Operations Management: Creating Value Along the Supply Chain, 7th Edition

Chapter S1. Operational Decision-Making Tools: Decision Analysis

In this supplement, you will learn about. . .

• Decision Analysis (with and without probabilities)

At the operational level hundreds of decisions are made in order to achieve local outcomes that contribute to the achievement of a company's overall strategic goal. These local outcomes are usually not measured directly in terms of profit, but instead are measured in terms of quality, cost-effectiveness, efficiency, productivity, and so forth. Achieving good results for local outcomes is an important objective for individual operational units and individual operations managers. However, all these decisions are interrelated and must be coordinated for the purpose of attaining the overall company goals. Decision making is analogous to a great stage play or opera, in which all the actors, the costumes, the props, the music, the orchestra, and the script must be choreographed and staged by the director, the stage managers, the author, and the conductor so that everything comes together for the performance.

For many topics in operations management, there are quantitative models and techniques available that help managers make decisions. Some techniques simply provide information that the operations manager might use to help make a decision; other techniques recommend a decision to the manager. Some techniques are specific to a particular aspect of operations management; others are more generic and can be applied to a variety of ...