Success and failure in personal and corporate life is depends on decision making. Quality decision making is done considering all available data and alternatives and it is performed through various management functions. In our daily life we often face situation where we need to take decision where some people seem very difficult, complicated and some seems very easy.
Making decision is not an easy task, a wrong decision will impact you badly while making a good decision will helps you, benefits you, increase confidence and build respect.
Who makes decision:-
Authorized person
Can be delegated by rules
Aids to decision making:-
A] Intuition
B] Experience
C] Facts and figures
This type of decisions may take under various environments. Decision making environment classifies in following five environments
1] Open system
2] Closed system
3] Decision making under certainty
4] Decision making under uncertainty
5] Decision making under risk
1] Open system:- Assumption of this systems are as follows:
Decision maker doesn’t know all alternatives and outcomes
He / She acts in an unknown environment
Makes a limited search to discover a few satisfactory alternatives
No model is available to finalize decision among all available alternatives
Example: – Deciding price of the product
2] Closed system: – In this system decision maker operates in a known environment. He logically examines all alternatives which are completely known and select the alternative which leads to the best result.
It works on following assumptions:
All alternatives and alternatives are completely known
Decision maker seeks to maximum profit
Decision maker has a model or method whereby the decision alternatives can be generated and tested
Example: – Exam system
3] Decision making under certainty: –
Decision maker knows all the effects and alternatives, certainty exist
Have complete information
Decision maker able to predict what the decision result will lead into
He / She able to make accurate decision when such environment exists
4] Decision making under uncertainty: –
Decision maker does not know about the alternatives and their outcomes
Have lack of information
Decision maker doesn’t know the future and not able to predict the outcome of every alternative he has
Decision maker may not have experience to handle the task
5] Decision making under risk: –
This situation occurs when decision maker can not predict alternatives, outcomes with certainty
It may be due to incomplete information or have to predict the probability
A wrong evaluation
There are more than one possible course of action and can select which can have maximum expected value
great. thanks kumar