Foundations for DSS: Rationality, Utility Theory

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Foundations for DSSRationality, Utility Theory
Decision Analysis

• Topics in DSS
• End user computing
• DSS concepts
• EIS, GDSS, groupware
• Rationality
• Frameworks for decision making
• Decision trees
• Multiattribute decision modeling
• Spreadsheet implementations
• Reading assignments (2 sessions)
• Zwass, DSS chapter
• Kimbrough, MIS Notes, Part II, DSS chapter 5, A
  Brief Introduction to Decision Analysis (skip
  sections 5.3-4) chapter 6, Case DSS Evaluation
  with MAUT
• Kimbrough et al., AMV DSS paper
• Dawes, Robust Beauty of Improper Linear Models

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End User Computing

• Concept
• History
• Motivations
• Packages
• Management issues
• How much?
• Who?
• or -?
• etc.
• Examples?

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S(imple) or F(ancy)?
S
F
90, -3
50, -1
S
10, -1
50, -1
10, -1
50, -3
F
90, -3
50, -3
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DSS Concepts

• Data, models,, and documents
• Interactively
• History
• Motivations
• Packages and tools
• Roll your own
• DSS generators
• Spreadsheets
• Management issues
• How much?
• Who?
• or -?
• etc.
• Examples?

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DSS Concepts (cont.)

• Data-oriented DSS
• Questions? Examples?
• Model-oriented DSS
• Examples?
• DSS application theory
• what if exploration, training, insight
• objectivity models, data in public
• argumentation and persuasion
• Development of DSS
• How do executives use DSS?
• EIS?
• GDSS
• Groupware

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Examples of Model-BasedDSS

• See, e.g., Interfaces
• From one recent issue

IMPReSS An Automated Production-Planning and
Delivery-Quotation System at Harris
Corporation--Semiconductor Sector IMPReSS has
raised on-time deliveries from 75 to 95 percent
without increasing inventories, enabled the
sector to expand market share, and helped it to
move from an annual loss of 75 million ot an
annual profit of over 40 million. Integrated
Planning for Poultry Production at Sadia Sadia
has saved over 50 billion over three years using
mathematical models to obtain better conversaion
of feed to live bird weight, improved
utilitization of birds, improved fulfillment of
production plans, reduced lead times, and wide
ranging studies of price and demand
scenarios. KeyCorp Service Excellence
Management System KeyCorps SEMS models have
helpd it reduce customer processing time by 53
percent, improve customer wai time, and reduce
personnel expenses. And more!
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Reminders on Rationality

• "To do something rationally is to do it for good
  and cognet reasons. And this is not the same as
  just having a motive for doing it. All of us
  almost always act for motives, but valid reasons
  are...what motivate the rational agent, and most
  of us do not act rationally all of the time."
• "From the rational point of view, our mere wants
  have little significance. They can and should be
  outweighed by our interests and our needs."
• "Rationality is not just a matter of having some
  reasons for what one does, but of aligning one's
  beliefs, actions, and evaluations effectively
  with the best or strongest available reasons."

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Rationality

• "Rationality does not make demands beyond the
  limits of what is genuinely possible for us---it
  does not require accomplishments beyond the
  limits of the possible. For rationality, no more
  is demanded of us than doing our realistic best
  to work efficiently and effectively towards the
  realization of our cognitive, practical, and
  evaluative goals."
• "To be sure, rationality is not just a passible
  matter of making good use of the materials one
  has on hand---in cognitive matters, say, the
  evidence in view. It is also a matter of
  actively seeking to enhance these materials in
  the cognitive case, by developing new evidential
  resources that enable one to amplify and to test
  one's conclusions. The endeavour to make the
  most of one's opportunities is an aspect of
  intelligence that is crucial to rationality."

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Rationality

• "Rationality makes demands upon us. It speaks in
  didactic tones this or that is what you should
  do."
• "Accordingly, rationality in all its forms calls
  for the comparative assessment of feasible
  alternatives, and so demands five faculties
• "1. Imagination...
• "2. Information-processing...
• "3. Evaluation...
• "4. Selection---Informed Choice...
• "5. Agency the capacity to implement choices."
• "Rational choice in a given situation generally
  requires a consideration of the wider context."
• All this from Rescher, Rationality. (Aunte
  Martha)

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Frameworks for DecisionMaking

• General elements for decision making
• Actions--a
• Up to us
• Outcomes--o
• Given to us
• Not considering game theory here.
• How might we do this?
• Probabilities--P(oa)
• Desirabilities--D(oa)

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Example Which Wine to Bring?

• Actions bring red, bring white, bring rosé
• Outcomes, primary
• Beef served
• Chicken served
• Fish
• Vegetarian
• Outcomes, net
• Beef served with your red wine
• Beef served with your white wine
• ... etc.

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Example Which Wine to Bring?(con't.)

• Model with tables (a) probabillities, (b)
  desirabilities, (c) net results

Outcomes o(j)
Beef Chicken Fish Vegetarian
Actions a(i)
P(o(1)a(1)) .........................

Red White Rosé
P(o(j)a(i))
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Example Which Wine to Bring?(con't.)

• Model with tables (b) desirabilities

Outcomes o(j)
Beef Chicken Fish Vegetarian
Actions a(i)
D(o(1)a(1)) .........................

Red White Rosé
D(o(j)a(i))
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Example Which Wine to Bring?(con't.)

• Model with tables (c) net results

Outcomes o(j)