Decision Making Models

Decision Making Models Managers can choose the model used in making decisions, programmed or non-programmed, and the circumstances of decision making, certainty, risk or uncertainty. There are three models that managers can use in making decisions, including: 1. Classical decision model The classical decision model is a model that expects managers to make rational decisions. The classical model aims to define how decision makers should make decisions. In recent years, classical models have provided applications to quantitative techniques using computers such as linear programming, decision trees, research operations, payoff matrices, break-even analysis. event points), and forecasting techniques. Managers often face problems that are repetitive and clearly identified, so they can know the possibilities of all alternative actions and their consequences. In this case, managers making classic decisions have the ability to help managers become more rational. This model is a very rational model in helping managers to make decisions. 2. Administrative decision model The administrative decision making model (administrative decision model) describes how managers make decisions in difficult conditions. Managers often face problems that are difficult, rare, or unstructured. In anticipation of facing this problem, managers use non-program decision types. The available information about alternatives and their results is very limited, so the conditions for decision making are uncertainty. Managers are unable to make rational economic decisions. Herbert A. Simon proposed two concepts in forming administrative models, including: a. Bounded Rationale and Fulfillment Limited rationality (bounded rationality), managers have limitations in making economically rational decisions. The large number of unstructured problems faced and the very limited information available makes it difficult for managers to solve them by making rational decisions. Fulfillment, managers choose a problem solution from the first alternative that meets the minimum decision criteria. In decision making, managers only choose the first satisfactory problem solution that appears. This model is very precise in describing how managers make decisions about problems that are difficult to solve in risky situations. b. Intuition Another way of making administrative decisions is intuition. Intuition is a decision-making process based on feelings and accumulated experience. Making decisions in this way does not mean that it does not require rational thinking. Based on past experience, managers can quickly develop several alternatives to make the right decision. In general, such problems are structured problems so that managers can easily overcome them. Likewise, by using feelings, managers make decisions based on feelings and emotions in decision making, but cannot be separated from rational analysis. To face new problems and uncertain situations, managers often use intuition to solve the problems they face. Apart from that, intuitive decision making can also be done based on subconscious mental processes and values or ethics. Many managers are successful by using analysis rationally in making decisions. Based on research results, more than fifty percent of managers use intuition in making decisions. 3. Political or Incremental Decision Model Political decision model, managers often face unstructured problems, and information is very limited. This model is used in non-programmed decision making and conditions of uncertainty. Decisions are made by managers in organizations with different goals, so they are required to come to an agreement on various information. These managers need to form a coalition to reach agreement. Coalition means the formation of an informal alliance among managers to reach agreement in decision making. Thus, without a coalition in decision making, it can result in strong individuals or groups dominating decision making. The political decision model involves many people in forming coalitions, managers have the opportunity to contribute their opinions to each other in decision making, and increase their commitment to the alternatives selected and used in decision making.