Enhancing Decision Making

Types of Decision
Unstructured decisions: requires judgment, evaluation, and insight into non-routine situations. Usually made at senior levels of management. Structured decisions: repetitive, routine, with definite procedures for making the decision. Usually made at the lowest organizational levels. Semistructured decisions: A combination of the two. Usually made by middle managers.

Decision Making Process

Intelligence: discovering, identifying, and understanding the problem Design: identifying and exploring solutions to the problem Choice: choosing among solution alternatives Implementation: making the chosen alternative work and monitoring how well the solution is working

Managers and decision making in the real world

Classical model of management Behavioral models Managerial Roles

Classical model of management

Planning Organizing Coordinating Deciding Controlling

Behavioral Models
Accomplishing tasks at an unrelenting pace Fragmented activities completed in a very short time Speculation, hearsay, and gossip are more the norm Oral communication is preferred over written An informal information system is more desirable than a highly structured system

Managerial Roles
Interpersonal. Managers act as a representative of the organization to internal and external audiences. Informational. Managers pass information up and down and around the organization. Decisional. Once managers make a decision, they must pass it on to someone else. But before they can make that decision, they have to gather information from internal/external sources.

Real world decision making

Information Quality: Was the information used accurate, consistent, complete, valid, timely, accessible, and of high integrity? Management Filters: Everyone processes the best information through personal filters and biases. Managers are no different Organizational Inertia and Politics: People hate change and will sometimes do whatever they can to keep the status quo.

Systems for Decision Support

Management Information Systems: routine reports and summaries of transaction-level data for middle and operational-level managers. Best suited to structured and semistructured decisions. Decision-support systems: combine analytical models with operational data for middle managers making semistructured decisions Executive support systems: includes external as well internal information for senior managers who generally make unstructured decisions. Group decision-support systems: supply groups and teams with an electronic environment in which they can make unstructured and semistructured problems.

Characteristics of MIS
MIS Structured decisions Reports based on routine flows of data General control of organization Structured information flows Presentation in form of reports

Characteristics of DSS
DSS Semistructured, unstructured decisions Focused on specific decisions or classes of decisions End user control of data, tools, and sessions Emphasizes change, flexibility, quick responses Presentation in form of graphics Greater emphasis on models, assumptions, ad hoc queries Develop through prototyping; iterative process

Components of DSS
A DSS database is a collection of current or historical data from a number of applications or groups The DSS Software system contains the software tools that are used for data analysis A model is an abstract representation that illustrates the components or relationship of a phenomenon. Sensitivity analysis models ask what if questions repeatedly to determine the impact on outcomes of changes in one or more factors.

 Data Visualization tools help users see patterns and relationships in large amounts of data that would be difficult to discern if the data were presented as traditional lists of text GIS are a special category of DSS that use data visualization technology to analyze and display data for planning and decision making in the form of digitized maps

Data Visualization and Geographic Information Systems (GIS)

Web-based Customer Decision Support System (CDSS)

CDSS support the decision making process of an existing or potential customer

ESS
An ESS can supply the summarized information executives need and yet provide the opportunity to drill down to more detail if necessary.

Firms using ESS

National Life: ESS for Business Intelligence: Access information from corporate databases through a Web interface Ability to drill down into current sales information Examine data from many different perspectives.

 Bonita Bay Properties Inc. uses its digital dashboard DSS to: Monitor daily business performance Populate dashboards with key performance indicators Spot trends and anomalies Receive up-to-date information on corporate performance Drill down to see detailed data behind the trends

 Pharmacia Corporation uses its balanced scorecard (Performance Measurement framework) DSS to: Determine how operations are performing in relation to corporate objectives Track product attrition rates Monitor the number of patients in clinical trials See how funds allocated for research are being spent

Group Decision Support system (GDSS)

GDSS is an interactive, computer based system used to facilitate the solution of unstructured problems by a set of decision makers working together as a group

Components of GDSS

Business Value of GDSS

GDSS are best used for tasks involving: Idea generation Complex problems Large groups