Decision making models are the methods that help people like managers, CEOs, consultants and other members of the organization to solve any type of problem and find the best solution to the problem. These methods will tell you what you need the most to eliminate your problem and remove the confusions that arises in your mind while solving any problem.
Decision making models are of three types:-
- Classical Model
- Administrative Model
- Herbert Simon’s Model
1) Classical Model
Classical model is very old and well known model in any kind of decision making. Classical Model is also known as rational model Because in this method the decision maker takes the decision without any biases. It is a prescriptive model because in this the decision maker only suggests the best solution to the problem.
In the classical model, the decision maker explores all possible ways of solving a problem and also notices the effect of each possible method and then logically select the best option to solve the problem without any biases.
The classical model is based on the following four most important assumptions:
- Problem should be clearly defined
- Eliminate all those things that are unpredictable
- Access to all information related to the problem
- The solution must be based on reasonable logic and fairness
When a decision maker seeks to solve any problem through classical model, he should always keep in mind the above four points to get the full benefit of this method and find the best solution to the problem.
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2) Administrative model
Administrative model is also known as bounded rationality model Because here in this model the decision maker has incomplete information about the problem.
The only difference between administrative model and classical model is that administrative model does not contain complete information about the problem and the decision maker has to make his/her decisions under certain restrictions. In this, the person has only limited information and limited guidelines about the problem and on the basis of that he has to make a decision.
In this method, the decision maker tries to make satisfactory decisions which can satisfy everyone in the organization. Such decision-making models are used to find solutions to the problem where the problem is related to more than 2 different departments in the organization. Basically it is used to find solutions to complex problems in organizations.
This problem also has four most important assumptions:
- Problem solving is not towards the goal of the organization as this model is used to satisfy.
- Not fully aware of all possible options
- The goals of various elements of the organization such as employees, customers, shareholders, etc. limit decisions and the result is a settlement solution.
- Not able to predict future outcomes
3) Herbert Simon’s Model
Herbert Simon was also a great researcher and Nobel laureate. This model of decision making was given by him hence it is known as Herbert Simon’s model.
According to this model a person goes through three stages while solving a problem.
Let’s understand all three stages one by one
1) Intelligence– Intelligence refers to the amount of internal and external information a person has about the problem. The more a person has the information related to the problem, the more he will be able to understand the problem better and will be able to take the right decision.
2) Design– Design refers to finding different types of solutions to eliminate the problem and evaluating all the solutions to find the best solution.
3) Choice– Choice refers to choosing the best solution among different types of solutions and then implementing and monitoring the solution to eliminate the problem.