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A summary of ITM chapter 3,4,7,8,9
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Introduction to managementChapter 9; Managerial decision-making
Types of decisions and problems:
Decision: a choice made from available alternatives. E.g. an accounting manager’s
selection among Colin, Tasha or Chris for the position of a junior level auditor, is
considered a decision. Many people assume that making a choice is the major part of
decision-making, but it is only part of it.
Decision-making: is the process of identifying problems and opportunities and then
resolving them. It involves both effort before and after the actual choice.
Programmed and non- programmed decisions:
Management decisions typically fall into one of two categories: programmed and non-
programmed decisions.
Programmed decisions: involve situations that have occurred often enough to enable
decision rules to be developed and applied in the feature. Programmed decisions are
made in response to recurring organizational problems. The decision to reorder
office supplies when inventories drop to a certain level is a programmed decisions.
Other programmed decisions concern the types of skills required to fill certain jobs,
the reorder point for manufacturing inventory and selection of freight routes for
product deliveries. Once managers formulate decision rules, subordinates and others
can make decision, freeing managers for other tasks. For example, when staffing
banquets, many hotels use a rule that specifies having one server per 20 guests for a
sit-down function and one server per 30 guests for a buffet.
Non-programmed decisions: are made in response to situations that are unique, are
weakly defined and largely unstructured, and have important consequences for the
organization. Sprint Nextel’s decision about carrying the iPhone is a good example of
a non-programmed decision. Apple has strong power over wireless carriers and is
able to require them to make long-term volume commitments. Sprint managers had
to decide whether to agree purchase at least 30,5 million iPhones over a period of 4
years at a cost of $20 billion or more – regardless of whether the company could sell
them to their customers. For Sprint, the stakes were high as the company was losing
customers and hadn’t been profitable
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