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Management and Decision Making

Decision support framework

Decision support technologies

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DECISION MAKING AND COMPUTERIZED

SUPPORT

Management Support Systems (MSS)

Objectives

Support managerial work .

Support decision making.

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Managerial decision making and information systems

Management is a process by whichorganizational goals are achieved through theuse of resources.

Resources: Inputs

Goal Attainment: Output

Measuring Success:

Productivity = Outputs / Inputs

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Managerial decision making and information

systems

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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 andchain 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

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Need for Computerized Decision Support and the

Supporting Technologies

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• 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 physician’s 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 groupmembers 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 complexcomputations. Data can be store in different database and atWeb sites possibly outside the organization. The data may

include sound and graphics, and there may be need transmitthem 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 mayhave difficulty in recalling information in an errorfreefashion when it is needed.

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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)

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Highly Structured

(Programmed)

Decisions

Highly Unstructured

(Nonprogrammed)

Decisions

Semistructured Decisions

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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 Making Problem

(Simon)

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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 Supply-

Chain Management (SCM)

Knowledge Management Systems (KMS)

Expert Systems (ES)

Artificial Neural Networks (ANN)

Hybrid Support Systems

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Decision Support Framework

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Type of Control

Operational Managerial Strategic

Control Control ControlType of

Decision

Structured

Semistructured

Unstructured

Accounts receivable,order entry

Budget analysis,short-term

forecasting,

personnel reports,

make or buy

Financialmanagement

(investment),

warehouse location,

distribution systems

Production

scheduling, inventory

control

Credit evaluation,

budget preparation,

plant layout, projectscheduling, reward

system design

Building new plants,

acquisition, new product

planning, compensationplanning, quality

assurance planning

Selecting cover for

magazines, buying

software, approve

loans

Negotiating, recruiting

an executive, buying

hardware

R&D planning, new

technology development,

social responsibility

planning

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Types of decision –

The technology support

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Type of ControlOperational Managerial Strategic

Control Control Control

Type of

Decision

Structured

Semistructured

Unstructured

Technology support

needed

Technology

support

needed

MIS,

Management

Science

Management

Science, DSS,

ES, EIS

EIS, ES,

ANN, KMS

MIS, TPS

DSS, KMS

IDSS, ES, ANN,

FL, CBR

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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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