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Types of decision making - Programmed decision making

Definition of Decision making
Decision making represents a process of choosing the best alternative from among many possible options available to the manager of the business unit. A manager at any given moment of making a decision concerning the business would first of all assess all the different alternative decisions which the business can take. Each of these alternative decisions will be looked at in terms of their advantages and disadvantages which are known to the managers of the business. From this evaluation, a final decision may be arrived at. Weighing the merits and demerits of each choice or option helps the managers of the company to make the best decisions.

One must bear in mind that decision making is an important function of management. Without this managerial function of decision making, other functions of management such as planning, directing, organizing and staffing cannot be performed, because each of these function involve making decisions. In the words of Stephen Robins, “decision making is the selection of a preferred course of action from two or more alternatives.”

Decision making can be categorized into two main types; Programmed decision making and unprogrammed decision making.

Programmed Decisions
Programmed Decisions relate to those kinds of decision making carried out in structured situations where the problems targeted are fairly routine and recurrent. For instance, issues affecting employees' leave allowances are solved using the firm’s policies on leave claims. A worker must meet certain requirements in order to qualify for such claims. While this example may be rather simple, in reality there may be routine situation that are more complex in nature. Consider a routine in the production department where the production manager orders for an inventory to be taken when production reaches re-order point.

However, this routine cannot be followed in instances where demand for the product suddenly increases. The manager must go against this routine by not waiting for the re-order point because he must order earlier than usual. We can therefore deduce from the examples given above that while there may be programmed decisions which are simple, there are other programmed decision which are necessary and a lot more complex. In both situations, the manager has to follow a pre-determined set of requirements for taking his decision. Programmed decisions do not need major brainstorming, they are taken based on already existing company policies and work procedures. In other words, programmed decisions do not need managers to figure out a new or creative way of solving the problems they are intended for. In other words, programmed decisions involve some amount of certainty.

If we are to summarize important features of programmed decision we can say that: Programmed decisions are taken in accordance with the way things are done in the firm. The way things are done in the firm is often called standard operating procedures. 

·   Programmed decisions are used to address frequently occurring or routine decisions for example request for a leave or determining whether the employee going on leave qualifies for a leave allowance or similar such situations that happens frequently.

·       Programmed decisions are more appropriate for problems which happen frequently and are similar. 

·    Programmed decision in reality are made by managers only once and later specified as the way to approach problem when similar situation in the future arise. 

·       Programmed decision could lead to the formulation of policies, rules and procedures.

The various kinds of organisational decisions are the following: Organisational decision, Operational decisions, Research decisions, and Opportunity decisions.

Steps in the decision making process
The definition and importance of decision making

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