Importance Of Managerial Decision Making

Managerial Decision Making
Decision making refers to making choices among alternative courses of action—which may also include inaction. While it can be argued that management is decision making, half of the decisions made by managers within organizations fail (Ireland & Miller, 2004; Nutt, 2002; Nutt, 1999). Therefore, increasing effectiveness in decision making is an important part of maximizing your effectiveness at work
Describe Differential analysis to drop/keep customers
Managers use differential analysis to determine whether to keep or drop a customer. The format is similar to the differential analysis format used for making product line decisions. However, sales revenue, variable costs, and fixed costs are traced directly to customers

In general, managers select the alternative with the highest profit. If the only differences between the alternatives are with costs, decision-makers would select the alternative with the lowest cost.
Discuss the role qualitative information may have in differential analysis
Decision making is a tough process especially if the issue on hand is complicated and the significance of the outcome has major consequences to the stakeholders. Decision making is a five step process: recognition of a situation that requires a decision; identification and development of alternative courses of action; evaluation of the alternatives; choice of one of the alternatives, and implementation of the selected course of action.
Qualitative decisions are based on many algorithms like type and quality of data, factors that influence collected data, risk assessments etc. It is a more in-depth evaluation of information taking into account all possible factors that affect a given scenario not just the numerical data value to reach a

It is a potential benefit or income that is given up as a result of selecting an alternative over another. For example, you have a job in a company that pays you $25,000 per year. For a better future, you want to get a Master’s degree but cannot continue your job while studying. If you decide to give up your job and return to school to earn a Master’s degree, you would not receive $25,000. Your opportunity cost would be $25,000. Almost every alternative has an opportunity cost. It is not entered in the accounting records but must be considered while making