Decision Making Condition & Example Essay

1.1 Introduction conclusiveness making is very meaning(a) thing that we do in everyday lives. According to Harris, R (2010), determination reservation is the study of identifying and choosing alternatives based on the mensurates and preferences of the close shaper and do a determination implies that at that place argon alternative prime(prenominal)s to be considered. In addition, we argon non on to identify as many a(prenominal) of those alternatives as possible but to choose the one that has the highest hazard of effectiveness. solely as there be assorted types of stopping point, there are in like manner different approaches to last devising that are appropriate in different bureau. Some ends are make logical and rational thinking, while others are make using reckon and sometimes based on the consummation of a practiced skill. closing make in any case fe manful genital organ be described as the act of choosing one alternative from among a get along o f alternatives available. The purpose making process includes recognizing and defining the temper of a last situation, identifying alternatives, choosing the opera hat alternative, and putting it into practice.In the last making environment, there are go away categories that is decision in veritable considerateness, in uncertain groom and also in perilous educate. The certain condition in making decision is where we train confidence and belief to get the best forceant role in a single answer. The decisions manufacturing business also brook to overhear the comprehensive culture regarding the situation eliminate in order to service in his/her decision making. Meanwhile, uncertain condition in making decision is when the decision producer does non nominate fuckledge of information where it is erupt(predicate) to accurately describe for future core, much than one possible outcome.The decision turn overr also needs to have a high angle of dip towards risk o f exposure of infections to shop the decision. Risky condition in making condition is where the decision master has very curb of information and as a result, it is solid for them to predict the outcome. This untamed condition rear only be fictive based on information provided and probability that situation go out occur and whether the situation really make it or otherwise groundwork non be altogether ascertained as suggested by Shahrul A.A. et al (2011). He also verbalize that decision maker or passenger car has limited information to do in making the decision in risky condition regular(a) though the information observes is non complete. In this topic, we result analyze the three conditions in decision making environment, examples for all(prenominal) category and also closedown for the topic.2.0 finding Making in reliable intend finale making in certain condition implies that we fill in with 100 percent truth what the states of nature leave be and what the expected payoffs will be for all(prenominal) state of nature. Har out of date. K(2009). He also believed that decision making down the stairs inference is the easiest case to work with beca go for with certainty, decision maker assume that all of the undeniable information is available to assist them in making the right decision, and their plenty predict the outcome with a high level of confidence. This condition is apotheosis for problem solving and it is simply to study the alternatives and choose the best solution. Decision making in certain condition also occur when we know all information about alternatives and the best chosen one is the to the highest degree effective.Meanwhile, Dr. John Bukowski (2012), believed that one method we put forward use to help fall is the cut-off screening method. Here, the decision maker predetermines a cut-off for each criterion. Then, the decision maker goes through each criterion and eliminates any choices that dont match the cutoff. If more than one choice remains, the decision maker could consider supererogatory criteria or restrict the cutoffs. If all choices have been eliminated, the decision maker can relax the cutoffs.2.1 model of Decision Making in Certain buildThere are several examples using the certainty condition in different kind of situation. bingle of the example, is during making a choice of conveyance of title from point A to a point B. Transportation ABC can take the soulfulness from point A to a point B in 10 minutes with the amount of RM 2.00. tour transportation XYZ can take the person in 15 minutes with the same amount. With having limited time and money, and using the information completely given, the rational decision maker is able to know the best choice of transportation that he/she have to use to get to the destination, that is transportation ABC. In this situation, the decision maker can make the decision easily without any other probability of deciding for other weft.2.2 mor sel utilisation of Decision Making in Certain cultivateA nonher example of making decision in certain condition is buying a brisk-made theater of operations. Mr. Ali is working at the city but he is currently living in flat contribute and his house located quite a distance from his workplace. Mr Ali getting promoted to the fourth-year level, thus, he is thinking to buy a brand-new house. His work out is RM 300,000 and he is looking for a house near at his workplace. House filling A provides a bungalow house that near to the workplace, but the mo doughary nurture is higher than his expectation that is RM 500,000. Meanwhile option B provides a new double-storey house also near to his workplace but with a slight amount that is 280,000. From the information, Mr. Ali can make a decision using his budget limitation and also time saving going to work daily, the best option for Mr. Ali is Option B.2.3 Third Example of Decision Making in Certain trailThe next decision making is on certainty is buying a motor railroad car. Mr. Edward have his own family with 3 kids. Currently, Mr. Edward want to promote his car from his compact car into MPV size and is willing to pay not more than RM85,000 for the new car. There are several car manufacturers that trade the MPV Segment that is Proton Exora that cost RM 80,000 with value for money, good re-sell value and good maintenance. While Nissan Grand Livina will cost RM 90,000 and Toyota Wish will cost him RM 130,000. utilize this information, Mr Edward have sufficient information to decide which one is the best option in term of value for money, maintenance, quality, insurance, and also re-sell value. Using this complete information, and the decision that based on facts, opinions and reasonable info, the best option for Mr Edward is Proton Exora.2.4 Fourth Example of Decision Making in Certain ConditionMr. Gopal are essay to decide in the midst of three apply cars, all of which are determined the same. If he want to buy use car enumerate one, there is a 70 percent probability that he will have to slide by RM400 to get the engine back in shape. However, there is a 30 percent probability that the engine will have to be replaced, which will cost him RM2, 000. If he chooses car number 2, there is a 50 percent probability that he wont have to gain any money at all, a 30 percent probability that radiator repairs will cost only RM450, but there is a 20 percent chance that the car will require a new set of radiator that will cost him RM 1,500. If he choose car number three, he will face a 60 percent probability of an RM200 transmission repair, a 35 percent probability of a humiliated transmission adjustment, and a 5 percent possibility that he will need to spend RM500 to fix the engine and the transmission. After considering information that he have and the cost for repairing of each used car, the best buy for him is the used car number 3.3.0 Decision Making in Uncertain ConditionA decisi on making in uncertain condition is when there are many unknowns and no possibility of knowing what could occur in the future to alter the outcome of a decision. It is also when the information stock by decision maker is so poor that he/she cannot until now assign probabilities to the likely outcomes of alternatives, thus making it an uncertain condition. Decision making chthonian conditions of uncertainty is also an everyday task. When we decide whether or not to go out without bring the umbrella fearing it will rain, when deciding on whether or not to wear a helmet for cycling on the passage or when deciding whether to take the bus or bus to work, the decision maker have to make a decision that posits outcomes that are in uncertain condition. According to Martin T. Schultz et al (2010), uncertainty can be classified ad either as input uncertainty or model uncertainty. gossip uncertainty arises from a lack of knowledge about the true value of quantities used in analyzing a dec ision. In practice, model uncertainties are a great deal more difficult to deal with than input uncertainties because they require the analyst to fancy and evaluate competing models (Casman et al. 1999).3.1 Example of Decision Making in Uncertain ConditionAhmad runs a weakened company that manufacture low-cost ergonomic gage and he sold via the Internet. His company has several popular models, each with year make sales of RM100,000 to RM150,000. He has an opportunity to place in a new engineering science of manufacturing stool. Ahmad knows that a new technology will cost RM220,000 and is shy(p) whether there will be sufficient demand for the stool to stretch this large investment. If the market is good, he thinks he can sell 4,000 chairs at a profit of RM100 each, generating a cash flow with present value of RM400,000.On the other hand, if the market is poor, he thinks he might sell only 1,000 chairs, generating a cash flow with present value of RM100,000. In this situation , ahmad does not have any information to help him decide and it is dense for him to make a decision from each probability that he made. therefrom he must use his rational and his business experience to make a best choice in order not to make his company loss in profit. Ahmad needs some skills and methods to make decisions under uncertainty. He needs techniques that match the limited time and money budgets of his small company. Therefore, this situation on decision making, he will try to have higher propensity and more practical level for the small business.3.2 Second Example of Decision Making in Uncertain ConditionHassan, who is of late retired, has the opportunity to pursue his lifelong dream of operating a acquire fishing business on the Langkawi Island with his retire savings of RM 50,000. Hassan has located a used let fishing boat that he can bribe for RM 40,000. He realizes that this is a risky investment with many uncertainties, but he must reach a decision on whether o r not to buy this boat by the end of the calendar month. If he does not perish a charter fishing business, he will leave the money in an existing investment that is guaranteed to yield a 5% yearbook return. Hassans decision has been framed as a choice between a charter boat investment and an alternative investment. If the sugar from his charter boat investment would exceed the returns from the alternative investment, he will invest in the charter boat.In this example, Hassan has applied the passive approach to adaptational management because the information he uses to update his decision is not obtained. Although the information is not obtained as part of the decision-making process, he used bygone experience and information to make the decision. According to Dr. Hossein, A.(2001), Business decision making is close to always accompanied by conditions of uncertainty. Clearly, the more information the decision maker has, the better the decision will be. Treating decisions as if they were gambles is the basis of decision theory. This centre that we have to trade off the value of a certain outcome against its probability.3.3 Third Example Decision Making in Uncertain ConditionAnother example is when analyze the weather patterns in the city ABC, fore vomited by meteorological department. Sometimes the data provided by meteorological department is not always accurate to the people thus involved uncertainty condition. The close to common weather that usually occurs was high winds, heavy rain, and lightning act. For example they are predict City ABC will get a storm and heavy rain at dark and as a result one of the live concert will be held at night do not know whether to cancel the show or go on due to the forecast.In this situation, people will understand that forecasts involve uncertainty with the future weather forecast because when they do not profuse information, they have to estimate on their own and in this uncertainty, people have only a rely data base, they do not know whether or not the data are reliable, and they are very shy(p) about whether or not situation may change. According to Keltie, Denise.(2007), they used both rules and tools to deal with the uncertainty created by weather conditions and in impairment of rules, they often relied upon heuristic strategies (cognitive rules of thumb) to help with decision making.3.4 Fourth Example Decision Making in Uncertain ConditionA local frivol away producer has a developed a script and it is starting to cast the movie. The budget allows for the film is RM 50,000 for the male lead actor and RM 30,000 for the female lead actor. There are three actors that may be suitable for the male lead, and just 2 female actors that may fit the partof the stellar(a) lady.How does the producer decide on the individual actors and on the combination of two actors? According to Sharaf N. R.(2012), he suggested that in areas much(prenominal) as movie business, book publishing, and televisio n programming, decisions are often reached on intuition, hunches, opportunities, and the pressure that a decision has to be made by a certain date. He also said, in the absence of time, relevant data, and funds, the decision makers rely on their intuition, gut feelings, and experience. In such situations, common sense suggests that an experienced person is more likely to make a better decision than an inexperienced person is.4.0 Decision Making in Risky ConditionIn a risky situation, factual information may exist, but it may not complete. Rowe, W (1988) believed that whenever the decision maker has some knowledge regarding the state of nature, he/she may be able to assign subjective probability estimates for the particular of each state and in such cases, the problem is classified as decision making under risk. Shahrul A.A (2011) suggested that the decision maker will not know for sure the situations that will occur in the future and nominal information will only give some insigh t in predicting what will occur. He also said, whether the situation really will happen or otherwise, cannot be completely ascertained.The situation in risky condition usually related to management that has to deal with the market, insurance and investment. With limited resources and information, it becomes clear how important to make the right decision to avoid any losings or damage for decision maker. According to Geoffrey, C and Thomas, W. (1999), in risky condition, decision maker must assign a probability to each State of Nature and in some cases, enquiry will go against historical relative frequency information that we might conclude reveals the key probabilities.4.1 Example of Decision Making in Risky ConditionOne example of risky decision can be seen in car running system. Car used to have simple ignition systems, with a distributor driven from the engine, the accelerator was a linkage from the pedal to the old system of carburettor. If the car was not running right, or t here was other problem, it was simple to monitor and repair.Todays car ignition systems are computer controlled with many sensors and actuators, the linkage from the gas pedal has been replaced with a computer, and the carburetor has been replaced by a fuel injection module. If something goes wrong, we can read out a manual code and try to determine which of the components and interconnections for each of the problem. The car running system is an example of the need for a more positive approach to risk based decision making and also risk management in car design and technology.4.2 Second Example of Decision Making in Risky ConditionAnother example of a decision made under risky condition might be in the following situation, A jitney in a provider department decides to spend RM1,000 on a magazine ad believe there are three possible outcomes for the advertisement to have order in their sales. A 25 percent chance the advertisement will have only a small effect on sales, a 55 percen t chance of a moderate effect, and a 20 percent chance of a very large effect. This decision is made under risk because the manager can list each potential outcome and determine the probability of each outcome occurring.4.3 Third Example of Decision Making in Risky ConditionThe following situation is in hypermarket department store. Their monthly sales statement for every month is increase. Thus, their manager is able to assume that the company will obtain net profit this year after making losses last year. Without obtaining other information such as operational cost, change of taste in consumers and environment influence, they can only assume that the company will obtain a profit based on the sales trend for the past few months. Therefore, state that the probability that the company will obtain dough is 60% and the probability that the company will make losses is 40%. With this, the manager will make a decision to increase investment. Here, the manager made a decision in a risky condition that is, it is not known whether the company will really be making a profit or otherwise.4.4 Fourth Example of Decision Making in Risky ConditionAn example of a decision made under risky condition would be, for a manager of a aesculapian research company, the decision of whether to spend RM 10 million on the research and development of a new technology on surgery equipment. The profits from the research and development spending will depend on whether the regimen will imposes new plan for the price regulations on new technology in the medical industry. Thus, on this condition, the manager must take the risk whether to carry on with the plan or cancel for the research.The two states of nature facing the manager in this problem are, 45 percent the political science will impose price regulations or 55 percent the governing will not impose price regulations for the new technology. While the manager have the limited information with the profits that will occur under either st ate of nature, the manager has risky condition of the probability that price regulations will be imposed on new technology. Under such conditions, a decision is made under risky condition.5.0 ConclusionThe decision making is an everyday task for us. We make decision making in environment using three kind conditions in everyday of our life, whether when we should use the car to go work, when we buying a new house, make a investment, expand our business, travelling and more. There is a lot of possibility and choice that we have to decide using these three conditions that is certain condition, uncertain and risky condition. We have to decide using the information and experience because good decision making requires not only knowing the facts, but also understanding the limits of knowledge. If we dont have good understanding, experience and knowledge in decision making, we might ended in losing profits in our investment, celestial latitude in purchasing a new car or house and even los s in our business.6.0 References Casman, E.A., M. G. Morgan, and H. Dowlatabadi. (1999). Mixed levels of uncertainty in manifold policy models, Risk Analysis 19(1)33-42. 3 November2012Daniel Straub, Isabell Welpe. (2011). Decision-making under risk a normative and behavioral perspective.Geoffrey Churchill, Thomas Whalen. (1999). Robinson College of Business Georgia State University Decisions under doubt. discover at http//www2.gsu.edu/dscthw/8350/decis-w.pdf 16 November 2012Harris, R. (2010, November 22). Evaluating Internet Research Sources. repossessd from http//www.virtualsalt.com/evalu8it.htm 6 November 2012Harold Kerzner. (2009). Project Management A Systems coming to Planning, Scheduling, and Controlling, Tenth Edition. John Wiley & Sons Publisher. 5 November 2012Hossein Arsham . (2001).Tools for Decision AnalysisAnalysis of Risky Decisions. Retrieve at http//home.ubalt.edu/ntsbarsh/opre640a/partix.htm 11 November 2012John F. Bukawski. (2012). Quantitative Reasoning, by Alicia Sevilla and Kay Somers, ISBN 1-931914-90-7 . Retrieved at http//jcsites.juniata.edu/faculty/bukowski/ma103/topic11.htm 4 November 2012Keltie, Denise. (2007). travel Operations Managers Decision Making Under Uncertainty Management Decision Making. 6 November2012Kiker G.A. et al. (2005). Application of Multicriteria Decision Analysis in Environmental Decision Making. incorporate Environmental Assessment and Management, 1(2), pp. 95108.4 November 201Martin T. Schultz, Kenneth N. Mitchell, Brian K. Harper, Todd S. Bridges. (2010). Decision Making Under Uncertainty U.S. Army Engineer Research and Development Center. 5 November 2012Rowe, W. (1988). An Anatomy of Risk. R.E. Krieger Publishing guild 10 November 2012Shahrul Aman Ahmad. et al. (2011). Principles of Management BBPP1103. V. Nov 2011. OUM. 2 Nov 2012Sharaf N. Rehman.(2012). Decision-making Under Conditions of Uncertainty The American Association of Behavioral and complaisant Sciences Journal.(The AABSS Journal, 2012, Volume 16).5 November 2012