Бесплатный фрагмент - Management and decision-making optimization methods

Introduction

In the context of globalization and the rapid development of technology, organization management and management decision-making have become critical aspects of a successful business. Competition, the changing economic environment and the growth of data volumes require managers to be highly competent and able to adapt quickly to new challenges. To achieve success, managers need to have not only knowledge in the field of planning and optimization, but also be able to effectively use modern analytical tools, technologies and approaches. This tutorial is dedicated to the basics of management and the process of making managerial decisions. It provides students with a structured overview of the methods and principles that are used at all stages of management activities. The main purpose of the textbook is to give students a comprehensive understanding of the decision — making process and management of the organization. We consider both traditional approaches and modern technologies and methods that can improve the quality of management decisions and increase the sustainability of the company. Students will learn how to analyze situations, develop and evaluate alternatives, use mathematical and analytical methods to optimize solutions, and take into account social and environmental aspects of management. Given the complexities and rapid changes in the business environment, successful management requires the application of a wide range of knowledge and skills. We hope that this textbook will become a basis for students that will help them not only understand decision-making processes, but also apply them in practice in order to become competent and in-demand specialists in the field of management.

Chapter 1: Decision management introduction

1.1 The concept and role of decision management in the organization

A management decision is the process of choosing the best action course from a variety of possible alternatives to achieve certain goals. In modern management, decisions play a key role, since it is on their basis that control over the organization’s activities, its development and adaptation to changes in the external environment is carried out. A decision in a managerial context can be defined as the result of an analysis and justification of choosing the optimal course of action to achieve the set goals. A management decision requires a clear analysis of the available information, an assessment of possible options and the determination of the most effective course of action.

1.2 The main elements of a decision management

The management decision-making process consists of several key elements:

1. A management situation is a situation that requires the intervention of a manager to achieve an optimal result. Not every problem in an organization requires a managerial solution; it is important that the situation is characterized by contradictions, uncertainty, or opportunities for improvement.

2. Information — qualitative and quantitative data that serve as the basis for analyzing the situation. Reliability and completeness of information are key success factors in decision — making.

3. Alternatives — various options for actions that can be implemented to solve the problem. At the decision preparation stage, all possible alternatives are analyzed in order to choose the most profitable path.

4. Selection criteria — indicators based on which alternatives are evaluated. These can be economic, social, or technical criteria that reflect the company’s priorities and strategic goals.

1.3 Situations requiring decision-making

Not every situation requires managerial intervention. In order to talk about the need to make a decision, the situation must meet several conditions:

— the presence of a conflict of interest or contradictions;

— the ability to choose from several alternatives;

— the impact of the situation on the achievement of the strategic goals of the organization. Situations requiring solutions may be of varying complexity and degree of uncertainty. Depending on this, they are divided into several types:

1. Standard situations — such situations are repeated with a certain regularity, they can be solved using already developed algorithms.

2. Structured situations — in such situations, the main dependencies between the parameters are clear, and they can be expressed in numerical form for subsequent analysis.

3. Unstructured situations — include many unknown factors that are difficult to quantify. Solving such situations requires a creative approach and the use of expert assessments.

4. Weakly structured situations — such situations combine both qualitative and quantitative elements. They often require a combination of formalized and non-formalized decision-making methods.

1.4 The decision management role in the company

Management decisions are the main tool for managing an organization. The success of the company’s operation depends on their quality. The decision-making process includes an analysis of the current situation, forecasting its development, choosing alternatives and implementing the chosen course of action.

The main tasks that are solved with the help of management solutions:

— achieving the goals of the organization;

— improving the efficiency of production and management;

— adaptation to changes in the external environment;

— resolution of internal and external conflicts;

— improvement of the organizational structure and processes.

Chapter 2: Decision management classification

2.1 By scale and objectives classification

Management decisions can be classified according to several criteria, one of which is scale and goals. Depending on which object the decision affects and what goals are pursued, there are:

1. Global solutions — cover all parts of the management system and have a long-term effect. For example, the decision to merge companies, open new markets, or change the business model.

2. Local solutions — affect individual divisions or areas of activity of the company. These solutions are aimed at solving specific tasks within the framework of the overall goals of the organization, for example, the introduction of new working methods in one department.

3. Strategic decisions — determine the main directions of the organization’s development. Their goal is to achieve long-term goals, such as increasing market share, increasing profits, and introducing innovative technologies.

4. Tactical decisions are aimed at implementing specific steps within the framework of strategic goals. They involve more detailed tasks, for example, the development of a marketing campaign plan.

5. Operational decisions are made within the framework of the company’s daily activities and are aimed at solving current tasks. These can be decisions about resource allocation, personnel management, or changing production processes.

2.2 By acceptance conditions classification

The conditions in which management decisions are made also play an important role. Depending on the degree of certainty of the initial information, the following types of solutions are distinguished:

1. Decisions in terms of certainty are made in situations where all the initial data and the consequences of each course of action are known. In such situations, the decision is strictly formalized, since the probability of occurrence of certain events can be accurately calculated. An example is a decision on the optimal allocation of resources based on a known volume of production.

2. Decisions under risk conditions are made when possible outcomes of events are known, but their occurrence is associated with probabilities. In such situations, the decision requires an assessment of risks and the choice of an optimal strategy, taking into account possible losses and gains. An example is the decision to launch a new product on the market with incomplete information about demand.

3. Decisions in conditions of uncertainty are made in the absence of accurate data on the future development of the situation. In such circumstances, it is extremely difficult to predict the consequences of actions, and decisions are often made based on intuition or expert assessments. An example is a decision to enter a new market without data on possible competitive actions.

4. Counteraction solutions are situations where the actions of one party depend on the counteractions of other parties, which is typical for competitive markets. These decisions are usually related to game theory, where the interests of all participants in the situation are taken into account. An example is making a decision in a price war with competitors.

2.3 By justification methods classification

An important aspect of managerial decision-making is the method of their justification. There are several methods that are used to make decisions, depending on the nature of the problem and the available data.

1. Formalized methods — include the use of mathematical models and algorithms. These methods are used when the problem is structured and its parameters can be expressed quantitatively. Examples of such methods are mathematical programming, econometric models, and optimization methods.

2. Informal methods are used in situations where quantitative data is not available or the solution is creative. In such cases, heuristic methods based on experience and intuition are used. An example is expert assessments, brainstorming and other methods that do not require strict calculations.

3. Combined methods are often used in difficult situations where both quantitative and qualitative data are present. In such cases, the solution may include elements of both formalized and non-formalized methods. An example of such an approach could be making an investment decision taking into account both financial indicators and expert assessments of market trends.

2.4 By decision frequency classification

Management decisions can also be classified according to the frequency of their adoption:

1. One — time decisions are made in unique situations that are rarely repeated. Such decisions usually relate to large-scale projects or events, for example, the decision to merge companies or reorganize the structure of the enterprise.

2. Recurring decisions are typical decisions that are made regularly within the framework of standard procedures. An example of such solutions may be decisions on purchasing materials, hiring staff, or planning production processes.

3. Routine decisions — related to day-to-day operations that require minimal involvement of senior management. They are often automated or delegated to lower levels of management.

2.5 By standardization degree classification

Another important aspect of the classification of management decisions is the degree of their standardization:

1. Standard decisions are made on the basis of well — known and proven algorithms of actions. These solutions can be fully formalized and automated. An example is the decision to launch regular processes in production, where all the stages have already been prescribed and worked out in advance.

2. Partially standard solutions are solutions that include standard procedures, but require flexibility in some aspects. For example, the decision to launch an advertising campaign may follow a standard planning process, but require a creative approach in terms of creative strategy.

3. Non — standard solutions are decisions that are made in new or difficult conditions for which there are no pre-developed methods or standards. An example is entering a new market or developing an innovative product.

Chapter 3: Stages of the decision management process

3.1 Getting the situation information

The first step in the management decision — making process is to collect and analyze information about the current situation. Without accurate and complete information, it is impossible to make an informed decision. Sources of information can be internal and external data, analytical reports, statistics, data on competitors’ activities, marketing research results and other materials. The need to collect information is due to the fact that the manager needs to have a clear understanding of the current state of the enterprise, market conditions, opportunities and threats.

The basic principles of obtaining information:

— completeness — it is necessary to collect as much data as possible to help understand the situation.

— reliability — it is important that the data is up-to-date and verified.

— timeliness — information must be received before a decision is made.

— relevance — the data should relate directly to the problem that needs to be solved.

The information can be both quantitative (financial indicators, sales volumes, costs) and qualitative (risk assessments, consumer expectations, expert opinions).

3.2 Defining goals

Goals are the basis of any management decision. They determine what results need to be achieved and in what time frame. It is important that the goals are clearly formulated and measurable.

The goals can be:

— strategic — long-term, aimed at the development of the company in the future. Example: a 20% increase in market share over five years.

— tactical — medium-term, more specific goals that help move towards strategic goals. Example: Launching a new product line to increase sales by 10% next year.

— operational — short-term goals that are aimed at solving current problems. Example: optimization of the production process to reduce costs by 5% in the coming months.

The following requirements apply to the goals:

1. Concreteness — the goal should be formulated clearly and unambiguously.

2. Measurability — it is necessary to clearly indicate how the achievement of the goal will be evaluated.

3. Realistic — the goal must be achievable with the available resources.

4. Relevance — goals should correspond to the current situation and objectives of the organization.

5. Time constraints — it is necessary to set a clear time frame to achieve the goal.

3.3 Alternatives development and evaluation

Once the goals are defined, the next step is to develop and analyze possible solutions to the problem. Alternatives are different approaches that can be applied to achieve goals.

When developing alternatives, it is important to consider:

— available resources: financial, human, temporary.

— possible risks and limitations.

— expected results from each option.

At this stage, methods of generating ideas are used, such as brainstorming, expert assessments, and scenario analysis. Alternatives can be both standard (for example, the use of already tested methods) and new ones that require an innovative approach.

Several criteria are used to evaluate alternatives:

1. effectiveness — to what extent the solution option helps to achieve the set goals;

2. risks — the likelihood of problems during the implementation of each option;

3. Costs — financial and resource costs for the implementation of each of the alternatives;

4. Implementation time — how long it will take to achieve results.

Evaluation of alternatives is often carried out using special models and methods, such as the weighting method, SWOT analysis, and the decision matrix. These tools help you compare options and choose the best one.

3.4 Results forecasting

Forecasting is a key stage that helps to predict the consequences of each possible decision. It includes an assessment of the likely outcomes of each of the alternatives.

The purpose of the forecast is to determine which of the proposed solutions will lead to the best results, taking into account possible risks, market changes and other external factors. Forecasting can be quantitative (for example, financial models) or qualitative (expert assessments, scenario analyses).

Forecasting includes:

— scenario development — analysis of the best, worst and most likely scenarios;

— simulation of consequences — using computer programs and mathematical models to calculate likely outcomes;

— risk assessment — analysis of the probability of adverse events and development of a plan in case of their occurrence.

Example: If a company is considering entering a new market, forecasting may include demand assessment, competitor analysis, currency exchange rate forecast, and other important factors.

3.5 Decision-making and its implementation

After developing and evaluating all alternatives, it is necessary to choose the most appropriate option.

This stage is key, as it is here that the final decision is made, which will be implemented.

Decision-making criteria:

— how well the chosen option meets the goals of the organization;

— the level of risk associated with the chosen alternative;

— costs and benefits;

— the feasibility of the solution in the current conditions.

After choosing the optimal option, the implementation of the solution begins. To do this, an action plan is being developed, which defines:

— specific steps to be taken to achieve the goal;

— responsible persons for completing tasks;

— time frame for completing each stage;

— the resources needed to complete the solution.

The successful implementation of a management decision depends on the correct allocation of responsibilities, control over the fulfillment of tasks and timely adjustment of the plan in case of unforeseen circumstances.

3.6 Result monitoring and evaluation

The last stage of the management decision — making process is monitoring its implementation and evaluating the results achieved. It is important to monitor how the plan is being implemented, how the actual results correspond to the planned ones, and make adjustments on time.

The control includes:

— Systematic collection of information on the implementation of decisions;

— analysis of data on the fulfillment of assigned tasks;

— making changes to the plan if necessary to achieve the goals.

If the results do not meet expectations, it is necessary to analyze the reasons and make adjustments. This may be due to both internal factors (incorrect assessment of resources, errors in implementation) and external factors (changes in the market, new regulations).

The evaluation of the result includes an analysis of the following issues:

— how far have the set goals been achieved;

— what problems have arisen in the implementation process;

— what can be improved in the future.

Effective feedback after the completion of the project allows you to learn from experience and improve the quality of management decisions in the future.

Chapter 4: Management decisions analysis and justification methods

4.1 Calculation and analytical methods

Computational and analytical methods occupy an important place in the process of substantiating management decisions. They allow you to objectively assess the current situation, predict possible consequences and determine the best alternatives. These methods are widely used in management, as they make it possible to carry out quantitative calculations and analyze data, which is especially important when making decisions in complex systems. Basic computational and analytical methods:

1. Correlation and regression analysis is a method used to study the relationship between various factors and performance indicators. It helps to identify the degree of influence of one or more factors on the results of activities. For example, you can analyze how changes in advertising volumes affect sales growth.

2. The sequential substitution method is used to study the effect of each factor on the result, provided that all other factors remain unchanged. This method helps to identify the most significant factors that should be considered when making a decision.

3. The dynamic method is used to analyze changes over time. This method is based on the study of time series, which allow you to track the dynamics of indicators and identify trends. An example would be analyzing a company’s financial results over several years to identify seasonal fluctuations.

4. The parametric method is used to determine the functional dependencies between the parameters of various elements of the system. This method allows you to assess the degree of compliance of the system elements with the specified parameters. For example, the parametric method can be used to assess the compliance of an enterprise’s production capacity with production volumes.

5. Factor analysis — allows you to identify the factors that have the greatest impact on the final result. This method helps to study the structure of indicators in detail and understand what factors are responsible for the change in key economic or production indicators.

4.2 Expert methods

Expert methods are used in cases where quantitative methods cannot provide an accurate assessment of the situation or when the problem is of a qualitative nature. These methods are based on the opinions and judgments of experts with in-depth knowledge and experience in the relevant field. The main expert methods:

1. The decomposition method consists in dividing a complex problem into simpler elements, which are then evaluated sequentially. This helps to better understand the structure of the problem and identify important elements for its solution.

2. The analogy method is used to find solutions based on comparing the current situation with previous similar situations. Experts assess the similarities and differences and suggest approaches that have previously been successful in similar conditions.

3. The control question method is based on the use of a special set of questions that help generate new ideas and solutions. This method is especially useful in the initial stages of analysis, when it is necessary to expand the range of possible alternatives.

4. Expert-analytical method — combines elements of expert assessments and quantitative analysis. Experts provide qualitative estimates, which are then subjected to quantitative processing using mathematical and statistical methods.