Management and Decision Making Decision support framework Decision support technologies

DECISION MAKING AND COMPUTERIZED SUPPORT

Management Support Systems (MSS) Objectives

Support managerial work.
Support decision making.

Managerial decision making and information systems

Management is a process by which organizational goals are achieved through the use of resources. Resources: Inputs Goal Attainment: Output Measuring Success: Productivity = Outputs / Inputs

Managerial decision making and information systems

There are 4 major functions of manager in management theory i.e. planning, organizing, directing and controlling.
Managerial decision is getting more complex for some reasons: larger alternative space for decision options due to improved modern technology and communication systems. cost of making errors can be very large because of the complexity and magnitude of operations, automation and chain reaction or even legal issues. continuous in fluctuating environment and more uncertainty in several impacting elements.
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System Effectiveness and Efficiency

Two Major Classes of Performance Measurement

Effectiveness is the degree to which goals are achieved Doing the right thing! Efficiency is a measure of the use of inputs (or resources) to achieve outputs Doing the thing right! MSS emphasize effectiveness.
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Computer Applications Evolving from TPS and MIS Proactive Applications (DSS)
New modern management tools in Data access Online analytical processing (OLAP) Internet / Intranet / Web for decision support

Need for Computerized Decision Support and the Supporting Technologies

Speedy computations. A computer allows the decision maker to perfom large numbers of computations very quickly and at low cost. Timely decicions are critical for many situations, ranging from a physicians decision in an emergency room to that of a stock trader. Increrased productivity. Assembling a group of decision makers, especially experts, may be costly. Computerized support can reduce the size of the group and enable the group members to be at different locations (sasving travel cost). Also, the productivity of staff support (such as financial and legal analysts) may be incresed.
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Need for Computerized Decision Support and the Supporting Technologies

Technical support. Many decisions involve complex computations. Data can be store in different database and at Web sites possibly outside the organization. The data may include sound and graphics, and there may be need transmit them quickly from distant locations. Computers can search, store, and transmit needed data quickly and economically. Overcoming cognitive limits in processing and storage. According to Simon (1997), the human mind is limited in its ability to process and information. Also, people may have difficulty in recalling information in an errorfree fashion when it is needed.

Three Phase Decision-making Process (Simon)

Intelligence - searching for conditions that call for decisions Design - inventing, developing, and analyzing possible courses of action Choice - selecting a course of action from those available
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Decision Making Along a Continuum (Simon)

Highly Unstructured

Highly Structured

(Nonprogrammed)
Decisions

(Programmed)
Decisions

Semistructured Decisions

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Decision Making Problem (Simon)

Unstructured problem has no structured phases

problems often solved with human intuition

Semistructured problem has some (or some parts with) structured phases

solve with standard solution procedures and human judgment

Structured problem has all structured phases

procedures for obtaining the best solution are known
objectives are clearly defined management support systems can be useful

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Decision Support Technologies

Management Support Systems (MSS) Decision Support Systems (DSS) Intelligent DSS Group Support Systems (GSS) Enterprise (Executive) Information Systems (EIS) Enterprise Resource Planning (ERP) and SupplyChain Management (SCM) Knowledge Management Systems (KMS) Expert Systems (ES) Artificial Neural Networks (ANN) Hybrid Support Systems
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Decision Support Framework

Type of Control Type of Decision Operational Managerial Control Control
Accounts receivable, order entry Budget analysis, short-term forecasting, personnel reports, make or buy Credit evaluation, budget preparation, plant layout, project scheduling, reward system design

Strategic Control
Financial management (investment), warehouse location, distribution systems Building new plants, acquisition, new product planning, compensation planning, quality assurance planning

Structured

Semistructured

Production scheduling, inventory control Selecting cover for magazines, buying software, approve loans

Unstructured

Negotiating, recruiting R&D planning, new an executive, buying technology development, hardware social responsibility planning
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Types of decision The technology support

Type of Control Type of Decision Structured
Operational Managerial Strategic Control Control Control
Technology support needed
MIS, TPS DSS, KMS

Semistructured
IDSS, ES, ANN, FL, CBR
MIS, Management Science Management Science, DSS, ES, EIS EIS, ES, ANN, KMS
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Unstructured
Technology support needed

Typical Business Decision Aspects

Decision may be made by a group Group member biases Several, possibly contradictory objectives Many alternatives Results can occur in the future Attitudes towards risk Gathering information takes time and expense Too much information What-if scenarios Trial-and-error experimentation with the real system may result in a loss Changes in the environment can occur continuously
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