University Report: BUSN11079 Analytical Thinking and Decision Making

This report delves into the critical aspects of decision-making and analytical thinking within a business context. It begins by emphasizing the significance of effective decision-making and the application of decision analysis, setting the stage for a practical application. The core of the report involves id...Read More

Running Head: DECISION MAKING AND ANALYTICAL THINKING
Analytical Thinking and Decision Making
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Table of Contents
Introduction......................................................................................................................................3
Importance of decision making and application of decision analysis.........................................4
Identifying and outlining a decision problem in a raw material supplier....................................7
Simple Multi-Attribute Rating Technique (SMART) to the Outlined Decision Making..........11
 Identification of the decision maker................................................................................11
 Identification of issues which are related to the selections of the supplier.....................11
 Alternatives identification...............................................................................................12
 Criteria identification......................................................................................................12
 Value assignment for each of the above mentioned criteria...........................................13
 Weight determination for each of the mentioned criterion.............................................13
 Weighted average calculation of the values assigned to each alternative.......................13
 Provisional decision making...........................................................................................13
Strengths of the analysis done in the decision making context.................................................13
Limitations.................................................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

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Introduction:
The modules of analytical thinking and decision making helps in the understanding of the
importance of the application of making decision and thinking analytically to resolve the
occurred problem in an organization that includes several objectives which would analyze the
limitations and strength of the following analysis. For the process of analysis the technique used
is the “simple multi attribute rating technique”, in short SMART analysis. Analytical thinking
incorporates critical reasoning of the occurred problem resulting in an effective and efficient
solution to the problem. Analytical thinking involves several steps in order to achieve the
required solution of the problem such as addressing the issues and collection of related
information (Whimbey, Lochhead and Narode 2013). Thinking analytically is the process of
analyzing a problem efficiently and rapidly (Cook et al. 2014). Analytical thinking involves
analyzation of a situation or problem by means of practical knowledge and information available
be it quantitative or qualitative. Analytical thinking can be compared with intuition also. As
discussed by Anders Omstedt, analytical thinking sometimes make the mental process of a
person “limited and slow” whereas intuition is opposite of analytical thinking that is “theory free
and fast” (Alter, Oppenheimer and Epley 2013). However the combination of intuition and
analytical thinking can lead to effective solution (Rusou, Zakay and Usher 2013). Therefore,
decision making and analytical thinking is the key to a successful business. A complex problem
is broken down into several small parts which would be easier to solve. The process of making
vital decisions in order to solve a problem is called as decision making (Hoffenson & Söderberg
2015). In any organization, every individual is responsible in the process of decision making, as
analytical thinking involves analyzation of a situation or problem by means of practical
knowledge and information available be it quantitative or qualitative therefore it can be used by

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most of the people in an organization (Kremer-Asaf 2015). This report would discuss about the
problem in the organization is the identification of raw material supplier selection also the use of
the technique called SMART in the analyzation and finding out of the solution to the problem.
Significance of decision making and utilization of decision analysis:
Decision making can be expressed as the choices made on the basis of identifying
decision, collection of information, and analyzing several alternatives. Decision making includes
selection of a particular alternative from the possible alternatives for arriving to a desired
solution (Sharma 2013). Moreover, the process of decision making is considered as a check and
balance system for the growth of a business in several direction. The process of decision making
always aims to achieve a goal, a business always pre-set its missions and visions. The individuals
involved in the process of decision making required to have proper scientific knowledge
accompanied with experiences and skills. The decision making process of a management ranges
from simple to critical decisions. Decision making involves the study of the all the possible
alternative from the available option that can lead to the effective solution of the problem (Kanna
et al. 2013). The management takes several important decisions such as employees’ effort,
location of the production, choices of the suppliers etc. Decision making is explained as the
decisions taken in several small steps and analysis of the progress in every step of problem
solving rather than making decision for reaching the ultimate goal (Kremer-Asaf 2015).
According to the view of Organizational procedure in decision making, an organization should
utilize the previous experiences in formulating the procedures of the upcoming decision making
(Domingues et al. 2015).
The importance in the decision making process are as follows:
 Decision making facilitates the growth of the organization.

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 Decision making utilizes the available resources fruitfully.
 Decision making facilitate innovation.
 It helps in motivating the employees.
 It helps in tackling challenges and problems.
 It helps in choosing suitable opportunities.
 The use of decision making in the creation of policies and planning in the organization.
Policies and plans would be difficult to implement without proper decision made from
the available alternatives in the process of planning.
 The decisions taken must involve all the employees of the organization as it would affect
the over output of the organization.
 For un-interrupt work flow in an organization, making of decision plays a vital role in
order to achieve the goals of the organization.
 The performance of the managers can be evaluated by the means of decision making. For
example, if the decision made by the manager are efficient and proper, they become
qualified and if the decision made are inefficient and improper, then they become
disqualified.
 In the concept of decision making, several alternatives are analyzed which can be both
merits and demerits of those alternatives, therefore decision making process becomes
important.
 In the implementation of the functions by the manager that is organizing, directing,
planning, controlling and staffing becomes a key functions for the process of decision
making as the decision making plays an important role in the works of the employees.

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The process of selecting the most relevant and efficient decision among the other alternative
available causes an effective making of decision for an organization is known as decision
making. Prior to the decision making process, the available alternatives must be evaluated
thoroughly (Nasseri et al. 2015). A formal process of analyzing the decision in solving problem
is called the decision analysis. Decision analysis is the method used in business organizations for
investment purpose such as cost benefit, cost utility and cost effectiveness analysis.
Decision analysis has also been used in the field of medical such as for the procedures of
treatments of diseases and diagnosis methods (Menzel 2013). In the conflicting situations,
decision analysis plays an important role due to the occurrence of various actions. In the business
filed, the decision analysis mostly used for investment purpose and its effects in the coming
future such as planning of product, selection of project, selection of strategies, choices of
technology, planning of the finances etc. Decision analysis is carried out on the basis of
recognizing the structure of the problem. The analysis of alternatives and after affects are done
after recognizing the structure of the problem. The decision analysis process is shows by the
decision tree.

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Fig: - A decision Tree
According to the above decision tree structure, the parent node splits into two nodes of solution
(Subramoniam et al. 2013). After that again those nodes splits into further consequences. In this
method, the probability of the outcome are pre-defined (Hoffenson and Söderberg 2015).
Therefore, decision analysis makes decision by analyzing the expected outcome of different
actions.
Identifying and outlining a decision problem in a raw material supplier:
As various problems are faced by every organization in delivering operations every day,
some problem might be easy and some might be complex. In solving critical problems the
concept of decision analysis and analytical thinking are applied by the organizations. The
problem of finding suppliers for raw material is faced by an organization is discussed here.
In making the right decision for choosing a supplier of raw materials is a vital decision to
make as raw materials are the roots of an organization from which the final product would come
out. Therefore, the rising problem in choosing the right supplier need to be solved (Li et al.
2015). The process of decision making involves several objectives and those objectives contain
several components like set of constrains of the problem, ways of gaining information and set of
multiple objectives that are quantified (Cook et al. 2014). The several techniques of making
decision are method of goal attainment, the method of setting objective, method of goal criterion
etc. In the problem solving process it is necessary to find out an objective from multiple
conflicting objectives as the decision making process consists of several conflicting objectives
(Kasprzyk 2013). After the identification of the objective, several solutions are to be discovered

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depending upon the values of the conflicting objectives. At the end, the most appropriate solution
is to be taken into consideration from all the possible solutions present.
The several objective in the selection of the supplier of raw material are:
 Reduction in the inventory and transportation cost, by using an approach of just-in-time,
this approach involves making a decent relationship with the suppliers of raw material.
 Creating strategic enhancement in the alliances with the raw material suppliers that would
result in the increase of competitive advantages.
 The cost of the raw materials must be of variable cost.
 Increasing the amount of time in the delivery of the raw materials.
 The annual operation cost for the raw materials must be maximized.
 The quality of end product must be increased by increasing the quality of the raw
materials.
 The delivery as well as the services of the product must be increased in the market.
 Reduction in the risk of insufficient raw materials in the market.
Apart from these that are mentioned, there are numerous other objection that can be used in
order to select a good supplier of raw materials. The process of selection of a good supplier
among a sea of suppliers is really a very hard process. The financial viability, the financial status
should be checked by the organization (Anderson et al. 2015). The organization should also
identify the capability of the suppliers in order to increment the delivered quantities in a short
amount of time. The amount of the raw materials which are provided by the suppliers should also
be checked by the organization that whether or not the suppliers have the certification of
ISO9000. The organization should also identify whether or not the specifications of that

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particular organization can be met by the suppliers in the stipulated amount of time
(Romiszowski 2016). The organization should and must always verify the prices as whether the
prices of those raw materials that are provided by the suppliers are upto the mark as well as
justifiable too. Hence the criteria for the selection of the supplier of the raw material are as
follows:
 The capacity as well as the capability of all the suppliers in order to meet the
specification of the quality of the raw materials provided by them to the particular
organization.
 The net worth or the amount of the raw materials that are provided by the suppliers
should include discounts as well as the other charges that are provided by the various
suppliers as well.
 The individual suppliers will have to provide the possible or the nearest repair service.
 The suppliers should be able to meet the specified delivery schedules.
 The financial status of the suppliers is required.
 The different kinds of capacities as well as facilities which are used by the suppliers will
also be taken into consideration.
 The past business history will also be considered which were done with the suppliers.
 The ability as well as the capacity of the technology along with the facilities of the
development as well as the research of the suppliers will also be considered.
 The kinds of the approaches used by the suppliers regarding the management will also be
considered.
 The various purchases that the organization will execute with the suppliers in the near
future.

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 The types of the communication system that are used by the suppliers like the
information as well as the data records will also be considered.
 The market share as well as the market position that the supplier holds within the industry
will be considered.
 The kind of behavior as well as the relationship shared by the suppliers with the labors
will be considered.
 The attitude shown towards the own organization by the suppliers individually is
monitored.
 The approaches that are used by the suppliers in the context of Operations Management
like the techniques of quality control and the techniques of the inventory control are
considered.
 The desire of the suppliers is also important.
 The policies, warranties and claims done by the raw material suppliers must be taken into
account.
 The training provided to the individuals who would use those end products from the
suppliers.
 The suppliers must provide expected packaging of the raw materials, on the basis of the
company’s norms.
 The impressions of the suppliers must be favorable to the company.
 The track record of the suppliers with the company must be clean and crisp.
The options in the selection of the suppliers:
 Creation of a good relationship with the supplier company.
 Selection of the supplier within a fixed area.

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 The production of raw material within the company area itself.
 Suppliers could export the raw materials from outer countries if required.
 Addition of company that would supply the raw material.
Simple Multi-Attribute Rating Technique (SMART) applied in Decision Making:
The simple multi-attribute rating technique which can also be indicated as SMART
technique makes the utilization of the model which is linear additive. This means that the value
of each of the options is increased along with the weight of that particular option or else the total
score of the performance is for the calculation of the comprehensive or overall value of that
particular alternative (Levin and Nolan 2014). In the section mentioned above, one of such
problems that are mostly common and which can be witnessed in any kind of organization is
selected (Rothman, 2017). The problem which is selected here is selection of the raw materials
suppliers. The simple multi-attribute rating technique or SMART analysis for the above
mentioned decision problem is discussed as follows:
 Recognition of the decision maker:
The identification of the decision maker is the first and the foremost step for performing the
SMART analysis. It is the Operations Manager who has to play a major role for the selection of
the raw materials for a particular organization. It is the responsibility of the Operations Manager
for the decision making phase which is related with choosing the suppliers of the raw materials
(Hunink et al. 2014). Moreover, advices regarding this might be sought by the manager of
operations from several employees working in that same department of operations and also from
the managers of the other various departments as well.

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 Identification of issues which are related to the selections of the supplier:
The recognition of the issues which are related with the selection of the supplier of the
raw materials is very important. One vital decision is the selection of the right as well as
correct supplier of the raw materials for that particular organization (Kaner 2014).
Determination of the competitive advantages of that particular organization can be done by
decision of the selection of the suppliers. The standard of a certain service or product can be
determined by the standard of the raw materials which is used for making the finished
products as well as services (Snyder and Diesing 2015). Certain amount of difficulties are
faced by the manager of operations at time of selecting the best of suppliers from the bunch
of various kinds of suppliers.
 Alternatives identification
The identification of the alternatives also plays a major role as the alternatives for the
selection of the suppliers includes and takes into account as to whether the production of the
supplies will take place in the plant of production of that particular organization (Yu 2013). It
can be done by the utilization of the strategic alliance or by the method of acquiring the
company of the certain suppliers or by the method of outsourcing the raw material from the
particular organization covering the area within and out of the country.
 Criteria identification:
The identification of the different criteria is also important as there are various criteria at
time of the selection of the raw material suppliers for the particular organization. There are
various criteria among which four criteria are selected for the simplification of the task.
These consists of the delivery, service, structure of pricing as well as quality which are very
important (Yu 2013). Moreover, the criteria of delivery consists of certain sub criteria like

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the costs and timelines. The criteria of quality further consists of the standard of the costs as
well as the incoming lots (Lerner, Valdesolo and Kassam 2015). The service criteria also has
sub criteria that consists of the facilities, capabilities, research and development along with
personnel.
 Value assignment for each of the above mentioned criteria:
The certain criteria that is mentioned above are the main criteria that are very important
(Ferrell and Fraedrich 2015). The most important criteria among the criteria that are mentioned
above is the quality followed by the criteria of delivery followed by price and then the service.
 Weight determination for each of the mentioned criterion:
The determination of the weight for each and every criterion that is mentioned above is very
much important. The most important step is the allocation of the weights to each and every
mentioned criterion.
 Average weighted calculation of the each alternative:
The calculation of assigned value of the weighted average are to be given to each and every
alternatives which is very important in order to do the SMART analysis.
 Provisional decision making:
The step of the provisional decision making is a major step which includes the weighted
average step and also indicates the similarity of the suppliers by the utilization of the certain
calculations.
Strengths of the analysis done in the making of decision context:
 After the analysis is done, the process of decision making has become easier as well as
simpler.

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 After the analysis is done, it has become helpful in allocation of the values to the various
criteria.
 The breaking down of the problems which are complex into more simple parts have been
possible because of the analysis which in turn can be solved using the easy methods.
 The analysis also helps in the ranking of the attributes.
 The analysis also helps in avoiding the criteria which carries less importance and is of
less importance as well.
 Each and every qualitative attribute is an assigned with quantitative values using this
analysis.
 The analysis takes into consideration of both the objective as well as subjective criteria.
 The analysis also includes the low costs in the process of making the decision.
Limitations:
The limitations are as follows:
 There is a chance of certain important criterions getting neglected in the phase of
screening.
 Difficulties are faced in ranking the different kinds of the alternatives.
 Allocation of the ranks to the different types of criteria might be inappropriate at times
which also has the tendency of differentiating in various kinds of situations.
 The uncertain behaviour of the suppliers are neglected.
 The analysis lacks of the innovative ideas as well as it also lacks in generating certain
new ideas as well.

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 The process of the analysis has totally oversimplified the problem which is not required
and which in turn has the tendency which can lead to even neglecting of the real essence
of the problem.
 The analysis also leads to the negligence in obtaining the solution which is the optimal
solution of the problem.
 The analysis does not involve too many number of criteria.
Conclusion:
As a consequence in this report, the most common as well as the main problem that is
found is the problem of the organization. The main problem or the issue is the selection of the
suppliers which is represented (Glimcher and Fehr 2013). The supplier of the selection of raw
material is the most important as well as one of the main decisions for each and every existing
organizations as the raw materials are the main thing or the key for the production of the services
as well as the goods of that particular organization (Zsambok and Klein 2014). The standard of
the raw materials helps in determining the overall quality of the finished products as well as
services which in turn are the production of that particular organization. The different types of
costs that are linked with the raw materials helps in the determination of the cost of production of
that particular product which in turn helps in determination of the cost of that particular product.
The correct selection of the right raw material suppliers will result in the proper as well as
systematic achievements of the aim as well as the goals of that particular organization in order to
strengthen the advantages that are competitive in nature (Pettigrew 2014). The various selection
criteria for selection of the correct supplier of the raw materials as well as the various objectives
for the selection of the supplier as well as the various kinds of the alternatives for the selection of
the supplier of the raw materials are also involved in this particular phase. The SMART analysis

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which stands for Simple Multi Attribute Rating Techniques has also been used in this particular
part so as to make the decisions regarding the problems that are identified (Art 2015). This
particular method which is identified is invented to be much easier as well as very simple for
analysing different kinds of criteria which are available for the selection of the alternatives. But
on the other hand this particular method is lagging behind and does not have proper information
which are required in order to make the decisions in the organization (Yu 2013). As this method
is lagging behind in some perspectives, there are numerous other methods which are available
that must be utilized along with this particular method whenever the complex kind of decision
making is important and is required.

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