- 1.1 Chapter Topic
- 1.2 Key Corporate Participants
- 1.3 Management Steps Required to Execute the Approach
- 1.4 Solving the Right Problem
- 1.5 Developing an Understanding of the Problem
- 1.6 Defining Goals and Objectives of a Company or Organization
- 1.7 Defining the Framework for the Decisions Being Made
- 1.8 Metrics for Measuring Success
- 1.9 Definition of a Metric
- 1.10 Developing Decision Criteria and Metrics
- 1.11 Data Used to Support Metrics
- 1.12 Structure and Definition of the Problem
- 1.13 Key Concepts in Defining the Objectives
1.7 Defining the Framework for the Decisions Being Made
You need to know what the organization wants to accomplish, the purpose of the decisions being made, and the operating environment of the organization. You can then develop the decision model to reflect the conditions and characteristics of the organization. Use the following questions to aid in defining the framework for the model.
- What specific decisions need to be made?
- What are the business environment and constraints in which decisions are made?
- What are the firm constraints within which to achieve the goals and objectives?
- What is the flexibility of the decision to be made to achieve the goals?
Use various fact-finding efforts to answer these questions. Depending on the breadth of the model, this may require that you conduct interviews with individuals in various departments and levels within the organization. Individuals currently responsible for the decisions and individuals that have been previously responsible for the decisions are good starting points to gain information. At this point in the development, this should still only be general information that you can use to outline the model being developed.
Decisions to be made with the model would dictate the structure of the model. Some examples of decisions might include the following:
- Establish budgets for the divisions and corporation as a whole.
- Determine which products should be in the product line.
- List the warehouse requirements.
- Compile the least-cost production scheduling options.
- Assess the facility conditions.
- Examine the personnel management and number and skill mix of employees.
Part of answering these questions and the nature of the information gathered in the modeling process may provide additional information that you can use to make decisions. For example, use a decision model to allocate resources. However, this can also provide an opportunity to standardize the submission format of budget requests and potentially do various database queries on the submitted budget data to determine how well you make the budget.
The business environment in which the decisions are made is also important in the decision process. In an organizational environment that is dictatorial, no matter what the justification for the decision, the model may be of no use. If it is a group consensus organization, the model should reflect that type of decision-making process so that it is representative of the organization. The model should be focused forward and adaptable to changes. For example, if a division combines with another division in the next 3 months, this should be accounted for in the model structure. These types of events should be investigated in the model development process.
To determine the framework for the model, you need to identify what elements of the operating environment are fixed and what elements of the environment can change. Fixed constraints would include those elements that have permanent limitations or restrictions in the decision process. In a production environment, it could be limitations on quantities that can be produced, steps in the manufacturing process required to create an item, warehouse limitations, and others. In budget decisions, this could involve the resource limits, limits on certain types of projects or programs funded, and others. In manpower planning, there may be limitations on the mix of skills required to perform certain activities or restrictions based on union requirements. A general overall understanding of what cannot change is as important as understanding what can be changed in the model.
Understanding the decision variables that represent the decisions to be made by the organization is equally important. Again, these variables are dependent upon the business environment of an organization and impact the type of model being built. With a model in a production environment, variables might include the amount of safety stock that is kept in-house or at remote locations or quantities of various products produced. With a model used for resource allocation, the decision may be which research and development projects you should fund.
The accuracy of the model is also an important consideration in the model development process. If a model must be accurate to a high level, such as 99 percent, the level of detail required will be much greater than for a model that must be accurate to 95 percent or 90 percent. The type of data and information processing will be different for these two modeling scenarios.
Overall, Group Decision-Making techniques can be useful in many consensus-building situations within the organizational environment. These techniques are used (as shown in the next chapter) to facilitate the establishment of corporate goals and objectives and in building decision models. Your goal here is to determine what is important to the organization and what is your future direction.