In our everyday life, decision making is very important although the information available to the decision maker may be unclear and furthermore there might also ...
CREATIVE THINKING AND PROBLEM SOLVING CHAPTER 6: DECISION MAKING
Paimah Atoma Farah Laili Muda @ Ismail Mohd Azmir Mohd Nizah
Editors
Hisham Mlaky Eldin Kandil Adibah Sulaiman @Mohamad •
CHAPTER6
Decision Making PAIMAHATOMA
FARAH LAiu MUDA@ !SMAIL MOHD AzMIR MOHD NIZAH
Introduction In our everyday life, decision making is very important although the information available to the decision maker may be unclear and furthermore there might also be some disagreements among people who are involved in the decision making process. Decisions can be simple or easy, or they can be complicated. Some easy examples of decision making are: deciding where to shop, what to eat, what to wear, what to buy, etc. More complex decision making is needed when, for example, deciding on getting engaged to a person, or buying a house. Leaders have to make difficult decisions when they are considering their countries' welfare.
Definition of Decision Making Making decisions includes defining problems, collecting information, generating alternative ideas and choosing to act. Decision making is a cognitive process that leads a decision maker to select specific actions among various alternatives that exist. Every decision making process produces options that later can occur in a form of action or opinion. It is a consideration process that may be rational or irrational. From the perspective of Islam, Allah reminds us to depend on Him in all affairs including in decision making as follows: And to Allah belongs the Ghaib (unseen) of the heavens and the earth, and to Him return all affairs (for decision). So worship Him (0 Muhammad SAW) and put your trust in Him. And your Lord is not unaware of what you (people) do (Hud: 123)
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I Decision Making
Forms of Problems Since decisions arise out of facing problems, it is appropriate here to learn a little about the forms of problems that exist, and it is imperative that the decision maker is able to distinguish between the forms of problems. Below are two broad forms of problems: i.
Structured problems a. b.
ii.
A straightforward and clear problem. A repetitive problem that can be handled by a routine approach.
Unstructured problems a. A new or unusual problem with ambiguous or incomplete information. b. A problem that needs an immediate solution.
The Process of Decision Making Decision making occurs through a process which, generally, is made up of three broad stages (see Figure 6.1). First, the problem needs to be defmed and understood. Facts also need to be gathered. Second, options or ways of solving the problem need to be generated and assessed. Third, a solution needs to be implemented, and later evaluated to see if it achieved its purpose or not. Figure 6.1 General Decision Making Process Define the Problem
ell
Gather facts and develop alternative
Assess Options
Select the best choice
jY t
Implement options Follow up and evaluate alternative
Sequence of Decision Making Process Step 1: Identify the Problem i.
Problem A discrepancy between an existing and desired state of affairs.
PaimahAtoma, Farah Lai/i Muda @ Ismail &Mohd Azmir Mohd. Nizah /91
ii.
Characteristics of Problems a. b.
The problem becomes a problem when an individual is aware of it. There is pressure to solve the problem.
c.
Individuals must have the authority, information or resources to solve the problem.
Step 2: Identify the Decision Criteria Decision criteria are important factors related to solving the problem. They include: i. Costs that will be incurred (if investment is required). u. Risks which are likely to be encountered (including the chance of failure). u1. Outcomes that are desired (e.g. growth of the firm).
Step 3: Allocate Weights to the Criteria Decision criteria are not necessarily the same in all situations. Such assessment should be made to: i.
Assigning a weight to each item.
ii.
Placing the items in the correct priority order of their importance in the decision making process.
Step 4: Develop Solutions IdentifY viable solutions.
Step 5: Analyze Solutions 1. ii.
Assess the strengths and weaknesses of each solution. The evaluation of each solution is based on its ability to resolve issues identified in Step 2 and Step 3.
Step 6: Select the Best Solution The best solution is the one with the highest total weight.
Step 7: Implement the Best Solution Implement the best solution and get comments from those who carried out the decision.
Step 8: Evaluate the Effectiveness of the Decision The effectiveness ofthe decision is judged by its outcomes.
Paimah Atoma, Farah Laili Muda @ Ismail & Mohd Azmir Mohd. Nizah 193
Conditions in Decision Making i.
Certainty
a. b. ii.
Each alternative outcome is known in advance. A situation when someone can make a right decision because each alternative choice is known.
Risk
a. b.
The probability is calculated on each outcome. A situation when someone can estimate the possibility (probability) based on a specific alternative result.
iii. Uncertainty a. Lack of information or knowledge in decision making on each unpredictable alternative and thus, the probability cannot be determined. B.Little information prevents estimation of outcome probabilities for alternatives associated with the problem and may force managers to rely on intuition, hunches, and 'gut feelings'. Figure 6.2 Summary of Decision-Making Conditions
Uncertain
RISK - - - •
Intuition and Judgment
Clear
Styles in Decision Making Styles in decision making can be seen in several dimensions, they include: Ways of thinking. ii. Rational, orderly and consistent decision making. iii. Intuitive, creative and unique decision making.
1.
