Decision Making, Systems,
Modeling, and Support
R.Rajkumar
Asst.Professor
CSE
Overview
Conceptual Foundations of Decision
Making
The Systems Approach
How Support is Provided
Introduction and Definitions
Typical Business Decision Aspects
Decision may be made by a group
Several, possibly contradictory objectives
Hundreds or thousands of alternatives
Results can occur in the future
Attitudes towards risk
What-if scenarios
Trial-and-error experimentation with the real system: may
result in a loss
Experimentation with the real system can only be done
once
Changes in the environment can occur continuously
How are decisions made???
What methodologies can be applied?
What is the role of information systems in
supporting decision making?
DSS
Decision
Support
Systems
Decision Making
Decision Making: a process of
choosing among alternative courses
of action for the purpose of
attaining a goal or goals
Managerial Decision Making is
synonymous with the whole process
of management
Decision Making versus
Problem Solving
Simons 4 Phases of Decision
Making
1.
2.
3.
4.
Intelligence
Design
Choice
Implementation
Decision making and problem solving
are interchangeable
Management Support
Systems
MSS enables senior management to:
1. access common, shared sources of
2. internal and external information
3. that have been summarized in
4. easy-to-access, graphical displays.
Management Support
Systems
function as an integrated approach to
sharing information in an easy-to-use,
highly visual, and personalized way
system helps promote a shared view of
business activities due to integration of
tools and distributed data/information
managers can get up-to-date information
on industry news, competitor/market
trends and internal operations
Most successful MSS are
developed as
1. one aspect of a distributed,
enterprise information system
2. that enables flexible and
integrated information sharing and
communication
3. both inside orgs. and with external
suppliers, customers and other
business partners.
1980s to 1990s
1980s - managers had support tools
designed to run on PCs (e.g.
spreadsheets, statistical packages,
graphics packages, word processing,
project management, etc.)
1990s - MSS provide integrated
environment for these support tools
MSS
MSS usually designed so that
individual manager can customize
the system as needed
MSS architecture - client/server
environment
one component of a distributed
information infrastructure
Four levels of functionality
in MSS
1. electronic briefing books
2. exception reporting
3. active exploration of info.
resources using
4. focused management support
1. electronic briefing books
graphical information displays that
provide pre-formatte d routine info.
displays stored as information
categories (e.g. pricing, product)
2. exception reporting
critical info. outside range of predefined boundaries is highlighted
manager may be notified by system
some orgs. use traffic-light pattern for
exception reporting
green = no problems
yellow = caution, marginal condition
red = trouble, needs immediate attention
3. Active exploration of
info. resources using
MSS can build queries to relational
data bases based on point and click
of managers
can move between internal and
external DBs
integrate all different analysis tools
4. Focused management
support
focus support on key management
activities or decisions (e.g. promotion
planning, pricing)
requires integration of variety of
sophisticated support tools
customized for specific activity
Implementing an MSS
Four key categories of risk must be
managed:
1. need thorough understanding of
individual, team, and organizational
information requirements
2. involves mega-change to formal
and informal policies and practices for
information management and
communication information is power
Implementing an MSS
3. implementation of an MSS should
be considered an organizational
change initiative need to manage the
change
4. must manage the simultaneous
evolution of both the organization
and the technological infrastructure
Past
Back in 1980s, management support
tools consisted of stand-alone (e.g.
not integrated!!) systems.
Two major types of support systems
were (are) termed (1) DSS and (2)
EIS/ESS.
Heres some info. on these standalone systems.
1. Decision support
systems
systems that support rather than replace
"managers" in their decision-making activities
give decision maker access to data and
models, but the intelligence, intuition, and
judgment of the decision maker are integral
parts of the system
DSS provide decision support - don't
automatically make the decision. They help
with the decision.
Primarily support planning function
Types of decisions
Organizational problems differ in terms
of how structured the problems are
the extent to which a solution procedure
can be stated
structured - routine, repetitive
unstructured - novel, nonroutine
semistructured - somewhere in
between
DSS
DSS - computer system at management
level that combines data, analytical
models, and user-friendly software to
support semistructured and
unstructured decision making
give uses capability to analyze data provide software tools
a DSS is focused on a specific decision
Can define DSS as
computer-based systems
that help decision makers
confront un-structured and semistructured problems
through direct interaction
with data and analysis models
Differences between DSS
and MIS
(note - MIS refers to formal systems
developed by IS professionals; e.g.
management reporting systems)
DSS - end-user control of data and
tools
aimed at top and middle managers
emphasize change, flexibility and quick
response iterative development
process
Differences between DSS
and MIS
MIS - dominated by IS professionals
focuses on structured information
flows to
middle managers
traditional development process
Core DSS capabilities
representations - heavy use of graphs and
charts
operations - mathematical manipulations of
data (e.g. assigning risks, generating statistics,
simulating alternatives)
memory aids - databases, views of data, work
spaces, libraries
control aids - user control activities of the DSS;
include software language for user control of
representations, operations, and memory
DSS
DSS is a decision-making scratch pad,
backed up by databases - used to
support decision-making processes
can be applied to problems with
quantifiable dimensions that provide
criteria for evaluation of alternative
solutions
helps DM identify best alternative
3 basic Components of DSS
1. DSS database - collection of current or historical
data which has been extracted from corporate
databases; DSS manipulates live organizational data
to support decision making
2. model base - collection of mathematical and
analytical models
model - abstract representation, e.g. statistical
functions
sensitivity analysis - models that ask what-if
questions to determine the impact of changes in one
or more factors on outcomes
e.g. what is we increase price by 5%?
3 basic Components of DSS
3. DSS software system - permits
easy interaction between users and
the DSS database and model base
Building a DSS - requires intense user
interaction because customized to
specific users and specific type of
decision; must be flexible and able to
evolve; use an iterative development
method like prototyping
DSS
DSS Subsystems
Subsystems &
& The
The
Capabilities
Capabilities They
They Offer
Offer
Data Management
for Retrieval
Data Extraction
from Internal and
External Databases
Data
Management
Model
Management
Creation,
Maintenance,
and Use of
Models
Menus, Icons,
Dialog
Natural Language,
Management Graphics
DSS on a Computer Platform
Human Decision Maker
User
models
Model is built by using a variety of
assumptions about the relationship
between its variables
by comparing alternatives (what ifs),
you can vary the premises and
compare the outcomes
DSS supports asking 2 types
of questions
Scenario generation - what-if mode
user considers alternative scenarios and
their results
e.g. what if advertising expenditures are
increased by 5%
goal-seeking
user asks what would it take in terms of
input factors to achieve a particular
outcome
Spreadsheets for decision
support
very popular tools for decision support
activities:
1) based on familiar way to view data (table)
and
relationships between data take
form of a report
2) very easy to use
allow users to make corrections, additions,
and deletions quickly and easily
can perform what if analyses by changing
some values and viewing results
Spreadsheets for decision
support
thousands of templates for
spreadsheet packages to help users
- templates are prepared
spreadsheet models into which users
only enter data - all relationships and
calculating formulas are provided
and in place
examples for financial
planning
loan amortization
depreciation
lease versus buy
break-even analysis
discounted cash flows and net
present value
Spreadsheets
about 20-30% of users will become
dissatisfied with spreadsheets for
decision support and will want more
powerful tools, but many users will
stay with spreadsheets as primary
DSS, especially for smaller problems
Development
Development &
& Adaptation
Adaptation of
of
Problem DefinitionDSS
by
DSS
Users and Developers
Development of
Initial Prototype
Adaptation
Loop
Prototype/DSS
Evaluation
Development
Loop
Are Current
Requirements
Satisfied?
no
yes
Validation and
Documentation of DSS
Prototype/DSS
Modification
DSS Ready for Use
2. Executive support
systems (ESS)
help senior level managers with
unstructured problems dealing with
monitoring and control functions
monitor organizational performance
track activities of competitors
spot problems
identify opportunities
forecast trends
ESS combines computing
and communications
includes functions for providing summary
performance data
data typically covers sales, production, earnings,
budgets, and forecasts
uses graphics to display and visualize data in a
very easy to use fashion
combine data from internal and external sources
environmental scanning/alerting - for news on
government regulations, competition, financial
and economic developments, and scientific topics
ESS combines computing
and communications
support electronic
communications
ESS
used by both top level execs. and
managers several levels below
Relationship
Relationship between
between EIS
EIS and
and
DSS
User
Task
Primary Support
DSS
Areas
Executive
EIS
Problem/Opportunity
Discovery and
Assessment
Monitoring and
Control,
Strategic Planning
DSS
Seeking Problem
Solution:
Decision-Making
Process
Planning
Flow of Problems
Analyst/
Middle
Manager
2.3 Systems
A SYSTEM is a collection of objects
such as people, resources, concepts,
and procedures intended to perform
an identifiable function or to serve a
goal
System Levels (Hierarchy): All systems
are subsystems interconnected
through interfaces
43
The Structure of a
System
Three Distinct Parts of Systems (Figure 2.1)
Inputs
Processes
Outputs
Systems
Are surrounded by an environment
Frequently include a feedback mechanism
A human, the decision maker, is usually
considered part of the system
44
System
Environment
Output(s)
Input(s)
Processes
Feedback
Boundary
45
Inputs are elements that enter the system
Processes convert or transform the inputs into outputs
Outputs describe the finished products or the
consequences of being in the system
Feedback is the flow of information from the output to
the decision maker, who may modify the inputs or the
processes (closed loop)
The Environment contains the elements that lie outside
but impact the system's performance
46
How to Identify the
Environment?
Answer Two Questions (Churchman [1975])
1. Does the element matter relative to the system's goals?
[YES]
2. Is it possible for the decision maker to significantly
manipulate this element? [NO]
Environmental Elements Can Be
Social
Political
Legal
Physical
Economical
Often Other Systems
47
The Boundary Separates
a System From Its
Environment
Boundaries may be physical or
nonphysical (by definition of scope or
time frame)
Information System Boundaries are
Usually Directly Defined!
48
Closed and Open Systems
Defining manageable boundaries is closing
the system
A Closed System is totally independent of
other systems and subsystems
An Open System is very dependent on its
environment
49
TABLE 2.1 A Closed Versus an Open Inventory System
Factors
Management
Science, EOQ
(Closed System)
Demand
Constant
Variable, influenced by many
factors
Unit cost
Constant
May changedaily
Lead time
Constant
Variable, difficult to predict
Vendors and users
Excluded from
analysis
May beincluded in analysis
Weather and other
environmental factors
Ignored
May influencedemand and
lead time
Inventory DSS
(Open System)
50
An Information System
Collects, processes, stores, analyzes, and
disseminates information for a specific
purpose
Is often at the heart of many organizations
Accepts inputs and processes data to
provide information to decision makers
and helps decision makers communicate
their results
51
System Effectiveness and
Efficiency
Two Major Classes of
Performance Measurement
Effectiveness is the degree to which goals are
achieved
Doing the right thing!
Efficiency is a measure of the use of inputs (or
resources) to achieve outputs
Doing the thing right!
MSS emphasize effectiveness
Often: several non-quantifiable, conflicting goals
52
2.4 Models
Major Component of DSS
Use Models instead of experimenting on the
real system
A model is a simplified representation or
abstraction of reality.
Reality is generally too complex to copy exactly
Much of the complexity is actually irrelevant in
problem solving
53
Degrees of Model
Abstraction
(Least to Most)
Iconic (Scale) Model: Physical replica of a
system
Analog Model behaves like the real system
but does not look like it (symbolic
representation)
Mathematical (Quantitative) Models use
mathematical relationships to represent
complexity
Used in most DSS analyses
54
Benefits of Models
An MSS employs models because
1. Time compression
2. Easy model manipulation
3. Low cost of construction
4. Low cost of execution (especially that of errors)
5. Can model risk and uncertainty
6. Can model large and extremely complex
systems with possibly infinite solutions
7. Enhance and reinforce learning, and enhance
training.
Computer graphics advances: more iconic and
analog models (visual simulation)
55
2.5 The Modeling Process-A Preview
Example: How Much to Order for the Ma-Pa Grocery?
The Owners: Bob and Jan
The Question: How much bread to stock each day?
Several Solution Approaches
Trial-and-Error
Simulation
Optimization
Heuristics
56
The Decision-Making
Process
Systematic Decision-Making Process (Simon [1977])
Intelligence
Design
Choice
Implementation
(See Figure 2.2)
Modeling is Essential to the Process
57
Intelligence phase
Reality is examined
The problem is identified and defined
Design phase
Representative model is constructed
The model is validated and evaluation criteria are set
Choice phase
Includes a proposed solution to the model
If reasonable, move on to the
Implementation phase
Solution to the original problem
Failure: Return to the modeling process
Often Backtrack / Cycle Throughout the Process
58
2.6 The Intelligence Phase
Scan the environment to identify problem
situations or opportunities
Find the Problem
Identify organizational goals and objectives
Determine whether they are being met
Explicitly define the problem
59
2.7 The Design Phase
Generating, developing, and analyzing
possible courses of action
Includes
Understanding the problem
Testing solutions for feasibility
A model is constructed, tested, and validated
Modeling
Conceptualization of the problem
Abstraction to quantitative and/or qualitative forms
60
Mathematical Model
Identify Variables
Establish Equations describing their
Relationships
Simplifications through Assumptions
Balance Model Simplification and the
Accurate Representation of Reality
Modeling: An Art and Science
61
Quantitative Modeling
Topics
Model Components
Model Structure
Selection of a Principle of Choice
(Criteria for Evaluation)
Developing (Generating)
Alternatives
Predicting Outcomes
Measuring Outcomes
Scenarios
62
Components of
Quantitative Models
(Figure 2.3)
Decision Variables
Uncontrollable Variables (and/or
Parameters)
Result (Outcome) Variables
Mathematical Relationships
or
Symbolic or Qualitative Relationships
63
Results of Decisions are Determined by the
Decision
Uncontrollable Factors
Relationships among Variables
Result Variables
Reflect the level of effectiveness of the system
Dependent variables
Examples - Table 2.2
Decision Variables
Describe alternative courses of action
The decision maker controls them
Examples - Table 2.2
64
TABLE 2.2 Examples of the Components of Models.
Uncontrollable
Area
Financial investment
Decision
Result
Variables and
Variables
Variables
Parameters
Investment
Total profit
Inflation rate
alternatives and
Rate of return (ROI)
Prime rate
amounts
Earnings per share
Competition
How long to invest
Liquidity level
When to invest
Marketing
Manufacturing
Advertising budget
Market share
Customers' income
Where to advertise
Customer satisfaction
Competitors' actions
What and how much
Total cost
Machine capacity
to produce
Quality level
Technology
Inventory levels
Employee satisfaction
Materials prices
Use of computers
Data processing cost
Computer technology
Audit schedule
Error rate
Tax rates
Compensation
programs
Accounting
Legal requirements
Transportation
Shipments schedule
Total transport cost
Delivery distance
Regulations
Services
Staffing levels
Customer satisfaction
Demand for services
65
Uncontrollable Variables or
Parameters
Factors that affect the result variables
Not under the control of the decision maker
Generally part of the environment
Some constrain the decision maker and are
called constraints
Examples - Table 2.2
Intermediate Result Variables
Reflect intermediate outcomes
66
The Structure of
Quantitative Models
Mathematical expressions (e.g.,
equations or inequalities) connect
the components
Simple financial-type model
P=R-C
Present-value model
P = F / (1+i)n
67
Example
The Product-Mix Linear Programming Model
MBI Corporation
Decision: How many computers to build next month?
Two types of computers
Labor limit
Materials limit
Marketing lower limits
Constraint CC7
Labor (days)
Materials $ 10,000
Units
1
Units
1
Profit $
8,000
CC8
300
15,000
>=
>=
12,000
Rel
500
<=
100
200
Max
Limit
<=
200,000 / mo
8,000,000/mo
Objective: Maximize Total Profit / Month
68
Linear Programming
Model
(DSS In Focus 2.1)
Components
Decision variables
Result variable
Uncontrollable variables (constraints)
Solution
X1 = 333.33
X2 = 200
Profit = $5,066,667
69
DSS In Focus 2.2: Optimization Models
Assignment (best matching of objects)
Dynamic programming
Goal programming
Investment (maximizing rateof return)
Linear programming
Network models for planning and scheduling
Nonlinear programming
Replacement (capital budgeting)
Simpleinventory models (such as, economic order
quantity)
Transportation (minimizecost of shipments)
70
The Principle of Choice
What criteria to use?
Best solution?
Good enough solution?
Selection of a Principle of Choice
A decision regarding the acceptability
of a solution approach
Normative
Descriptive
71
Normative Models
The chosen alternative is demonstrably the best of all
Optimization process
Normative decision theory is based
on rational decision makers
Humans are economic beings whose objective is to
maximize the attainment of goals; that is, the decision
maker is rational
In a given decision situation, all viable alternative courses
of action and their consequences, or at least the
probability and the values of the consequences, are known
Decision makers have an order or preference that enables
them to rank the desirability of all consequences of the
analysis
72
Suboptimization
Narrow the boundaries of a system
Consider a part of a complete
system
Leads to (possibly very good, but)
non-optimal solutions
Viable method
73
Descriptive Models
Describe things as they are, or as they
are believed to be
Extremely useful in DSS for evaluating
the consequences of decisions and
scenarios
No guarantee a solution is optimal
Often a solution will be "good enough
Simulation: Well-known descriptive
modeling technique
74
DSS In Focus 2.3: DescriptiveModels
Information flow
Scenario analysis
Financial planning
Complex inventory decisions
Markov analysis (predictions)
Environmental impact analysis
Simulation (different types)
Technological forecasting
Waiting line(queueing) management
75
Satisficing (Good
Enough)
Most human decision makers will settle
for a good enough solution
There is a tradeoff between the time
and cost of searching for an optimum
versus the value of obtaining one
A good enough or satisficing solution
may be found if a certain goal level is
attained
(Simon [1977])
76
Why Satisfice?
Bounded Rationality
(Simon)
Humans have a limited capacity for rational thinking
They generally construct and analyze a simplified
model
Their behavior with respect to the simplified model
may be rational
But, the rational solution for the simplified model
may NOT BE rational in the real-world situation
Rationality is bounded not only by limitations on
human processing capacities, but also by individual
differences
Bounded rationality is why many models are
descriptive, not normative
77
Developing (Generating)
Alternatives
In Optimization Models:
Automatically by the Model!
Not Always So!
Issue: When to Stop?
78
Predicting the Outcome of
Each Alternative
Must predict the future outcome of
each proposed alternative
Consider what the decision maker
knows (or believes) about the
forecasted results
Classify Each Situation as Under
Certainty
Risk
Uncertainty
79
Decision Making Under
Certainty
Assumes that complete knowledge is
available (deterministic environment)
Example: U.S. Treasury bill investment
Typically for structured problems with
short time horizons
Sometimes DSS approach is needed
for certainty situations
80
Decision Making Under
Risk (Risk Analysis)
(Probabilistic or stochastic decision situation)
Decision maker must consider several possible
outcomes for each alternative, each with a given
probability of occurrence
Long-run probabilities of the occurrences of the
given outcomes are assumed known or can be
estimated
Decision maker can assess the degree of risk
associated with each alternative (calculated risk)
81
Risk Analysis
Calculate the expected value of each
alternative
Selecting the alternative with the best
expected value.
Example: Poker game with some cards
face up (7 card game - 2 down, 4 up, 1
down)
82
Decision Making Under
Uncertainty
Situations in which several outcomes are
possible for each course of action
BUT the decision maker does not know, or cannot
estimate, the probability of occurrence of the
possible outcomes
More difficult - insufficient information
Modeling involves assessing the decision maker's
(and/or the organizational) attitude toward risk
Example: Poker game with no cards face up (5
card stud or draw)
83
Measuring Outcomes
Goal attainment
Maximize profit
Minimize cost
Customer satisfaction level (Minimize
number of complaints)
Maximize quality or satisfaction
ratings (found by surveys)
84
Scenarios
Useful in
Simulation
What-if analysis
85
Importance of Scenarios
in MSS
Help identify potential opportunities
and/or problem areas
Provide flexibility in planning
Identify leading edges of changes that
management should monitor
Help validate major assumptions used
in modeling
Help check the sensitivity of proposed
solutions to changes in scenarios
86
Possible Scenarios
Many, but
Worst possible (Low demand, High costs)
Best possible (High demand, High Revenue,
Low Costs)
Most likely (Typical or average values)
The scenario sets the stage for the
analysis
87
2.8 The Choice Phase
Search, evaluation, and recommending an
appropriate solution to the model
Specific set of values for the decision variables in a
selected alternative
The problem is considered solved after the
recommended solution to the model is successfully
implemented
Search Approaches
Analytical Techniques
Algorithms (Optimization)
Blind and Heuristic Search Techniques
88
TABLE 2.3 Examples of Heuristics
Sequencejobs through a
machine
Do thejobs that requirethe
least timefirst.
Purchasestocks
If a price-to-earnings ratio
exceeds 10, then do not buy
thestocks.
Travel
Do not usethefreeway
between 8 and 9 a.m.
Capital investment in hightech projects
Consider only thoseprojects
whoseestimated payback
period is less than two years.
Purchaseof a house
Buy only in a good
neighborhood, but buy only
in thelower pricerange.
89
2.9 Evaluation: Multiple Goals,
Sensitivity Analysis, "What-If,"
and Goal Seeking
Evaluation (coupled with the search process)
leads to a recommended solution
Multiple Goals
Complex systems have multiple goals
Some may conflict
Typical quantitative models have a single goal
Can transform a multiple-goal problem into a
single-goal problem
90
Common Methods
Utility theory
Goal programming
Expression of goals as constraints,
using linear programming
Point system
Computerized models can support
multiple goal decision making
91
Sensitivity Analysis
Change inputs or parameters, look at
model results
Sensitivity analysis checks relationships
Types of Sensitivity Analyses
Automatic
Trial and error
92
Trial and Error
Change input data and re-solve the
problem
Better and better solutions can be
discovered
How to do? Easy in spreadsheets
(Excel)
what-if
goal seeking
93
What-If Analysis
Figure 2.8 - SSpreadsheet example of a what-if
query for a cash flow problem
Goal Seeking
Backward solution approach
Example: Figure 2.9
Example: What interest rate causes an the net
present value of an investment to break even?
In a DSS the what-if and the goal-seeking options
must be easy to perform
94
2.10 The Implementation Phase
There is nothing more difficult to carry out, nor more
doubtful of success, nor more dangerous to handle,
than to initiate a new order of things (Machiavelli
[1500s])
*** The Introduction of a Change ***
Important Issues
Resistance to change
Degree of top management support
Users roles and involvement in system development
Users training
95
2.11 How Decisions Are
Supported
Specific MSS technologies relationship
to the decision making process (see
Figure 2.10)
Intelligence: DSS, ES, ANN, MIS, Data
Mining, OLAP, EIS, GDSS
Design and Choice: DSS, ES, GDSS,
Management Science, ANN
Implementation: DSS, ES, GDSS
96
2.12 Human Cognition and
Decision Styles
Cognition Theory
Cognition: Activities by which an individual
resolves differences between an internalized
view of the environment and what actually
exists in that same environment
Ability to perceive and understand information
Cognitive models are attempts to explain or
understand various human cognitive processes
97
Cognitive Style
The subjective process through which individuals perceive,
organize, and change information during the decisionmaking process
Often determines people's preference for human-machine
interface
Impacts on preferences for qualitative versus quantitative
analysis and preferences for decision-making aids
Cognitive style research impacts on the design of
management information systems
Analytic decision maker
Heuristic decision maker
(See Table 2.4)
98
TABLE 2.4 Cognitive-style Decision Approaches.
Problem-solving
Dimension
Approach to learning
Heuristic
Analytic
Learns more by acting than
Employs a planned sequential
by analyzing the situation and
approach to problem solving;
places more emphasis on
learns more by analyzing the
feedback.
situation than by acting and
places less emphasis on
feedback.
Search
Uses trial and error and
Uses formal rational analysis.
spontaneous action.
Approach to analysis
Uses common sense,
Develops explicit, often
intuition, and feelings.
quantitative, models of the
situation.
Scope of analysis
Views the totality of the
Reduces the problem
situation as an organic whole
situation to a set of underlying
rather than as a structure
causal functions.
constructed from specific
parts.
Basis for inferences
Looks for highly visible
Locates similarities or
situational differences that
commonalities by comparing
vary with time.
objects.
(Source: G. B. Davis. Management Information Systems: Conceptual Foundations,
Structure, and Development. New York: McGraw-Hill, 1974, p. 150. Reproduced with
permission of McGraw-Hill, Inc.)
99
Decision Styles
The manner in which decision makers
Think and react to problems
Perceive
Their cognitive response
Their values and beliefs
Varies from individual to individual and from situation to
situation
Decision making is a nonlinear process
The manner in which managers make decisions (and the way
they interact with other people) describes their decision style
There are dozens
100
Some Decision Styles
Heuristic
Analytic
Autocratic
Democratic
Consultative (with individuals or groups)
Combinations and variations
For successful decision making support,
an MSS must fit the
Decision situation
Decision style
101
The system
should be flexible and adaptable to different users
have what-if and goal-seeking
have graphics
have process flexibility
An MSS should help decision makers use and
develop their own styles, skills, and
knowledge
Different decision styles require different
types of support
Major factor: individual or group decision
maker
102
2.13 The Decision Makers
Individuals
Groups
103
Individuals
May still have conflicting objectives
Decisions may be fully automated
104
Groups
Most major decisions in medium and large
organizations are made by groups
Conflicting objectives are common
Variable size
People from different departments
People from different organizations
The group decision making process can be very
complicated
Consider Group Support Systems (GSS)
Organizational DSS can help in enterprise-wide
decision making situations
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Summary
Managerial decision making is synonymous with
the whole process of management
Problem solving also refers to opportunity's
evaluation
A system is a collection of objects such as people,
resources, concepts, and procedures intended to
perform an identifiable function or to serve a goal
DSS deals primarily with open systems
A model is a simplified representation or
abstraction of reality
Models enable fast and inexpensive
experimentation with systems
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Summary (cont.)
Modeling can employ optimization, heuristic, or
simulation techniques
Decision making involves four major phases:
intelligence, design, choice, and implementation
What-if and goal seeking are the two most common
sensitivity analysis approaches
Computers can support all phases of decision
making by automating many of the required tasks
Human cognitive styles may influence humanmachine interaction
Human decision styles need to be recognized in
designing MSS
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Questions?
1. Identify the conflicting objectives
2. Identify the uncertainties
3. Identify the alternative courses of action (can
they be combined?)
4. What are the possible results of the decision?
Why may the results be difficult to predict?
5. What kind of risk is associated with the
decision?
6. What were the decision-makers different
attitudes toward risk? How could this
influence the decision?
7. What would you do and why?
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Group Project
Interview an individual who was recently
involved in making a business decision. Try to
identify:
1. The scope of the problem being solved
2. The individuals involved in the decision
(explicitly identify the problem owner(s))
3. Simons phases (you may have to ask the
individual specific questions such as how he
or she identified the problem, etc.)
4. The alternatives (choices) and the decision
chosen
5. How the decision was implemented
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