Decision Making as a Component of Problem Solving

Decision Making as a Component of Problem Solving

Decision Making as a Component of Problem Solving Programmed versus Nonprogrammed Decisions Programmed decisions

Structured situations with well defined relationships Quantifiable Management information system Easy to computerize Nonprogrammed decisions Rules and relationships not defined

Problem is not routine Not easily quantifiable Problem Solving Approaches Optimization: find the best solution Satisficing: find a good solution Heuristics: rules of thumb Inputs to an MIS

Characteristics of an MIS Fixed format, standard reports

Hard-copy or soft-copy reports Uses internal data User-developed reports Users must request formal reports from IS department Functional Aspects of an MIS Financial MIS

Manufacturing MIS Design engineering Process control Computer-assisted manufacturing (CAM) Computer-integrated manufacturing (CIM) Flexible manufacturing system Quality control and testing

Overview of a Manufacturing MIS Marketing MIS Human Resource MIS Other MIS Accounting management information systems

Geographic information systems (GIS) Characteristics of Decision Support Systems Handle large amounts of data from various sources Provide report and presentation flexibility Offer both textual and graphical orientation Support drill down analysis

Characteristics of a DSS Perform complex, sophisticated analysis Optimization, satisficing, heuristics Simulation What-if analysis Goal-seeking analysis Capabilities of a DSS

Support all problem-solving phases Support different decision frequencies Support different problem structures Support various decision-making levels Selected DSS Applications Support for Various Decision-Making Levels

Factor DSS Problem Type New, Unstructured Problems Users In the short term, users have more control Support Not intended to replace the

human decision maker Emphasis Decisions and decision making style Approach Direct support through System Speed

Output Development MIS Routine, Structured Problems In the short term, user have less control Some automatic decisions can be made

Data to Information Automation of regular business interactive, drill-down interface reporting On-line, real-time, on-screen, Generate hard-copy reports, interactive scheduled reporting, up-to-date but not necessarily real-time

Response time should be faster Response time usually slower Screen, interactive interface Oriented towards static, printed reports and documents Developed in close Off-the-shelf solutions collaboration with users and developed for general users decision makers

Components of a DSS The Model Base Financial models Cash flow Internal rate of return

Statistical analysis models Summary statistics Trend projections Hypothesis testing

Graphical models Project management models Executive Support Systems Executive Support Systems (ESS) in Perspective

Tailored to individual executives

Easy to use Drill down capabilities Support need for external data Can help when uncertainty is high Future-oriented Linked to value-added processes Capabilities of an ESS

Support for defining an overall vision Support for strategic planning Support for strategic organizing & staffing Support for strategic control

Support for crisis management Summary Decision-making phase: includes intelligence, design, and choice Problem solving: also includes implementation and monitoring Decision approaches: optimization, satisficing, and heuristic

Summary Management information system (MIS) - an integrated collection of people, procedures, databases, and devices that provide managers and decision-makers with information to help achieve organizational goals Decision support system (DSS) - an organized collection of people, procedures, software, databases, and devices working to support managerial decision

making Executive support systems (ESSs) - specialized decision support systems designed to meet the needs of senior management

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