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Class 5 Decision Support Systems Chapter 12

Asper School of Business 9.614 Information Age Organizations Part-Time MBA, April 2002 Instructor: Bob Travica. Class 5 Decision Support Systems Chapter 12. Outline. Generic Problem Solving/Decision Making Model Specific Models IT/IS for Supporting Managerial Decision Making

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Class 5 Decision Support Systems Chapter 12

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  1. Asper School of Business 9.614 Information Age Organizations Part-Time MBA, April 2002 Instructor: Bob Travica Class 5 Decision Support Systems Chapter 12 9.614 Information Age Organizations Instructor: Bob Travica

  2. Outline • Generic Problem Solving/Decision Making Model • Specific Models • IT/IS for Supporting Managerial Decision Making • Organizational benefits 9.614 Information Age Organizations Instructor: Bob Travica

  3. Generic Decision Making Model Define problem Create possible solutions (choices, options) Select best solution) Implement solution More… 9.614 Information Age Organizations Instructor: Bob Travica

  4. Generic Decision Making Model Define problem (what needs to be decided on, acted upon) Define possible solutions (possible options of acting; information search, analysis) Select solution (assess options on some criteria; compare, analyze past/future) Implement solution (decide on related problems conducive to the implementing the decision to start problem) 9.614 Information Age Organizations Instructor: Bob Travica

  5. Specific Decision Making Models • Scientific (“rational”; Simon): • Define problem with certainty • Define A & B options • Select A or B so that the choice optimally meets criteria • Implement the selection The scientific (rational) model is close to the way we usually think about decision making (go/no go decisions, optimal choices, etc.) BUT… Is it the way we always really make decisions? More… 9.614 Information Age Organizations Instructor: Bob Travica

  6. Satisfycing decision making (Simon) • Define problem with as much certainty as possible • Create some optional solutions • Evaluate options and pick the first option that meets most or • most important evaluation criteria (a “good enough” option) • Cognitive, time & organizational limitations are reality • Incremental (doctors’ diagnosing; Etzioni): • Define problem with some certainty • Define A & optionally B • Break A into pieces (A1…An); • Implement A1, evaluate, implement A2, • evaluate… maybe switch to B 9.614 Information Age Organizations Instructor: Bob Travica

  7. Specific Decision Making Models • Intuitive (“guts feeling”; less intensive information search than • in incremental): • Define problem subjectively (certainty=?) • Define A subjectively based on past experience • Implement A • Zig-Zag (“muddling through”; Lindblom): • Define problem with higher uncertainty • Define tentatively A, B…n; • Implement some A, if blocked some B, if blocked some A… n 9.614 Information Age Organizations Instructor: Bob Travica

  8. IT/IS for Supporting Decision Making • Decision Support Systems (DSS; one instance is GDSS) • - support higher management levels • - problem definable with less certainty (“ill-structured”) • - build on Transaction Processing Systems (databases) & • Management Information Systems (reporting systems) • - beyond understanding past -- predict future 9.614 Information Age Organizations Instructor: Bob Travica

  9. DSS: Data + Analysis Model + User Interface • Database, • Datawarehouse/Datamart; • Mostly internal sources • Data format issues • Mathematical formula • Hybrid numerical+text • Expert System (If-Then rules) • Neural Nets • Datawarehousing Analysis Tools • Data Mining Tools • GUI, easy to use • Graphing cap. • Natural language 9.614 Information Age Organizations Instructor: Bob Travica

  10. Executive Information Systems (EIS) • Supports executives • Special design features: • Use more external information than DSS • Drill-down capability (background of information) • Uses: • Status Report (in/out of organization) • Environmental Scanning (market trends, regulations…) • Communications management • Specialized tasks (e.g., longer range planning) 9.614 Information Age Organizations Instructor: Bob Travica

  11. Organizational Benefits • Efficiency in decision making translates into • tangible operational benefit of savings on decision • makers work hours • Effectiveness in decision making (quality of decision, • market responsiveness, competitive survival, • Accuracy of info for DM…) translates into strategic benefits • (tangible & intangible) • Trade-offs between efficiency & effectiveness in DM • (e.g., perfecting info for DM increases effectiveness of DM • but decreases its efficiency) 9.614 Information Age Organizations Instructor: Bob Travica

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