The use of a specific model of managerial decision making is due to a number of reasons, such as the complexity of the real world, experimentation, and future orientation.
Before we proceed to consider widely used models, we describe the basic models for making managerial decisions.
· A physical model that represents an object of study using its reduced or enlarged description. It practically represents a simulated integrity;
· An analog model that represents the object of study as an analogue, whose behavior is similar to the behavior of a real object, but externally they do not match.
· Mathematical model or symbolic. It uses symbols to indicate characteristics or properties of an object.
Modeling is a process, therefore, we outline the stages of the management decision-making process.
Formulation of the problem. This is the main stage of building a model, providing the correct solution to a managerial issue. The correct statement of the problem is sometimes more important than its solution. To find the optimal or acceptable solution to a specific problem, you need to know its components. This will distinguish the symptoms from the reasons that every leader should be able to do.
Building a model. This is the next step. The developer defines the main goal of the model, as well as the output standards or the expected receipt, using the model, helping management to effectively solve the problem that it faces. Here you need to determine the information required to build a model that would satisfy these goals and provide the necessary information at the output.
Sample of the model for reliability. The main aspect of verification is to determine the degree to which the constructed model matches the real world. It is necessary to determine the presence of all the essential components built into the model that correspond to the actual situation. Verification often shows that the constructed models are not perfect, because do not contain all the necessary variables. This stage is also necessary to establish the degree of reliability of the information obtained using the model, determining its ability to really help management solve the problem.
Application of the model. No models of managerial decision making can be considered successful until they have passed the adoption and become understood and put into practice.
Model update. Even successful management decision-making models that have gone through all stages of the management decision-making process need to be updated.
Like other methods and tools, models can cause errors. The effectiveness of the model is reduced by the action of potential errors.
Decision making is a process because it is necessary to take sequentially interconnected steps. To make a decision of a problem, not a single solution is used, but various ways of making managerial decisions.
In general, the decision-making process can be represented in five stages, but their actual number is determined by a specific problem.
1. Diagnosis of the problem. There are two options for dealing with the problem. A problem may include a situation in which the set goals are not achieved. The need for management decisions is obvious here, we are talking about reactive management. But sometimes the alleged situations are considered as a problem.
2. The wording of the criteria and limitations of decision making. When diagnosing a problem, it is necessary to determine what can be done with it. The manager needs to determine the limitations on the path to achieving the result and their alternative.
3. Definition of alternatives. Which should be in sufficient quantity. But each of them should be analyzed in detail and weighted.
4. Assessment of alternatives. The next step is the selection of the most desirable alternatives based on the assessment.
5. The choice of alternatives with more favorable consequences.
As practice shows, the methods of making managerial decisions and their quality largely depend on the leader, his mental state.