Operating decisions definition
/What are Operating Decisions?
Operating decisions are determinations made in regard to the routine, ongoing activities of an organization. A business usually derives a number of operating decisions and then locks them down through the use of policies and procedures, so that the staff routinely handles them with no need for any management intervention.
Operating decisions are made within the context of longer-term strategic decisions, so that an organization’s strategy is always supported by its operating decisions.
Examples of Operating Decisions
There are many examples of operating decisions, which include the following items:
Production scheduling. A daily operating decision is which customer orders to schedule for production.
Materials purchases. A daily operating decision is which components and raw materials to buy from suppliers.
Marketing campaigns. A common operating decision is deciding the nature of a marketing campaign, when and where it will run, and how much will be invested in it.
Funds investment. The treasury staff routinely decides where to invest any excess funds, which is an operating decision.
Inventory investment. An ongoing operating decision is determining how much inventory to keep on hand.
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FAQs
Can Operating Decisions be Automated?
Many operating decisions can be automated using technology such as enterprise resource planning (ERP) systems, artificial intelligence, and machine learning. Routine tasks like inventory reordering, invoice processing, and scheduling can be efficiently handled through automation, reducing human error and increasing speed. However, strategic or judgment-based decisions, such as vendor negotiations or crisis response, often still require human oversight. Automation is most effective when applied to repetitive, rules-based processes with clear decision logic.