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Topic 1 - Introduction to decision making as the context for quantitative methods
Learning objectives
After completing this topic you will be able to:
Understand the importance of decision making.
Know that decision making is a process which may involve solving problems.
Appreciate the importance of information to decision making.
Appreciate that quantitative methods may aide in decision making.
Be able to identify and describe the steps involved in decision making.
Introduction
This topic introduces the subject of quantitative methods as an important part of the decision making process of executives and managers. The process of decision making is presented to provide the context for quantitative methods in the functions required for rational decision making. The purpose of this book is then outlined, in which the distinction between decision making and problem solving is made.
The process of decision making
Making decisions is a process. According to Hebert Simon (1960, p. 1):
“decision making comprises three principal phases: finding occasions for making a decision; finding possible courses of action; and choosing among courses of action”.
When there are possible courses of actions (options) available, decisions need to be made, even if the result of making a decision is to continue with the status quo. Most definitions of decision making confer that the process involves the person/people making a decision having several alternatives to choose from and that making a choice involves evaluating the potential outcomes.
The ability to make the right decisions in a timely fashion is the arguably most defining characteristic of an effective manager and executive. Cornell (1980, p.13) argues that:
“the act of making a decision is without equal importance – that is to say the act of making the right decision about the right problem or opportunity”.
He continues to say that this assertion is not to downgrade the many other functions that a man
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