According to McGuigan, Moyer, and Harris (2011), managerial economics comes from the idea of the microeconomic theory whereby concepts and techniques allow managers to apply select strategic direction which allows them to allocate resources efficiently and respond to tactical issues effectively. Managerial decision making seeks to identify the alternatives or opportunity costs, to select the choice that accomplishes the objectives in the most efficient manner, to take into account the constraints, and the likely actions and reactions of rival decision makers. Therefore, the key to a manager achieving successful managerial performance is their ability to make good decisions, and that all decision making shares several common elements. Ray (2012) states the key to making good decisions is to have a sound process or a series of steps from start to finish. He states that a study of leadership and management texts provides a number of processes from a simple three-step process to as many as up to seven steps. Ray chose four steps: define the problem, gather data, list and evaluate alternatives and chose and implement the best alternative.
However, McGuigan, et al. (2011) demonstrates a more comprehensive decision making model. The decision maker must have the ability to recognize the mission or the objectives of the organization. The decision maker must identify the problem that requires a solution. Once the decision maker has found the source or issue in the organization, the decision maker must start examining possible solutions. The choice between these alternatives looks at marginal analysis where cost versus benefits is weighed. With analysis, relative costs and benefits are weighed as well as other organizational and societal constraints that may make one alternative more attractive than another choice. The decision maker must then review all alternatives, and