Methods of making management decisions – the theory, stages, an algorithm, criteria

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Methods of making management decisions can be observed in the history of the ancient world. Today, with development of high technologies, the human thinking capable to the analysis of a situation in management and adoption of the relevant decision, remains the most important factor of success of any given business, the enterprise.

Theory of making management decisions

Management decisions are based on the theory of system knowledge reflecting such concepts as regularity and decision. Making management decisions in the theory leans on the following important factors:

the objective existing reality;
logicality;
sufficient independence;
ability to development;
practicality and effectiveness.

Ways of making management decisions

Methods of making management decisions, they methods are used and implemented depending on importance and urgency. There is a set of ways of decision-making:

complex;
individual;
expert;
not expert;
heuristic (informal);
quantitative;
qualitative;
game;
method of the Delphic oracle (Delfi);
analytical;
mathematical modeling;
non-standard.

Stages of making management decisions:

Definition of a problem.
Search of a way or method.
Development of alternatives.
The analysis of the received decisions.
Introduction of the decision in reality.

Expert methods of making management decisions

Process of making management decisions is based of previously carried out expertize which purposes:

formation and selection of expert group;
definition of ways of expression and estimation by experts;
conducting examination;
processing and analysis of results;
formation of options.

The most demanded, today expert methods and techniques of making management decisions:

brainstorming method (collective collecting ideas and offers);
method of the commissions – gathering of experts for a diskutirovaniye in a problem, permission of controversial issues;
the Delfi method is use of special questionnaires, succeeds to several rounds;
method of scenarios – each expert writes possible scenarios of development of the analyzed situation;
the method of court – is modelled judicial reality where experts act as protection or accuser to the made decision.

Not expert method of making management decisions

The algorithm of making management decisions at not expert methods is under construction the experts who do not have big competence of a case in point, but they possess approximate representation owing to competence of adjacent areas. Not expert methods of adoption of effective management decisions:

game theory method – the accurate purposes and tasks are absent, actions in the conditions of uncertainty, is used for a specific problem once, often takes place in a quest form;
probability theory method;
imitating modeling – different criteria and the person the making decision look looks for a compromise between modeling options which are processed by means of the computer;
analogies – others experience (other enterprise, firm) of the solution of problems can try to be applied to current situation.

The Delfi method in making management decisions

Making management decisions in the organization not always can do only to heads of this enterprise therefore the Delfi method relating to an expert method can become that the saving straw capable to bring the enterprise, business, partnership to new level. Pluses of this method:

fast finding solutions;
expert highly skilled competent group;
it can be carried out remotely;
anonymity;
it is carried out in several steps;
high reliability of forecasting.

The Delfi method is carried out step by step:

Preliminary – a set of a large number of experts.
The main. The letter with the main issues is distributed to the specialists experts participating in the procedure and it is offered to make the list of subquestions on the basis of this question problem. The general questionnaire on the basis of often found questions which is distributed to experts for the purpose of the analysis by them sufficiency of information is created. Often there are additional questions to available and again the improved questionnaire goes to experts for adoption of the decision on a question by them, also to experts suggest to consider decisions of other experts.
Analytical. As a result coherence between experts in decision-making has to be high. The analytical group which checks coherence is created, analyzes conclusions and develops fan of recommendations.

Trial and error method in making management decisions

Making management decisions in management is accompanied by heavy responsibility and sometimes the decision needs to be made quickly. The trial and error method concerns the simplest, does not need special preparation and an algorithm of following. All possible ways of solving the problem register and followed by actions, the success of any given action is checked by practical consideration. Heads, managers with the insufficient level of competence and professionalism often use method, frequent it is young specialists, the filling cones.

Modeling method in making management decisions

Criteria of making management decisions are based on development of mathematical model. Development of model happens in several stages:

The task is formed.
The criterion of efficiency of that operation which is exposed to the analysis is defined.
The influencing factors are quantitatively measured.
The mathematical model of the studied object (operation) is under construction.
Finding of an optimal solution on the basis of model.
Check of the constructed model on adequacy.
Correction if necessary.

The following types of programming carry types to a method of modeling:

linear;
nonlinear;
dynamic;
mathematical statistics.

Game theory method in making management decisions

The effective method of making management decisions can not always be expert. The method of game theory is not expert method with success applied in conflict resolution at the enterprise. The player (the person the making decision) acts in the conditions of uncertainty and deficiency of information on the cause of the taken place conflict. The purpose of a method of game theory is the finding of an optimum outcome for all parties assuming sets of the benefits, prizes or increase on a career ladder.

Decomposition method in making management decisions

The best method of making management decisions that which results in effective result. The method of decomposition is that the difficult task breaks on several: an elephant eat in parts, then tasks are ranged on importance degree. It is possible to give a production example when it is necessary to carry out the choice for the purpose of increase in quality of products:

To continue work on the available equipment with high degree of wear.
Reconstruction of the equipment.

Each choice is considered fixedly:

Vulnerability of the first option is that the equipment became outdated, capacities small and the quality of products which is released on this equipment does not conform to the accepted global standards, logic such is that even at high demand the potential clients will address those producers where the quality products and result will be realization falling.
The second option assumes increase in performance several times and the products will be able to compete on sales market. Here vulnerability in big capital investments and generally from borrowed funds.
There is also the third option as turning of the production which is not making for profit, and sometimes it there is the most optimum.

Psychological methods of making management decisions

The brainstorming method in making management decisions is psychological, comprising an impulse of the creative beginning. Any methods decision-making is a responsible step, but that the result was impressive in any decision creativity has to appear. Creative thinking it both inspiration and implementation of the ideas seeming to others nonwinning, but they work, for this purpose in the organizations and brainstorming when all employees irrespective of a post contribute a pile to prosperity of production is applied, the ideas can bring fabulous money.

Other psychological methods:

Day dreams – if the decision is not possible to make it is necessary to arrange collective meditation and inspiration will not keep itself waiting;
The group genius – experts with different abilities (technicians, humanists) propose the solutions which can be combined.

Efficiency of making management decisions

Methods of making management decisions have to rely on such criterion as efficiency, assuming result. Problems of making management decisions can arise because of not counted unforeseen circumstances. The effective management decision is: