Class 11 Decision Making Processes & Decision Support Systems MIS 2000

Bob Travica
MIS 2000
Instructor: Bob Travica
Class 11
Decision Making Processes &
Decision Support Systems
Updated Feb. 2014
Outline
• Decision making and problem solving process rational (scientific) model
• Other decision making models
• Decision Support System
• MIS & DSS support to rational decision making
• Summary
• Exercise
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Decision making and problem solving process:
Rational (Scientific) Model
(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.
• Desirable model in business and generally but its assumptions are
limiting.*
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Other Models: Satisfycing (Good Enough) Decision Making
• Decisional making made under significant constraints
?
• Making a choice that is good enough
•
Simon supplanted Rational Model; necessary evil
due to human & organizational limitations
(e.g., cognitive capabilities, time constraints,
struggles)
Define problem
under constraints
Define some
optional solutions
Focus on most important
evaluation criterion-two
?
Select the 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 balance each other,
- nobody to “cut the knot”, struggles over budget and assets
- “endless” decision processes, like walking through mud.
• What is the problem? Different things for different people!
• Problem defining includes negotiations and maneuvering.
• Optional decisions are defined tentatively.
• Decision maker implements just a part of a chosen option.
If blocked, he switches to an alternative; if blocked again,
must maneuver again (might even turn back to the first option);
see diagram on next slide.
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Zig-Zag
Problem
Solving –
Process
Diagram
Administrator
Define problem
Internal Stakeholder
Define problem
External Stakeholder
Define problem
AND
Make a compromise definition
Define options tentatively
Adjust options
Comment
Comment
React
React
Implement an option partly
Evaluate situation
Y
Blocked?
N
Implement another part
Evaluate situation
N
Blocked?
Y
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 loops may seem infinite.
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Decision Support System (DSS)
 Managerial decision making about future is supported by DSS.
DSS
Outputs:
• Models
• Scenarios and outcomes
• Results of tests
• Relationships & patterns
 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).
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
Management tasks: Planning and forecasting

Visually represent key performance indicators (e.g., financial ratios);
dashboards.

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)*
MIS
Data
transformation models
- Simulation
- Scenario
- Result of stats tests
environment
• Data-driven: Looking for patterns in large data sets.
•
Data mining** and Big Data***
TPS
MIS
environment
Data Warehouse
New relationships in sequence,
New relationships per transaction,
Groupings ***
Data
Mining software
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Rational Decisional Making Process and Information Systems
for Decision Making
IDENTIFY PROBLEM
Upper-level
Manager
(Business
Analyst
helping)
Learn about
problem
MIS
Create
reports
DSS
Run environment
analysis
Define problem
(may include
negotiations)
Run organization
analysis
DEFINE OPTIONS
SELECT OPTION
Evaluate result &
accept/reject
Yes
Create optional
solutions
Discuss & Negotiate
No
Deliver decision
options
Adjust
inputs?
Analyze options &
select the best

IS can help rational DM.

The role of MIS is to inform the user so that a potential problem in operations
can be identified.

Model-driven DSS can help with more steps and entire DM process – best
option can be automatically delivered.

People still make the final choice (decision).
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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) cycles includes 2 more steps: (4) implement solution, and (5)
evaluate solution based on reaction of the affected party.
Satisficing and Zig-Zag models acknowledge constraints in problem
solving.
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. DSS uses data reflecting both the organization and the
environment, and delivers key performance indicators, visuals, and drilldown of aggregate figures.
Role of MIS in decision making processes is limited to informing the user
in the problem definition step of rational DM. DSS can support whole DM
process. Human decision makers still play the key role.
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