Evaluation Of Alternatives Inwards Determination Making - Techniques

Evaluation of Alternatives inwards Decision Making

After making all the alternatives, the adjacent pace inwards planning or inwards decision making is to evaluate these alternatives. Evaluation is required inwards fellowship to direct the best option for implementation.

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While evaluating alternatives, the managers must compare the option plans or decisions. For this, the director must reckon the quantitative too qualitative factors.

1. Quantitative Factors : The quantitative factors are those factors that tin travel 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 likewise reckon the qualitative factors. The qualitative factors are intangible inwards nature for e.g. character of labour force, client satisfaction, etc.

The management must laissez passer on importance non exclusively to quantitative factors simply likewise to qualitative factors. For e.g. An first-class production conception could non accomplish its targets, due to bad character of labour force, misfortunate 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 role the marginal analysis technique. The marginal analysis technique helps to compare additional revenues amongst additional costs. If the additional revenue is greater than the additional costs, to a greater extent than net income tin travel made past times producing more. However, if the additional revenue is less than the additional costs, to a greater extent than net income tin travel 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 option that provides the maximum benefits at the minimum toll is selected. The toll tin travel measured inwards price of money, time, risk, goodwill, etc. The primary characteristic of toll effectiveness analysis is that it gives importance to the results.