Management Decision-Making

Syllabus

Thematic definition of lectures: 1. Decision-making process and its basic elements. Definition of the concept and place of decision-making and the decision-making process in management, the connection and linkage with other managerial functions. A brief introduction to the concepts of decision-making methods and the stages of the decision-making process. Explanation of the basic decision matrix model with a focus on the requirements that must be met by a set of decisions alternatives, environmental states and consequences. Explanation of the principle of dominance with practical application. 2. Decision theories and rationality in decision-making. Normative and descriptive direction in decision-making. Factors influencing rationality in decision-making. Identifying barriers to rationality. Principles of decision-making. Classification of decision-making processes. 3. Structure of the decision-making process. Definition of the phases of the decision-making process, clarification of their meaning and different perspectives on the structure of the decision-making process. 4. Decision-making methods and their classification. Description and explanation of the use of exact, empirical and heuristic methods of decision-making. Definition of the fundamental of decision tables and the principles of their compilation. Clarifying the structure of decision tables and defining the types of decision tables. 5. Psychological aspects of decision-making. Their definition in the context of descriptive decision theories. Explanation of behavioural economics and its manifestations in decision-making processes. Definition of psychological deviations, deeper understanding of selected psychological traps. Defining intuition and the influence of emotions on decision-making. 6. Methods of decision-making under conditions of certainty. Clarifying multi-criteria decision-making. Explanation of the essence of methods of partial evaluation of variants – weighted ranking method, methods based on direct evaluation of partial utilities, method of linear partial utility functions, base variant method, PATTERN method. Explanation of methods for determining criteria weights – pairwise comparison methods, Saaty’s method, Metfessel allocation and other. The fundamental and use of decision networks. 7. Methods of decision-making under risk conditions. The importance of determining the probability of future possible situations with the definition of objective or subjective probability. Clarification of the tools used in terms of risk – expected value rule, probabilistic trees, decision tree method. 8. Methods of decision-making under uncertainty. Explanation of various decision rules under conditions of uncertainty that do not require knowing the degree of probability of occurrence of environmental states – Wald’s, Savage’s, Hurwicz’s and Laplace’s rules. 9. Modelling of decision-making processes. Clarification of the phases of the modelling process and modelling tools. Classification of decision models. Defining the stages of model building. 10. Methods of operational analysis. Classification of operational analysis methods with a focus on mathematical programming, structural analysis, network analysis methods and simulation methods. Clarification of linear programming as on of the best developed and applied methods of mathematical programming. Explanation of general linear programming and distribution problems (transport, assignment problems). 11. Subjects of managerial decision-making. Individual decision-making. Defining decision-making styles. Characteristics of team decision-making, defining the benefits of team decision-making, factors of successful team decision-making and specification of team personalities. Defining group decision-making. 12. Information security of decision-making processes. The definition of information and its need in today’s dynamic environment. Clarification of information systems, their fundamentals, role and classification. Focus on management information system and decision support systems. 13. Expert systems in decision-making. Components of expert systems and their functioning. Introducing types of expert systems with a deeper analysis of diagnostic and generative expert systems. Thematic definition of exercises: 1. Introduction to managerial decision-making. Methodology, course content, credit requirements. Relation to other subjects and other managerial functions. 2. Group decision-making. Case studies – teamwork, team tasks, their contribution in group work. Group decision making, advantages and disadvantages. 3. Definition of psychological deviance, deeper understanding of selected psychological traps – the anchoring trap, the status quo trap, the sunk cost trap, the corroborating evidence trap, the framing trap, the estimation and prediction trap. Pointing out the advantages and disadvanatages of intuitive decision-making. The impact of emotions on decision-making. 4. Stages of the decision-making process. Techniques of searching for variants. Case studies – brainstorming, morphological analysis and others. 5. Decision tables. Fundamentals, types, use in practice. Construction of a specific decision table. 6. Methods of decision-making under conditions of certainty. Solving examples for single and multi-criteria decision-making under neutral and complementary relationship between objectives. 7. Methods of decision-making under conditions of certainty. Examples for multi-criteria decision-making under competing objectives. Method of goal suppression and claim level determination. Utility analysis. Methods for sub-criteria evaluation of alternatives. 8. Methods of determining criteria weights. Solving complex examples of multi-criteria evaluation of variants. 9. Methods of decision-making under risk conditions. Solving examples to apply the expected value rule and constructing decision trees. 10. Methods of decision-making under risk conditions. Constructing a probabilistic tree. Decision analysis. 11. Methods of decision-making under uncertainty. Application of individual decision rules. 12. Methods of operational analysis. Optimization methods. Solution of transport problems using the North-West corner method, the method of the tabular minimum of transport costs and Vogel’s approximation method. 13. Methods of operational analysis. Network analysis. CPM and PERT method.