Decision Making: Introduc?on
Decision Making System includes: • How decision making is prac?ced
• Some of the underlying theories
• Models of decision making
Defini?on of Decision making
• “It is a process of choosing among two or more alterna?ve courses of ac?on for the purpose of aEaining a goal or goals.”
Characteris*cs of Decision Making • Individuals are involved • There may be 100’s of alterna?ves • Needs data and analysis with understanding to make a good decision • Past results may not be sufficient to predict future results • Decisions are interrelated • There may be several conflic?ng objec?ves • May decisions involve risk. Diff people have different appe?te for risk • Groupthink can lead to bad decision. • Decision makers are interested in evalua?ng what-‐ if scenarios. • Experimenta?on with a real system-‐trial and error-‐may result in failure. Con?nued……
• Experimenta?on with a real system is possible only for one set of condi?ons at a ?me and can be disastrous.
• Changes in the decision making environment may occur con?nuously, lending to invalida?ng assump?ons about a situa?ons.
• Collec?ng informa?on and analyzing a problem takes ?me and can be expensive.
• There may not be sufficient informa?on to make an intelligent decision.
Decision Making And Problem Solving
• Problem occurs when: a system does not meet it’s established goals, does not yield the predicted results,or does not work as planned.
• Some consider the en?re process of decision making as problem solving while other view phase 1-‐3 as formal decision making, ending with a recommenda?on.
• Addi?onally includes the actual implementa?on of the recommenda?on.
Decision Style
• The manner in which decision makers think and react to problems.
• Vary from individual to individual and situa?on to situa?on.
• Although the process is similar, the applica?on is not always linear.
• As a result, people make decision in different ways. • Heuris?c and analy?cal • Autocra?c vs democra?c • Consulta?ve • Decision situa?on as well style for system to help. Hence it should be flexible
Decision Making Models
“A model is a simplified representa?on or abstrac?on of reality.” • Iconic(Scale)Models: Physical replica of system • Analog Models: Symbolic representa?on of reality.
• Mental Models: Descrip?ve representa?on of decision making situa?ons.
• Mathema*cal(Quan*ta*ve)Models: Mathema?cal descrip?on of abstract model
The Intelligence phase
• Involves scanning the environment, includes several ac?vi?es aimed at iden?fying problem
situa?ons or opportuni?es.
• Intelligence phase includes: 1.Problem(or opportunity) Iden?fica?on
2.Problem Classifica?on
3.Problem Decomposi?on
4.Problem Ownership
The Decision Phase • Involves finding or developing and analyzing possible courses of ac?on.
• Includes understanding the problems and tes?ng solu?ons for feasibility.
• A model of the decision-‐making is constructed, tested and validated.
• Models include: norma?ve(best amongst available amongst all available), subop?misa?on, descrip?ve model(simula?on, cogni?ve) and sa?sifying
• Measuring outcome, risk and scenarios
The Choice Phase
• Choice is cri?cal act of decision making. • The choice phase is the one in which the actual decision is made & the commitment to follow a certain course of ac?on.
• Includes the search for, evalua?on of, and recommenda?on of an appropriate solu?on.
• A solu?on is a specific set of values for the decision variables in a selected alterna?ves.
Concept of DSS
• A system intended to support managerial decision makers in semi structured and unstructured decision situa?ons.
• Adjuncts to decision makers to extend their capabili?es but not to replace their judgments.
DSS Configura?on
• Depend on nature of management-‐decision situa?on and specific technology used.
• These technologies are assembled from four basic components: Data, models, user interface, and knowledge.
• These components are managed by so6ware that is either commercially available or programmed for specific task.
DSS Applica?on • Built to support the solu?on of a certain problem or to evaluate an opportunity.
• DSS typically have their own database and are developed to solve a specific problem or set of problems. Therefore they are called DSS applica?ons.
• A DSS is an approach for suppor?ng decision making.
• Uses an interac?ve, flexible, adaptable computer-‐based informa?on system CBIS developed for suppor?ng the solu?on to a specific nonstructured management problem.
Characteris?cs And Capabili?es
• Support for decision makers in semistructured and unstructured problems.
• Support for all managerial levels.
• Support for individuals and groups. • Support for Interdependent or sequen?al decision.
• Support in all phases of decision making process.
• Adaptable and flexible. con?nued…..
• User friendly, Interac?ve. • Improvement of effec?veness rather than efficiency.
• Support and not to replace the decision maker • Easy development by end users. • Models are used to analyze decision making. • Data access • Can be employed as standalone tool or can be integrate with other DSS.
A DSS applica?on composed of: • The Data Management Subsystem
• The Model Management Subsystem
• The User Interface Subsystem
• The Knowledge-‐Based Management System
Data management subsystem is composed of following elements: • DSS database: Is a collec?on of interrelated data, organized to meet the needs and structure of an organiza?on, used by one or more applica?ons.
• DBMS: A database is created, accessed , and updated by DBMS.
• The Directory: Is a catalog of all data in a database.
• The Query Facility: Necessary to access, manipulate, and query data.
• Key issues: quality, scalability, security, integra?on
The model management subsystem is composed
of following elements:
• Model base: Contains rou?ne & special sta?s?cal, financial, forecas?ng, management science, and other quan?ta?ve models.
• Types: strategic, opera?onal, tac?cal, analy?cal. • The Model Base Management System: Interrela?ng models with appropriate linkage through a database.
• Model Directory: Catalog of all the models and other so6ware in the model base.
• Model Execu?on, integra?on, and Command
• Covers all aspects of communica?on between a user and the DSS or any MSS.
• It includes not only the hardware and so6ware but also factors that ease to use, accessibility, and human-‐machine interac?ons.
• It is the source of many of the power, flexibility, and ease-‐of-‐use characteris?cs of MSS.
• The user interface is managed by so6ware called the user interface management system.
The knowledge based management subsystem
• Use to get the solu?on of complex unstructured and semistructured problems.
• Supply the required exper?se for solving some aspects of the problem
• Provide knowledge that can enhance the opera?on of other DSS components.
• The knowledge component consists of one or more intelligent systems.
The Decision Support System User
• The person or people primarily responsible for making decision, provides exper?se in guiding the development and use of a DSS. • Two broad classes of users: 1.Managers 2.Staff specialists Includes Financial analysts, produc?on planners, and market researchers.
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