Distinguish between closed decision making system & open decision making system?

Distinguish between closed decision making system & open decision making system?

Answer:

Closed decision making system and open decision making system

Closed Decision Making System

•    There are known set of decision alternatives and knows their outcomes fully in terms of value, if implemented
• The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested, and ranked for selection.
• The manager can “this site”choose one of them, based on some goal or objective criterion.
• Since there are known set of decision alternatives and knows their outcomes fully, and there are methods available that can be tested, it is easier to decide.
• 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

• The manager does not know all the decision alternatives. 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 outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one.
• No method, rule or model is available to study and finalize one decision among the set of decision alternatives.
• 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.