Decision Making as a Component of Problem Solving

Programmed versus Nonprogrammed Decisions

• Programmed decisions– Structured situations with well defined relationships– Quantifiable– Management information system– Easy to computerize

• Nonprogrammed decisions– Rules and relationships not defined– Problem is not routine– Not easily quantifiable

Problem Solving Approaches

• Optimization: find the best solution• Satisficing: find a good solution• Heuristics: rules of thumb

Inputs to an MIS

Characteristics of an MIS

• Fixed format, standard reports• Hard-copy or soft-copy reports• Uses internal data• User-developed reports• Users must request formal reports from IS

department

Functional Aspects of an MIS

Financial MIS

Manufacturing MIS

• Design engineering

• Process control– Computer-assisted manufacturing (CAM)– Computer-integrated manufacturing (CIM)– Flexible manufacturing system

• Quality control and testing

Overview of a Manufacturing MIS

Marketing MIS

Human Resource MIS

Other MIS

• Accounting management information systems• Geographic information systems (GIS)

Characteristics of Decision Support Systems

• Handle large amounts of data from various sources

• Provide report and presentation flexibility• Offer both textual and graphical orientation• Support drill down analysis

Characteristics of a DSS

• Perform complex, sophisticated analysis

• Optimization, satisficing, heuristics– Simulation– What-if analysis– Goal-seeking analysis

Capabilities of a DSS

• Support all problem-solving phases• Support different decision frequencies• Support different problem structures

• Support various decision-making levels

Selected DSS Applications

Support for Various Decision-Making Levels

Factor DSS MISProblem Type New, Unstructured Problems Routine, Structured ProblemsUsers In the short term, users have

more controlIn the short term, user have less control

Support Not intended to replace the human decision maker

Some automatic decisions can be made

Approach Direct support through interactive, drill-down interface

Automation of regular business reporting

System On-line, real-time, on-screen, interactive

Generate hard-copy reports, scheduled reporting, up-to-date but not necessarily real-time

Speed Response time should be faster Response time usually slowerOutput Screen, interactive interface Oriented towards static, printed

reports and documentsDevelopment Developed in close

collaboration with users and decision makers

Off-the-shelf solutions developed for general users

Emphasis Decisions and decision making style

Data to Information

Components of a DSS

The Model Base

• Financial models– Cash flow– Internal rate of return

• Statistical analysis models– Summary statistics– Trend projections– Hypothesis testing

• Graphical models• Project management models

Executive Support Systems

Executive Support Systems (ESS) in Perspective

• Tailored to individual executives• Easy to use• Drill down capabilities• Support need for external data• Can help when uncertainty is high• Future-oriented• Linked to value-added processes

Capabilities of an ESS

• Support for defining an overall vision• Support for strategic planning• Support for strategic organizing & staffing• Support for strategic control• Support for crisis management

Summary

• Decision-making phase: includes intelligence, design, and choice

• Problem solving: also includes implementation and monitoring

• Decision approaches: optimization, satisficing, and heuristic

Summary

• Management information system (MIS) - an integrated collection of people, procedures, databases, and devices that provide managers and decision-makers with information to help achieve organizational goals

• Decision support system (DSS) - an organized collection of people, procedures, software, databases, and devices working to support managerial decision making

• Executive support systems (ESSs) - specialized decision support systems designed to meet the needs of senior management