Quantitative Analysis and Managerial Decisions

SCIENTIFIC DECISIONMAKING

In the early1970s, scientific approaches to decision making were introduced, as tools with which organizational leaders could (1) minimize the effects of risk and uncertainty in the development and implementation of strategy, and (2) optimize outcomes in the conduct of operations (Clark, 1987, p. 28). While not yet commonplace as managerial tools in the mid to late1980s, the various manifestations of scientific decision making are well established (Clark, 1987, p. 28).

Decision making in organizations has been described as a process of behavior with the economic model (or total rationality) at one extreme, and with the social model (or complete irrationality) at the other extreme (Kimberly & Rottman, 1987, pp. 596-619). This description implies that only irrational decision making accords human values precedence over economic values. In the organizational environments of the mid to late1980s, leaders must find some middle ground between these extremes, for it is evident that neither set of values can be ignored.

Scientific decision making theory is manif

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most probable time for completion of a project. PERT provides probability estimates of the time required for completion of specific activities within a series of activities.The probability determinations employ three time estimates  the most optimistic time, the most probable time, and the most pessimistic time. The most optimistic time assumes that everything will work out as planned, while the most pessimistic time assumes that Murphy's Law will prevail. In PERT, each of these time estimates is assigned a probability of 1/100. Following the successful development of the PERT system, the CPM system was slightly modified, without making any fundamental changes in the system. In effect, these changes meant that two critical paths would be defined. The first was a normal path, in which typical leastcost operating conditions were assumed. The second was a "crash" path, in which operating procedures were assumed which would result in events completion in less than the normal time  overtime work, additional workers, and similar nontypical operating practices. For both the normal path and the crash path, CPM provides both a time estimate for project completion and a cost estimate for project completion. In cont
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Approximate Word count = 1458
Approximate Pages = 6 (250 words per page)

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