A SYSTEMS APPROACH TO OPERATIONAL AND BUSINESS DECISION-MAKING

Abstract

The “PQ” problem was published in 1990 by Goldratt. An adapted version of this problem is provided to master’s level students a few weeks before starting an operations management course. The performance statistics collected from three South African (since 2016) and one European business school (from 2018 onwards) do not make for good reading. To date, only 2.3 per cent of the students (42 students from the sample of 1 866 students) were able to answer both questions correctly; and some of them were not able to justify their correct decisions. This paper will explore the differences between traditional, cost-based methods of decision-making for day-to-day operational and improvement decisions as practised by many companies today — and hence the bad performance by the students — and taking a systems approach to decision-making. The paper will argue for taking the systems approach as a real alternative, without which alternative realities will remain but a dream.

Keywords

• organisational decision-making
• business decision-making
• operational decision-making
• cost-based decision-making
• traditional decision-making