Techniques of Decision Making

Technique of decision making

1. Brainstorming technique
2. Normal group technique
3. Delphi technique
4. Synectics
5. Operation research technique

a)     Game theory

b)     Queuing theory

c)     Decision tree theory

d)     Linear programming

e)     PERT

f)       CPM

Brainstorming Technique

  ü This technique is developed by Alex Osborn.

  ü It is group decision making technique where in a selected group of persons sit together and discuss the problem thoroughly with open mind.

  ü The options offered by the participants for solving the problem are critically examined and finally all members try to arrive at a consensus formula or strategy through which the problem could be resolved.

  ü This technique is very popular in business organisation because it is of democratic nature and provides opportunity to jointly develop a scientific solution to the problem.

  ü This technique is more useful in those cases where the problem is of specific nature and can be easily defined.

  ü Moreover, the basic purpose of brain storming is developed as many alternatives as possible to solve the problem. 

Nominal Group Technique

  ü It is a modified form of brainstorming techniques.

   ü In this technique, the selected group of persons are requested not to discuss their solutions in open but write these on a piece of paper.

  ü Once the exercise is completed each member is required to explain his idea which is discussed in detail one by one.

  ü After evaluating the merits and demerits of all the ideas given by the members a final decision is taken either by voting or consensus.

  ü This technique is better than brainstorming techniques in the sense that it tries to prevent the strong personality domination and encourages members to think and develop their own ideas independently to solve the problem.

 

Delphi Technique

  ü It is a modified version of nominal group technique.

  ü This technique is developed by Norman Dal key and Olaf Helmer.

  ü In this technique the members do not sit together for writing their solutions to the problems. Instead, all the details of the problem are sent to the concerned experts, and they are requested to send their ideas in writing to the central coordinator on a pre structured questionnaire.

  ü In this way, none can influence others in offering solutions. The idea received from the individual expert members are then sent to the other participants who are requested to reconsider their own views in the light of other ideas.

  ü This process of collecting opinions from the member experts and giving feedback of the same to others individually is repeated several times until a consensus is reached among the experts for solving the problem.

  ü It is obviously a time consuming and costly techniques of decision making which is not very popular amongst business houses.

  ü In fact, it is more useful in resolving broad based long term complex issues (e.g., Flood management, drought management or any other disaster management etc.)

 

Synectics

  ü This technique of decision making was developed by William J.J. Gordon in 1944.

   ü Synectics, a Greek word which means fitting together different, distinct, novel, and irrelevant ideas.

    ü Its purpose is to increase the creative output of individuals and groups.

  ü It is another technique of group decision making where in emphasis is given on developing creative and innovative ideas through which attempt is made to carve out an ideal solution.

    ü In this technique, a group of selected experts with different backgrounds and specialists sit together before whom the coordinator places the details of the problem and request them to think and develop some non-traditional ideas for tackling the problem.

Operation research techniques

The term ‘operation research’ was used for the first time by McCluskey and Trefethen in USA.

(a)  Game theory

(b)  Queuing theory

(c)   Decision tree theory

(d)  Linear programming

(e)  PERT

(f)    CPM

Game theory

• The credit to develop this theory is generally given to John Wan Newman and Oscar Morgenstern.
• A game is a situation where in at least two persons or parties are involved who takes decisions keeping in mind the other strategies to win the game.
• So, in game theory, a person or party visualises the opponent’s strategy and select that strategy out of available alternatives which facilitate to get victory over others.
• This theory is more used in defence than in business organizations since the situations are more turbulent and fast changing in the business world against the Defence fronts.

Queuing theory

•  It is very common in India to find long queues at railway ticket counters or ATM machine or petrol pumps.
•   It generally happens when the demand for a product or service is more as compared to its supply.

Demand › supply

•         When a customer must wait in queue for his chance to get the product, he must waste time unnecessary which may be termed as ‘Waiting Cost’.
•         Now, suppose the supplier increases his supply facilities and he finds that the queues have vanished and instead the employees at the outlet must wait for the customers. This unnecessary waiting period of the supplier may be termed as ‘Idle Time Cost’ which obviously pushes up his total cost of the product/service.
•          As per queuing theory, the management must take a decision in such a way which helps in maintaining equilibrium between the ‘Waiting Cost of the customers’ and the ‘Idle Time Cost of the supplier’.
•         Thus, queen theory emphasizes on keeping ideal balance to the extent possible two opposite elements.

Decision tree theory

•     Decision tree theory is a modern quantitative technique of decision making wherein different alternatives to solve a problem are developed and shown as branches of a problem tree.
•       In case an alternative has two or more sub alternatives, these are shown as the subbranches of the concerned branch.
•        After such display, the probability of each alternative is quantified and finally the most suitable branch (i.e., alternative) is selected for resolving the problem.
•         Thus, this technique helps in understanding the problem and its possible alternatives is a wholistic way and facilitates quantitative decision making.

Linear programming

•         Linear programming is a quantitative technique used in decision making.
•      It involves making an optimum allocation of scarce or limited resources of an organization to achieve a particular objective.
•      The world ‘linear’ implies that the relationship among the different variables is proportionate.
•     The term ‘programming’ implies developing a specific mathematical model to optimise outputs when the resources are scarce.
•         To apply this technique, the situation must involve two or more activities competing for limited resources and all relationships in the situation must be linear.

PERT

•         ‘PERT’ Stands for Programme (Project) Evaluation and Review Technique.
•     PERT is appropriate for the project where the time needed to complete different activities are not known.
•         PERT is a project management technique, used to manage uncertain activities of a project.

CPM

•         ‘CPM’ stands for Critical Path Method.
•      CPM is a statistical techniques of project management that manages well defined activities of a project.

PERT VS. CPM

CPM is different from PERT in a way that-

1.  the PERT concentrates on time while the CPM stresses on the time cost trade off.

2.   PERT is a technique of planning and control of time while CPM is a method to control costs and time.