how does a company go about tactical decisions? we can describe a general approach to making tactical decisions. The six steps describing the recommended decision-making process are as follows:
Recognize and define the problem.
Identify alternatives as possible solutions to the problem; eliminate alternatives that are clearly not feasible.
Identify the costs and benefits associates with each feasible alternative. Classify costs and benefits as relevant or irrelevant, and eliminate irrelevant ones from consideration.
Total the relevant costs and benefits for each alternative.
Assess qualitative factors.
Select the alternative with the greatest overall benefit.
These six steps define a simple decision model. a decision model is a set of procedures that, of followed, will lead to a decision. Exhibit 12-1 depicts the sequence of steps to be followed.
define the problem.
Identify the alternatives.
identify the costs and benefits associates with each feasible alternative.
Total the relevant costs and benefits for each alternative.
Assess qualitative factors.
Make the decision
increase capacity for warehousing and production.
build new facility.
lease larger facility; sublease current facility.
lease additional facility.
lease warehouse space.
buy shafts and bushings; free up needed space.
alternative 4
variable production costs
warehouse lease
purchase price differential cost
Quality of external supplier
Reliability of external supplier
price stability
labor relations and community image
Continue to produce shafts and bushings internally; lease warehouse