Tools of Decision Making

	Discuss the tools to be used for decision making.
	A technique may be defined as a way of doing something. Management techniques are those which help the management in making decisions, evaluating and comparing the results of a management process with the established objectives. Some of the basic tools and techniques used in management are described below:
Budgeting	Budgeting is the formulation of plans, in numerical terms, for a given future period of time. In this technique, we set out numerical estimates (usually amounts) for a particular task or department or activity for a specified future period. The results are then matched with the estimates set out and appropriate measures taken. Budgeting is the most common of all control techniques; many organizations use budgeting techniques for controlling. As an example, consider the financial budgets allocated by the Federal Government for expenditure by various ministries and departments. The budget for each department is further bifurcated for each type of account; for example there are different budget amounts for salaries, allowances, purchase of equipment, repair/maintenance of equipment, purchase of stationery items and supplies etc. Similarly production organizations use budgets for number of units to be manufactured or sold.
Gantt charts	Gantt charts, first developed by Henry L. Gantt, provide a useful means of scheduling events in a time-frame. In this technique, a plan is treated as a series of inter-related supporting plans called events, each event is then represented on the chart as an entity in time frame. A Gantt chart also takes into account whether or not two events can be parallel or simultaneous.
PERT/CPM	Program Evaluation and Review Technique/Critical Path Method.  This control technique was developed in 1958 by the Special Projects Office of the US. Navy. It breaks up a project into controllable pieces called events, and through a time-event network analysis, it determines the minimum time required to complete the project. In this technique, a network diagram is drawn, in which events are represented by numbered circles, or nodes, and the sequence of events and time required for each event are represented by arrows. The PERT/CPM technique, then, seeks to determine the longest path from the first event to the last one, and this path, known as the critical path, gives the time required to complete the project.
Decision Matrix or Payoff Table	A Payoff table is a two-dimensional matrix that allows a decision maker to compare how different future conditions are likely to affect the respective out comes of two or more decision alternatives.  This is also referred to a decision matrix.  Typically, in a payoff table, the decision alternatives are shown as column headings.  The number at the intersection of a row and a column represents the payoff, the amount of decision-maker value associated with a particular decision alternative and future condition.
Decision Trees	A decision tree is a graphic model that displays the structure of a sequence of alternative courses of action and usually shows the payoffs associated with various paths and the probabilities associated with potential future conditions.  The decision tree operates as a graphic alternative to the decision matrix.  However, a major advantage of a decision tree is that it allows decision makers to consider more complex alternatives.
Break-Even Analysis	Break-even analysis is a technique that helps decision makers understand the relationship among sales volume, costs, and revenues in an organization.  Although break-even analysis is often conducted graphically.
Program budgeting	Program budgeting means for providing a systematic method for allocating resources effectively to meet goals. It overcomes the flaws of ordinary budgeting by emphasizing goals and programs that meet them, in the light of available resources.