ENGINEERING

MANAGEMENT
FE 406
Decision Making
INTENDED LEARNING OUTCOME

Demonstrate problem-solving abilities and

rational effective decision making to address
organization challenges
Topics

Decision Making
▪ Types of Problems and Decisions
▪ Decision Making Process
▪ Decision Making Conditions
▪ Decision Making Tools and Techniques
Decision Making
Managers of all kinds and types, including the
engineer manager, are primarily tasked to
provide leadership in the quest for the
attainment of the organization's objectives.
The engineer manager's decision-making skills will
be very essential to his success as a professional.
DECISION-MAKING AS A MANAGEMENT
RESPONSIBILITY
Decision must be made at various levels in the
workplace. They are also made at the various stages in
the management process. If certain resources must be
used, someone must make a decision authorizing
certain persons to appropriate such resources.
Decision-making is a responsibility of the engineer
manager. It is understandable for managers to make
wrong decisions at times. The wise manager will
correct them as soon as they are identified. The
bigger issue is the manager who cannot or do not
want to make decisions.
An example may be provided as follows:

The production manager of a certain company has received a

written request from a section head regarding the purchase
of an air-conditioning unit. Almost simultaneously, another
request from another section was forwarded to him requiring
the purchase of a forklift. The production manager was
informed by his superior that he can only buy one of the two
requested items due to budgetary constraints.
Decision-making is the process of selecting a course of action
from multiple alternatives to address a specific issue or achieve
a goal. It involves evaluating options, considering potential
outcomes, and choosing the option that best meets the desired
objectives or solves the problem at hand.
Decisions are made at various management levels (i.e., top,
middle, and lower levels) and at various management
functions (i.e., planning, organizing, directing, and
controlling). Decision-making, according to Nickels and
others, "is the heart of all the management functions."
THE DECISION-MAKING PROCESS
Rational decision-making, according to David H. Holt, is a
process involving the following steps:
1. Diagnose problem
2. Analyze environment
3. Articulate problem or opportunity
4. Develop viable alternatives
5. Evaluate alternatives
6. Make a choice
7. Implement decision
8. Evaluate and adapt decision results
1. Diagnose Problem
If a manager wants to make an intelligent decision, his first
move must be to identify the problem. If the manager fails
in this aspect, it is almost impossible to succeed in the
subsequent steps.
What is a Problem?
A problem is a situation or challenge that requires a
solution or resolution.
2. Analyze environment

Analyzing the environment involves assessing

the external and internal factors that could
influence an organization, project, or
decision.
The process typically includes:

1. External Environment Analysis:

2. Internal Environment Analysis:
Tools for environmental analysis include:

•PESTLE Analysis (Political, Economic, Social, Technological, Legal,

Environmental)

•SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

•Porter's Five Forces (Competitive rivalry, supplier power, buyer

power, threat of new entrants, threat of substitutes)
3. Articulating the Problem or Opportunity

This step in rational decision-making involves clearly

defining the issue that needs to be addressed or the
opportunity that can be pursued. Proper articulation
ensures that decision-makers have a shared
understanding of what needs to be solved or achieved.
Actions in This Step:

1.Clarify the Nature of the Issue

• Is it a problem (a challenge, inefficiency, or obstacle) that needs to be resolved?
• Is it an opportunity (a chance to improve, grow, or innovate) that should be
explored?
2.Define the Scope and Impact
• Who or what is affected by the problem/opportunity?
• What are the potential consequences of inaction?
• What resources or constraints must be considered?
3.Establish Clear Objectives
• What is the desired outcome of addressing the problem or seizing the
opportunity?
• What metrics or indicators will determine success?
4.Ensure Alignment with Goals
• How does solving this problem or taking this opportunity align with
organizational or personal objectives?
• Does it support strategic priorities, efficiency, profitability, or innovation?
4. Developing Viable Alternatives

Once the problem or opportunity is clearly articulated, the next step in

rational decision-making is to generate feasible solutions or courses
of action. This ensures that decision-makers have multiple options to
evaluate before choosing the best path forward.
Actions in This Step:

1.Brainstorm Multiple Solutions

2.Ensure Feasibility
3.Consider Short-Term and Long-Term Implications
4.Use Decision-Making Tools
5. Evaluating Alternatives

After developing viable alternatives, the next step in rational

decision-making is to assess and compare each option based on
key criteria. This ensures that the best possible decision is made,
minimizing risks and maximizing benefits.
Actions in This Step:

1.Define Evaluation Criteria

2.Compare Alternatives
Use decision-making tools such as:
• SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)
• Cost-Benefit Analysis (Quantify potential returns vs. costs)
• Decision Matrix (Score alternatives based on criteria)

3. Prioritize the Best Options

Final Decision for Reducing Product Spoilage in a Food
Manufacturing Company:

Based on the evaluation, the best alternative is:

Enhancing Quality Control Measures
•This option received the highest evaluation score (39/50).
•It directly addresses the root cause of product spoilage by improving
defect detection and process control.
•It is feasible within existing operations and has long-term benefits for
product consistency and customer satisfaction.
6. Making a Choice

After evaluating all alternatives, the next step in rational

decision-making is to select the best option based on the
analysis. This decision should align with the organization’s goals,
resources, and constraints while providing the most effective
solution to the problem or opportunity.
Considerations in Making a Choice:

1.Highest Overall Score

2. Alignment with Objectives
3.Feasibility and Resources
4.Risk vs. Reward
5.Stakeholder Buy-in
7. Implement the Decision focuses on executing the selected
course of action effectively.
Actions in Implementing the Decision:
1.Develop an Action Plan
2.Allocate Resources
3.Communicate the Decision
4.Monitor Execution
5.Manage Resistance and Risks
6.Ensure Compliance
8. Evaluate and Adapt Decision Results
Evaluation Methods:
✓ Data Analysis: Compare product quality metrics, waste
reduction, and efficiency levels before and after
implementation.
✓ Employee Feedback: Conduct surveys to understand challenges
and areas for improvement.
✓ Customer Satisfaction: Monitor customer complaints and
product returns.
Adaptation Strategies:
❑ If successful: Expand automation to other production lines.
❑ If issues arise: Adjust system settings, provide additional
training, or integrate manual quality checks where needed.
❑ Continuous Improvement: Conduct periodic reviews and
upgrade the system as technology advances.
Approaches in Problem Solving

1. Qualitative Evaluation
2. Quantitative Evaluation
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Thank you!