FACTORS INVOLVED IN DECISION-MAKING

There are two kinds of factors to be considered in decision-making in favor ofany alternative. These may be classified as (a) tangible and (b) intangible factors.

Tangible factors 

Among the tangible factors relevant to decision-making the important ones are(a) sales; (b) cost; (c) purchases; (d) production; (e) inventory; (f) financial; (g)personnel and (h) logistics.

The effect of any decision on one or more of the tangible factors can bemeasured and therefore it is easy to consider the pros and cons of every decision.

Decisions based on these factors are likely to be more rational and free from bias andfeelings of the decision-maker.

Intangible factors 

Among the intangible factors which may influence decision-making in favor ofany alternative, the important ones are the effects of any particular decision (a) prestigeof the enterprise; (b) consumer behavior, (c) employee morale; and so on.

Accurate information and data about these factors is not easy to obtain.

Therefore, intuition and value-judgment of the decision-maker will assume a significantrole in the choice of a particular alternative.