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ABSTRACT

This study answered the question: do manufacturing firms in Nigeria adopt quantitative models in decision making? The existing literature has provided narrative and evidence to the assertion that wrong decisions have occasioned the untimely demise of many business organization. The study anchors on the theory of constraints (TOC) which insists on iterative approach and removal of noticeable obstacles to decision making by adapting appropriate management practices in the context of decision making. It was clear that decisions precede and give impetus to actions to resolve business organizations’ problems in the bid to achieve nominated goals and/or objectives. The contexts of decision making in business organizations are complex and solutions to unstructured problems only need to be satisficing using the words of the doyen of decision-making Herbert Simon. On the strength of empirical literature, quantitative techniques are critically useful to making major decisions in business organizations. Therefore, the application of quantitative techniques is recommended to business organizations and government establishments to encourage their managers to as often as practically possible to use quantitative techniques to help make their managerial decisions effective.

 

 

1.0 Introduction

1.1 Background of the study

Decision making constitutes one of the important functions which managers perform at different levels of business organizations. The dynamic and complex operating business environment poses great challenge to managers in the context of decision making. Hence, the need to leverage quantitative models as a set of scientific tools to aid the managerial decision-making exercise. There are varieties of quantitative models which managers can adopt to aid their decision making notably: queuing theory, game theory, forecasting, break-even analysis, linear programming methods, assignment, transportation, project evaluation and review models (PERT), critical path methods, simulation, expected value, decision tree, inventory management, information theory, preference and utility theories. The essence of applying quantitative models is to enable managers to achieve optimal results and thus, avoid costly mistakes associated with arbitrary decision making. The application of any of these quantitative models depends on the kind of decision which the managers intend to make given the context, time frame and available information.  The right application of the quantitative models leads to high quality decisions which encourage good management aimed at achieving efficiency and effectiveness in all functional areas as the foundation of viable and sustainable business organizations.

The quantitative models, which make use of models, rely on evaluation and interpretation of data to generate hard facts and figures which form the kernel or backbone of managerial decisions. The quantitative model which is “a selective abstraction or representation of reality” is of different types and is mostly expressed in the forms of mathematical-alphanumeric symbols (Eppen et al., 1988). A typical quantitative model has data which describe the environmental context, the decision variables and the objective to be achieved. Depending however on how many uncontrollable variables involved in a model are known or unknown to the model builder, models can be distinguished into two broad categories notably: deterministic and probabilistic or stochastic. The deterministic model describes a situation where all uncontrollable inputs to a model are known and cannot vary. The reverse becomes the case where all uncontrollable inputs to a model are unknown and amendable to variation resulting in probabilistic or stochastic model. The quantitative models or models help to concretise or orchestrate the real world by means of mathematical symbols, equations and formulae.

The managers making use of quantitative models to better the quality of their decisions occupy key or strategic positions in the structure of the business organizations. The ability of managers to make effective decisions is very crucial to the success of most business organizations just as wrong decisions are capable of accelerating the pace of failure and possible decline of corporate entities. Extant literature has indicated that wrong decisions do put people and business organizations out of operational existence. There are many kinds of situations in business, government, industry and what-have you that require decision making. Incidentally, most managers or those in positions of making critical decisions lack the requisite quantitative skills to grapple with the problems. The managers become circumspect to exercise due diligence to achieve high quality decisions by relying on quantitative models as operational working tools in their day-to-day operations and in line with systematic procedures.

1.2 Statement of the problem

The issue of whether decision making exists in the Nigerian industrial set-up is very controversial. Some companies in Nigeria practice participative decision making and the government has in the past encouraged participative decision making through legislation. On the contrary, some management writers in Nigeria are of the opinion that it does not exist and where it does it is not real. Their reason is that the necessary prerequisite conditions to encourage participation in Nigeria are not available.

The problem mainly lies on the fact that participation though obtained has not been clearly understood as well as its benefits. Some of the managers feel that the decision-making process is their sole prerogative and as such should be protected. Again, top management likes to remain aloof from its employee as to build an all-important air around themselves.

The procedure of using quantitative models warrants that the need to define the objectives which the system is designed to achieve, spells out the mission conditions to attain the objectives, generate alternatives to accomplish the system and concomitant evaluative criteria for assessing the alternative systems. Therefore, the working knowledge of the quantitative models and associated systems by managers and strategic leaders becomes crucial as delegation of the role to specialists in pure statistics and mathematics fields may not quite serve the purpose as they may not appreciate the full import and relevance of the tools in the business context. This research paper attempts to x-ray and explore how quantitative models could be applied to help make sound and viable decisions for survival of manufacturing firms.

1.3 Objectives of the study

To this end, the study specifically sets out to examine the following objectives:

1. To examine the concept of decision making with quantitative models in manufacturing firms.
2. To examine decision making typology in relation to quantitative models in manufacturing firms.
3. Decision making context characterization and quantitative models in manufacturing firms.

1.4 Research questions

From the aforementioned objectives, the following research questions were coined:

1. What is the concept of decision making with quantitative models in manufacturing firms?
2. What is decision making typology in relation to quantitative models in manufacturing firms?
3. What is the relationship between decision making context characterization and quantitative models in manufacturing firms?

1.5 Significance of the study

The research will be beneficial to all organization especially as it emphasized the need and encourage the establishment of policy guidelines on the efficient and effective decision making.

It will help managers of various organizations to generate ideas and solution to problems based on the best way to run their organization in order to achieve desired goals and objectives.

This study will be useful to institution, government, as well as organizations. They will find it particularly useful in making a sound decision on its operations and decision making. Similarly, it will aid government in making decisions that will enhance growth and development of the nation.

This project will also be useful to students and other individuals, as they are faced with one form of decision making or another. This may range from purchasing a commodity, to pursuing a profession course in higher school of learning, or any other form of situation that require decision making.  At any point, we are faced with the problem of choice, which finally result in decision-making.

Since organization, either profit making or not are faced with making choice about their operational activities, this project will also go a long way to helping them in making decision.