3. Establishing priorities-Scarce resources demand that managers deal with problems in order of significance. Significance determined by i. Urgency—time pressure. ii. Impact—seriousness of the problem's effects. iii. Growth tendency—future considerations. 4. Consideration of causes—the search for causes often leads to anew and better problem statement. 5. Development of alternative solutions—a search process constrained by time and cost factors. 6. Evaluation of alternative solutions— It should be a. Guided by objectives (step 1). b. Assessed in terms of its potentially favorable and negative outcomes. c. The alternative-outcome relationship is based on three possible considerations i. Certainty—you have complete knowledge of the probability of each alternative's outcome. ii. Uncertainty—you have no knowledge of the probability. iii. Risk—you have some probabilistic estimate of the outcomes of each alternative. This is the most common situation.
