Transcript Slide 1

Bob Travica
MIS 2000
Instructor: Bob Travica
Class 11
Decision Making Processes,
System Support &
Decision Support System
Updated May 2015
Outline
• Decision making and problem solving process rational (scientific) model
• MIS & DSS support to rational decision making
• Decision Support System
• Decision making under constraints (realistic)
• Summary
• Exercise
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Decision making and problem solving process:
Rational (Scientific) Model
(H. Simon, 1950s)
1. Identify (define) problem
?
5. Evaluate/Adjust
solution
4. Implement
solution
1
%
2. Define optional
solutions
P
0
3
3. Evaluate optional solutions
exhaustively and select best
• Steps 1-3 are decision making; with steps 4-5 the whole process
is problem solving. Read the case of sales drop in the chapter.
• Desirable model in business and generally but its assumptions limit
real applications.
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Rational Decisional Making Process and
Information Systems
1. IDENTIFY PROBLEM
Manager
(Business
Analyst
assisting)
Define problem
(may include
negotiations)
2. DEFINE OPTIONS
3. SELECT OPTION
Create
optional
solutions
Evaluate
options and
define decision
Store options and
evaluation criteria
Process & evaluate
options/rank options
Create
reports & queries
MIS
TPS
Create organization
performance indicators &
environment scan
DSS

The role of MIS is to inform the user so that a potential problem in operations
can be identified. Also in Creating optional solutions. TPS may help.

Model-driven DSS can support the entire DM process. Best option can be
proposed by DSS, but the user should still make the ultimate choice.
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Decision Support System (DSS)
 Executive managers’ decision making is supported by DSS.
DSS
Data modeling &
Data mining
Outputs (data modeling):
• KPI* & drill-down
• What-If analysis (fitting input values to desired
output value)
• Scenarios (testing effects of inputs of output value)
• Statistical tests
• Process simulation
• New relationships & patterns (data mining)
 DSS Supports higher mgt. levels. Problems to solve are less
structured than in routine situations where TPS & MIS can do the
work.
 DSS uses outputs from MIS and data from sources outside the
company.
 Time horizon of DSS: Future – from close (day, week) to
far (one+ years).
More
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
Management tasks: Planning and forecasting

Visually representing key performance indicators (e.g., financial
ratios); dashboards.

DSS may have a “drill-down capability” to find what is behind
aggregated figures
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DSS Types
•
Model–driven: Processes data using different transformation
methods (optimization, if-then analysis, statistical tests); cited in
chapter’s case
MIS
Data
transformation models
- What-If
- Process simulation
- Statistical tests
environment
• Data-driven: Looking for patterns in large data sets.
•
Data mining and Big Data
TPS
MIS
environment
Data Warehouse
- Events in sequence (buying this & then that)
- Things that go together (contents of shopper’s cart)
- Grouping of people (customer types)
Data
Mining software
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Other Models of Decision Making Satisfycing (Good Enough)
• Rational decision making not always possible
• Organizational & human limitations (time pressure,
resources, difficulties in understanding a situation)
• Alternative: Making a choice that is good enough
1 Define problem
under constraints
2 Define some
optional solutions
3 Focus on key
evaluation criterion
4 Select first solution
that fits the criterion
More
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Other Models: Zig-Zag Problem Solving (“Muddling Through”)
•
How decision making typically runs in public organizations:
- different interests that counter each other
- nobody to “cut the knot” in struggles over budget
- “endless” decision processes, like walking through mud.
• Issues: What is the problem? Different things for different people!
Negotiations and maneuvering in defining problem.
• Optional decisions defined tentatively.
• Decision maker implements just a part of a chosen option;
If blocked, switches to optional solution… and over again…
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Zig-Zag
Problem
Solving –
Process
Diagram
Administrator
Define problem
Internal Stakeholder
Define problem
External Stakeholder
Define problem
Make a compromise definition
Implement an option
partly
Evaluate situation
Y
React
React
Blocked?
N
Implement another part
Evaluate situation
Switch to another option
React
React
Only without blocking to any part of a decision, it is
completely realized. But there is usually some
blocking and the loop may seem infinite.
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Summary




In Simon’s rational model, decision making (DM) takes 3 steps: (1)
identify problem, (2) create optional solutions, and (3) evaluate optional
solutions exhaustively and select the best one. The full problem solving
(PS) process includes 2 more steps: (4) implement solution, and (5)
evaluate effect & adjust.
DSS supports higher mgt. levels in solving less structured problems
related to upcoming activities in the near to far future. It can be modelor data-driven. TPS & MIS support start of decision process.
Role of MIS in decision making processes is to inform the user at the
problem identification step of rational DM. DSS can support whole DM
process. People still make the final choice.
Satisficing and Zig-Zag DM acknowledge constraints in problem solving.
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