Once the problem is defined, feasible alternatives to the problem should be developed and the potential consequences of each alternative should be considered. This search process investigates the internal and external environments of the organisation to provide information that can be developed into possible alternatives. This search is conducted within certain time and cost constrains.
But how are alternatives best generated? There are a number of methods for finding solutions: association, analogy, brainstorming, Delphi method, the nominal group method, intuition, analytical thinking.
Intuition: this mode of thinking is based on hunches. It is not, as some think, irrational. Intuition or hunches are built on a strong foundation of facts and experiences that are buried somewhere in the subconscious. All the things you know and have experienced can lead you to believe that something might be true although you've neveractually experienced that reality. Use your intuition as much as possible but check it against the reality of the situation.
Analytical Thinking: this thinking method is based on analysis. It is the most conventional and logical of all the methods and follows a step by step pattern.
A) examine each cause of the problem. Then for each cause, based on your direct knowledge and experience, list the solutions that logically would seem to solve the
problem.
B) check the possible solutions you arrive at with the research you have compiled on how the problem was solved by others.
Using each thinking technique, search for solutions, Keep a running list of all of them, even the ones that seem far out, too simple or even impossible, The effect of this is to give you a rich pool of ideas that will lead you to the best solution.
5. Sorting Out the Best Solution
1) The alternative — outcome relationship.
Once alternatives have been developed, they must be evaluated and compared. In every decision situation the objective in making a decision is to select the alternative that produces the most favourable outcomes and avoids the least unfavourable outcomes. The alternative outcome relationship is based on three possible conditions:
1. Certainty. The decision maker has complete knowledge of the outcomes of each alternative.
2. Risk. The decision maker has some probabilistic estimate of the outcomes of each alternative.
3. Uncertainty. The decision maker has absolutely no knowledge of the probability of the outcome of each alternative.
Decision making under conditions of risk is the most common situation. Although some would say that taxes and death are the only certainties, there may be some circumstances, which help firm to enjoy the benefits of relatively high certainty. Perfect knowledge of demand is seldom. When the manager has some, but not complete, knowledge, the condition of risk may prevail.
2) Types of Decision Makers
When no information exists relevant to the outcomes of possible alternatives, the personality characteristics of the decision maker become more important for determining which decision is made. Although it is possible to enumerate countless characteristics. One can point out 4 groups of decision makers:
The Optimistic Decision Maker
Some decision makers think optimistically about the events that influence decisions. Such individuals always choose the alternative that maximises the maximum outcomes. That is to say, they always act as though no matter what they do everything will come out to their benefit; consequently, why not go for broke, because they cannot, so they believe, go broke.
The Pessimistic Decision Maker
Other decision makers believe the worst possible outcome will occur no matter what they do. Under these circumstances, they estimate the worst outcomes associatedwith each alternatives and select the best of these worst outcomes. Thus, a pessimistic publisher would produce the minimum number of books.
The Regret Minimising Decision Maker
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