Distinguish between closed decision making system & open decision making system? What is ‘What – if‘ analysis? Why is more time spend in problem analysis & problem definition as compared to the time spends on decision analysis?

Distinguish between closed decision making system & open decision making system? What is ‘What – if‘ analysis? Why is more time spend in problem analysis & problem definition as compared to the time spends on decision analysis?

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  2. Difference between closed decision making system and open decision making system
    Closed decision making system:
    If the manager operates in a known environment then it is a closed decision making system. The conditions of the closed decision making system are:
    (a) The manager has a known set of decision alternatives and knows their outcomes fully in terms of value, if implemented.
    (b) The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested, and ranked.
    (c) The manager can choose one of them, based on some goal or objective.
    A few examples are:
    a product mix problem,
    an examination system to declare pass or fail, or
    an acceptance of the fixed deposits.

    Open decision making system:
    If the manager operates in an environment not known to him, then the decision making system is termed as an open decision making system. The conditions of this system are:
    (a) The manager does not know all the decision alternatives.
    (b) The outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one.
    (c) No method, rule or model is available to study and finalize one decision among the set of decision alternatives.
    (d) It is difficult to decide an objective or a goal and, therefore, the manager resorts to that decision, where his aspirations or desires are met best.
    Deciding on the possible product diversification lines, the pricing of a new product, and the plant location, are some decision making situations which fall in the category of the open decision making systems.

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