Decision Making Techniques: A number of sophisticated techniques or tools which are useful in the decision making process are

e available. In this section, each of these techniques is discussed in brief. 1. Marginal Analysis: This technique is used in decision making to figure out how much extra output will result if one more variable (for example: material, machine, worker) is added. Marginal Analysis as the extra output that will result by adding one extra unit of any input variable, other factors being held constant. Marginal analysis is particularly useful for evaluating alternatives in the decision making process. 2. Financial Analysis: This decision making tool is used to estimate the profitability of an investment. For example, If your company yearly making profit of Rs. 1 crore, decision regarding where to invest? How to invest? How long to invest? And when to invest? These types of decision generally affect the Financial Analysis. 3. Break Even Analysis: This tool enables a decision maker to evaluate the situation of no profit and no loss. For example: in company is finding out that which level of sales is necessary to cover loss. 4. Ratio Analysis: It is an accounting tool for interpreting accounting information. Ratio defines the relationship between two variables. It compares the historical performance and current financial condition. It determines the strength and weaknesses of the firm. 5. Queuing or waiting line method: This is an operations research method that uses a mathematical technique for balancing services provided and waiting lines. Waiting lines occur whenever the demand for the service exceeds the service facilities. Since the perfect balance between demand and supply cannot be achieved, either customers will have to wait for the service or there may be no customers for the organization to serve (excess supply). When the queue is long and the customers have to wait for a long duration, they may get frustrated. This may cost the firm its customers. On the other hand, it may not be feasible for the firm to maintain facilities to provide quick service all the time since the cost of idle service facilities have to be borne by the company. The firm, therefore, has to strike a balance between the two. The queuing technique helps to optimize customer service on the basis of quantitative criteria. However, it only provides vital information for decision making and does not by itself solve the problem. Developing queuing models often requires advanced mathematical and statistical knowledge. 6. Simulation: This technique involves building a model that represents a real or an existing system. Simulation is useful for solving complex problems that cannot be readily solved by other techniques. Simulation techniques are useful in evaluating various alternatives and selecting the best one. Simulation can be used to develop price strategies, distribution strategies, determining resource allocation, logistics, etc. 7. Decision Tree: This is an interesting techniques used for analysis of a decision. A decision tree is a sophisticated mathematical tool that enables a decision maker to consider various alternative courses of action and select the best alternative. A decision tree is a graphical representation of alternative courses of action and the possible outcomes and risks associated

with each action. In this technique, the decision maker traces the optimum path through the tree diagram. For example: The decision tree can be illustrated with an example: If a firm expects an increase in the demand for its products, it can consider two alternative courses of action to meet the increased demand 1. Installing new Machines, 2. Introducing a double shift. There are two possibilities of each alternative that is output may increase or fall. 8. Linear Programming: Linear Programming is quantitative technique used in decisionmaking. It involves making an optimum allocation of scarce or limited resources of an organization to achieve a particular objective. The work linear implies that the relationship among different variables is proportionate. The term programming implies developing a specific mathematical model to optimize outputs when the resources are scarce. For Example: A company makes two products (X and Y) using two machines (A and B). Each unit of X that is produced requires 50 minutes processing time on machine A and 30 minutes processing time on machine B. Each unit of Y that is produced requires 24 minutes processing time on machine A and 33 minutes processing time on machine B. At the start of the current week there are 30 units of X and 90 units of Y in stock. Available processing time on machine A is forecast to be 40 hours and on machine B is forecast to be 35 hours. The demand for X in the current week is forecast to be 75 units and for Y is forecast to be 95 units. Company policy is to maximise the combined sum of the units of X and the units of Y in stock at the end of the week. (Introduction to Management: ICFAI. Page: 157)

Functions of Management: The functions of management relate to those activities that help in value addition and also in achieving the goals and objectives of organizations. Production, purchasing, selling, advertisement, finance, and accounting are examples of such functions. The nature of such functions varies from organization to organization, but there are certain commonalities. 1. Planning: Planning is deciding in advance what is to be done, how it is to be done, and when it is to be done. It involves projecting the future course of action for the business as a whole and also for different sections within it. Planning is thus the preparatory step for taking action and helps in bridging the gap between the present and the future. Thus, Planning is intellectual process and signifies the use of a rational approach to the solution of a problem. In more, concrete sense, the planning process comprises determination and laying down of objectives, policies, procedures, rules, programmes, budgets, and strategies. Management might plan for a short period and also for the long run. For improved efficiency and better results, short range plans need to be properly coordinated with long range plans. Planning is fundamental function of management and all other functions of management are greatly influenced by the planning process. The fact, though, is that planning permeates all levels in the organization and every manager, irrespective of their position in the management hierarchy, must plan within the limits of their authority and the decisions of their seniors. 2. Organizing: Organizing is the next function of management. It may be conceived of as the structuring of functions and duties to be performed by a group of people for the purpose of

attaining enterprise objectives. The functions and activities of the enterprise depend upon the objectives to be accomplished and are also directed towards fulfilment of such objectives. Determination of activities of the enterprise keeping in view its objectives. Classification of activities into convenient groups for the purpose of division. Assignment of these groups of activities to individuals. Delegation of authority and fixing of responsibility for carrying out such assigned duties. Coordination of these activities and authority relations throughout the organization. Thus, division of work among people and coordination of their efforts to achieve specific objectives are the fundamental aspects of organizations. Problems of organizing arise only when group efforts are involved. 3. Staffing: Organization as a function of management helps the executive to establish positions and lay down their functional relations to each other. It is through the function of staffing that different positions in the organization structure are filled. Since the successful performance by individuals largely determines the success of the structure, the staffing function deserves sufficient care and attention of the management. This requires managers to properly estimate the workforce requirements of the organization, consistent with the qualifications expected for proper and efficient discharge of duties of existing and possible jobs in the organization. Managers should also be able to lay down suitable selection and placement procedures, develop employee skills through training and appraisal schemes of compensation. Staffing is continuous function. A new enterprise has to employ people to fill in positions in the organization. In an established concern, factors such as death or retirement of employees and frequent change in the organizations objectives as well as changes within the organization itself make staffing a continuous function of management. 4. Directing: Mere planning, organizing, and staffing are not sufficient to set tasks in motion. The Management may have well-coordinated plans, properly established duties and authority relations, and able personnel, but it is through the function of directing that the manager is able to get the employees to accomplish their tasks. Directing means issuing of orders and instructions Guiding and counselling the subordinates in their work with a view to improving their performance. Supervising the work of subordinates to ensure that it conforms to plans. 5. Control: While directing, the manager explains to subordinates the work expected of each of them and also helps them to do their respective jobs so that enterprise objectives can be achieved. Yet, even then there is no guarantee that work will always proceed according to ones plans. It is this possibility of actions deviating form the plan that necessitates constant observation of actual performance so that appropriate steps may be taken to ensure conformance. Thus, control involves compelling events to conform to plans. (Principles of Management: By Dipak Kumar Bhattacharyya : Pearson Pg: 4)