Evaluation Of Alternatives Inwards Determination Making - Techniques

Evaluation of Alternatives inwards Decision Making

After making all the alternatives, the adjacent pace inwards blogspot.com//search?q=planning-first-primary-important">planning or inwards blogspot.com//search?q=planning-first-primary-important">decision making is to evaluate these alternatives. Evaluation is required inwards lodge to direct the best choice for implementation.

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While evaluating alternatives, the managers must compare the choice plans or decisions. For this, the director must take in the quantitative too qualitative factors.

1. Quantitative Factors : The quantitative factors are those factors that tin last measured numerically. For e.g. Number of units sold, costs inwards rupees, etc. The quantitative factors are tangible inwards nature.
2. Qualitative Factors : The director must besides take in the qualitative factors. The qualitative factors are intangible inwards nature for e.g. character of labour force, client satisfaction, etc.

The administration must order importance non exclusively to quantitative factors precisely besides to qualitative factors. For e.g. An first-class production conception could non make its targets, due to bad character of labour force, wretched maintenance of machines, etc.

Techniques for Evaluation of Alternatives

The methods or techniques for the evaluation of alternatives are:-

1. Marginal Analysis : To evaluate alternatives, a director may run the marginal analysis technique. The marginal analysis technique helps to compare additional revenues alongside additional costs. If the additional revenue is greater than the additional costs, to a greater extent than profits tin last made past times producing more. However, if the additional revenue is less than the additional costs, to a greater extent than profits tin last made past times producing less.
2. Cost Effectiveness Analysis : This technique is an improvement of the traditional marginal analysis. In this case, the director considers the cost-benefit analysis. The choice that provides the maximum benefits at the minimum terms is selected. The terms tin last measured inwards terms of money, time, risk, goodwill, etc. The principal characteristic of terms effectiveness analysis is that it gives importance to the results.