Tools and Techniques in Decision-making

Decision Tree: It is a chart, graph or model that focuses on each event and its outcomes. It also focuses on the likelihood of occurrences of these events. They are used in quantitative decision making. The diagram consists of a tree-shaped figure which shows a course of action. The branch of tree represents various outcomes. It also presents if a certain course of action is selected then what outcomes will follow it. These outcomes are mutually exclusive.

Delhi Technique: It helps in estimating the probability of occurrence of future happenings. It involves a written process where a group of people fill their responses in multiple questionnaires. There are no physical meetings and discussion. Every new questionnaire is based on the information collected from the previous questionnaire. The process ceases when the group agrees to a single decision. The responses of members are kept anonymous.

Decision Matrix: All the options of a decision are presented in the reform of a table or matrix. All options are listed in the first column. The factors affecting the decision are represented in the first row. The manager then scores and weighs the options on the basis of a factor of decision. More core is awarded to more important factors. The sum of scores reveals the best alternative.

Cost Benefit Analysis: Under this, the manager weighs the various options on the basis of financial constraints. He identifies what will be the cost of exercising the option and what will be the monetary benefit derived from it. The alternative that gives maximum cost-benefit, i.e. lower cost resulting in higher benefits, will be selected.

T Chart: it is a technique where the manager rights minuses (negative points) and plusses (positive points) of each alternative. This decision helps in judging the pros and cons of each alternative.

Pest Analysis: It is one of the technique to look into the external environment and decide in accordance with it. It stands for political, economic, social and technological. This decision-making technique helps in identifying the current trend in the outside environment and making decisions accordingly.

SWOT Analysis: It stands for Strength, Weakness, Opportunities and Threats. It is an effective decision-making tool that helps in strategic planning. The top-level managers use this technique to gauge the internal as well as external environment.

Conjoint Analysis: This decision-making method is generally used by leaders of the business to learn about the preferences of the consumers. It generally helps in pricing the product.

Pareto Analysis: This method is used in circumstances where the manager is overloaded with a variety of decisions. He is required to make numerous decisions simultaneously. In this, the manager prioritises and arranges the tasks. This is done by determining which activity will have a great impact on the organisation.

Multivoting: It is a decision-making process where a group of people are involved in decision-making. This helps in jotting down a huge list of options which is filtered over and over again until a final decision is obtained.

Linear Programming: It is a technique of depicting complex relations between different variable through a linear function. This is followed by finding the optimum points that will either maximise the profits or minimise the costs. Thus, this methods establish a relationship between a different variable and identifying the feasible outcomes.

Monte-Carlo Simulation Technique: It is a technique where the manager replaces and amplifies the real experiences on the basis of some guided techniques. It is done on the basis of random sampling so that there is true variability. It is generally used in social care and health information system, supply chain management and logistics.

Playback Analysis: It is a technique used in a financial analysis of the project.  This technique helps in ascertaining the time required by the project to cover the investment cost. Various alternatives are ranked according to the number of years in which the invested amount will be yielded back. The alternatives with the lowest payback is selected.

Experiences: The past experiences of the manager helps in taking new decision.

Facts: The primitive tool in decision-making is the facts and data gathered by the manager. Reliable and qualitative data is the core of effective decision-making.

Intuition: The manager takes the decision on the basis of inner conscience and gut feelings. However, often managers use quantitative techniques, they rely on intuitions for making judgements. Intuitions are an amalgamation of experiences, past training and acquired knowledge. It is made by the sub-concious mind. Generally, it is considered irrational, but it is not necessarily correct.