DECISION MAKING IN A DIGITAL AGE

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DECISION MAKING IN A DIGITAL AGE
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Review of Decision Making

• Stages
• Intelligence
• Design
• Choice
• Implementation
• Models
• Rational - Bureaucratic
• Cognitive - Political
• Systematic - Garbage Can
• Intuitive

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Decision Support Systems

• Management level computer system combines data,
  models, user friendly software for
  semistructured unstructured decision making
• Model-driven DSS
• Performs what-if analysis
• Data-driven DSS Permit extraction analysis of
  large pools of data. Includes tools for
• on-line analytical processing (OLAP)
• Datamining

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OLAP

• Powerful querying tools for reporting on data
• Top down approach that is user driven
• Ex show me total sales of canister and upright
  vacuum cleaners for the past three years.
• Typically deals with dimensions relating to
  firms products, locations and times
• Time--gtyear--gtquarter--gtmonth--gtweek--gtdays
• Location--gtcountry--gtregion--gtprovince--gtcity
  --gtstore

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OLAP ctd.

• Ex. Total sales of books for western canada for
  fall 01

Product Amount Region Time
All Books 3,264,329 Western canada Fall 01
Product Amount Region Time
Fiction 1,847,000 Western canada Fall 01
Non Fiction 657,000 Western canada Fall 01
Periodicals 425,000 Western canada Fall 01

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Datamining

• Automatically find hidden patterns
  relationships in large databases
• Associations associate a particular conclusion
  (ex. Purchase of a product) with a set of
  conditions (ex. Purchase of other products)
• Classification/Prediction patterns that describe
  a group that exhibits certain behaviour (ex.
  Credit card co. can determine class of customer
  who is likely to leave to another co.)
• Sequences events that are linked over time (ex.
  After purchase of new tv, within 3 months a dvd
  player is purchased 30 of the time)

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How Does Datamining Work?

• Neural Networks hardware/software that emulates
  processing patterns of the human brain.
• Excellent for classifications
• Genetic Algorithms (more next week)
• Case-Based Reasoning
• Machine Learning

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DSS Components 1

• DSS database
• Frequently data drawn from TPS or data warehouse
• Usually a subset of all the data
• May be combined with external data (e.g., prime
  rate)
• DSS software system
• Models abstractions of reality to represent the
  real thing
• Physical (3-D)
• Mathematical (ymxb)
• Verbal or narrative (explanatory paragraph or
  article)
• Graphical (chart or diagram)

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DSS Components 2

• Libraries of statistical models
• Statistical (means, std. deviations)
• Financial (NPV, ROI)
• Optimization (maximize revenues, minimize costs)
• Forecasting (trends from historical data)
• What-if sensitivity analysis
• OLAP tools software to assist the user in OLAP
• Datamining tools software to assist the user in
  extracting analyzing data from a data warehouse
• User interface typically Windows based (a few
  are menu based)
• User must be trained in using the DSS

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Examples of DSS 1

• Help people with disabilities make work
  transition decisions (WorkWORLD)
• Supply chain management
• Economic order quantity determination
• Production shipping schedules
• Customer relationship management
• Customer profiling and retention
• Web site design, dynamic page execution plan

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Examples of DSS 2

• Geographic information systems (GIS)
• Analyze display data for decision making using
  digital maps, including modeling capabilities
• Example traffic flow, crime analysis.
• Web-based
• On-line access to DSS DSS data models
• Example assist customer in determining
  investment portfolio allocation

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Group Decision Support Systems (GDSS)

• An interactive, computer-based information
  systems that facilitates solution of problems by
  a set of decision makers working together as a
  group
• Arose out of concern about problems with meetings
• Too many
• Too long
• Too many attendees
• Group Think

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Tools of GDSS

• Electronic questionnaires
• Electronic brainstorming tools
• Idea organizers
• Tools for voting, setting priorities
• Policy formation
• Group dictionaries

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Electronic Meeting System (EMS)

• Collaborative GDSS
• Uses information technology to make group
  meetings more productive by facilitating
  communication as well as decision making
• Meetings can be at same place and time, or
  different place and time

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GDSS Enhance Group Decision Making

• Improved pre-planning
• Increased participation
• Open, collaborative atmosphere
• Evaluation objectivity
• Idea organization evaluation

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GDSS Enhance Group Decision Making

• Documentation of meetings
• Access to external information
• Preservation of organizational memory

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What is different about executive (or top)
decision making?

• External focus
• Time frame (long term vs. short or medium term)
• Impact on firm (survival?)
• Who are executives stereotypically?
• Older
• Not part of the computer generation
• Not comfortable with hands-on technology?

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Executive Support Systems (ESS)

• Aid top managers in making decisions
• External focus/data
• Long term focus
• Ability to drill down
• User-friendly GUI (graphical user interface)
• Customized to user
• Use of graphics models to present information
• Can be used for communication scheduling among
  executives

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Benefits of ESS

• Free executives from gathering data putting
  together models
• Allows executives to focus on the issues at hand
• Timeliness availability of data

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ESS Example Balanced Scorecard

• Supplements traditional financial models with
  measurements from additional biz perspectives
• Customer perspective
• Internal perspective
• Learning and Growth perspective
• What you measure is what you get

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