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09/27/16 1Advesh Consultancy Services
PROBLEM SOLVING AND
DECISION MAKING
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ICE BREAKER
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ICEBREAKER
• What is your leisure activity?
• Who , living or dead , do you most admire ,
and why?
• What is your greatest achievement?
• What are your positive qualities?
• If you had unlimited resources , what would
you buy which would give you most pleasure?
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PROGRAMME OBJECTIVE
• To clarify and define the problem.
• To understand the usefulness of collaborative
problem solving and decision making.
• To examine different decision
making models.
• To utilize creativity in the problem solving/decision
making process.
• To plan, practice, and problem solve with making
decisions through case studies, role playing and
group discussions.
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Please write a One Sentence
Definition of
PROBLEM SOLVING
and
DECISION MAKING.
Please write a One Sentence
Definition of
PROBLEM SOLVING
and
DECISION MAKING.
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DEFINITION –PROBLEM SOLVING
A systematic approach to defining the
problem and creating a vast number of
possible solutions without judging these
solutions.
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PROBLEM SOLVING
Problem solving is a cognitive processing
directed at achieving a goal where no
solution method is obvious to the problem
solver.
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PROBLEM SOLVING
Problem Solving is …..
• “….. the art of finding ways to get
from where you are now to where
you want to be (assuming you do
not already know how).
• The ‘problem’, therefore, is the
gap between the present situation
and a more desirable one.”
(Nolan 1989)
Is this Problem Solving?
A B
?
TRIPLE CONSTRAINT
PRINCIPLE
• Something is a problem if:
it makes you late
it increases costs
it degrades performance.
time cost
performance
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If none of these occur, it’s
NOT a problem,
just a hindrance.
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DEFINITION – DECISION MAKING
The act of narrowing down the
possibilities, choosing a course of action,
and determining the action’s potential
consequences.
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“It's not a
problem that we
have a problem.
It's a problem if
we don't deal
with the
problem.”
--Mary Kay
Utech
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WHAT DOES IT INVOLVE?
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• Problem solving is a skill, a tool and a process.
• It is a skill because once you have learnt it you
can use it repeatedly, like the ability to ride a
bicycle, add numbers or speak a language.
• It is a tool because it can help you solve an
immediate problem or to achieve a goal.
• It is also a process because it involves taking a
number of steps.
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PROBLEM SOLVING
• Skill
• Process
• Tools
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WHAT SKILLS DO YOU USE INWHAT SKILLS DO YOU USE IN
PROBLEM SOLVING?PROBLEM SOLVING?
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• Making judgements
SKILL SETS IN PROBLEMSKILL SETS IN PROBLEM
SOLVING?SOLVING?
• Analytical skills
• Decision making
• Collecting information
• Planning
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PROBLEM SOLVING PEOPLE?
Experts.
People who know the area of
knowledge thoroughly. Solving
problems becomes more natural.
People who can think of
alternatives even when no clear
solutions seems apparent.
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Have a better memory for relevant
details in the problem.
Classify problems according to their
underlying principles.
Use well-established procedures.
Work forwards towards a goal
(rather than backwards).
EXPERT PROBLEM SOLVERSEXPERT PROBLEM SOLVERS
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ACTIVITY 1
10.45-11-15
Who is the murderer
The Zin Obelisk
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ANSWER AND RATIONALE
• The answer is Neptiminus.
Rationale
1. The dimensions of the zin indicate that it contains 50,000 cubic feet of stone blocks.
2. The blocks are 1 cubic foot each, therefore, 50,000 blocks are required.
3. Each worker works 7 schlibs in a day (2 schlibs are devoted to rest).
4. Each worker lays 150 blocks per schlib, therefore each worker lays 1050 blocks per
day.
5. There are 8 workers per day, therefore 8,400 blocks are laid per working day.
6. The 50,000th block, therefore, is laid on the sixth working day.
7. Since work does not take place on Daydoldrum,the sixth working day is Neptiminus.
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TEA
11.00 AM – 11.15 AM
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Content
Understanding
Domain-dependent
problem-solving
strategies
Self-regulation
Metacognition Motivation
Planning Self-monitoring Effort Self-efficacy
PROBLEM SOLVING REQUIREMENTSPROBLEM SOLVING REQUIREMENTS
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Understanding the Process:Understanding the Process:
‘‘How to Solve it’How to Solve it’
Engage: I want to and I can
– Read the problem (and all
the information)
– Listen
– Learn about the situation
that poses the problem
– Motivation
– Overcome panic
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Understand the problem: define
Put in the time to define the problem:
– Discuss.
– Ask questions.
– Visualize.
– Restate the problem in your own words.
– Explain the problem to someone else.
Understanding the Process:Understanding the Process:
‘‘How to Solve it’How to Solve it’
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Plan a procedure to solve
the problem
– Prior experience.
– Data available.
– Content knowledge.
– Patterns.
– Estimation.
– Alternate solutions.
– Feasibility.
Understanding the Process:Understanding the Process:
‘‘How to Solve it’How to Solve it’
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Collect data & the knowledge
required
– A solution may be required
based upon imperfect
knowledge.
Understanding the Process:Understanding the Process:
‘‘How to Solve it’How to Solve it’
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Select the preferred solution: test, use and evaluate
– Check each step
– Can you determine clearly
that each step is correct?
– Can you prove that each step
is correct?
Understanding the Process:Understanding the Process:
‘‘How to Solve it’How to Solve it’
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Reflect on the process
– Are you certain you solved the problem?
– Can you check the result and your argument?
– Can use alternate solutions?
– What did you actually do?
– Can you explain this to another?
– Can you use the result &/or method for
another problem?
Understanding the Process:Understanding the Process:
‘‘How to Solve it’How to Solve it’
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PROBLEM SOLVING
• DEFINE
• INFORMATION/MEASURES
• ANALYSE
• GENERATE ALTERNATIVES
• SELECT
ALTERNATIVES/DECIDE
• IMPLEMENT
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STEP 1
DEFINE
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Collect all the relevant information.
Clarify background issues.
What are the constraints?
Are there sub-problems that can be
dealt with separately?
Can the problem now be
formulated?
Defining The ProblemDefining The Problem
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PROBLEM/OPPORTUNITY STATEMENT
WORKSHEET
What is the area of concern?
What impact this problem already had? What evidence do you have that it is really a
problem worthy of attention?
What will happen if the business doesn’t address this problem?
Summarize the above information in a concise statement
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ACTIVITY 2
12.00 – 1.00
DEFINE PROBLEM
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ACTIVITY 2
• Problem 1
I am in the habit of coming late to office
• Problem 2
We could not meet production targets
• Problem 3
Take an issue in work situation. Define the problem.
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1.00 – 2.00
LUNCH
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STEP 2
INFORMATION
/MEASURES
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ACTIVITY 3
2.00 PM – 2.15 PM
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ACTIVITY
• Imagine that you were going to buy a house in
a new area. List ten things that you would
want to know about a house before you gave
it serious consideration . Tick any of these
things that you could find out from the agent’s
information. How could you find out the other
things?
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• Do we have all of the information and
data we need?
• Collect data and digest the information.
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TYPES OF INFORMATION
• QUANTITATIVE
• QUALITATIVE
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Quantitative
• How much?
• How many?
• How frequently?
• How likely?
• How quickly?
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QUALITATIVE
• What?
• Why?
• How?
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DATA SOURCES
• Primary
Data gathered by you directly for your
purpose
• Secondary
Gathered by others for their purpose
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PRIMARY DATA
• Give examples
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SECONDARY DATA
• Collected by other Depts.
• Reference Books
• Databases
• Journals
• Published Reports
• Govt Statistics
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ACTIVITY 4
2.30 PM 3.00 PM
INFORMATION
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ACTIVITY 4A
• In a production line, the output of a particular
machine has come down drastically. There
was a hue and cry that the operator is
intentionally slowing down production.
• What all information need to be collected
before commencing any action?
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ACTIVITY 4B
• First batch of Vacuum Circuit Breakers
supplied by a Company in India in the year
1981 failed miserably
• The Technical collaborators, the
Manufacturers and the Customers were trying
to resolve the issue
• What all information need to be collected?
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ACTIVITY 4C
• On a piece of paper, draw a map of the people
you know. Put yourself in the middle and
connect the people you know very well in the
first circle. Add people you know through
these network in the next layer and connect
them with spokes. Do three levels.
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REVIEW AND SHARING BY
INDIVIDUALS
3.00 PM – 3.15 PM
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3.15 PM-3.3.30PM
TEA
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STEP 3
ANALYSE
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ANALYZE THE PROBLEM
Do not make the mistake of assuming you know what is
causing the problem
without an effort
to fully investigate the problem
you have defined.
Try to view the problem from a
variety of viewpoints, not just how it affects you.
Think about how the issue
affects others.
It is essential to spend some time
researching the problem.
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Questions to Ask When Analyzing the
Problem:
• What is the history of the problem? How long has it
existed?
• How serious is the problem?
• What are the causes of the problem?
• What are the effects of the problem?
• What are the symptoms of the problem?
• What methods does the group already have for dealing with
the problem?
• What are the limitations of those methods?
• How much freedom does the group have in gathering
information and attempting to solve the problem?
• What obstacles keep the group from achieving the goal?
• Can the problem be divided into sub problems for definition
and analysis
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MAKING SENSE OF NUMBERS
• Averages(Mean,Median,Mode)
• Grouping of data
• Distribution
• Trends
• Correlation
• Pie charts
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ANALYSE
• Data Analysis
Exploring
Generating Theories about causes
Verifying/eliminating causes
• Process Analysis
Exploring
Generating Theories about causes
Verifying/eliminating causes
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`
DATA ANALYSIS PROCESS ANALYSIS
EXPLORING Examine data to discover
clues
TOOLS
Pareto Charts, Run
Charts, Histograms
Understand what actually
happens in the process
TOOLS
Basic flowchart,Depolyment
flow charts
GENERATING
HYPOTHESIS
Generate ideas about
the causes
TOOLS
Brainstorming, Cause
and Effect Diagram
Use the process maps to
identify areas
TOOLS
Brainstorming, Value
Analysis
VERIFYING
CAUSES
Gather additional data to
verify hypothesis
TOOLS
Scatter Diagram,
Stratification
Quantify delays/lost time in
various process steps
Experiment with changes
TOOLS
Process maps
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Use Pareto Charts to find the
“Vital few”
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Use run/trend charts to find
“patterns over time”
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Cause and Effect Diagram
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When should a fishbone diagram be
used?
• Need to study a problem/issue to determine
the root cause?
• Want to study all the possible reasons why a
process is beginning to have difficulties,
problems, or breakdowns?
• Need to identify areas for data collection?
• Want to study why a process is not
performing properly or producing the desired
results
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How is a fishbone diagram
constructed?
• Draw the fishbone diagram....
• List the problem/issue to be studied in the "head of the fish".
• Label each ""bone" of the "fish". The major categories typically
utilized are:
• The 4 M’s:
– Methods, Machines, Materials, Manpower
• The 4 P’s:
– Place, Procedure, People, Policies
• The 4 S’s:
– Surroundings, Suppliers, Systems, Skills
• Note: You may use one of the four categories suggested, combine
them in any fashion or make up your own. The categories are to
help you organize your ideas.
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How To Complete The 5 Whys
1. Write down the specific problem. Writing the issue
helps you formalize the problem and describe it
completely. It also helps a team focus on the same
problem.
2. Ask Why the problem happens and write the answer
down below the problem.
3. If the answer you just provided doesn't identify the
root cause of the problem that you wrote down in step
1, ask Why again and write that answer down.
4. Loop back to step 3 until the team is in agreement
that the problem's root cause is identified. Again, this
may take fewer or more times than five Whys.
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5 Whys Examples
Problem Statement: Customers are unhappy because they are being
shipped products that don't meet their specifications.
1. Why are customers being shipped bad products?
- Because manufacturing built the products to a specification that is
different from what the customer and the sales person agreed to.
2. Why did manufacturing build the products to a different specification
than that of sales?
- Because the sales person expedites work on the shop floor by calling
the head of manufacturing directly to begin work. An error happened
when the specifications were being communicated or written down.
3. Why does the sales person call the head of manufacturing directly to
start work instead of following the procedure established in the
company?
- Because the "start work" form requires the sales director's approval
before work can begin and slows the manufacturing process (or stops it
when the director is out of the office).
4. Why does the form contain an approval for the sales director?
- Because the sales director needs to be continually updated on sales for
discussions with the CEO.
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Verifying Causes
• Correlation
• Stratification
• Pilot Testing
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1/02/2007 Business Process Management 70
Types of Flow ChartsTypes of Flow Charts
 Linear FlowchartLinear Flowchart
 Deployment FlowchartDeployment Flowchart
 Opportunity FlowchartOpportunity Flowchart
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Linear FlowchartLinear Flowchart
Start
Collect inputs
Draft Circular
Type rough
Submit to A
Sign(A)
Retype
Make Copies Distribute
Type smooth
OK?
Yes
No
End
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Deployment FlowchartDeployment Flowchart
AA BB CC
Collect Input
Draft
Retype
Submit to C
Make Copies
Type rough
Type smooth
Distribute
Accept?
Yes
NO
Sign
PROCESS
MAP
Customerpullstime-
stamped ticket
Customer parks car
Customer returns to
car toleave
Customer drives to
cashier at exit
Cashier System
Customer exits
Recieve ticketfrom
customer
Stampexit timeon
ticket
Readindicator stamp
for fee
Observeexacttimefor
borderlinerate
Place ticket instorage
bin
Enter charge on
register
Accept payment and
returnchange
Raisegatearm for
customer to exit
Accounting department
getsreport
Complete dailyreport
(End of Day)
Customer System Cashier System
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Value and Cycle Time Worksheet
Process Step 1 2 3 4 5 6 7 8 9 10 Total Percentage
VALUE
Value added
Value enabled
Non value
added
TIME
Work time
Wait time
Total Time
Total Value added
time
Percentage value added
time
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Correlation Analysis
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Past Experience: Future Problems
Have we ever encountered a
problem like this before?
Do we have all of the information and
data we need?
Is there any pattern to what we know?
Can we construct a table or a picture?
What might the solution be?
What would assist us in getting to a
solution?
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END OF DAY 1
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DAY 2
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STEP 4
GENERATE
ALTERNATIVES
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Good decisions emerge from a
set of feasible alternatives
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Tips for Generating Alternatives
• Brainstorm
• Involve outsiders
• External Benchmarking
• Encourage members to step out of their
traditional roles
• Ask probing questions
• Be willing to consider views differing from yours
• Revisit abandoned alternatives
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• Vertical Thinking
• Lateral Thinking
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 What is Vertical Thinking?
Basing our thought process on
prior knowledge and experience.
Using logic that relates only to our
immediate experience.
Constraining our creativity and
ability to solve problems.
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What is Lateral Thinking?
• Changing orientation and perception.
• Generating new ideas and visions.
• Exploring multiple possibilities and
approaches.
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• Vertical Thinking is selective
• One may reach a conclusion by a valid series
of steps
• Lateral Thinking is generative
• Vertical Thinking develops the ideas
generated by Lateral Thinking
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IX
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ACTIVITY 5
10.15 AM – 11.15 AM
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How would you divide a square
into four equal pieces
Give at least 6 alternatives
• Time 15 minutes
• EXERCISE
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• Make a
square
out of
this
• 10
• minutes
• Exercise
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The Dog, the Goose and the Bag of Corn
The farmer takes the goose across and leaves
the dog with the corn. The farmer then goes
back across the stream and gets the corn. He
takes the goose back across with him because
he cannot leave it with the corn. He then gets
the dog and takes it across leaving it on the
other side with the corn. He then goes back
across once again, gets the goose and returns to
the other side of the stream with all safely
across and not eaten!
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Exercise
5 minutes
• You have a pile of 24 coins. 23 of them have
the same weight. But one of them is heavier
than the rest. You are given a scale but no
weights. Your task is t identify the heavy coin
in no more than three uses of the scale.
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Exercise
3 minutes
• A conference room contains three separate wall-
mounted spotlights - right, left and front of stage.
Each is controlled by its own on-off switch. These
three switches are numbered 1, 2 and 3, but they
are in a back-room which has no sight of the
spotlights or the conference room (and there are
no reflections or shadows or mirrors, and you are
alone). How do you identify each switch correctly
- right, left, front - if you can only enter the back-
room once
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Exercise
5 minutes
• Four men, one of whom was known to have
committed murder, made the following
statements to the police.
• Arun: Dave did it
Dave: Tony did it
George: I did not do it
Tony: Dave lied when he said I did it
If only one of these four statements is true, who
was the guilty man?
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Exercise
5 minutes
• You are the treasurer in charge of the Royal mint,
which produces a single type coin, the Grote.
There are ten machines producing Grote, one
machine is producing Grote weighing one gram
less than they should, each coin should weigh 10
grams. You have a set of broken scales which can
be fixed to provide one single weigh of a single
amount (no weight changes are allowed). Using
the scales once you must identify the single
faulty machine.
• How do you do it?
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Exercise
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11.00 AM-11.15 AM
TEA
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STEP 5
SELECT
ALTERNATIVES/DECISION
MAKING
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Types
• Strategic Decision
• Business Decision
• Operational Decision
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ACTIVITY 6
11.45 AM – 12.00 NOON
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ACTIVITY 5
• List three personal decisions you’ve made in
the last one or two years.
• List three decisions you need to take in the
next one year in your personal life.
• Classify them into Strategic , Business and
Operational
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How are decisions made
in organizations?
Decision making.
– The process of choosing a course of action for
dealing with a problem or opportunity.
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DECISION MAKING
• ENVIRONMENT
• DECISION MAKING
MODELS
• DECISION MAKING
REALITIES
• AUTHORITIES IN DECISION
MAKING
• INFLUENCING FACTORS IN
DECISION MAKING
• 7 Cs
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ENVIRONMENT
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How are decisions made
in organizations?
Decision environments include:
– Certain environments.
– Risk environments.
– Uncertain environments.
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How are decisions made
in organizations?
Certain environments.
– Exist when information is sufficient to predict the
results of each alternative in advance of
implementation.
– Certainty is the ideal problem solving and decision
making environment.
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How are decisions made
in organizations?
Risk environments.
– Exist when decision makers lack complete
certainty regarding the outcomes of various
courses of action, but they can assign probabilities
of occurrence.
– Probabilities can be assigned through objective
statistical procedures or personal intuition.
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How are decisions made
in organizations?
Uncertain environments.
– Exist when managers have so little information
that they cannot even assign probabilities to
various alternatives and possible outcomes.
– Uncertainty forces decision makers to rely on
individual and group creativity to succeed in
problem solving.
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How are decisions made
in organizations?
Uncertain environments — cont.
– Also characterized by rapidly changing:
• External conditions.
• Information technology requirements.
• Personnel influencing problem and choice definitions.
– These rapid changes are also called organized
anarchy.
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DECISION MAKING MODELS
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• Classical decision theory
• Behavioural decision theory
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What are the useful
decision making models?
Classical decision theory.
– Views the decision maker as acting in a world of
complete certainty.
Behavioral decision theory.
– Accepts a world with bounded rationality and
views the decision maker as acting only in terms
of what he/she perceives about a given situation.
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What are the useful
decision making models?
Behavioral decision theory.
– Recognizes that human beings operate with:
• Cognitive limitations.
• Bounded rationality.
– The behavioral decision maker:
• Faces a problem that is not clearly defined.
• Has limited knowledge of possible action alternatives
and their consequences.
• Chooses a satisfactory alternative.
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What are the useful
decision making models?
Classical decision theory.
– The classical decision maker:
• Faces a clearly defined problem.
• Knows all possible action alternatives and their
consequences.
• Chooses the optimum alternative.
– Is often used as a model of how managers should
make decisions.
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What are the useful
decision making models?
Classical decision theory:
– May not fit well in a chaotic world.
– Can be used toward the bottom of many firms,
even most high-tech firms.
Behavioral decision theory:
– Fits with a chaotic world of uncertain conditions
and limited information.
– Encourages satisfying decision making.
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LUNCH
1.00 PM – 2.00 PM
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DECISION MAKING REALITIES
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Decision making realities
– Most decision making in organizations goes
beyond step-by-step rational choice.
– Most decision making in organizations falls
somewhere between the highly rational and the
highly chaotic.
– Decisions must be made under risk and
uncertainty.
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Decision making realities
– Decisions must be made to solve non-routine
problems.
– Decisions must be made under time pressures
and information limitations.
– Decisions should be ethical.
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How do intuition, judgment, and creativity
affect decision making?
Intuition.
– The ability to know or recognize quickly and
readily the possibilities of a given situation.
– A key element of decision making under risk and
uncertainty.
Advesh Consultancy Services 12109/27/16
How do intuition, judgment, and creativity
affect decision making?
Judgment
– Simplifying strategies or “rules of thumb” used to
make decisions.
– Makes it easier to deal with uncertainty and
limited information.
– Can lead to systematic errors that affect the
quality and/or ethics of decisions.
Advesh Consultancy Services 12209/27/16
ACTIVITY 6
2.30 PM – 2.45 PM
09/27/16 123Advesh Consultancy Services
ACTIVITY 6
• Imagine that you are driving across country to
an important meeting that will start in an
hour’s time, along a route you have travelled
several times before. You are thirty miles from
your destination and the road is clear ahead
of you. You see a signpost pointing up to a
narrow side road that you have not noticed on
earlier journeys. It indicates 20 miles to your
destination.
09/27/16 124Advesh Consultancy Services
ACTIVITY 6
1. Would you turn into the side road without
further thoughts?
2. Ignore the side road and continue on your
existing route?
3. Stop the vehicle, consult a map and then
decide whether to drive up the side road?
Why?
09/27/16 125Advesh Consultancy Services
AUTHORITIES IN DECISION
MAKING
09/27/16 126Advesh Consultancy Services
AUTHORITY IN DECISION MAKING
 Deciding who should participate.
– Authority decisions.
• Made by the manager or team leader without involving other
people and by using information that he/she possesses.
– Consultative decisions.
• Made by one individual after seeking input from group members.
– Group decisions.
• Made by all members of the group.
Advesh Consultancy Services 12709/27/16
ACTIVITY 7
3.00PM – 3.15 PM
09/27/16 128Advesh Consultancy Services
ACTIVITY
• Give three examples of decisions that you
would refer to a senior manager in your
organisation.
• Do these decisions have anything in common?
09/27/16 129Advesh Consultancy Services
TEA
3.15 PM – 3.30 PM
09/27/16 130Advesh Consultancy Services
INFLUENCING FACTORS IN
DECISION MAKING
09/27/16 131Advesh Consultancy Services
• Technology
• Culture
• Ethics
09/27/16 132Advesh Consultancy Services
How do technology, culture, and ethics
influence decision making?
Increasingly complex problems and
opportunities face decision makers in
organizations due to various workplace
trends.
These workplace trends are changing the who,
when, where, and how of decision making.
Advesh Consultancy Services 13309/27/16
How do technology, culture, and ethics
influence decision making?
 Information technology and decision making.
– Artificial intelligence.
• The study of how computers can be programmed to think like
human beings.
• Will allow computers to displace many decision makers.
– Expert systems that support decision making by following
“either-or” rules to make deductions.
Advesh Consultancy Services 13409/27/16
How do technology, culture, and ethics
influence decision making?
Information technology and decision making
— cont.
– Fuzzy logic and neural networks that reason
inductively.
– Computer support for decision making.
• The Internet.
• Company intranets.
• Decision support software to facilitate virtual
teamwork.
Advesh Consultancy Services 13509/27/16
How do technology, culture, and ethics
influence decision making?
 Cultural factors and decision making.
– Culture is “the way in which a group of people solves
problems.”
– North American culture stresses decisiveness, speed, and
the individual selection of alternatives.
– Other cultures place less emphasis on individual choice
than on developing implementations that work.
– The most important impact of culture on decision making
concerns which issues are elevated to the status of
problems solvable with the firm.
Advesh Consultancy Services 13609/27/16
How do technology, culture, and ethics
influence decision making?
Ethical issues and decision making.
– Ethical dilemma.
• A situation in which a person must decide whether or
not to do something that, although personally or
organizationally beneficial, may be considered
unethical and perhaps illegal.
– Ethical dilemmas are often associated with:
• Risk and uncertainty.
• Non-routine problem situations.
Advesh Consultancy Services 13709/27/16
How do technology, culture, and ethics
influence decision making?
Ethical decision-making checklist.
– Is my action legal?
– Is it right?
– Is it beneficial?
– How would I feel if my family found out about
this?
– How would I feel if my decision were printed in
the local newspaper?
Advesh Consultancy Services 13809/27/16
How do technology, culture, and ethics
influence decision making?
 Suggestions for integrating ethical decision making
into the firm.
– Develop a code of ethics and follow it.
– Establish procedures for reporting violations.
– Involve employees in identifying ethical issues.
– Monitor ethical performance.
– Reward ethical behavior.
– Publicize ethical efforts.
Advesh Consultancy Services 13909/27/16
How do technology, culture, and ethics
influence decision making?
Implications of ethics for decision making.
– Morality is involved in:
• Choosing problems.
• Deciding who should be involved in making decisions.
• Estimating the impacts of decision alternatives.
• Selecting an alternative for implementation.
– Moral conduct does not arise from after-the-fact
embarrassment.
Advesh Consultancy Services 14009/27/16
ACTIVITY 8
4.00 PM – 4.15 PM
09/27/16 141Advesh Consultancy Services
ACTIVITY 8
• One of the best performing employees
working under you was caught carrying one
stapler belonging to the company at the gate.
09/27/16 142Advesh Consultancy Services
6 Cs OF DECISION MAKING
09/27/16 143Advesh Consultancy Services
Six C's of Decision Making (1 of 3)
 Construct
 Compile.
 Collect.
 Compare.
 Consider.
 Commit.
09/27/16 144Advesh Consultancy Services
Decision Making (Six C's) (2 of 3)
 Construct a clear picture of
precisely what must be decided.
 Compile a list of requirements
that must be met.
 Collect information on
alternatives that meet the
requirements.
09/27/16 145Advesh Consultancy Services
Decision Making (Six C's) (3 of 3)
 Compare alternatives that meet
the requirements.
 Consider the "what might go
wrong" factor with each
alternative.
 Commit to a decision and stick
to it.
09/27/16 146Advesh Consultancy Services
Inherent Personal: Traps (1 of 2)
Trying too hard to play it safe.
Letting fears and biases tilt your
thinking and analysis.
Getting lost in the minutia.
Craving unanimous approval.
Trying to make decisions which are
outside your realm of authority.
09/27/16 147Advesh Consultancy Services
Inherent System: Traps (2 of 2)
Willing to begin with too little,
inaccurate, or wrong information.
Overlooking viable alternatives or
wasting time considering alternatives
which have no realistic prospects.
Not following the six C's.
Failing to clearly define the results you
expect to achieve.
Worst of all, failing to reach a decision.
09/27/16 148Advesh Consultancy Services
FINANCIAL TOOLS FOR EVALUATING
ALTERNATIVES
• ROI
• Payback
• Net present value
• Internal rate of return
• Breakeven analysis
• Sensitivity analysis
09/27/16 149Advesh Consultancy Services
ACTIVITY 9
09/27/16 150Advesh Consultancy Services
ACTIVITY
• List four or five decisions you made at
work/home regardless of their size or
importance . For each decision, consider
whether you really needed to make it or
whether the decision could have been
handled in some other way. Perhaps it could
have been dealt with by someone else. Or
perhaps there was not a decision to make at
all.
09/27/16 151Advesh Consultancy Services
STEP 6
IMPLEMENT
09/27/16 Advesh Consultancy Services 152
IMPLEMENT
• Communicate
• Train
• Execute
• Review
09/27/16 Advesh Consultancy Services 153
• PLAN
• DO
• CHECK
• ACT
• PDCA CYCLE
09/27/16 Advesh Consultancy Services 154
09/27/16 Advesh Consultancy Services 155

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Problem solving and decision making copy

  • 2. PROBLEM SOLVING AND DECISION MAKING 09/27/16 2Advesh Consultancy Services
  • 3. ICE BREAKER 09/27/16 3Advesh Consultancy Services
  • 4. ICEBREAKER • What is your leisure activity? • Who , living or dead , do you most admire , and why? • What is your greatest achievement? • What are your positive qualities? • If you had unlimited resources , what would you buy which would give you most pleasure? 09/27/16 4Advesh Consultancy Services
  • 5. PROGRAMME OBJECTIVE • To clarify and define the problem. • To understand the usefulness of collaborative problem solving and decision making. • To examine different decision making models. • To utilize creativity in the problem solving/decision making process. • To plan, practice, and problem solve with making decisions through case studies, role playing and group discussions. 09/27/16 5Advesh Consultancy Services
  • 6. Please write a One Sentence Definition of PROBLEM SOLVING and DECISION MAKING. Please write a One Sentence Definition of PROBLEM SOLVING and DECISION MAKING. 09/27/16 6Advesh Consultancy Services
  • 7. DEFINITION –PROBLEM SOLVING A systematic approach to defining the problem and creating a vast number of possible solutions without judging these solutions. 09/27/16 7Advesh Consultancy Services
  • 8. PROBLEM SOLVING Problem solving is a cognitive processing directed at achieving a goal where no solution method is obvious to the problem solver. 09/27/16 8Advesh Consultancy Services
  • 9. PROBLEM SOLVING Problem Solving is ….. • “….. the art of finding ways to get from where you are now to where you want to be (assuming you do not already know how). • The ‘problem’, therefore, is the gap between the present situation and a more desirable one.” (Nolan 1989) Is this Problem Solving? A B ?
  • 10. TRIPLE CONSTRAINT PRINCIPLE • Something is a problem if: it makes you late it increases costs it degrades performance. time cost performance 09/27/16 10Advesh Consultancy Services
  • 11. If none of these occur, it’s NOT a problem, just a hindrance. 09/27/16 11Advesh Consultancy Services
  • 12. DEFINITION – DECISION MAKING The act of narrowing down the possibilities, choosing a course of action, and determining the action’s potential consequences. 09/27/16 12Advesh Consultancy Services
  • 13. “It's not a problem that we have a problem. It's a problem if we don't deal with the problem.” --Mary Kay Utech 09/27/16 13Advesh Consultancy Services
  • 14. WHAT DOES IT INVOLVE? 09/27/16 14Advesh Consultancy Services
  • 15. • Problem solving is a skill, a tool and a process. • It is a skill because once you have learnt it you can use it repeatedly, like the ability to ride a bicycle, add numbers or speak a language. • It is a tool because it can help you solve an immediate problem or to achieve a goal. • It is also a process because it involves taking a number of steps. 09/27/16 15Advesh Consultancy Services
  • 16. PROBLEM SOLVING • Skill • Process • Tools 09/27/16 16Advesh Consultancy Services
  • 17. WHAT SKILLS DO YOU USE INWHAT SKILLS DO YOU USE IN PROBLEM SOLVING?PROBLEM SOLVING? 09/27/16 17Advesh Consultancy Services
  • 18. • Making judgements SKILL SETS IN PROBLEMSKILL SETS IN PROBLEM SOLVING?SOLVING? • Analytical skills • Decision making • Collecting information • Planning 09/27/16 18Advesh Consultancy Services
  • 19. PROBLEM SOLVING PEOPLE? Experts. People who know the area of knowledge thoroughly. Solving problems becomes more natural. People who can think of alternatives even when no clear solutions seems apparent. 09/27/16 19Advesh Consultancy Services
  • 20. Have a better memory for relevant details in the problem. Classify problems according to their underlying principles. Use well-established procedures. Work forwards towards a goal (rather than backwards). EXPERT PROBLEM SOLVERSEXPERT PROBLEM SOLVERS 09/27/16 20Advesh Consultancy Services
  • 21. ACTIVITY 1 10.45-11-15 Who is the murderer The Zin Obelisk 09/27/16 Advesh Consultancy Services 21
  • 22. ANSWER AND RATIONALE • The answer is Neptiminus. Rationale 1. The dimensions of the zin indicate that it contains 50,000 cubic feet of stone blocks. 2. The blocks are 1 cubic foot each, therefore, 50,000 blocks are required. 3. Each worker works 7 schlibs in a day (2 schlibs are devoted to rest). 4. Each worker lays 150 blocks per schlib, therefore each worker lays 1050 blocks per day. 5. There are 8 workers per day, therefore 8,400 blocks are laid per working day. 6. The 50,000th block, therefore, is laid on the sixth working day. 7. Since work does not take place on Daydoldrum,the sixth working day is Neptiminus. 09/27/16 Advesh Consultancy Services 22
  • 23. TEA 11.00 AM – 11.15 AM 09/27/16 23Advesh Consultancy Services
  • 24. Content Understanding Domain-dependent problem-solving strategies Self-regulation Metacognition Motivation Planning Self-monitoring Effort Self-efficacy PROBLEM SOLVING REQUIREMENTSPROBLEM SOLVING REQUIREMENTS 09/27/16 24Advesh Consultancy Services
  • 25. Understanding the Process:Understanding the Process: ‘‘How to Solve it’How to Solve it’ Engage: I want to and I can – Read the problem (and all the information) – Listen – Learn about the situation that poses the problem – Motivation – Overcome panic 09/27/16 25Advesh Consultancy Services
  • 26. Understand the problem: define Put in the time to define the problem: – Discuss. – Ask questions. – Visualize. – Restate the problem in your own words. – Explain the problem to someone else. Understanding the Process:Understanding the Process: ‘‘How to Solve it’How to Solve it’ 09/27/16 26Advesh Consultancy Services
  • 27. Plan a procedure to solve the problem – Prior experience. – Data available. – Content knowledge. – Patterns. – Estimation. – Alternate solutions. – Feasibility. Understanding the Process:Understanding the Process: ‘‘How to Solve it’How to Solve it’ 09/27/16 27Advesh Consultancy Services
  • 28. Collect data & the knowledge required – A solution may be required based upon imperfect knowledge. Understanding the Process:Understanding the Process: ‘‘How to Solve it’How to Solve it’ 09/27/16 28Advesh Consultancy Services
  • 29. Select the preferred solution: test, use and evaluate – Check each step – Can you determine clearly that each step is correct? – Can you prove that each step is correct? Understanding the Process:Understanding the Process: ‘‘How to Solve it’How to Solve it’ 09/27/16 29Advesh Consultancy Services
  • 30. Reflect on the process – Are you certain you solved the problem? – Can you check the result and your argument? – Can use alternate solutions? – What did you actually do? – Can you explain this to another? – Can you use the result &/or method for another problem? Understanding the Process:Understanding the Process: ‘‘How to Solve it’How to Solve it’ 09/27/16 30Advesh Consultancy Services
  • 31. PROBLEM SOLVING • DEFINE • INFORMATION/MEASURES • ANALYSE • GENERATE ALTERNATIVES • SELECT ALTERNATIVES/DECIDE • IMPLEMENT 09/27/16 31Advesh Consultancy Services
  • 32. STEP 1 DEFINE 09/27/16 32Advesh Consultancy Services
  • 33. Collect all the relevant information. Clarify background issues. What are the constraints? Are there sub-problems that can be dealt with separately? Can the problem now be formulated? Defining The ProblemDefining The Problem 09/27/16 33Advesh Consultancy Services
  • 34. PROBLEM/OPPORTUNITY STATEMENT WORKSHEET What is the area of concern? What impact this problem already had? What evidence do you have that it is really a problem worthy of attention? What will happen if the business doesn’t address this problem? Summarize the above information in a concise statement 09/27/16 34Advesh Consultancy Services
  • 35. ACTIVITY 2 12.00 – 1.00 DEFINE PROBLEM 09/27/16 35Advesh Consultancy Services
  • 36. ACTIVITY 2 • Problem 1 I am in the habit of coming late to office • Problem 2 We could not meet production targets • Problem 3 Take an issue in work situation. Define the problem. 09/27/16 36Advesh Consultancy Services
  • 37. 1.00 – 2.00 LUNCH 09/27/16 37Advesh Consultancy Services
  • 39. ACTIVITY 3 2.00 PM – 2.15 PM 09/27/16 39Advesh Consultancy Services
  • 40. ACTIVITY • Imagine that you were going to buy a house in a new area. List ten things that you would want to know about a house before you gave it serious consideration . Tick any of these things that you could find out from the agent’s information. How could you find out the other things? 09/27/16 40Advesh Consultancy Services
  • 41. • Do we have all of the information and data we need? • Collect data and digest the information. 09/27/16 41Advesh Consultancy Services
  • 42. TYPES OF INFORMATION • QUANTITATIVE • QUALITATIVE 09/27/16 42Advesh Consultancy Services
  • 43. Quantitative • How much? • How many? • How frequently? • How likely? • How quickly? 09/27/16 43Advesh Consultancy Services
  • 44. QUALITATIVE • What? • Why? • How? 09/27/16 44Advesh Consultancy Services
  • 45. DATA SOURCES • Primary Data gathered by you directly for your purpose • Secondary Gathered by others for their purpose 09/27/16 45Advesh Consultancy Services
  • 46. PRIMARY DATA • Give examples 09/27/16 46Advesh Consultancy Services
  • 47. SECONDARY DATA • Collected by other Depts. • Reference Books • Databases • Journals • Published Reports • Govt Statistics 09/27/16 47Advesh Consultancy Services
  • 48. ACTIVITY 4 2.30 PM 3.00 PM INFORMATION 09/27/16 48Advesh Consultancy Services
  • 49. ACTIVITY 4A • In a production line, the output of a particular machine has come down drastically. There was a hue and cry that the operator is intentionally slowing down production. • What all information need to be collected before commencing any action? 09/27/16 49Advesh Consultancy Services
  • 50. ACTIVITY 4B • First batch of Vacuum Circuit Breakers supplied by a Company in India in the year 1981 failed miserably • The Technical collaborators, the Manufacturers and the Customers were trying to resolve the issue • What all information need to be collected? 09/27/16 50Advesh Consultancy Services
  • 51. ACTIVITY 4C • On a piece of paper, draw a map of the people you know. Put yourself in the middle and connect the people you know very well in the first circle. Add people you know through these network in the next layer and connect them with spokes. Do three levels. 09/27/16 51Advesh Consultancy Services
  • 52. REVIEW AND SHARING BY INDIVIDUALS 3.00 PM – 3.15 PM 09/27/16 52Advesh Consultancy Services
  • 54. STEP 3 ANALYSE 09/27/16 54Advesh Consultancy Services
  • 55. ANALYZE THE PROBLEM Do not make the mistake of assuming you know what is causing the problem without an effort to fully investigate the problem you have defined. Try to view the problem from a variety of viewpoints, not just how it affects you. Think about how the issue affects others. It is essential to spend some time researching the problem. 09/27/16 55Advesh Consultancy Services
  • 56. Questions to Ask When Analyzing the Problem: • What is the history of the problem? How long has it existed? • How serious is the problem? • What are the causes of the problem? • What are the effects of the problem? • What are the symptoms of the problem? • What methods does the group already have for dealing with the problem? • What are the limitations of those methods? • How much freedom does the group have in gathering information and attempting to solve the problem? • What obstacles keep the group from achieving the goal? • Can the problem be divided into sub problems for definition and analysis 09/27/16 56Advesh Consultancy Services
  • 57. MAKING SENSE OF NUMBERS • Averages(Mean,Median,Mode) • Grouping of data • Distribution • Trends • Correlation • Pie charts 09/27/16 57Advesh Consultancy Services
  • 58. ANALYSE • Data Analysis Exploring Generating Theories about causes Verifying/eliminating causes • Process Analysis Exploring Generating Theories about causes Verifying/eliminating causes 09/27/16 58Advesh Consultancy Services
  • 59. ` DATA ANALYSIS PROCESS ANALYSIS EXPLORING Examine data to discover clues TOOLS Pareto Charts, Run Charts, Histograms Understand what actually happens in the process TOOLS Basic flowchart,Depolyment flow charts GENERATING HYPOTHESIS Generate ideas about the causes TOOLS Brainstorming, Cause and Effect Diagram Use the process maps to identify areas TOOLS Brainstorming, Value Analysis VERIFYING CAUSES Gather additional data to verify hypothesis TOOLS Scatter Diagram, Stratification Quantify delays/lost time in various process steps Experiment with changes TOOLS Process maps 09/27/16 59Advesh Consultancy Services
  • 60. Use Pareto Charts to find the “Vital few” 09/27/16 60Advesh Consultancy Services
  • 61. Use run/trend charts to find “patterns over time” 09/27/16 61Advesh Consultancy Services
  • 62. Cause and Effect Diagram 09/27/16 62Advesh Consultancy Services
  • 63. When should a fishbone diagram be used? • Need to study a problem/issue to determine the root cause? • Want to study all the possible reasons why a process is beginning to have difficulties, problems, or breakdowns? • Need to identify areas for data collection? • Want to study why a process is not performing properly or producing the desired results 09/27/16 63Advesh Consultancy Services
  • 64. How is a fishbone diagram constructed? • Draw the fishbone diagram.... • List the problem/issue to be studied in the "head of the fish". • Label each ""bone" of the "fish". The major categories typically utilized are: • The 4 M’s: – Methods, Machines, Materials, Manpower • The 4 P’s: – Place, Procedure, People, Policies • The 4 S’s: – Surroundings, Suppliers, Systems, Skills • Note: You may use one of the four categories suggested, combine them in any fashion or make up your own. The categories are to help you organize your ideas. 09/27/16 64Advesh Consultancy Services
  • 65. How To Complete The 5 Whys 1. Write down the specific problem. Writing the issue helps you formalize the problem and describe it completely. It also helps a team focus on the same problem. 2. Ask Why the problem happens and write the answer down below the problem. 3. If the answer you just provided doesn't identify the root cause of the problem that you wrote down in step 1, ask Why again and write that answer down. 4. Loop back to step 3 until the team is in agreement that the problem's root cause is identified. Again, this may take fewer or more times than five Whys. 09/27/16 65Advesh Consultancy Services
  • 66. 5 Whys Examples Problem Statement: Customers are unhappy because they are being shipped products that don't meet their specifications. 1. Why are customers being shipped bad products? - Because manufacturing built the products to a specification that is different from what the customer and the sales person agreed to. 2. Why did manufacturing build the products to a different specification than that of sales? - Because the sales person expedites work on the shop floor by calling the head of manufacturing directly to begin work. An error happened when the specifications were being communicated or written down. 3. Why does the sales person call the head of manufacturing directly to start work instead of following the procedure established in the company? - Because the "start work" form requires the sales director's approval before work can begin and slows the manufacturing process (or stops it when the director is out of the office). 4. Why does the form contain an approval for the sales director? - Because the sales director needs to be continually updated on sales for discussions with the CEO. 09/27/16 66Advesh Consultancy Services
  • 69. Verifying Causes • Correlation • Stratification • Pilot Testing 09/27/16 69Advesh Consultancy Services
  • 70. 1/02/2007 Business Process Management 70 Types of Flow ChartsTypes of Flow Charts  Linear FlowchartLinear Flowchart  Deployment FlowchartDeployment Flowchart  Opportunity FlowchartOpportunity Flowchart
  • 71. 1/02/2007 Business Process Management 71 Linear FlowchartLinear Flowchart Start Collect inputs Draft Circular Type rough Submit to A Sign(A) Retype Make Copies Distribute Type smooth OK? Yes No End
  • 72. 1/02/2007 Business Process Management 72 Deployment FlowchartDeployment Flowchart AA BB CC Collect Input Draft Retype Submit to C Make Copies Type rough Type smooth Distribute Accept? Yes NO Sign
  • 73. PROCESS MAP Customerpullstime- stamped ticket Customer parks car Customer returns to car toleave Customer drives to cashier at exit Cashier System Customer exits Recieve ticketfrom customer Stampexit timeon ticket Readindicator stamp for fee Observeexacttimefor borderlinerate Place ticket instorage bin Enter charge on register Accept payment and returnchange Raisegatearm for customer to exit Accounting department getsreport Complete dailyreport (End of Day) Customer System Cashier System 09/27/16 73Advesh Consultancy Services
  • 74. Value and Cycle Time Worksheet Process Step 1 2 3 4 5 6 7 8 9 10 Total Percentage VALUE Value added Value enabled Non value added TIME Work time Wait time Total Time Total Value added time Percentage value added time 09/27/16 74Advesh Consultancy Services
  • 76. Past Experience: Future Problems Have we ever encountered a problem like this before? Do we have all of the information and data we need? Is there any pattern to what we know? Can we construct a table or a picture? What might the solution be? What would assist us in getting to a solution? 09/27/16 76Advesh Consultancy Services
  • 77. END OF DAY 1 09/27/16 77Advesh Consultancy Services
  • 78. DAY 2 09/27/16 78Advesh Consultancy Services
  • 80. Good decisions emerge from a set of feasible alternatives 09/27/16 80Advesh Consultancy Services
  • 81. Tips for Generating Alternatives • Brainstorm • Involve outsiders • External Benchmarking • Encourage members to step out of their traditional roles • Ask probing questions • Be willing to consider views differing from yours • Revisit abandoned alternatives 09/27/16 81Advesh Consultancy Services
  • 82. • Vertical Thinking • Lateral Thinking 09/27/16 82Advesh Consultancy Services
  • 83.  What is Vertical Thinking? Basing our thought process on prior knowledge and experience. Using logic that relates only to our immediate experience. Constraining our creativity and ability to solve problems. 09/27/16 83Advesh Consultancy Services
  • 84. What is Lateral Thinking? • Changing orientation and perception. • Generating new ideas and visions. • Exploring multiple possibilities and approaches. 09/27/16 84Advesh Consultancy Services
  • 85. • Vertical Thinking is selective • One may reach a conclusion by a valid series of steps • Lateral Thinking is generative • Vertical Thinking develops the ideas generated by Lateral Thinking 09/27/16 85Advesh Consultancy Services
  • 88. ACTIVITY 5 10.15 AM – 11.15 AM 09/27/16 88Advesh Consultancy Services
  • 89. How would you divide a square into four equal pieces Give at least 6 alternatives • Time 15 minutes • EXERCISE 09/27/16 89Advesh Consultancy Services
  • 90. • Make a square out of this • 10 • minutes • Exercise 09/27/16 90Advesh Consultancy Services
  • 92. The Dog, the Goose and the Bag of Corn The farmer takes the goose across and leaves the dog with the corn. The farmer then goes back across the stream and gets the corn. He takes the goose back across with him because he cannot leave it with the corn. He then gets the dog and takes it across leaving it on the other side with the corn. He then goes back across once again, gets the goose and returns to the other side of the stream with all safely across and not eaten! 09/27/16 92Advesh Consultancy Services
  • 93. Exercise 5 minutes • You have a pile of 24 coins. 23 of them have the same weight. But one of them is heavier than the rest. You are given a scale but no weights. Your task is t identify the heavy coin in no more than three uses of the scale. 09/27/16 93Advesh Consultancy Services
  • 94. Exercise 3 minutes • A conference room contains three separate wall- mounted spotlights - right, left and front of stage. Each is controlled by its own on-off switch. These three switches are numbered 1, 2 and 3, but they are in a back-room which has no sight of the spotlights or the conference room (and there are no reflections or shadows or mirrors, and you are alone). How do you identify each switch correctly - right, left, front - if you can only enter the back- room once 09/27/16 94Advesh Consultancy Services
  • 95. Exercise 5 minutes • Four men, one of whom was known to have committed murder, made the following statements to the police. • Arun: Dave did it Dave: Tony did it George: I did not do it Tony: Dave lied when he said I did it If only one of these four statements is true, who was the guilty man? 09/27/16 95Advesh Consultancy Services
  • 96. Exercise 5 minutes • You are the treasurer in charge of the Royal mint, which produces a single type coin, the Grote. There are ten machines producing Grote, one machine is producing Grote weighing one gram less than they should, each coin should weigh 10 grams. You have a set of broken scales which can be fixed to provide one single weigh of a single amount (no weight changes are allowed). Using the scales once you must identify the single faulty machine. • How do you do it? 09/27/16 96Advesh Consultancy Services
  • 98. 11.00 AM-11.15 AM TEA 09/27/16 98Advesh Consultancy Services
  • 100. Types • Strategic Decision • Business Decision • Operational Decision 09/27/16 100Advesh Consultancy Services
  • 101. ACTIVITY 6 11.45 AM – 12.00 NOON 09/27/16 101Advesh Consultancy Services
  • 102. ACTIVITY 5 • List three personal decisions you’ve made in the last one or two years. • List three decisions you need to take in the next one year in your personal life. • Classify them into Strategic , Business and Operational 09/27/16 102Advesh Consultancy Services
  • 103. How are decisions made in organizations? Decision making. – The process of choosing a course of action for dealing with a problem or opportunity. Advesh Consultancy Services 10309/27/16
  • 104. DECISION MAKING • ENVIRONMENT • DECISION MAKING MODELS • DECISION MAKING REALITIES • AUTHORITIES IN DECISION MAKING • INFLUENCING FACTORS IN DECISION MAKING • 7 Cs 09/27/16 104Advesh Consultancy Services
  • 106. How are decisions made in organizations? Decision environments include: – Certain environments. – Risk environments. – Uncertain environments. Advesh Consultancy Services 10609/27/16
  • 107. How are decisions made in organizations? Certain environments. – Exist when information is sufficient to predict the results of each alternative in advance of implementation. – Certainty is the ideal problem solving and decision making environment. Advesh Consultancy Services 10709/27/16
  • 108. How are decisions made in organizations? Risk environments. – Exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they can assign probabilities of occurrence. – Probabilities can be assigned through objective statistical procedures or personal intuition. Advesh Consultancy Services 10809/27/16
  • 109. How are decisions made in organizations? Uncertain environments. – Exist when managers have so little information that they cannot even assign probabilities to various alternatives and possible outcomes. – Uncertainty forces decision makers to rely on individual and group creativity to succeed in problem solving. Advesh Consultancy Services 10909/27/16
  • 110. How are decisions made in organizations? Uncertain environments — cont. – Also characterized by rapidly changing: • External conditions. • Information technology requirements. • Personnel influencing problem and choice definitions. – These rapid changes are also called organized anarchy. Advesh Consultancy Services 11009/27/16
  • 111. DECISION MAKING MODELS 09/27/16 111Advesh Consultancy Services
  • 112. • Classical decision theory • Behavioural decision theory 09/27/16 112Advesh Consultancy Services
  • 113. What are the useful decision making models? Classical decision theory. – Views the decision maker as acting in a world of complete certainty. Behavioral decision theory. – Accepts a world with bounded rationality and views the decision maker as acting only in terms of what he/she perceives about a given situation. Advesh Consultancy Services 11309/27/16
  • 114. What are the useful decision making models? Behavioral decision theory. – Recognizes that human beings operate with: • Cognitive limitations. • Bounded rationality. – The behavioral decision maker: • Faces a problem that is not clearly defined. • Has limited knowledge of possible action alternatives and their consequences. • Chooses a satisfactory alternative. Advesh Consultancy Services 11409/27/16
  • 115. What are the useful decision making models? Classical decision theory. – The classical decision maker: • Faces a clearly defined problem. • Knows all possible action alternatives and their consequences. • Chooses the optimum alternative. – Is often used as a model of how managers should make decisions. Advesh Consultancy Services 11509/27/16
  • 116. What are the useful decision making models? Classical decision theory: – May not fit well in a chaotic world. – Can be used toward the bottom of many firms, even most high-tech firms. Behavioral decision theory: – Fits with a chaotic world of uncertain conditions and limited information. – Encourages satisfying decision making. Advesh Consultancy Services 11609/27/16
  • 117. LUNCH 1.00 PM – 2.00 PM 09/27/16 117Advesh Consultancy Services
  • 118. DECISION MAKING REALITIES 09/27/16 118Advesh Consultancy Services
  • 119. Decision making realities – Most decision making in organizations goes beyond step-by-step rational choice. – Most decision making in organizations falls somewhere between the highly rational and the highly chaotic. – Decisions must be made under risk and uncertainty. Advesh Consultancy Services 11909/27/16
  • 120. Decision making realities – Decisions must be made to solve non-routine problems. – Decisions must be made under time pressures and information limitations. – Decisions should be ethical. Advesh Consultancy Services 12009/27/16
  • 121. How do intuition, judgment, and creativity affect decision making? Intuition. – The ability to know or recognize quickly and readily the possibilities of a given situation. – A key element of decision making under risk and uncertainty. Advesh Consultancy Services 12109/27/16
  • 122. How do intuition, judgment, and creativity affect decision making? Judgment – Simplifying strategies or “rules of thumb” used to make decisions. – Makes it easier to deal with uncertainty and limited information. – Can lead to systematic errors that affect the quality and/or ethics of decisions. Advesh Consultancy Services 12209/27/16
  • 123. ACTIVITY 6 2.30 PM – 2.45 PM 09/27/16 123Advesh Consultancy Services
  • 124. ACTIVITY 6 • Imagine that you are driving across country to an important meeting that will start in an hour’s time, along a route you have travelled several times before. You are thirty miles from your destination and the road is clear ahead of you. You see a signpost pointing up to a narrow side road that you have not noticed on earlier journeys. It indicates 20 miles to your destination. 09/27/16 124Advesh Consultancy Services
  • 125. ACTIVITY 6 1. Would you turn into the side road without further thoughts? 2. Ignore the side road and continue on your existing route? 3. Stop the vehicle, consult a map and then decide whether to drive up the side road? Why? 09/27/16 125Advesh Consultancy Services
  • 126. AUTHORITIES IN DECISION MAKING 09/27/16 126Advesh Consultancy Services
  • 127. AUTHORITY IN DECISION MAKING  Deciding who should participate. – Authority decisions. • Made by the manager or team leader without involving other people and by using information that he/she possesses. – Consultative decisions. • Made by one individual after seeking input from group members. – Group decisions. • Made by all members of the group. Advesh Consultancy Services 12709/27/16
  • 128. ACTIVITY 7 3.00PM – 3.15 PM 09/27/16 128Advesh Consultancy Services
  • 129. ACTIVITY • Give three examples of decisions that you would refer to a senior manager in your organisation. • Do these decisions have anything in common? 09/27/16 129Advesh Consultancy Services
  • 130. TEA 3.15 PM – 3.30 PM 09/27/16 130Advesh Consultancy Services
  • 131. INFLUENCING FACTORS IN DECISION MAKING 09/27/16 131Advesh Consultancy Services
  • 132. • Technology • Culture • Ethics 09/27/16 132Advesh Consultancy Services
  • 133. How do technology, culture, and ethics influence decision making? Increasingly complex problems and opportunities face decision makers in organizations due to various workplace trends. These workplace trends are changing the who, when, where, and how of decision making. Advesh Consultancy Services 13309/27/16
  • 134. How do technology, culture, and ethics influence decision making?  Information technology and decision making. – Artificial intelligence. • The study of how computers can be programmed to think like human beings. • Will allow computers to displace many decision makers. – Expert systems that support decision making by following “either-or” rules to make deductions. Advesh Consultancy Services 13409/27/16
  • 135. How do technology, culture, and ethics influence decision making? Information technology and decision making — cont. – Fuzzy logic and neural networks that reason inductively. – Computer support for decision making. • The Internet. • Company intranets. • Decision support software to facilitate virtual teamwork. Advesh Consultancy Services 13509/27/16
  • 136. How do technology, culture, and ethics influence decision making?  Cultural factors and decision making. – Culture is “the way in which a group of people solves problems.” – North American culture stresses decisiveness, speed, and the individual selection of alternatives. – Other cultures place less emphasis on individual choice than on developing implementations that work. – The most important impact of culture on decision making concerns which issues are elevated to the status of problems solvable with the firm. Advesh Consultancy Services 13609/27/16
  • 137. How do technology, culture, and ethics influence decision making? Ethical issues and decision making. – Ethical dilemma. • A situation in which a person must decide whether or not to do something that, although personally or organizationally beneficial, may be considered unethical and perhaps illegal. – Ethical dilemmas are often associated with: • Risk and uncertainty. • Non-routine problem situations. Advesh Consultancy Services 13709/27/16
  • 138. How do technology, culture, and ethics influence decision making? Ethical decision-making checklist. – Is my action legal? – Is it right? – Is it beneficial? – How would I feel if my family found out about this? – How would I feel if my decision were printed in the local newspaper? Advesh Consultancy Services 13809/27/16
  • 139. How do technology, culture, and ethics influence decision making?  Suggestions for integrating ethical decision making into the firm. – Develop a code of ethics and follow it. – Establish procedures for reporting violations. – Involve employees in identifying ethical issues. – Monitor ethical performance. – Reward ethical behavior. – Publicize ethical efforts. Advesh Consultancy Services 13909/27/16
  • 140. How do technology, culture, and ethics influence decision making? Implications of ethics for decision making. – Morality is involved in: • Choosing problems. • Deciding who should be involved in making decisions. • Estimating the impacts of decision alternatives. • Selecting an alternative for implementation. – Moral conduct does not arise from after-the-fact embarrassment. Advesh Consultancy Services 14009/27/16
  • 141. ACTIVITY 8 4.00 PM – 4.15 PM 09/27/16 141Advesh Consultancy Services
  • 142. ACTIVITY 8 • One of the best performing employees working under you was caught carrying one stapler belonging to the company at the gate. 09/27/16 142Advesh Consultancy Services
  • 143. 6 Cs OF DECISION MAKING 09/27/16 143Advesh Consultancy Services
  • 144. Six C's of Decision Making (1 of 3)  Construct  Compile.  Collect.  Compare.  Consider.  Commit. 09/27/16 144Advesh Consultancy Services
  • 145. Decision Making (Six C's) (2 of 3)  Construct a clear picture of precisely what must be decided.  Compile a list of requirements that must be met.  Collect information on alternatives that meet the requirements. 09/27/16 145Advesh Consultancy Services
  • 146. Decision Making (Six C's) (3 of 3)  Compare alternatives that meet the requirements.  Consider the "what might go wrong" factor with each alternative.  Commit to a decision and stick to it. 09/27/16 146Advesh Consultancy Services
  • 147. Inherent Personal: Traps (1 of 2) Trying too hard to play it safe. Letting fears and biases tilt your thinking and analysis. Getting lost in the minutia. Craving unanimous approval. Trying to make decisions which are outside your realm of authority. 09/27/16 147Advesh Consultancy Services
  • 148. Inherent System: Traps (2 of 2) Willing to begin with too little, inaccurate, or wrong information. Overlooking viable alternatives or wasting time considering alternatives which have no realistic prospects. Not following the six C's. Failing to clearly define the results you expect to achieve. Worst of all, failing to reach a decision. 09/27/16 148Advesh Consultancy Services
  • 149. FINANCIAL TOOLS FOR EVALUATING ALTERNATIVES • ROI • Payback • Net present value • Internal rate of return • Breakeven analysis • Sensitivity analysis 09/27/16 149Advesh Consultancy Services
  • 150. ACTIVITY 9 09/27/16 150Advesh Consultancy Services
  • 151. ACTIVITY • List four or five decisions you made at work/home regardless of their size or importance . For each decision, consider whether you really needed to make it or whether the decision could have been handled in some other way. Perhaps it could have been dealt with by someone else. Or perhaps there was not a decision to make at all. 09/27/16 151Advesh Consultancy Services
  • 152. STEP 6 IMPLEMENT 09/27/16 Advesh Consultancy Services 152
  • 153. IMPLEMENT • Communicate • Train • Execute • Review 09/27/16 Advesh Consultancy Services 153
  • 154. • PLAN • DO • CHECK • ACT • PDCA CYCLE 09/27/16 Advesh Consultancy Services 154