Lec02_DSS - CHAPTER 2 Decision Making, Systems, Modeling,...

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1 CHAPTER 2 Decision Making, Systems, Modeling, and Support
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2 Decision Making, Systems, Modeling, and Support Conceptual Foundations of Decision Making The Systems Approach How Support is Provided Opening Vignette: How to Invest $10,000,000
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3 Typical Business Decision Aspects Decision may be made by a group Group member biases Groupthink Several, possibly contradictory objectives Many alternatives Results can occur in the future Attitudes towards risk Need information Gathering information takes time and expense Too much information “What-if ” scenarios Trial-and-error experimentation with the real system may result in a loss Experimentation with the real system - only once Changes in the environment can occur continuously Time pressure
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4 How are decisions made??? What methodologies can be applied? What is the role of information systems in supporting decision making? DSS Decision Support Systems
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5 Decision Making Decision Making : a process of choosing among alternative courses of action for the purpose of attaining a goal or goals Managerial Decision Making is synonymous with the whole process of management (Simon, 1977)
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6 Decision Making versus Problem Solving Simon’s 4 Phases of Decision Making 1 . Intelligence 2 . Design 3 . Choice 4 . Implementation Decision making and problem solving are interchangeable
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7 Systems A SYSTEM is a collection of objects such as people, resources, concepts, and procedures intended to perform an identifiable function or to serve a goal System Levels (Hierarchy) : All systems are subsystems interconnected through interfaces
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8 The Structure of a System Three Distinct Parts of Systems (Figure 2.1) Inputs Processes Outputs Systems Surrounded by an environment Frequently include feedback The decision maker is usually considered part of the system
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9 System Input(s) Feedback Environment Output(s) Boundary Processes
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10 How to Identify the Environment? Two Questions (Churchman, 1975) 1 . Does the element matter relative to the system's goals? [YES] 2 . Is it possible for the decision maker to significantly manipulate this element? [NO]
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11 An Information System Collects, processes, stores, analyzes, and disseminates information for a specific purpose Is often at the heart of many organizations Accepts inputs and processes data to provide information to decision makers and helps decision makers communicate their results
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12 System Effectiveness and Efficiency Two Major Classes of Performance Measurement Effectiveness is the degree to which goals are achieved Doing the right thing! Efficiency
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Lec02_DSS - CHAPTER 2 Decision Making, Systems, Modeling,...

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