportunity costs, and
follow-on costs.
The risks characteristics refers to the
likelihood of achieving the goals of the
alternatives. If the probability of a net profit
of 10 million is only 10 percent, then the
decision-maker may opt. to consider an
alternative with a 5 million profit but with
an 80 percent probability of success.
5. Make a Choice
After the alternatives have been evaluated,
the decision-maker must now be ready to
make a choice. This is the point where he
must be convinced that all the previous
steps were correctly undertaken.
Choice-making refers to the process of
selecting among alternatives representing
potential solutions to a problem. At this
point, Webber advises that " particular
effort should be made to identify all
significant consequences of each choice."
5. Make a Choice
6. Implement Decision
6. Implement Decision
1. Inventory Models
Inventory models consist of several types of designed to
help the engineer manager make decisions regarding
inventory. They are as follows:
1. Economic order quantity model - this one used to
calculate the number of item that should be ordered at
one time to minimize the total yearly cost of placing
orders and carrying the items in inventory.
2. Production order quantity model - this is an economic
order quantity technique applied to production orders.
3. Back order inventory model - this is an inventory model
used for planned shortages.
4. Quantity discount model an inventory model used to
minimize the total cost when quantity discounts are
offered by suppliers.
2. Queuing Theory
3. Network models
These are model where large complex tasks are broken
into smaller segment that can be managed
independently.
The two most prominent network models are:
1.The Program Evaluation Review Technique (PERT) - a
technique which enables engineer managers to
schedule, monitor, and control large and complex
projects by employing three time estimates for each
activity.
2.The Critical Path Method (CPM) - this is a network
technique using only one time factor per activity that
enables engineer managers to schedule, monitor and
control large and complex projects.
4. Forecasting
5. Regression Analysis
The regression model is a forecasting
method that examines the association
between two or more variables. It uses
data from previous period to predict future.
Regression analysis may be simple or
multiple depending on the number of
independent variables present. When one
independent variables is involved. It is
called simple regression, when two or
more independent variables is involved, it
is called multiple regression.
6. Simulation
7. Linear Programming
8. Sampling theory
Sampling theory is a quantitative technique
where samples of populations are
statistically determined to be used for a
number of processes, such as quality
control and marketing research.
When data gathering is expensive, sampling
provides an alternative. Sampling, in
effect, saves time and money.
9. Statistical Decision-Theory
9. Statistical Decision-Theory
Bayesian Analysis
The purpose of Bayesian analysis is to revise and update
the initial assessments of the event probabilities
generated by the alternatives solutions. This is achieved
by the use of additional information.
When the decision-maker is able to assign probabilities to
the various events, the use of probabilistic decision rule,
called Bayes criterion, becomes possible. The Bayes
criterion selects the decision alternative having the
maximum expected payoff, or the minimum expected
loss I he is working with a loss table.