BUILDING DECISION MODEL

PRESENTED TO :
MS GAGANDEEP
PRESENTED BY:
KUSUM
2525
 CONTENTS
1.INTRODUCTION
2.DEFINITION
3.FEATURES
4.REASON FOR USING MODEL
5.BUILDING DECISION MODEL
6.TYPES OF MODEL
7.ADVANTAGES
8.DISADVANTAGES
 INTRODUCTION
 DECISION-MAKING is regarded as the
cognitive process resulting in the selection of a
course of action among several alternative
possibilities.
Every decision making process produces a final
choice. It can be an action or an opinion.
Example:
In a business; deciding about financing criteria, type
of products & services to be offered.
 DEFINITION
“Decision-making involves the
selection of a course of action
from among two or more possible
alternatives in order to arrive at a
solution for a given problem”.

OXFORD ADVANCED DICTIONARY

 RELATED QUOTES
 “Be sure you are right – then go ahead”.
 -DAVY CROCKET
“Doing what’s right isn’t hard – knowing what’s
right is”
-LYNDON B. JOHNSON
“Mine own applause is the only applause which
matters.”
-CICERO
“Once you’ve made your mark , watch out for
erasers”.
-WILL ROGERS.

REASON FOR USING MODELS

 1.Identify & record the decisions that

influence these objectives.
 2.Allow communication of your ideas &
understanding to facilitate teamwork.
 3.Think carefully about variables to be
included & their definitions on terms that
should be quantifiable.
 4.Be explicit about your objectives.
BUILDING DECISION MODEL

Manager analyzes
situation (alternatives)

Makes decision to
resolve conflict

Decisions are
implemented

Consequences
of decision
 DETAILED VIEW OF MODELING PROCESS
1.Diagnose the problem
2.Select relevant aspects of reality
3.Organize the facts; identify the assumptions,
objectives, and decisions to be made
4.Select the methodology
5.Construct the model
6.Solve the model (generate alternatives)
7.Interpret results (in “lay” terms!)
8.Validate the model (does it work correctly?)
9.Do sensitivity analysis (does the solution
change?)
10.Implement the solution
11.Monitor results
 MODELS
OF
DECISION MAKING
 TYPES OF MODELS
The decision making process though a logical one
is a difficult task. All the decisions categorized
into the basic THREE models:-

1. RATIONAL / CLASSICAL MODEL

2. ADMINISTRATIVE OR BOUNDED
RATIONALITY MODEL
3. RETROSPECTIVE DECISION MAKING
MODEL.
 RATIONAL / CLASSICAL MODEL
This model is the first attempt to know the decision
making process. It provides a structured & sequenced
approach to decision making. As the word suggest , this
approach is logic & create consistency ; discipline
in a process.
FEATURES -:
1. PROBLEMS ARE CLEAR
2. THEY ARE NOT BIASED IN RECOGNIZING A
PROBLEM.
3. THEY ANTICIPATE PRESENT & FUTURE
CONSEQUENCES OF DECISIONS.
 EXAMPLE OF RATIONAL
MODEL
Here a SIX step model of rational decision
making;-
1.Define the situation and the desired outcomes.
2.Research & identify options.
3. Compare and contrast each alternative & its
consequences.
4.Make a decision/ choose an alternative.
5.Design & implement an action plan.
6.Evaluate results.
 BOUNDED RATIONALITY /
ADMINISTRATIVE MAN MODEL
This model is developed by HERBERT SIMON.
In this model decision makers have little time to
make decisions & thus seek shortcuts to find
acceptable solutions. Here decision maker doesn’t
try to optimize but make satisfaction of their
objectives. Here is a limitation in a rationality of
decisions. FEATURES :-
1. Only fullfiill a problem.
1 2. Only to accept the first
2 alternative.
RETROSPECTIVE DECISION MODEL

This decision making model focuses on how

decision maker attempt to rationalize their choices
after they have make decisions what he thinks is
best suited.. This model is developed by PER
SOELBERG. The process is designed to justify
through the scientific rigor , a decision has
already made by intuitively.
FEATURES :- 1. Decision makers have a full of
responsibility.
2. Decision are quickly made.
 ADVANTAGES
 1. INCREASE UNDERSTANDABILITY &
KNOWLEDGE :- Decision making has the ability to
enhance collective understanding & ensure that everyone
has the voice to be listened to.
 2. HIGHER QUALITY :- The quality of the decision
 might be higher because of
 Combined wisdom of group
 Members other than the
 Individual person.
 ADVANTAGES
 3. IMPROVED COLLABORATION :-
Graphical modeling & centralized modeling
storage significantly improve collaboration.The
standarised models ensure a common
understanding between business & it
stakeholders & reduce coordination loops also.
 4. INTERACTIVE DECISIONS :- With the
help of decision model all decisions are taken by
analysts through which a quck response as well
as consistency & clarity maintain in a
organisation.
 DISADVANTAGES
 1. CHOOSING A WRONG DECISION
MODEL :- There is a risk of choosing a wrong model
for making a decision . If you make a business decision
to commit resources to a new project based on “gut
feeling” and not on analysis on projected costs &
benefits , it is a very expensive mistake.
2. EXPENSIVE :- Group
decision making is quite
expensive in terms of time,
man, money . Larger the group,
the less contribution of person.
 DISADVANTAGES
 3.TIME – CONSUMING :- These models
are time consuming because various decisions are
to be considered by each & every model
consequences & by various decision makers also
through which a decision made when the
opportunity is gone from the hand of a
organization.
 4. DECISION-MAKER CAPACITY :-
The decision maker have their own individuals
capacity to reach a decision with accuracy. So it
creates a conflict in an organization to choose
among best decision maker from various
alternatives.
