Programmed and Nonprogrammed Decisions

A distinction can be made between programmed and nonprogrammed decisions. A programmed decision, as shown in Figure 6-2, is applied to structured or routine problems. Lathe operators, for instance, have specifications and rules that tell them whether the part they made is acceptable, has to be discarded, or should be reworked. Another example of a programmed decision is the recording of standard inventory items. This kind of decision is used for routine and repetitive work; it relies primarily on previously established criteria. It is, in effect, decision making by precedent.
Nonprogrammed decisions are used for structured, novel, and ill-defined situations of a nonrecurring nature. Examples are the introduction of the Macintosh computer by Apple Computer or the development of the four-wheel-drive passenger car by Audit. In fact, strategic decisions, in general, are nonprogrammed decisions, since they requires subjective judgements.
Figure 6-2 The nature of problems and decision making in the organization
Organizational level
Highest level Nature of problems Nature of decision making
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_^_Lowest level--[Structured\]--[Programmed decisions\Non-programmed decisions]
Most decisions are neither completely programmed nor completely nonprogrammed; they are a combination of both. As Figure 6-2 indicates, most nonprogrammed decisions are made by upper-level managers; this is because upper-level managers have to deal with unstructured problems. Problems at lower levels of the organization are often routine and well structured, requiring less decision discretion by managers and nonmanagers.
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Fundamentals of Management : Planning [BBA 2305]