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Chapter 2 Decision-Making Systems, Models, and Support ﺍ. ﻣﺤﻤﺪ ﺷﺒﻴﺮ Chapter 2 Decision-Making Systems, Models, and Support ﺍ. ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Learning Objectives Learn the basic concepts of decision making. Understand systems approach. Learn Simon’s Learning Objectives Learn the basic concepts of decision making. Understand systems approach. Learn Simon’s four phases of decision making. Understand the concepts of rationality and bounded rationality. Differentiate betwixt making a choice and establishing a principle of choice. Learn which factors affect decision making. Learn how DSS supports decision making in practice. http: //tmohammed. wordpress. co 2 -2 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Standard Motor Products Shifts Gears Into Team-Based Decision-Making Vignette Team-based decision making Increased information Standard Motor Products Shifts Gears Into Team-Based Decision-Making Vignette Team-based decision making Increased information sharing Daily feedback Self-empowerment Shifting responsibility towards teams Elimination of middle management http: //tmohammed. wordpress. co 2 -3 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision Making Process of choosing between alternative courses of action for the purpose of Decision Making Process of choosing between alternative courses of action for the purpose of achieving a goal or goals. The four phases of the decision process are: Intelligence Design Choice implementation http: //tmohammed. wordpress. co 2 -4 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Systems Structure Inputs Processes Outputs Feedback from output to decision maker Separated from environment Systems Structure Inputs Processes Outputs Feedback from output to decision maker Separated from environment by boundary Surrounded by environment Input Processes Output boundary Environment http: //tmohammed. wordpress. co 2 -5 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

http: //tmohammed. wordpress. co 2 -6 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ http: //tmohammed. wordpress. co 2 -6 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

System Types Closed system Independent Takes no inputs Delivers no outputs to the environment System Types Closed system Independent Takes no inputs Delivers no outputs to the environment Black Box Open system Accepts inputs Delivers outputs to environment © 2005 Prentice Hall, Decision Support Systems and 2 -7 Intelligent Systems, 7 th http: //tmohammed. wordpress. co Edition, Turban, Aronson, and Liang ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Models Used for DSS Iconic Small physical replication of system 3 D Car, airplane Models Used for DSS Iconic Small physical replication of system 3 D Car, airplane Analog Behavioral representation of system May not look like system 2 D Organization Chart Price movement chart http: //tmohammed. wordpress. co 2 -8 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Models Used for DSS, cont. Quantitative (mathematical)* Demonstrates relationships between systems Most used in Models Used for DSS, cont. Quantitative (mathematical)* Demonstrates relationships between systems Most used in DSS http: //tmohammed. wordpress. co ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Phases of Decision-Making Simon’s original three phases: Intelligence Design Choice He added fourth phase Phases of Decision-Making Simon’s original three phases: Intelligence Design Choice He added fourth phase later: Implementation Book adds fifth stage: Monitoring http: //tmohammed. wordpress. co 2 -10 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision-Making Intelligence Phase Scan the environment Analyze organizational goals Collect data Identify problem Categorize Decision-Making Intelligence Phase Scan the environment Analyze organizational goals Collect data Identify problem Categorize problem Programmed and non-programmed Decomposed into smaller parts Assess ownership and responsibility for problem resolution http: //tmohammed. wordpress. co 2 -11 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision-Making Design Phase Develop alternative courses of action Analyze potential solutions Create model Test Decision-Making Design Phase Develop alternative courses of action Analyze potential solutions Create model Test for feasibility Validate results Select a principle of choice Establish objectives Incorporate into models Risk assessment and acceptance Criteria and constraints http: //tmohammed. wordpress. co 2 -12 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision-Making Choice Phase Principle of choice Describes acceptability of a solution approach Normative Models Decision-Making Choice Phase Principle of choice Describes acceptability of a solution approach Normative Models Optimization Effect of each alternative Justification More of good things, less of bad things Courses of action are known quantity Options ranked from best to worse http: //tmohammed. wordpress. co 2 -13 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Descriptive Models Describe how things are believed to be Typically, mathematically based Applies single Descriptive Models Describe how things are believed to be Typically, mathematically based Applies single set of alternatives Examples: Simulations What-if scenarios Goal Seeking http: //tmohammed. wordpress. co 2 -14 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Developing Alternatives Generation of alternatives May be automatic or manual May be legion, leading Developing Alternatives Generation of alternatives May be automatic or manual May be legion, leading to information overload Scenarios Evaluate with heuristics Outcome measured by goal achievement http: //tmohammed. wordpress. co 2 -15 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision-Making Choice Phase Decision making with commitment to act Determine courses of action Analytical Decision-Making Choice Phase Decision making with commitment to act Determine courses of action Analytical techniques Algorithms Heuristics Blind searches Analyze for robustness http: //tmohammed. wordpress. co 2 -16 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision-Making Implementation Phase Putting solution to work Vague boundaries which include: Dealing with resistance Decision-Making Implementation Phase Putting solution to work Vague boundaries which include: Dealing with resistance to change User training Upper management support http: //tmohammed. wordpress. co 2 -17 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Source: Based on Sprague, R. H. , Jr. , “A Framework for the Development Source: Based on Sprague, R. H. , Jr. , “A Framework for the Development of DSS. ” MIS Quarterly, Dec. 1980, Fig. 5, p. 13. http: //tmohammed. wordpress. co 2 -18 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision Support Systems Intelligence Phase Automatic Data Mining Expert systems, CRM, neural networks Manual Decision Support Systems Intelligence Phase Automatic Data Mining Expert systems, CRM, neural networks Manual OLAP KMS Reporting Routine and ad hoc http: //tmohammed. wordpress. co 2 -19 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision Support Systems Design Phase Financial and forecasting models Generation of alternatives by expert Decision Support Systems Design Phase Financial and forecasting models Generation of alternatives by expert system Relationship identification through OLAP and data mining Recognition through KMS Business process models from CRM, RMS, ERP, and SCM http: //tmohammed. wordpress. co 2 -20 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision Support Systems Choice Phase Identification of best alternative Identification of good enough alternative Decision Support Systems Choice Phase Identification of best alternative Identification of good enough alternative What-if analysis Goal-seeking analysis May use KMS, GSS, CRM, ERP, and SCM systems http: //tmohammed. wordpress. co 2 -21 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ

Decision Support Systems Implementation Phase Improved communications Collaboration Training Supported by KMS, expert systems, Decision Support Systems Implementation Phase Improved communications Collaboration Training Supported by KMS, expert systems, GSS http: //tmohammed. wordpress. co 2 -22 ﺍ ﻣﺤﻤﺪ ﺷﺒﻴﺮ