Chapter 2 Decision-Making Systems, Models, and Support

Chapter 2

Decision-Making Systems, Models,

and Support

Turban, Aronson, and Liang

Decision Support Systems and Intelligent Systems,

Learning Objectives

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_{Learn the basic concepts of decision making.}

•

_{Understand systems approach.}

•

_{Learn Simon’s four phases of decision making.}

•

Understand the concepts of rationality and

bounded rationality.

•

_{Differentiate betwixt making a choice and}

establishing a principle of choice.

•

_{Learn which factors affect decision making.}

•

_{Learn how DSS supports decision making in}

Standard Motor Products Shifts Gears

Into Team-Based Decision-Making

Vignette

•

_{Team-based decision making}

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Increased information sharing

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_{Daily feedback}

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_{Self-empowerment}

Decision Making

•

Process of choosing amongst

alternative courses of action for the

purpose of attaining a goal or goals.

•

The four phases of the decision

process are:

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_Intelligence

–

Design

–

Choice

Systems

•

Structure

–

Inputs

–

_Processes

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_Outputs

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_{Feedback from output to decision maker}

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_{Separated from environment by boundary}

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Surrounded by environment

System Types

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_{Closed system}

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Independent

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_{Takes no inputs}

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_{Delivers no outputs to the environment}

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_{Black Box}

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Open system

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_{Accepts inputs}

Models Used for DSS

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_Iconic

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Small physical replication of system

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_Analog

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Behavioral representation of system

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_{May not look like system}

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_{Quantitative (mathematical)}

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_{Demonstrates relationships between}

Phases of Decision-Making

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_{Simon’s original three phases:}

–

Intelligence

–

_Design

–

_Choice

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_{He added fourth phase later:}

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_{Implementation}

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_{Book adds fifth stage:}

Decision-Making Intelligence

Phase

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Scan the environment

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_{Analyze organizational goals}

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_{Collect data}

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_{Identify problem}

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_{Categorize problem}

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_{Programmed and non-programmed}

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_{Decomposed into smaller parts}

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_{Assess ownership and responsibility for}

Decision-Making Design Phase

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_{Develop alternative courses of action}

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_{Analyze potential solutions}

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_{Create model}

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_{Test for feasibility}

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_{Validate results}

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_{Select a principle of choice}

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_{Establish objectives}

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_{Incorporate into models}

Decision-Making Choice Phase

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Principle of choice

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Describes acceptability of a solution approach

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_{Normative Models}

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Optimization

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_{Effect of each alternative}

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_{Rationalization}

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_{More of good things, less of bad things}

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_{Courses of action are known quantity}

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_{Options ranked from best to worse}

–

_{Suboptimization}

Descriptive Models

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Describe how things are believed to

be

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Typically, mathematically based

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Applies single set of alternatives

•

Examples:

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Simulations

Developing Alternatives

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_{Generation of alternatives}

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May be automatic or manual

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_{May be legion, leading to information}

overload

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Scenarios

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_{Evaluate with heuristics}

Problems

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_{Satisficing is the willingness to settle}

for less than ideal.

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_{Form of suboptimization}

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_{Bounded rationality}

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_{Limited human capacity}

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_{Limited by individual differences and}

biases

Decision-Making Choice Phase

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_{Decision making with commitment to}

act

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_{Determine courses of action}

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_{Analytical techniques}

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_Algorithms

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_Heuristics

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_{Blind searches}

Decision-Making

Implementation Phase

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_{Putting solution to work}

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Vague boundaries which include:

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_{Dealing with resistance to change}

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User training

Decision Support Systems

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_{Intelligence Phase}

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Automatic

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_{Data Mining}

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_{Expert systems, CRM, neural networks}

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_Manual

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_OLAP

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_KMS

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_Reporting

Decision Support Systems

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_{Design Phase}

–

Financial and forecasting models

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_{Generation of alternatives by expert}

system

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Relationship identification through OLAP

and data mining

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_{Recognition through KMS}

Decision Support Systems

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_{Choice Phase}

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Identification of best alternative

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_{Identification of good enough alternative}

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_{What-if analysis}

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_{Goal-seeking analysis}

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_{May use KMS, GSS, CRM, ERP, and}

Decision Support Systems

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_{Implementation Phase}

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Improved communications

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_{Collaboration}

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_Training

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_{Supported by KMS, expert systems,}

Decision-Making In Humans

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_Temperament

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Hippocrates’ personality types

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_{Myers-Briggs’ Type Indicator}

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_{Kiersey and Bates’ Types and}

Motivations

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_{Birkman’s True Colours}

Decision-Making In Humans

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Cognitive styles

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What is perceived?

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_{How is it organized?}

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Subjective

•

Decision styles

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_{How do people think?}

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How do they react?

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Heuristic, analytical, autocratic,