1. Enhancing Decision Making
Chapter 12 (10E)
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2. Business Value of Improved Decision Making
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3. The Decision-Making Process
Simon’s four stages
Mintzberg’s managerial roles
Real-world decision making
Relationship between roles and decision support
Information quality dimensions
Management filters
Organizational inertia and politics
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4. Types of Decisions (Simon)
Structured decisions are repetitive, routine, and involve a definite procedure for handling (e.g., restock inventory)
Unstructured decisions are nonroutine decisions in which the decision maker must provide judgment, evaluation, and insights; there is no agreed-upon procedure for making the decision (e.g., decide on corporate objectives).
Semistructured decisions are ones where only part of the problem has a clear-cut answer provided by an acceptable procedure (e.g., develop a marketing plan)
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5. Semi-Structured Decisions Related to SCM and CRM
Can we make decisions that match inventory with customer demand?
Can we generate optimal production allocation decisions that minimize cost or maximize profit?
Can we identify points in the SC that generate excessive costs?
CRM
Who are our most frequent customers? What determines a repeat customer?
Who are our most profitable customers?
Can we predict and intervene to prevent losing a customer?
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6. Simon’s Decision Making Process
Intelligence
Is there a problem?
Design
What are the alternatives?
Choice
Which should you choose?
Implementation
Is the choice working?
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7. Mintzberg’s Managerial Roles
Support System
Figurehead
Leader
Liaison
Nerve Center
Disseminator
Spokesperson
Entrepreneur
Disturbance handler
Recourse allocator
Negotiator
None
MIS, ESS
Mail, office systems
Office systems
DSS
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8. Information Quality Dimensions
Accuracy (representation of reality)
Integrity
Consistency
Completeness
Validity
Timeliness
Accessibility
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9. Real World Decision Making
Often decision support do not work because
One or more dimensions of information quality are poor (e.g., accuracy, completeness, timeliness, etc.)
Managerial filters or bias (only see the good news and ignore the bad)
Organizational inertia (e.g., Britannica, Kodak)
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10. Systems for Decision Support
MIS (covered in chapter 2)
DSS
GIS
CDSS
ESS
GDSS (not covered)
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11. A Definition of a DSS
A DSS is a computer system at the management level of an organization that combines data, sophisticated analytical models, and user-friendly software to support semistructured and unstructured decision making.
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12. Components of a DSS DSS database
collection of current or historical data and possibly some external data
may be small dataset downloaded from corporate mainframes to a PC
may be a massive data warehouse
DSS software system contains the software tools for data analysis, with models, data mining, and other analytical tools
collection of mathematical models (statistical models, linear programming, forecasting, sensitivity analysis models)
OLAP or datamining tools
DSS user interface controls the interaction between the user and the tools
graphical, flexible, and easy to use (e.g., Wizards)
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13. Overview of a Decision Support System
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14. Characteristics of a DSS
DSS offer users flexibility, adaptability, and a quick response (usually interactive)
DSS allow users to initiate and control the input and output
DSS operate with little or no assistance from professional programmers
DSS provide support for decisions and problems whose solutions cannot be specified in advance
DSS use sophisticated analysis and modeling tools
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15. Some Specifics About How a DSS Can Improve Managerial Decision Making
In the intelligence phase
produce more timely data
increase the use of quantitative data
make more data available
In the design phase
generate more alternatives
generate more accurate alternatives
In the choice phase
make faster decisions
sometimes rank the choices
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16. Types of DSS
Model-driven DSS are primarily standalone systems that use some type of quantitative model to perform “what-if” and other types of analysis.
Data-driven DSS are systems that analyze large pools of data collected stored in a data warehouse; these systems permit managers to extract useful relationships that are hidden in the data. Two techniques are used
On-line analytical processing (OLAP)
Datamining as knowledge discovery (search for hidden patterns)
Web-based DSS exist for both types (customer decision support systems)
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17. The Electronic Spreadsheet: A DSS Tool
Most widely used tool for decision support because it is widely accessible to both experienced and inexperienced users
Features of spreadsheets that support DSS construction
Pivot tables for OLAP
Data tables for sensitivity analysis (what-if)
Preprogrammed functions enable the use of many mathematical models
Built in IF-THEN function
Ability to use Visual Basic for Applications
Charts,
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18. Customer DSS (CDSS)
A CDSS is a special type of DSS designed to support the buying decisions of an existing or potential customer. Most current CDSS are Web based
Support exists for both the individual consumer (B2C) and businesses (B2B)
Complexity of products and sophistication of the buyer often determine the nature of a CDSS
Examples of model driven CDSSs
Bankrate ( )
Vanguard ( see planning and education
Examples of data driven CDSSs
PriceGrabber (
Buying tires (
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19. Geographic Information Systems (GIS)
A GIS is a DSS for decision aid for map-related decisions
Typical GIS contains
Database of quantitative and qualitative data
Database of maps
Program to display information on maps
Applications of GIS
Identifying the best site to locate a branch office
Targeting pockets of potential customers
Repositioning promotions and advertising
Tracking the spread of disease or crime
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20. Web Sites for GIS
HUD environmental maps
A major GIS vendor
An example of how a state can use a GIS
An example of how Groton, MA uses a GIS
An example from San Francisco, CA
Use APN # in SFprospector; demographic and business report for Mission Bay South location
An example from Mecklenburg County, NC
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21. Executive Support Systems (ESS)
Systems specifically designed to support unstructured and semi-structured decisions of senior management
Major features
Drill down
Integration of data from multiple internal sources
Integration of data from external sources
Availability of modeling tools with little required training
Environmental scanning tools
Often used at lower levels of management
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22. Business Value of ESS
Ability to analyze, compare, and highlight trends
Graphical interface enables users to review data more quickly and with more insight, speeding decision making.
Timeliness and availability of data enables more timely decision making, helping businesses move toward a “sense-and-respond” strategy.
Increases upper management span of control, better monitoring
ESS based on enterprise-wide data can be used for decentralization of decision making or increase management centralization.
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23. Web Sites With DSS or ESS Products
Examples of DSS software
DecisionScript enables you to build Web-based DSS or CDSS
DecisionPro can be used for free 15-day trial
Has a live demo of a product OutlookSoft CPM
Look at product functionality (corporate perf. Mgmt)
Examples of ESS
What-if tools; some OLAP
Drill down, customized views, individualized reporting
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24. Differences Between a DSS and MIS
DSS Philosophy
provide integrated tools, data, models and language to users
DSS Systems Analysis
establish what tools are needed in the decision process
Design
iterative process
MIS Philosophy
provide structured information to end users
MIS Systems Analysis
identify information requirements up front
Design
deliver system based on frozen requirements
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