Decision Making Tools Name: College: Tutor: Date: Contents Pareto Analysis 4 Advantages of Pareto Analysis 5 Disadvantages of Pareto Analysis 6 Decision Tree 7 Advantages of Decision Trees 7 Disadvantages of Decision Trees 9 Cost Benefit Analysis 10 Advantages of Cost Benefit Analysis 11 Disadvantages of Cost Benefit Analysis 12 Combination of the Three Decision Making Tools 13 References 15 Decision Making Tools Pareto Analysis The Pareto Analysis is one of the decision making tools that is used in the selection of a limited number of tasks that will produce an overall effect…
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This is a formal technique used in organizations where there are many possible causes that are competing to be implemented. In this respect, the Pareto Analysis is used as a problem solver that estimates each course of action’s benefits to the project. After the estimation, the analysis will then find the most effective actions that will bring a total benefit that is closest to the optimal possible benefit (Mullen 1991, p. 56). Where managers are interest in finding the causes of the problems, the Pareto analysis offers a creative way that enables a team to stimulate their thinking and though organization. This decision making tool is inhibited by important problems which initially were small but continue to grow as time passes by. The Pareto analysis is thus more practical when combined with other analytical tools such as the fault tree analysis and failure mode and effects analysis. The Pareto Analysis helps organization in the identification of the top 20% causes of problems that the management needs to address in order to resolve 80% of the problems facing the organization. After the identification of the top 20% causes, other analytical tools are used in the identification of the root causes of the organization’s problems. Some of the tools that are used for the analysis include the Fish-bone analysis and the Ishikawa diagram which are effective in looking for the root causes of problems. When the Pareto Analysis is applied in risk management, the management are given the opportunity to concentrate on the risks that have adverse effects on the project’s operations (Perrow 1986, p. 69). Advantages of Pareto Analysis One of the advantages of Pareto Analysis is realized in the undertaking of knowing the relevance of each stock keeping unit. A stock keeping unit’s relevance is helpful in determining the resources that are need in managing the stock keeping unit. The resources are mainly considered in the context of money and time that are allotted to one particular stock keeping unit. The nature of an organization determines the importance of a stock keeping unit by using different data that will be applicable to the organization. If the company is a small retail company, the Pareto Analysis will generally be used focusing on the units sold or the sales in dollars. Pareto Analysis in this instance will be used to identify the bottom selling unites and the top selling units by using the sales data of the organization (Rodrigues 1991, p. 15). Larger manufacturing companies will generally apply the Pareto Analysis with a focus on the cost of goods sold. A manufacturing company will thus apply the Pareto Analysis on cost of goods sold to concentrate its efforts in ensuring that the costs of the most expensive materials are lowered. The production planners of an organization will use the Pareto Analysis to keep a very close control on the spending part for the production of a particular stock taking unit that has a higher beneficial perspective to the organization in the context of the yearly cost of goods sold. The production planners will also seek to lessen the yearly expenditures for that particular part by looking for an
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The knowledge that is at hand, if handled properly, both in the quantitative and in the qualitative manners, it brings value to the organization’s decision makers. The techniques that assist in the providence of the value of knowledge are knowledge management and business intelligence.
can be improved 9 6.0 Conclusion 11 7.0 Bibliography 12 Title “Select three decision making tools studied in the Managing Decisions Modules and evaluate their advantages and disadvantages. Discuss how you may use these methods to improve decision making in business.” (2860 words) 1.0 Introduction Basically, decision making is regarded as one of the most- if not the most important aspect of all managerial activities (Schultz et al 2004, p.163).
To be able to achieve this plans a contingency plan is useful here. The 7-steps to a successful contingency plan are listed below. These steps are very useful in the development of any system as well as projects that are to be incepted. Change is also a major factor to be considered by these steps as it allows the system developers to make changes on parts they feel are not good enough.
Affinity diagrams are critical in making decisions where groups are involved. An affinity diagram is a tool that is used to congregate large sums of information, ideas, data issues and opinions and arrange them into factions based on their natural affiliations.
One example of a nonprofit organization is the SOS Children’s Village Lockport located in the United States. This paper will present the cash availability of the said organization, following its status in the market and its current financial situations.
The intervals are shown on the X-axis, and the number of scores in each interval is represented by the height of a rectangle located above the interval.
The cumulative frequency is the running total of the frequencies. On a graph, it can be represented by a cumulative
Ford Automotive has 2.21 dollar amounts of current assets to pay their current liabilities.
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Instead, management has chosen to include only senior-level management.
This implementation strategy is appropriate only in the early stages of implementing the strategic plan. The assumption here is that implementing the strategic
This research will begin with the statement that decision making is best utilized when it is viewed as a process rather than an event. What this means is that decision making must be seen as part of the daily activities that any business executive or person engages in, instead of a periodic or one-off task that comes and goes and is never remembered again.
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