Study GuidePrinciples of Management–Decision Making andProblem Solving1. Conditions That Influence Decision MakingManagers make decisions every day, but not all decisions are made under the same conditions. Inmanagement, decision making usually happens underthree main conditions:certainty, risk, anduncertainty. While all managers experience each condition at times,risk and uncertaintyare morecommon when dealing with complex problems—especially at higher management levels.1.1 Decision Making Under CertaintyDecision making undercertaintyhappens when a manager hascomplete and accurateinformation. All the facts are known, and the outcomes of each option are clear.This is theideal situationfor problem solving. The manager’s main task is to:•Review the available alternatives•Choose the best possible solutionProgrammed DecisionsWhen problems occurrepeatedly, managers often rely onprogrammed decisions. These arestandard, preplanned responses based on past experience.Example:Automatically reordering inventory when stock drops below a certain level.Today, many programmed decisions are supported—or even handled entirely—bycomputers anddecision-support software, making the process faster and more consistent.Structured ProblemsProblems handled under certainty are usuallystructured problems. These problems are:•Familiar•Clearly defined•Easy to understandPreview Mode
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