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April 21, 2013

Thinking on bias


Most important human judgements are made under conditions of uncertainty. We use heuristics, or rules of thumb, to guide us in such instances as we try to determine what belief or action has the highest probability of being the correct one in a given situation. These rules of thumb are often instinctive and irrational. Social psychologists such as Thomas Gilovich, Daniel Kahneman, Amos Tversky, and Paul Slovic have studied several important heuristics and discovered errors associated with their use. One of these heuristics is the affect heuristic. Our judgment regarding the costs and benefits of items is often significantly influenced by a feeling evoked by pictures or words not directly relevant to the actual cost or benefit. For some, the good or bad feeling they have just prior to making a decision is a bias that influences that decision and renders it irrational.

Different managers define the same problem in different terms. When presented with a common case, sales managers tend to see sales problems, production managers see production problems, and so on.

The ordering and importance of multiple objectives is also based, in part, on the values of the decision maker. Such values are personal; they are hard to understand, even by the individual, because they are so dynamic and complex. In many business situations different people's values about acceptable degrees of risk and profitability cause disagreement about the correctness of decisions.

People often assume that a decision is an isolated phenomenon. But from a systems point of view, problems have multiple causes, and decisions have intended and unintended consequences. An organization is an ongoing entity, and a decision made today may have consequences far into the future. Thus the skilled manager looks toward the future consequences of current decisions.

Reflective thinking on decision making from different people

There are several types of decisions that we need to make daily and the importance and complexity of these vary enormously. Most decisions are made by moving between the choice of criteria (the characteristics our choices meet) and the identification of alternatives (the possibilities we choose).

Decision making is the process of identifying a problem and choosing alternatives based on the values and preferences of the decision maker. It can also been described as a process of reducing uncertainty and doubt about alternatives to allow a rational choice to be made. Concepts such as choice, interest, consequence and relationship should also be highly regarded when arriving at a decision.

Decisions made by individuals or groups have their own advantages and disadvantages. Managers decisions, whether arrived at individually or by a group, can either make or break an organization and its people. A characteristic of high-performing organizations is that they make good decisions and they make them swiftly. These organizations also share other values such as prioritising, action, clear accountability and adaptability. It is equally important that decision makers are chosen correctly and involved in the designing of the decisions and their decisions are reinforced upon them. There are several obstacles to decision making that must be referred to when decisions have been made by a group or team. Issues such as group think may hinder the effectiveness of decision making within a group as pressures may "deter the group from critically evaluating unusual, minority or unpopular views?(Robbins, Millet & Waters-Marsh, 2001).

Reflective thinking

As we all known, it is essential to us all to make the right decision. But how to make the right decision for an unsure future? After considering numerous items about the topic, I do realize it a great challenge for Wave Rider. As far as I am concerned, there are several ways for making the right decision.

First of all, try to make the things to be detailed, that is to say , make the things be more concrete. Wave Rider analysis the detailed information to find the right decision. We analyse and think over what we have decided. Once your decision is in your mind, you can write it down and think of what's the next step you could do. Take writing notes as an example, When we have several kinds of options, you can write them down and select which one should be the best choice. After your consideration, the most precious one will be revealed.

Secondly, do not take everything for granted. Yes, everyone may sometimes think that common sense is the knowledge of power we could rely on.But different things may happen especially when you are making the right decision. Some experiments or other trials and errors may tell us what is right. Just like the saying you can not only judge a person by its appearance! After our own point of view, we can make the right decision which is more suitable to our tasks. Because what we know is based on our mutual understandings and our mutual benefits.

Thirdly, listen to others opinions. This is important for company and individuals. Even in Wave Rider, we try to create a good environment to let everybody¡¯s voice be heard. We know, we are easily confused or mislead by ourselves. So ask our colleagues or partners about their ideas. If possible, we may have someone as our guide or give us some guidance to assist us. It's really necessary and can modify our own decisions. Our nation has the people's congress and other meetings listening to its people's sayings. We have the minorities, we also need to know their views toward the society. We need people's voices both from the poor and the wealth. All of these are helpful for our final decision.


April 20, 2013

Decision process

Managers who recognize decision making as a group process that unfolds over time increase their likelihood of making more effective decisions. Why? Because by devoting time to the process, they are able to identify and assess the issues associated with making the decision.

By involving others, they weigh different perspectives and deepen the discussion.

Perhaps most important, taking a process-driven approach is more likely to lead to broader acceptance of the decision¡ªand to more effective implementation.

The decision-making process can be broken into three distinct phases:

  • Phase 1: Establishing a context for success is the point at which you set the parameters for the decision making process. You'll decide who should be involved and how you'll operate as a group.
  • Phase 2: Assessing the situation and choosing a course of action is when you determine the root cause of the issue you are trying to resolve and discuss possible solutions. By the end of this phase, your group should reach a decision.
  • Phase 3: Communicating and implementing the decision is the final stage, during which you notify stakeholders of your group's decision and take steps to put it into action.

Keep in mind that this topic addresses business decisions that are important and far-reaching. It assumes that such decisions cannot be made effectively by one individual operating in a vacuum. However, many of the general principles conveyed in this topic can be applied to smaller decisions that, for whatever reasons, need to be made without group input.

Management in decision making

As a manager, you are faced with decisions every day. Some decisions are straightforward, such as deciding which team member to assign to a specific project. Others are more complex, such as selecting a new vendor or deciding to discontinue a product due to weak sales.

Many managers tend to view decision making as an event¡ªa choice to be made at a single point in time, usually by an individual or a small group. In reality, however, significant decisions are seldom made in the moment by one manager or in one meeting. Important decisions, such as changing the strategic direction of a group or hiring a new manager, typically require time and input from many individuals and sources of information throughout an organization. Hence, decision making can more accurately be viewed as a process.

Managers who recognize decision making as a process increase their likelihood of making more effective decisions. Why? Because by taking time they are able to identify and assess the issues associated with making the decision. By involving others, they weigh different perspectives and deepen the discussion. Perhaps most important, taking a process-driven approach is more likely to lead to broader acceptance of the decision¡ªand to more effective implementation.

April 19, 2013

thinking on decision making

How to mix the guidelines for making effective decisions in today's world with the rationality and bounded rationality models of decision making for managers has became the heated question in recent decades.Some scholars claim that managers should keep the traditional models of making decisions which were applied by numerous companies and managers,so they concern that those decision making models are secure and convenient.Conversly other advanced scholars consider that decision making models should always be reformed and improved, in order to make the decisions be more effective and advanced.

"A decision is a choice made from available alternatives.For example,an accounting managers's selection among Colin,Tasha,and Jennifer for the position of junior auditor is a decision.Decision making is the process of identifying problems and opportunities and then resolving them.Decision making involves effort both before and after the actual choice." As we know from the management lessons,the decision can be made by decider in every company for anything.For instance manager have to determine the availability of potential job candidates,interview candidates to acquire necessary information,select one candidates,and follow up with the socialization of the new employee into the organization to ensure the decision's success.For another case in point,abour resources distribution.Managers should decide how much resources can be distribute to each part in a company from human resource to equipment resource.Which is beneficial for efficient and effective work.

The approach managers use to make decisions usually falls into one of three types-the classical model,the administrative model,or the political model.The choice of model depends on the managers??personal preference,whether the decision is programmed or nonprogrammed, and the extend to which the decision is characterized by risk,uncertainty,or ambiguity.

"The classical model of decision making is based on economic assumptions that managers should make logical decision that will be in the organization??s best economic interests. (Management seven edition Richard L.Daft 2006 P310)

In my opinion,if a manager want to use this kind of model,he or she has to be considerably sensible and enthusiastic,as well as enough professional knowledge in order to make decision that are economically sensible and in the organization's best economic interests.

Another model is administrative model. "A decision-making model that describes how managers actually make decision in situations characterized by nonprogrammed decisions,uncertainty,and ambiguity." The administrative model of decision making is depend on the job of Herbert A. Simon.Simon suggested two conceptions which are rationality and satisficing.Bounded rationality means that people have limits,or boudaries,on how rational they can be.

The third model is political model,which is beneficial for making nonprogrammed decisions when condition are uncertain,information is limited,and there is none agreement between managers about which goals to purse or what measures should be take.

But how can managers make efficient and effective decision in nowadays with rationality? As far as I am concerned,firstly we have to concern that decision makers is facing a given problem which is established.And then the policymakers have to choose the purpose of the decision,such as whether value or target is clear or not, and can be based on the importance of different target sorting. Next decision makers have choices for more than two planning, face the planning, usually in one by one to choose, and on the foundations of selecting one of them. If the plan is the same as the basic, it will usually be the same decision. Decision makers will face the same question one or more natural state. They are not to the people will as the shift of uncontrolled factors. Or we can say the decision maker's preferences will be the time changes.Managers may make each solution in different natural states of the profit value or loss value program which are calculated out, after comparison, according to the decision maker's value preferences and choose the best one.

As we all know that the rational decision in practice must have the following basic conditions:

1.Managers have to confirm that decision-making process must get all the effective information. For instance, the useful data which is collected by employees in the preparation work,and the market demand,the fund budget and others.

2.Managers have to find all the decisions schemes which are related to the achievement of the goal.Such as some successful schemes which were used by managers in the past.

3.Managers are able to accurately predict results which are produced by each scheme in different objective conditions.

4Managers should be very clear about people's social value and accounts for the relative weight which is directly or indirectly involved in public policy formulation.

5.Managers can choose the optimum scheme of the decision.After all the preparation work,they have to choose the best program of decision.

Futhermore,in the next process managers have to analyse this approach. At the first they should establish a complete set of operating goals and give the appropriate proportion.Besides they should prepare for a complete set of selected schemes.

In addition that it is necessary to establish a set of other value and a complete list of resources, and give weight .Then managers have to complete forecast for each plan cost about cost and plan. Calculating net expectations for each scheme,and comparing various net expectations, choose the highest expectations scheme for the best decision.

This model is started on defining the problems. As already mentioned, when a disagreement occur between expect state and real situation on certain degree, the problems will appear. If you calculate the monthly money when you found spending money more than $50, you can determine his problem. Many incorrect decision is made because decision makers ignored the problem or defined a wrong problem. Once the decision makers define the problem, and then they should be sure of decision which is very important to the standard. Policy makers need to make sure those factors which are related to make decisions. During this step, it is easy for decision makers to bring personal values and similar individual preference into the process. Identifying these standards are very important, because maybe this person think this factor is relative,but another person may not think so. Certain standards is not all of its same importantance. Therefore, the third step require policymakers judge and weigh these standards, to ensure that they has a right of priority of the order when making decision. The step four require decision makers solve the problem to list all of the alternatives. This step only need to list the alternatives, and need not to evaluate them. Once established alternatives, policy makers must analyze critically and evaluate each scheme. Using each standard options on the evaluation. When decision makers compare the standards and weight of these alternatives and step 2 and 3 steps, it is clear to see each scheme's advantages and disadvantages.The last step of the model require calculate the best decisions. According to the standard of weight with each alternative ,and finally choose the highest score of the resort.

As for making decision with bounded rationality models,"Herbert Simon (1916-2001) is most famous for what is known to economists as the theory of bounded rationality, a theory about economic decision-making that Simon himself preferred to call "satisficing", a combination of two words: "satisfy" and "suffice". Contrary to the tenets of classical economics, Simon maintained that individuals do not seek to maximise their benefit from a particular course of action (since they cannot assimilate and digest all the information that would be needed to do such a thing). Not only can they not get access to all the information required, but even if they could, their minds would be unable to process it properly. The human mind necessarily restricts itself. It is, as Simon put it, bounded by "cognitive limits?".

So we can conclude that,decision makers such as managers have to identify problems and opportunities depend on their personal professional knowledge and preference as well as necessary effective models. So decision maker can choose the best decision.

Robust decision making


March 10, 2013

The preparation of our presentation in RDM group

The preparation of our presentation in RDM

We made our presentation which regarding the Robust Decision Making methods to analysis the Wave Rider future plan. There were three basic problems we should consider: the first one is, there is a new production called Sea Catch, whether should they continue to produce it. The second problem is the location. There were two sites, Lymington and Exmouth. Further more, there are several factors which should be well considered. First is, Lymington seems a better choice because according to the material, we can easily find out that Lymington will be the right choice (if not, some part of the material which had provided us will be meaningless in logical). However, how to analysis this decision in a right and reliable way is the main problem. (Because the class was aims to taught us to make decisions in the right process) The third question was the market research and advertising. How to marketing the new product?

Our group discussed to use several tools to analysis these problems. Such as SWOT, the grid analysis, the decision tree, the finance analysis use NPV and so on. We search the websites to collect the information about some popular social media and their costs.

At last, we finished our presentation, which seems great. But the content was a little bit long.

The second class

Through today's class, I found there are so many decisions concepts or types that many of my decisions can be classified into such as delayed, conditional, cautions... In the most cases, you make decision depend on the problems, the goals, conditions, the situations. Some of them are unique. There are irreversible decision which you can't go back, reversible decision which you can go back and change it if you like, experimental decision is not final that you have to wait the result,people don't know what's happening. It's a halfway decision between those two. Moreover, there are trial -and-error which will always be reversible can check and make improvements next time.made in stage decision and so on. A satisficing decision is the combination of satisfy and suffice which describe a decision which is considered adequate. Then we applied this to the Wive Rider as an example, in the first step, we considered the common criterion and realism factors. The decision making, the pestle analysis should be considered the implication for the organisation or customer, there are also the analysis chart. Each of the considered factor will be settle down in specific in the chart. We should keep in mind the differences between this. We also learnt the application portfolio. What can we contribute to the market share? We used BGC grid. We can look at application Another tool we use is swot Further more, we use decision tree (it's best to see where we need to more information,give you a clear picture, there are )and value tree to help us make judgement.

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