The Decision-Making Process 7FIGURE I-lOne possible flowchartof the
decision process... ~.'i~ 'W- Recognize problel!l
- Define the goal or objective
- Assemble relevant data
...' ~-.. - ~- Identify feasible alternatives
." - L ~- Select the criterion to determine the best alternative
6. Construct a model
".., ~ ,~ ~-'''''''''''.- , "--- ~-- ~,.." ,- ~",-"->.-~- Predict each alternative's outcomes or consequences
0;;<. _ __- Choose the best alternative
-, ..--
- Audit the result
- Recognize the Problem
The starting point in rational decision making is recognizing that a problem exists.
Some years ago, for example, it was discovered that several species of ocean fish
contained substantial concentrations of mercury. The decision-making process began with
this recognition of a problem, and the rush was on to determine what should be done.
Research revealed that fish taken from the ocean decades before and preserved in laboratories
also contained similar concentrations of mercury. Thus, the problem had existed for a long
time but had not been recognized.
In typical situations, recognition is obvious and immediate. An auto accident, an over-
drawn check, a burned-out motor, an exhausted supply of parts all produce the recognition
of a problem. Once we are aware of the problem, we can solve it as best we can. Many firms
establish programs for total quality management (TQM) or continuous improvement (CI)
that are designed to identify problems, so that they can be solved. - Define the Goal or Objective
The goal or objective can be a grand, overall goal of a person or a firm. For example, a
personal goal could be to lead a pleasant and meaningful life, and a firm's goal is usually
to operate profitably. The presence of multiple, conflicting goals is often the foundation of
complex problems.
But an objective need not be a grand, overall goal of a business or an individual. It
may be quite narrow and specific: "I want to payoff the loan on my car by May," or "The
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