1. Bob Travica Class 10 Decision Making Processes, System Support & Decision Support System MIS 2000 Instructor: Bob Travica Updated February 2015 1 of 14

2. 2 of 13 Outline Decision making and problem solving process - rational (scientific) model MIS & DSS support to rational decision making Decision Support System Decision making under constraints (realistic) Summary Exercise 2 of 11

3. Decision making and problem solving process: Rational (Scientific) Model 1. Identify (define) problem ? 2. Define optional solutions 5. Evaluate/Adjust solution   3. Evaluate optional solutions exhaustively and select best   (H. Simon, 1950s) 4. Implement solution   Steps 1-3 are decision making; with steps 4-5 the whole process is problem solving. Read the case of sales drop in the chapter. Desirable model in business and generally but its assumptions limit real applications. 3 of 11

4. Rational Decisional Making Process and Information Systems  The role of MIS is to inform the user so that a potential problem in operations can be identified. Also in Creating optional solutions. TPS may help.  Model-driven DSS can support the entire DM process. Best option can be proposed by DSS, but the user should still make the ultimate choice. 4 of 11 Create reports & queries Manager (Business Analyst assisting) DSS MIS TPS Define problem (may include negotiations) Create optional solutions Store options and evaluation criteria Evaluate options and define decision Process & evaluate options/ rank options Create organization performance indicators & environment scan IDENTIFY PROBLEMDEFINE OPTIONS SELECT OPTION

5. Decision Support System (DSS)  DSS Supports higher mgt. levels. Problems to solve are less structured than in routine situations where TPS & MIS can do the work.  Time horizon of DSS: Future – from close (day, week) to far (one+ years).  DSS uses outputs from MIS and data from sources outside the company. More Outputs: KPI* & drill-down What-If Scenarios, changing input to fit desired output Statistical testing Process simulation New relationships & patterns Sales… Inventory ENVIRON- MENT Data modeling & Data mining MIS DSS  Executive managers’ decision making is supported by DSS. 5 of 11

6.  Management tasks: Planning and forecasting  Visually representing key performance indicators (e.g., financial ratios); dashboards.  DSS may have a “drill-down capability” to find what is behind aggregated figures 6 of 11

7. DSS Types Model–driven: Processes data using different transformation methods (optimization, if-then analysis, statistical tests); cited in chapter’s case Model–driven: Processes data using different transformation methods (optimization, if-then analysis, statistical tests); cited in chapter’s case Data-driven: Looking for patterns in large data sets. Data mining and Big Data MIS environment - What-If - Process simulation - Statistical tests Data transformation models TPS MIS environment - Events in sequence (buying this & then that) - Things that go together (contents of shopper’s cart) - Grouping of people (customer types) Data Warehouse Data Mining software 7 of 11

8. Other Models of Decision Making Satisfycing (Good Enough) Rational decision making not always possible Organizational & human limitations (time pressure, resources, difficulties in understanding a situation) Alternative: Making a choice that is good enough More Go for low-hanging fruit? 1 Define problem under constraints 2 Define some optional solutions 3 Focus on key evaluation criterion 4 Select first solution that fits the criterion 8 of 11 Go for perfect fruit?

9. How decision making typically runs in public organizations: - different interests that counter each other - nobody to “cut the knot” in struggles over budget - “endless” decision processes, like walking through mud. Issues: What is the problem? Different things for different people! Negotiations and maneuvering in defining problem. Optional decisions defined tentatively. Decision maker implements just a part of a chosen option; If blocked, switches to optional solution… and over again… Other Models: Zig-Zag Problem Solving (“Muddling Through”) 9 of 11

10. Define problem Administrator External StakeholderInternal Stakeholder Make a compromise definition Implement an option partly Implement another part Switch to another option Zig-Zag Problem Solving – Process Diagram React Y N Blocked? Evaluate situation Only without blocking to any part of a decision, it is completely realized. But there is usually some blocking and the loop may seem infinite. 10 of 11

11. Summary In Simon’s rational model, decision making (DM) takes 3 steps: (1) identify problem, (2) create optional solutions, and (3) evaluate optional solutions exhaustively and select the best one. The full problem solving (PS) process includes 2 more steps: (4) implement solution, and (5) evaluate effect & adjust. In Simon’s rational model, decision making (DM) takes 3 steps: (1) identify problem, (2) create optional solutions, and (3) evaluate optional solutions exhaustively and select the best one. The full problem solving (PS) process includes 2 more steps: (4) implement solution, and (5) evaluate effect & adjust. DSS supports higher mgt. levels in solving less structured problems related to upcoming activities in the near to far future. It can be model- or data-driven. TPS & MIS support start of decision process. DSS supports higher mgt. levels in solving less structured problems related to upcoming activities in the near to far future. It can be model- or data-driven. TPS & MIS support start of decision process. Role of MIS in decision making processes is to inform the user at the problem identification step of rational DM. DSS can support whole DM process. People still make the final choice. Role of MIS in decision making processes is to inform the user at the problem identification step of rational DM. DSS can support whole DM process. People still make the final choice. Satisficing and Zig-Zag DM acknowledge constraints in problem solving. Satisficing and Zig-Zag DM acknowledge constraints in problem solving. 11 of 11