Decision making, Cost Accounting

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Decision Making

Nature of Decision-making

Decision-making may fall into any type of the following categories as:

1. Short run operational decisions

2. Short run tactical decisions

3. Longer term strategic planning decisions

Short run operational decisions are made in relation to the accomplishment of short-term output needs. A decision may be made to work overtime in a department in order to contain a job completed in accordance along with a scheduled delivery date to the customer. That decisions are aimed at ensuring about the current business plan is achieved. Short run tactical decisions are related to exact events that management wish to decide upon and that will change the future operation of the business in several ways. Its time horizon is short and it is generally the next twelfth months

Longer term strategic planning is more concerned along with the overall direction of the business plan. It may contain a time horizon of 5 to 10 years. As an example should a decision to be made to install a completely automated production line to replace existing labour intensive machine process.


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