1. Recognition of a Problem
The starting point in any conscious attempt at rational decision-making must be
the recognition that a problem exists. Only when a problem is recognized can the work toward its solution begin in a logical
manner. In the early 1970's, for example, it was discovered that a number of species of ocean fish contained substantial concentrations
of mercury. The decision-making process began with this recognition of a problem, and the rush was on to determine what should
be done. Research into the problem revealed that fish taken from the ocean decades before, also contained similar concentrations
of mercury. Thus, the problem had existed for a long time; yet, it was not until recently that the problem was recognized.
In typical situations, recognition is obvious and immediate. An auto accident, an overdrawn check, a burned out motor, an
exhausted supply of parts or whatever, produces the recognition of the problem. Once we are aware of the problem, we can take
action to solve it as best we can.
2. Define the Goal or Objective
In a sense, every problem is a
situation that prevents us from achieving previously determined goals. If a personal goal is to lead a pleasant and meaningful
life, then any situation that would prevent it is viewed as a problem. Similarly, in a business situation, if a company objective
is to operate profitably, then problems are those occurrences which prevent the company from achieving its previously defined
profit objective. But an objective need not be a grand, overall goal of a business or an individual. It may be quite narrow
and specific. "I want to pay off the loan on my car by May," or "The plant must produce 300 golf carts in the next two weeks,"
are more limited objectives. Thus, defining the objective is the act of exactly describing the task or goal.
3. Assembly of Relevant Data
4. Identification of Feasible AlternativesFor decision-making to
take place, there must be alternative courses of action available. We can usually devise a variety of ways of achieving an
objective after some thought. But there is an ever present danger that in devising alternatives, we may overlook the best
alternative of all. lf this happens, we are left with the situation where the best of the identified alternatives will be
selected, but the result will not be the best possible solution.* There is no way to ensure that the best alternative is among
the alternatives considered. Probably, one should be certain that all conventional alternatives are enumerated, and that a
serious effort is made suggest innovative solutions. Sometimes a group of people considering alternatives in an innovative
atmosphere ("brainstorming') can be helpful.
Any listing of alternatives will produce both practical and impractical alternatives.
It would be of little use to seriously consider an alternative that cannot be adopted. An alternative may be infeasible for
a variety of reasons, such as, it violates fundamental laws of science, or it requires resources or materials that cannot
be obtained, or it cannot be available in time specified in the problem objective. After elimination, only feasible alternatives
remain, and these become an input for further analysis.
*A group of techniques called "value analysis" are sometimes used to examine decisions. Where the previously
made decision is not the best solution, value analysis (which is a re-examination of the decision process) may help identify
a better solution, and hence improve decision-making.
5. Selction Criteria for Judging AlternativesThe central task of
decision-making is the choice from among alternatives. How is the choice made? Logically, one wants to choose the best alternative.
This can only be done, however, if we can define what we mean by "best." There must be a criterion for judging which alternative
is best. Now we recognize that best is a relative adjective. It is on one end of the
spectrum. Since we are dealing in relative terms, rather than absolute values, the selection will be the
alternative that is relatively the most desirable. Consider a person found guilty of speeding by a judge and given the alternatives
of a $90 fine or three days in jail. On an absolute criterion, neither alternative is desirable. On a relative basis, one
would choose the better of the undesirable alternatives. In this case we would be following the old adage to "make the best
of a poor situation." There must be an almost unlimited number of ways in which one may judge the results of decision-making.
Several possible criteria are listed.
The selection of the criterion for choosing the best alternative may not be easy. If
one were to apply the seven criteria above to some situation in which there were a number of alternatives, it seems likely
that the different criteria would result in different decisions. It may be impossible for example, to minimize unemployment
without at the same time increasing the expenditure of money. The disagreement between management and labor in collective
bargaining concerning wages and conditions of employment reflect a disagreement over the criterion for selecting the best
alternative. Management's idea of the best alternative, based on its criterion~ is seldom the best alternative, using organized
- Create the least disturbance to the ecology.
- Improve the distribution of wealth among people.
- Use money in ways that are economically efficient.
- Minimize the expenditure of money.
- Ensure that the benefits to those who gain from the decision are greater than the losses of those who are harmed by the
- Minimize the time to accomplish the goal or objective.
- Minimize unemployment.
6. Modeling the InterrelationshipsAt some point in the decision-making
process the various elements must be brought together. The objective, the relevant data, the feasible alternatives and the
selection criterion must be merged. The relationships may be obscure and complex, as in trying to measure the impact of a
domestic decision on world peace. They may be impossible to define on paper in any meaningful way. On the other hand, if one
were considering borrowing money to pay for an automobile, for example, there is a readily defined mathematical relationship
between the following variables: amount of the loan, loan interest rate, duration of the loan, and monthly payment. The construction
of the interrelationships between the decision-making elements is frequently called model building or construction of the
model. To an engineer, modeling may be of two forms: a scaled physical representation of the real thing or system; or a mathematical
equation, or set of equations, that describe the desired interrelationships. In a laboratory there may be a physical model,
but in decision-making the model is mathematical. In modeling it is usual to represent only that part of the real system that
is important to the problem at hand. Thus, the mathematical model of the student capacity of a classroom might be
Capacity = lw/k; where l = length of classroom in meters, w = width of classroom in meters, and K = classroom arrangement
The equation for student capacity of a classroom is a very simple model; yet it may be adequate for the problem being
solved. Other situations might have much more elaborate mathematical models.
- 0.6 Auditorium seating
- 1.7 Classroom
- 3.2 Design/drafting room
- 10.0 Electronics laboratory
7. Prediction of the Outcome for Each AlternativeA model is used
to predict the outcome for each of the feasible alternatives. As was suggested earlier, each alternative produces a variety
of outcomes. Selecting a motorcycle, rather than a bicycle, for example, may make the fuel supplier happy, the neighbors unhappy,
the environment more polluted, and one's savings account smaller. But to avoid unnecessary complications we assume that decision-making
is based on a single criterion for measuring the relative attractiveness of the various alternatives. The other outcomes or
consequences are ignored and this single criterion* is used to judge the alternatives. Using the model, the magnitude of the
selected criterion is computed and recorded for each alternative.
8. Choice of the Best AlternativeWhen the prior elements of the rational
decision-making process have been completed, the final step is choosing the best alternative. If the other elements of decision-making
have been carefully done, the choice of the best alternative is simply accomplished by selecting the alternative which best
meets the chosen criterion.