Supervisors make decisions on a daily basis and often these decisions are made w

Question

Supervisors make decisions on a daily basis and often these decisions are made without giving any thought to the decision making process. By following a decision-making process, supervisors can improve the way they make decisions by understanding how the process works in theory and practice. Explain each the of following in 1-2 pages: •The process of decision making (provide an example of how you can use this process now)Tools for decision making (provide examples of how these tools can be helpful)

Explanation / Answer

The Process of descision making involves

1) Understanding of business requirement

2) gathering the relavant information

3) analyzing the data

4) figuring out different ways to acheive the end requirement

5) figuring out the impact of decisions

6) finally taking the decision which gives best outcome

For e.g Lets assume that decision is needed to be taken on movement of stock from WH to Store .

Now suppose if stock is required for opening a new store .Assume store opening date is 3 days from now. But if stock is transported by road , cost is $10 per unit and it takes 4 days to transport the material . If stock is transported by Air, cost is $30 per unit and it takes 2 days to transport the material.

If stock is of 10 units . Cost by rod is 10 * 10 = $1000 and cost by Air = $30 * 10 = $300. Now store opening cannot be postponed as marketing cost will be increased by $500 , if postponed . So decision is to move the stock by Air rather than by road and open the store on time. Because the cost of transportation will be increased by $200 which is less than the increase in marketing cost of $500 if store opening in postponed.

tools that can be used for descision making is

1) Linear programing :

cost analysis can be done by linear programing method

Lets assume WH cost = Fixed cost + variable cost

Lets assume there are 2 Warehouses .

Warehouse 1 and Warehouse 2 .

Warehouse1 ( WH1 ) has variable cost of $5 per unit & Fixed cost is $40.

Warehouse 2 ( WH2) has variable cost of $4 per unit & Fixed cost is $30 .

if suppose 100 units to be produced

WH1 cost = $40 + $5 * 100 = $540

WH2 Cost = $30 + $4* 100 = $430

So the cost of WH2 is less than that at WH1 .So production at WH2 is the better option.

2) Statistical tools like T-Test , anova or Chi-Square techniques are used to analyse the performance

3) charts like Bar charts , Pie Charts, Pivot Chart and column charts are used to take decision

Please find the engines and raw materials produced in three different WH .

Pie charts or column charts will show the best outcome of these results .

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