Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. The word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

The idea that individuals will always make rational, cautious and logical decisions is known as the rational choice theory. An example of a rational choice would be an investor choosing one stock over another because they believe it offers a higher return. Savings may also play into rational choices.

Rational Decision-Making. A process of comparing costs and benefits of various options to determine which are rational and which are rational. Rational Decisions. Decisions whose total benefit is greater than or equal to their total cost.

The Rational Decision-Making Process

1. Step 1: Identify the Problem.
2. Step 2: Establish Decision Criteria.
3. Step 3: Weigh Decision Criteria.
4. Step 4: Generate Alternatives.
5. Step 5: Evaluate Alternatives.
6. Step 6: Select the Best Alternative.

Types of Decisions

• Strategic Decisions and Routine Decisions.
• Programmed Decisions and Non-Programmed Decisions.
• Policy Decisions and Operating Decisions.
• Organizational Decisions and Personal Decisions.
• Individual Decisions and Group Decisions.

Decision Modeling enables a company to model even the most complex operational decisions into more manageable subsets, which in turn facilitates scalability. Most importantly, the company can document exactly how its business are made, thereby enabling operations to quickly identify any flaws in the process.

As a process model is to workflow or a data model is to information, a decision model is to decision-making: A clear and unambiguous way to describe decision-making by breaking down that decision-making into a set of simple concepts. The example shows a decision requirements model that uses the DMN notation.

Lack of support and acceptance by subordinates, lack of trust by superiors, legal restrictions, moral and ethical standards, formal policies and procedures, ineffective communication, incorrect timing of the decisions are also sources of limits on rationality.

Disadvantages of Decision Support Systems

• Information Overload: A computerized decision making system may sometimes result in information overload.
• Too much Dependence on DSS: It is true that decision support systems are integrated into businesses to make everyday decisions faster and more easily.

Decision support system examples Example uses include: GPS route planning. A DSS can be used to plan the fastest and best routes between two points by analyzing the available options. These systems often include the capability to monitor traffic in real-time to route around congestion.

Attributes of a DSS

• Adaptability and flexibility.
• High level of Interactivity.
• Ease of use.
• Efficiency and effectiveness.
• Complete control by decision-makers.
• Ease of development.
• Extendibility.
• Support for modeling and analysis.

Decision Support System can create advantages for organizations and can have positive benefits, however building and using Decision Support System can create negative outcomes in some situations. (1) Monetary cost.

They can simplify access to data needed to make decisions, provide reminders and prompts at the time of a patient encounter, assist in establishing a diagnosis and in entering appropriate orders, and alert clinicians when new patterns in patient data are recognized.

In the concept of better decisions, the simplest and most tangible benefit of a DSS is its ability to assist its users in making better decisions. … In the concept of better decisions, the simplest and most tangible benefit of a DSS is its ability to assist its users in making better decisions.

DSS applications can be used in a vast array of diverse fields, such as credit loan verification, medical diagnosis, business management, evaluating bids on engineering projects, agricultural production and railroad evaluation.