TITLE:
Decision Theory and Analysis: An Optima Value Creation Precursor for Organizations
AUTHORS:
Cephas A. Gbande, Paul T. Akuhwa
KEYWORDS:
Decision-Making, Decision Environment, Programmed and Nonprogrammed Decisions, Optimization
JOURNAL NAME:
Open Journal of Applied Sciences,
Vol.5 No.7,
July
15,
2015
ABSTRACT: Organizations make many informed decisions such as increasing production capacity, improving human capital, entering a new market etc. This paper shows that executives take either of the two major types of decisions: programmed (structured) and nonprogrammed (unstructured) decisions. While the programmed decisions are for perfectly stable situations, the nonprogrammed decisions are for the real world situation surrounded by uncertainties, risks and ambiguities. For an optima value creation, this paper is succinct that a robust decision theory and analysis serve as a precursor. The environment of decision-making keeps changing and it takes decision-making for organizations to change proportionately to these environmental changes if they must survive. The decision-maker uses probability values to convert uncertainties and risks into perfect knowledge poles so as to make informed decisions. Models are veritable decision making tools and are deterministic and probabilistic (or stochastic) for programmed and nonprogrammed decisions respectively. Real-world value optimization in this paper centres on decisions under pure uncertainty and risky situations generating model fits for an optima value creation. Finally, the optima value creation models under the uncertainty and risk are suggested and organizations advised to use professional decision theorists and analysts as the need arise.