MAKING INTRODUCTION Decision making is a key managerial responsibility Decision making is a choice amongst alternatives Steps involved Defining the problem Setting the objectives Collecting data ID: 1028249
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1. Presentation on DECISION MAKING
2. INTRODUCTIONDecision making is a key managerial responsibilityDecision making is a choice amongst alternativesSteps involved:Defining the problemSetting the objectivesCollecting dataAnalyzing data/Generating alternativesEvaluate and select the best alternative
3. TYPES OF DECISIONSBased on Simon’s idea decisions can be:Structured decisions which are for routine and typically repetitive problems for which standard solution method existsUnstructured decisions which are for fuzzy, complex problems for which there are no cut-and-dried solution methodsSemi structured decisions which are for problems having some structured elements and some unstructured elements
4. DECISION TABLEPossible for only structured/programmed decisionsIt is a non-graphical way of representing the steps involved in making a decisionIt is usually easier to construct a decision tree first from the description of how a decision is made and then create the decision tableIt consists of some conditions, rules and actions
5. Conditions – these are created from each decision question. Only one possible answer from each question is selected for use in the table. Each answer corresponds to one of each pair of branches in the tree.Actions – these are the final outcomes of the decision process and are the branch ends or outcomes of the decision treeRules – these give the combinations of conditions that lead to the final actions. Y (for Yes) and N (for No) characters in the table normally indicate which combinations of conditions are allowed
6. Discounting policy of a phone card company
7. DECISION TREESA decision tree is a graphical way of representing the steps involved in making a decision. A user can look at a decision tree that describes a decision process they use and identify any errors in the diagram. Each horizontal ‘branch’ of the tree represents the result of a decision or a series of decisions. The ‘roots’ where the branches join are the decision points – each point represents a separate decision, a question that much be answered. Decision points typically have two or three branches. At the ends of the branches are the outcomes of the decision process
8. The general arrangement of a decision tree is as shown below
9. Decision tree to describes the emergency sequence
10. A Library Membership Software(LMS) should support the following three options: new member, renewal, and cancel membership. When the new member option is selected, the software should ask for the member’s name, address, and phone number. If proper information is entered, the software should create a membership record for the new member and print a bill for the annual membership charge and the security deposit payable. If the renewal option is chosen, the LMS should ask for the member’s name and the membership number. If the member details entered are valid, then the membership expiry date in the membership record should be updated and the annual membership charge payable by the member should be printed. If the cancel membership option is selected and the name of a valid member is entered, then the membership is cancelled, a cheque for the balance amount due to the member is printed and his membership record is deleted.
11. Decision tree for LMSValid selection?YesNoNew memberRenewalCancel membershipAsk for member’s name, address, phone numberCreate membership recordPrint billDisplay error messageAsk for membership detailsUpdate expiry datePrint billAsk for membership detailsDelete membership recordPrint cheque
12. Decision table for LMS
13. SIMON’S DECISION MAKING PROCESSSimon describes the decision making process with a four phase process of:Intelligence phase: searching for conditions that call for decisionsDesign phase: inventing, developing and analyzing possible course of actionChoice phase: selecting a course of action from those availableImplementation phase: once a proposed solution seems reasonable execution starts and result is either a success or failure
14. Intelligence PhaseProblem IdentificationProblem ClassificationProblem DecompositionProblem OwnershipDesign PhaseFormulate a modelSet criteria for choiceSearch for alternativesPredict and measure outcomesChoice PhaseSolution to the modelSelection of best alternativePlan for implementationImplementation PhaseFailureProblem StatementAlternativesSolutionRealitySuccessValidation of the modelVerification, testing ofProposed solutionSimplificationAssumptions
15. THE INTELLIGENCE PHASEProblem (or opportunity) identificationBegins with the identification of organization goals and objectives related to an issue of concern and determination of whether they are being metDetermine whether a problem exists, identify its symptoms, determine its magnitude and explicitly define it
16. Problem classificationIt is the conceptualization of a problem in an attempt to place it in a definable categoryIt helps in leading to a standard solution approachEx. Classifying according to the degree of structuredness evident in the problem
17. Problem decompositionMany complex problems can be divided into sub-problemsSolving these simpler sub-problems helps in solving the complex problemProblem ownershipIt is important to understand whether the problem is a controllable or uncontrollable factor and if organization has the ability to solve it
18. THE DESIGN PHASEThe design phase involves finding and analyzing possible course of actionThese include understanding the problem and testing solutions for feasibilityA model of the decision making problem is constructed, tested and validated
19. Formulate a modelModeling involves conceptualization of the problem and its abstraction to quantitative and/or qualitative formsUncontrollable VariablesDecision VariablesMathematical RelationshipsResult VariablesGENERAL STRUCTURE OF A QUANTITATIVE MODEL
20. Set criteria for choiceSelection of a principle of choice describes the acceptability of a solution approachSearch for alternativesGenerating alternatives is a lengthy process that involves searching and creativityIt takes time and costs moneyIt is important to decide when to stop generating alternatives
21. Predict and measure outcomesTo evaluate and compare alternatives, it is necessary to predict the future outcome f each proposed alternativeIt is done under three broad categories:Decision making under certaintyDecision making under riskDecision making under uncertainty
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23. THE CHOICE PHASEThe choice phase is the one in which the actual decision is made, i.e., the commitment to follow a certain course of action is made. The boundary between the design and choice phase is unclear as one can jump frequently between this two phases. It includes,Solution to the modelSelection of best alternative(s)Plan for implementation
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25. GOAL SEEKING ANALYSIS
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27. THE IMPLEMENTATION PHASEThe implementation phase is the final stage of the decision making processIt is concerned with implementing and monitoringThe role of the system is feedback and assessment
28. Objective SettingInformation GatheringGeneration of AlternativesEvaluation of AlternativesSelection of Alternative ImplementationMonitor and ControlDefine the problemEstablish cause-effect relationshipImpose limitsLook at short rangeLook at long rangeApply qualitative aidsTranslate into actionsAnalyze dataDecide on boundary conditionGather dataDecide on feasible alternativesQuantify and measure against objectivesDecide on strengths and weaknessesDecide alternative
29. MASSIE’S DECISION MAKING MODEL It is a five stage procedure as follows:Understand situationDiagnose and define problemFind alternativesSelect actionSecure acceptance of decision
30. DSSDSS is a computer based support system for processing data to aid the management in decision making.
31. CAPABILITIES OF DSSSemi structured programsFor managers at different levelsFor groups and individualsInterdependent/Sequential decisionsSupports intelligence, design, choice phaseAdaptability and flexibilityInteractive ease of useEase of constructionModelling and analysis
32. COMPONENTS OF DSSData management subsystemDSS database, DBMS, data directoryModel management subsystemModel base, MBMS, model directoryKnowledge-based management subsystemIntelligent system, KBESUser interface subsystemDialog, UIMS, GUI
33. DSS CLASSIFICATIONSText oriented DSSDatabase oriented DSSSpreadsheet oriented DSSSolver oriented DSSRule oriented DSSCompound DSSIntelligent DSS
34. DSS APPLICATIONSMarket planning and researchDSS applications include pricing decisions for each customer, forecasting, termination or expansion and customer satisfactionOperation and strategic planningDSS is used to support both short-term and strategic planning for monitoring, analyzing and reporting on the market trendsSales supportDSS helps by generating daily sales summaries
35. ACTIVITIES OF BUSINESS INTELLIGENCEData sourcesData warehouseResultsVisualization OLAPDecisionsupportData miningVisualization
36. CHARACTERISTICS OF GROUP WORKA group performs a task, sometimes decision making, sometimes notGroup members may be located in different placesGroup members may work at different timesGroup members may work for the same or for different organizationsThe group can be permanent or temporaryThe group can be at any managerial level or span levels
37. There can be synergy or conflict in group workThere can be gains/losses in productivity from group workThe task might have to be accomplished very quicklyIt may be impossible for all members to meet in one placeSome of the data needed may be located in sources external to the organizationThe expertise of non-team members may be needed
38. COMMUNICATION SUPPORTCommunication is a vital element for decision supportWithout communication there is no collaborationGroups of decision makers must communicate, collaborate and negotiate in their workEffective e-commerce is possible only via modern communication technologiesModern information technologies provide inexpensive, fast, capable and reliable means of supporting communicationCollaborative technologies like EMS(electronic meeting systems) and electronic conferencing systems and services helps in connecting decision makers
39. TIME/PLACE COMMUNICATION FRAMEWORKSame TimeDifferent TimeSame PlaceGSS in a decision roomWeb-based GSSMultimedia presentation systemsWhiteboardDocument sharingGSS in a decision roomweb=-based GSSWorkflow management systemsDocument sharingE-mail, V-mailDifferent PlaceWeb-based GSSWhiteboardDocument sharingVideo conferencingAudio conferencingComputer conferencingE-mail, V-mailWeb-based GSSWhiteboardE-mail, V-mailWorkflow management systemsDocument sharingComputer conferencing with memory
40. KNOWLEDGE MANAGEMENTIt is a process that helps organizations identify, select, organize, disseminate and transfer important information and expertise that are part of the organizational memory that typically resides within the organization in an unstructured mannerThis enables effective and efficient problem solving, dynamic learning, strategic planning and decision makingIt thus focuses on identifying knowledge, explicating it in a way so that it can be shared in a formal manner and thus reusing it
41. IMPORTANCE OF MANAGING KNOWLEDGEIntellectual capital is a firm’s only appreciable asset. Most assets depreciate with time.Knowledge work is increasingEmployees with the most intellectual capital have become volunteersMany managers ignore intellectual capital and lose out on the benefits of its capture and useEmployees with the most intellectual capital are often the least appreciatedMany current investment in intellectual capital are misfocussed
42. FEATURES OF KNOWLEDGE MANAGEMENT SYSTEMCreating a knowledge cultureCapturing knowledgeKnowledge generationKnowledge explication(and digitization)Knowledge sharing and reuseKnowledge renewal
43. Knowledge management system processes are designed to manageKnowledge creation through learningKnowledge capture and explicationKnowledge sharing and communicationKnowledge accessKnowledge use and reuseKnowledge archiving
44. THE KNOWLEDGE MANAGEMENT CYCLECreateknowledgeCaptureknowledgeRefineknowledgeStoreknowledgeManageknowledgeDisseminateknowledge
45. IMPLEMENTING KNOWLEDGE MANAGEMENTIdentify the problem by identifying knowledge segmentsPrepare for change in terms of business efforts and operationCreate the team responsible for implementing a pilot projectMap out the knowledge by identifying what it is, where it is, who has it and who needs itCreate a feedback mechanism indicating how the system is used and report any difficultiesDefine the building blocks for a knowledge management systemIntegrate existing information systems to contribute and capture knowledge in an appropriate format
46. Data, Information and KnowledgeDATAINFORMATIONKNOWLEDGEProcessed Relevant andactionableRelevant and actionable dataKnowledge management transforms data and/or information into actionable knowledge in a format that when it is made available can be utilized effectively and efficiently throughout an organization
47. TACIT AND EXPLICIT KNOWLEDGETacit knowledge is in the domain of subjective, cognitive and experiential learningExplicit knowledge deals more with objective, rational and technical knowledge(data, policies, procedures, software, documents)Knowledge management transfers the tacit knowledge in individuals to value processes that lead to innovation, knowledge creation and replenishment of the organization’
48. ExplicitKnowledgeTacitKnowledgeCore competenciesof the organizationProcess of explication may generateNew tacit knowledgeConvert tacit knowledge toarticulated and measurableexplicit knowledgePolicies, patents,decisions, strategies etc.Expertise, know-how,Ideas, organizationculture, values etc.
49. MSSModeling is a key element in most DSS and a necessity in a model-based DSSManagement support systems(MSS) are collections of computerized technologies used to support managerial tasks in general and decision making in particularMSS refers to application of any technology, either as an independent tool or in combination with other information technologies
50. IMPLEMENTING MSSMSS technology implementation is complex because these systems are not merely information systems that collect, manipulate and distribute information; rather they are linked to tasks that may significantly change the manner in which organizations operateMSS implementation is an ongoing process that occurs during the entire development of the system, through the feasibility study, system analysis and design, programming, training, conversion and installation
51. ISSUES OF IMPLEMENTATIONTechnical factorsTechnical issues can be classified in two categories:Technical constraints which results mainly from the limitations of available technology. It disappears when new technology are developedTechnical problems which are not result of the technology but are caused by other factors such as scarcity of resources. It can be solved by increasing the available resources
52. Behavioral factorsThe way people perceive these systems and how they behave in accepting themUser resistance is a major behavioral factorReasons that employees resist new systems:Change in job contentLoss of statusChange in interpersonal relationshipsLoss of powerChange in decision making approachUncertainty/unfamiliarity/misinformationJob security
53. Process factorsTop management support for continuous financial support to maintain the systemsManagement and user commitmentInstitutionalization through which an MSS becomes incorporatedUser involvementParticipation in the system development process by users is a necessary condition
54. Organizational factorsCompetence skills of the MSS teamAdequacy of resourcesOrganizational politicsValues and ethicsPrime concerns are goals of the project, process and possible impact on other systemsExternal environmentIncludes legal, social, economic, political etc.
55. IMPLEMENTATION STRATEGIES FOR DSSImplementation strategies for DSS can be divided into four major categories:Divide the project into manageable piecesKeep the solution simpleDevelop a satisfactory support baseMeet user needs and institutionalize the system
56. EXPERT SYSTEM IMPLEMENTATIONQUALITY OF THE SYSTEMThe ES should be developed to fulfill a recognized needThe ES should be easy to use even by a noviceThe ES should be able to increase the expertise of the userThe ES should have explorative capabilities
57. The program should be capable to respond to simple questionsThe system should be capable of learning new knowledge (i.e., the system should be able to ask questions to gain additional information)The program knowledge should be easily modified (i.e., add, delete, and changed)
58. COOPERATION OF THE EXPERTSFor an ES to be successfully implemented it must give good advice. Such advice depends, most of all, on the cooperation of the domain expertCONDITIONS THAT JUSTIFY THE NEEDS FOR A PARTICULAR ESAn expert is not always available or is expensiveDecisions must be made under pressure or missing even a single factor could be disastrous
59. There is rapid employee turnover, resulting in a constant need to train new workers. Such training is costly and time-consumingA huge amount of data must be shifted through
60. SYSTEM INTEGRATIONIntegration of computer based systems means that the systems are merged into one facility rather than having separate hardware, software, and communications for each independent systems. Integration can be at the development tools level or at the application system level
61. TYPES OF INTEGRATIONThere are two general types:Functional integration implies that different support functions are provided as a single system. A user can access the appropriate facilities through a single, consistent interface and can switch from one task to another and back againPhysical integration refers to packaging of the hardware, software, and communication features required to accomplish functional integration
62. WHY INTEGRATE?Enhancements of basic toolsIncreasing the capabilities of the applicationBenefits that each technology provides to the otherImprovements in both the process and the outcomeIt results in combining the strengths of each individual technique
63. PROBLEMS AND ISSUES IN INTEGRATIONNeed for integrationJustification and cost-benefit analysisArchitecture of integrationPeople problemsFinding appropriate buildersAttitudes of employees in the information system departmentDevelopment progressOrganizational impactsData structure issuesData issuesConnectivity
64. OPERATIONS RESEARCHOperations research(OR) is a quantitative approach to decision makingMostly used as a support for structure decisionsCharacteristics of OR:Systems approachAnalytical approachInterdisciplinary approachDeals with real world problems
65. OR METHODOLOGYThe steps involved are:Problem IdentificationNeed analysisCause and effect analysisModel ConstructionData collectionModel designModel evaluation
66. ExperimentationFeasibility analysisOptimality analysisAdaptivity analysisImplementationManagement approvalTest operationsFull implementation Evaluation
67. CAUSE-EFFECT DIAGRAMProblemCausesDateEffects