DECISION MAKING, SYSTEMS, MODELING, AND SUPPORT

1
Chapter 2

• DECISION MAKING, SYSTEMS, MODELING, AND SUPPORT

2
Phases of the decision process

• Intelligence
• Design
• Choice
• Implementation

Simon
Huber
3
What is the relevance of this model to DSS?
What are some of the challenges in each phase
/sub-steps shown in Fig 2.1?
Herbert Simon
4
Issues in Intelligence Phase

• Example
• Data collection
• Data is not available or too much data
• Obtaining data is expensive
• Data may not be accurate /precise enough
• Data is qualitative representing it is difficult

Similarly, even though Simons model describes
the general steps humans go through in
decision-making, accomplishing each step can
itself be complicated.
5
Classification Decomposition (Intelligence
phase)

• Problem classification
• - places problem in a definable category
• Egs Product-mix, Capital budgeting,
  Negotiation
• - leads to a standard solution (canned) approach
  
• Problem decomposition
• - divide and conquer
• Eg CSU Common Management System (SOLAR)

6
Modeling for Decision Support (Design phase)

• Modeling involves conceptualizing a real-world
  problem and abstracting it to
• a quantitative form or
• qualitative form
• Models capture selected decision variables and
  their relationships

7
Types of Models

• Iconic (Scale) physical replica, Eg. Airplane,
  building
• Analog symbolic representation of reality, Eg.
  Car dashboard, hierarchy chart
• Quantitative / Mathematical uses analytic
  approach, Eg. LP, EOQ, Regression
• Descriptive / Mental narrative, uses heuristics
  (jury deliberations), cognitive map (banxia.com),
  simulation/scenarios

8
Decision Making (The Design Phase )

• Measuring outcomes
• The value of an alternative is evaluated in terms
  of goal attainment
• Validate the model
• Done typically through historical data or pilot
  testing of the model over a short window of time

9
Bounded Rationality (Design phase)

• Rational
• All alternatives will be evaluated
• Will look for the best (optimum) solution
• Bounded rationality
• Sub-optimization failure to look for an overall
  solution for the organization
• Satisficing (or good enough) solution
• Humans like to simplify problems
• consider fewer alternatives, criteria,
  constraints
• they are under time pressure, cost
• they have limited processing power

10
Decision Making (The Choice Phase)

• Objective is to select an alternative/ reach a
  decision
• Perform Sensitivity analysis
• - A study of the effect of a change in one or
  more input variables on the proposed solution
• What-if analysis
• A process that involves asking a computer what
  the effect of changing some of the input data or
  parameters would be
• Scenario and Risk analysis
• Assess level of risk to the outcome associated
  with each potential alternative being considered

11
Decision Making The Implementation Phase

• Generic implementation issues include
• Resistance to change
• Degree of support of top management
• User training

12
How does DSS support Simons model of
decision-making?

• Support for the intelligence phase
• The ability to scan external and internal
  information sources for opportunities and
  problems and to interpret what the scanning
  discovers
• Web tools and sources are extremely useful for
  environmental scanning
• Internal data sources/warehouses be scanned via a
  corporate intranet
• Set up agents/ triggers in software (eg. OS, SQL
  Server)

13
How does DSS support Simons model of
decision-making?

• Support for the design phase
• Mostly human intelligence/effort
• OLAP, data mining to discover data relationships
• Cognitive mapping software
• Computational tools/ management science models
• Any existing ES/KMS in the decision topic

14
How does DSS support Simons model of
decision-making?

• Support for the choice phase
• DSS can support through comparison of measurable
  outcomes of various alternatives eg. Risk
  indexes, what-if (scenarios) and goal-seeking
  analyses (Excel spread-sheeting)
• KMS help explain heuristics / logic of decision
  steps
• A GDSS can provide support for group think that
  lead to consensus

DSS support to Design Choice phases overlap
(See Fig 2.2)
15
How does DSS support Simons model of
decision-making?

• Support for the implementation phase
• DSS can be used in implementation activities such
  as identifying tasks to be completed, critical
  path analysis, decision communication among team
  members, project management
• DSS can also help with training in the new system
  
• (many DSS software like SPSS come with tutorial
  modules)