Belhaven University Operating Decisions Discussion
Description
Q1. Differentiate between routine operating decisions and non-routine operating decisions with suitable examples. List all non-routine operating decisions and explain any two decisions with suitable examples. (3 Marks)
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Non-routine decision
A non-routine decision is a choice made to deal with a non-repetitive, tactical situation. These
decisions typically involve situations that fall outside of the normal operating procedures of a
business. When such a situation arises, the operating procedures mandate that the decision be
bumped out of the normal operating flow and sent to a manager for resolution. Examples of such
non-routine decisions are:
hether to offer credit to a customer whose financial situation is weak
Whether to alter the production schedule to deal with a rush customer order
Whether to accept a customer order for a non-standard product that requires special
processing
When a business has a comprehensive suite of standard operating procedures, there should be
relatively few non-routine decisions, since most decisions have been accounted for by the
procedures.
Some non-routine decisions cannot be standardized. Instead, someone must make a decision
regarding which tactical alternative to take. For example, a manager must decide whether to stop
selling a product, or whether to make a product in-house or have it produced by a third party.
These decisions typically involve some analysis of the costs and margins involved, as well as
future projection
Routine Operating Decision
As the name suggests, routine operating decisions are those that the manager makes in the daily
functioning of the organization, i.e. they are routine.
Such decisions do not require a lot of evaluation, analysis or in-depth study. In fact, high-level
managers usually delegate these decisions to their subordinates.
On the other hand, strategic decisions are the important decisions of the firm. These are usually
taken by upper and middle-level management. They usually relate to the policies of the firm or
the strategic plan for the future.
Hence such decisions require analysis and careful study. Because strategic decisions taken at this
level will affect the routine decisions taken daily.
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