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Decision Making - Engineering Management

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ENGINEERING MANAGEMENT LECTURE 2

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Managers of all kinds and types, inclusing the engineer manager, are primarily the engineer manager, are primarily

tasked to provide leadership in the quest for attainment of the organization’s

objectives.

If he is to become effective, he must learn the intricacies of decision-making

(3)

The Engineer manager’s decision making skiils will be very crucial to his success skiils will be very crucial to his success

as a professional. A major blunder in decision making may be sufficient to cause destruction of any organization. Good decisions, on the other hand, will

provide the right environment for provide the right environment for continuous growth and success of any

(4)

Decisions must be made in various level.Decision making is a responsibility of the Decision making is a responsibility of the

engineer manager. It is understandable for

managers to make wrong decisions at times. The wise manager will correct them as soon as they are identified.

The bigger issue is the manager who cannot or

do not want to make decisions (Dangerous) do not want to make decisions (Dangerous)

Management must strive to choose a decision

option as correctly as possible. Since they have that power, they are responsible for whatever outcome their decision bring.

(5)

The production manager of a certain company has received a written request from a section head regarding the purchase of airconditioning unit. regarding the purchase of airconditioning unit. Almost simultaneously, another request from

another section was forwarded to him requiring the purchase of forklift. The production manager was informed by his superior that he can only

buy one of the two requested items due to

budgetary constraints. The production manager budgetary constraints. The production manager must now make a decision. His choice, however, must be based on sound arguments for he will be held responsible, later on, if he had made the wrong decision.

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Decision Making may be defined as the process of identifying and choosing the process of identifying and choosing the alternative courses of action in a manner appropriate to the demands of the

situation.

Engineer managers must adapt a certain Engineer managers must adapt a certain procedure designed to determine the

best option possible to solve certain problems.

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1. Diagnose Problem

Analyze Environment

2. Analyze Environment 3. Articulate Problem

4. Develop Viable Alternatives 5. Evaluate Alternatives

6. Make a choice 6. Make a choice

7. Implement Decision

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If a manager wants to make an intelligent decision, his first move must be to

decision, his first move must be to identify the problem.

“Identification of the problem is

tantamount to having the problem tantamount to having the problem solved..”

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A problem exist when there is a difference between an actual situation and a desired between an actual situation and a desired situation.

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Example of internal or external limitation: (due to environment)

(due to environment)

1. Limited funds available for the purchase

2. Limited training on the part of employess

3. Ill-designed facilities

4. Patents are controlled by other

organizations

Very limited market for the company’s

5. Very limited market for the company’s

products and services exits

6. Strict enforcement of local zoning

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When decisions are to be made, the

internal and external limitations must be internal and external limitations must be considered. It maybe costly, later on, to alter a decision because of a constraint that has not been previously identified.

(12)

The president of a new chemical manufacturing

company made a decision to locate his factory in a place adjacent to a thickly populated area.

place adjacent to a thickly populated area. Construction of the building was made with

precision and was finished in a short period. When the clearance for the commencement of operation was sought from local authorities, this could not be given. It turned out that the residents opposed the operation of the firm and made sure that no

clearances is given.

The president decided to relocate the factory but not clearances is given.

The president decided to relocate the factory but not after much time and money has been lost. This is a clear example of the cost associated with

management disregarding the environment when

decisions are made. In this case, the president would not consider what resident would do.

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1. Internal Environment – refers to

organizational activities within the firm organizational activities within the firm that surrounds decision making.

2. External Environment – refers to

variables are outside the organization and not typically within short run

and not typically within short run control of top management.

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Problems may be solved by any of the

solutions offered. solutions offered.

Pick the best solution by using a

procedure with the following:

1. Prepare a list of alternative solutions

2. Determine the viability of each solutions 2. Determine the viability of each solutions 3. Revise the list by striking out those

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An engineering firm has a problem of

increasing its output by 30%. This is the increasing its output by 30%. This is the result of a new agreement between the firm and one of its clients.

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Improve the capacity of the firm by hiring

more works and building additional more works and building additional facilities

Secure the services of subcontractorsBuy the needed additional output from

another firm another firm

Stop serving some of the company’s

costumer

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After determining the viability of the

alternatives and a revised list has been alternatives and a revised list has been made, an evaluation of the remaining alternatives is necessary. This is

important because the next step involves decision making.

“Each alternative must be analyzed and evaluated in terms of its value, cost, and risk characteristics.”

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Another example of an evaluation of alternatives is shown below:

alternatives is shown below:

An engineer manager is faced with problem of choosing between three

applicants to fill up a lone vacancy for a junior engineer. He will have to set up

certain criteria for evaluating the applicants. If the evaluation is not done by a

professional human resource officer, then If the evaluation is not done by a

professional human resource officer, then the engineer manager will be forced to use a predetermined criteria.

(19)

APPLICANT EDUCATION TRAINING EXPERIENCE AGE TOTAL POINTS

1. JOSE SIBAYAN, JR. 40 35 4 10 89

2. MENANDRO RILLON 40 36 5 9 90

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After the alternatives have been evaluated,

the decision-maker must now be ready to the decision-maker must now be ready to make a choice. This is the point where he must be convinced that all the previous steps were correctly undertaken.

Choice making refers to the process of

selecting among alternatives representing potential solutions to a problem.

To make the selection process easier, the potential solutions to a problem.

To make the selection process easier, the

alternatives can be ranked from best to worst on the basis of some factors like benefit, cost, or risk.

(21)

Implementation refers to carrying out the

decision so that the objectives sought will decision so that the objectives sought will be achieved.

At this stage, the resources must be made

available so that the decision may be properly implemented.

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In implementing the decision, the results expected may or may not happen. It is therefore, important for the engineer manager to use control and

for the engineer manager to use control and feedback mechanisms to ensure results and to provide information for future decisions.

Feedback refers to the process which requires checking at each stage of the process to assure that the alternatives generated, the criteria used that the alternatives generated, the criteria used in evaluation, and the solution selected for

implementation are in keeping with the goals and objectives originally specified.

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In decision making, the engineer manager is faced with problems which may either is faced with problems which may either be simple or complex. To provide him

with some guide, he must be familiar with the following approaches.

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Refers to the evaluation of alternatives

using intuition and subjective judgement. using intuition and subjective judgement.

Managers use this when:

1. The problem is fairly simple. 2. The problem is familiar.

3. The costs involved are not great. 3. The costs involved are not great. 4. Immediate decisions are needed.

(25)

A factory operates on three shifts with the following schedule: First Shift: 6:00 AM to 2:00 PM

Second Shift: 2:00PM to 10:00PM Second Shift: 2:00PM to 10:00PM Third Shift: 10:00PM to 6:00PM

Each shift consist of 200 workers manning 200 machines. On Sept. 16, 1996, the operations went smoothly until the factory manager, an industrial engineer was notified at 1:00PM, that 5 of the

workers assigned to the second shift could not report for work because of injuries sustained in a traffic accident while they were on their way to the factory.

on their way to the factory.

Because of the time constraints, the manager made an instant

decision on who among the first shirt workers would work to man the five machines.

(26)

Refers to the evaluation of alternatives

using any technique in a group classified using any technique in a group classified as rational and analytical.

(27)

Types of quantitative techniques: 1. Inventory Models 1. Inventory Models 2. Queuing theory 3. Network models 4. Forecasting 5. Regression analysis 6. Simulation 6. Simulation 7. Linear programming 8. Sampling theory

(28)

1. Economic order quantity model – this one is

used to calculate the number of items that used to calculate the number of items that

should be ordered at one time to minimize total yearly cost of placing orders and carrying the items in inventory.

2. Production order quantity model – economic

order quantity technique applied to production orders

3. Back order quantity model – inventory used for 3. Back order quantity model – inventory used for

planned shortages.

4. Quantity discount model – used to minimize the

total cost when quantity discounts are offered by suppliers

(29)

Determines the number of service units

that will minimize both costumers waiting that will minimize both costumers waiting time and cost of service.

Network Models: These are the models

where large complex task are broken into smaller segments.

into smaller segments.

1. Program Evaluation Network Model

(PERT)

(30)

References

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