1. DSS & Warehousing Systems
Chapter 2
Efrem Mallach
Prepared by
Luvai Motiwalla
Irwin/McGraw-Hill
Copyright © 2000 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Human Decision Making Processes
Introduction
What is a decision
The decision process
Categories of decisions
How business people make decisions
The rational manager
Organizational and political decision making
The impact of psychological type on decision making
The impact of culture on decision making
The Kepner–Tregoe decision making method
Conclusion

3. Introduction What is the role of DSS? Help people make decisions? OR
Make decisions for people?
DSS , exist to help people make decisions. They do not make decisions by themselves. This is why they are called DSS not decision making systems.

4. What Is a Decision?
A decision is a reasoned choice among alternatives.
Decision- making criteria are what we want to optimize in a decision.
Pages 37 to 38
Making decisions is part of the broader subject of problem solving.
A clear decision statement is important to intelligent decision making.
The alternatives are the possible decisions we can make.

5. The Decision Process Every decision must go through the three phases
Phases are:
Intelligence
Design
Choice
Page 39 to42
These phases called intelligence, design, and choice, were first defined by Herbert Simon.
Each decision must incorporate each phase at least minimally.
The emphasis on each phase, and the relationship among the phases, often differ from one decision to another.

6. Categories of Decisions
Two decisions dimensions
the nature of decisions
the scope of the decision
Three decision categories
structured decision
unstructured decision
semi-structured decision
Three decision scopes
strategic decision
tactical decision
operational decision
Pages 42 to 46
Categorization of decisions is useful because decisions of the same type often have common characteristics
We can organize decisions along two dimensions; the nature of decisions to be made and the scope of the decision itself.By dividing each dimension into three categories, we obtain nine decision types

7. How do Business People Make Decisions?
The many methods by which business people make decisions can be categorized along three dimensions:
Rationality
Politicality
Flexibility
Page 47 & 48
The rationality dimension of this categorization is often used to separate decision making approaches into two categories: the normative and descriptive models of decision makers’ behavior.

8. The Rational Manager
Rational management is the normative model of decision making.
Page 48 to 53
The rational manager presumably obtains all possible facts, weighs the likelihood of the alternative outcomes, and chooses the one with the highest statistically probable value to the firm. Rational management is the normative model of decision making.
Subjective utility:Examples of decision making can be understood and explained with the help of economic terms such as subjective utility, cardinal utility and indifference curves.
The rational manager model is explained with the help of examples including graphs. The graphs are understood with economic terms which help explain the example better.

9. The Rational Manager (cont’d)
Systematic decision making
Satisficing
Pages 54 to 59
Systematic decision making processes are usually applied to multi attribute decision problems where the alternatives are described by several attributes, and they cannot be optimized simultaneously.
Satisficing: The term satisficing was coined by Simon to describe the actions of a decision maker who wants a decision that is “good enough”.the concept of bounded rationality is related to satisficing.
Systematic decision making:- the envelope concept in systematic decision allows us to reduce the number of alternatives we must coincide.
Lexicographic starts with the most important attribute and keeps the alternative that ranks the highest on that score.
The elimination by aspects method considers one attribute at a time and compares it against a predetermined minimally acceptable standard.Any alternative that do not meet this standard is eliminated.
Conjunctive decision making applies the same concept as elimination by aspects method but in the reverse order.
The additive linear model computes a score for each alternative by multiplying its score on each attribute by a predetermined weight for that attribute.
Satisficing contains elements of rational and political decision making.

10. Organizational and Political Decision Making
Viewing decision making as an organizational process combines rationality with politicality.
Page 57 to 59
Viewing decision making as an organizational process combines rationality with politicality.
Where the driving factor in arriving at a decision becomes bargaining among the participants, it is called political decision making.
the nature of the bargaining process depends on the importance of the decision as it is perceived by the decision making group.
When decisions are taken by a number of units then it is called Group DSS.

11. The Impact of Psychological Type on Decision Making
Katharine Briggs & Isabel Briggs Myers showed that humans have four key behavioral characteristics.
Pages 59 to 63
psychological type is determined by a questionnaire.Each question asks which of two behaviors a person would be more likely to choose in a specified situation.
According to Briggs and Briggs Myers the four preferences that determine personality type are introversion/extroversion, sensing/intuition, thinking/feeling and judgment/perception.

12. The Impact of Culture on Decision Making
Culture can be defined “as the behaviors and beliefs characteristics of a particular group”.
Two aspects of culture influence decision making: organizational(corporate) culture and national culture.
Pages 64 to 65

13. The Kepner-Tregoe Decision-making Method
The K-T method is best suited to decision makers with a thinking preference.
Pages 65 to 70
Its concepts can help the DSS developers in two ways: to see where computers can fit into the decision making process and to outline a method computers can use to take over some of the decision making tasks.
The method consists of the following steps 1)state the purpose of the decision 2) establish objectives 3) classify according to importance 4) generate alternatives 5) evaluate alternatives against objectives 6) tentatively choose the best alternatives 7) assess adverse consequences 8) make a final choice.

14. Conclusion A decision is a choice among alternatives
Decision makers go through intelligence, design and choice phases
Managers make decisions with varying degree of rationality, politicality and flexibilty