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Unformatted text preview: Chapter 4- Decision Support and Artificial I ntelligence Herbert Simons 4 phases of business decision making Intelligence- find what to fix- find or recognize a problem, need, or opportunity. (sometimes called the diagnostic phase of decision making) This phase also detects and interprets signs that indicate a situations needing attention Design find fixes- consider possible ways of solving the problem, filling the need or taking advantage of the opportunity. In this phase you develop all the possible solutions you can. Choice- pick a fix- examine and weigh the merits of each solution, estimate the consequences of each, and choose the best one (sometimes may be choosing to do nothing at all). The best solution takes into consideration factors such as cost, ease of implementation, staffing requirements, and timing. This is the stage of decision making where a course of action is prescribed. Implementation- apply the fix- carry out the chosen solution, monitor the results, make adjustments. just simply implementing is usually not enough, there is fine-tuning necessary to make it work *This 4-phase process is not always linear. Sometimes youll cycle back to an earlier phase to try again* Herbert Simon also proposed the idea of Satisficing making a choice that meets your needs and is satisfactory without necessarily being the best possible choice available. This term combines satisfied and sufficient Example of satisficing: setting goals like status- quo pricing (the going rate price) 4 Main Types of Decisions: 1. Structured Decision: processing a certain kind of information in a specified way so that you will always get the right answer. No feel or intuition is necessary. These are the types of decisions that can easily be automated with the help of IT. 2. Nonstructured Decision: a decision that several right answers exist and there is no precise way to guarantee a right choice. Examples: deciding to introduce a new product line or not, employing new marketing campaigns, changing the corporate image **In reality, most decisions fall somewhere between structured and nonstructured; i.e., choosing a job structured elements exist (salary, benefits, and bonuses) but there are nonstructured elements too (possibilities for advancement) 3. Recur ring decisions: one that happens repeatedly, often periodically, weekly, monthly, quarterly, etc. Examples: How much inventory to carry in stock, what price to sell that inventory for 4. Nonrecur ring decisions:-aka ad hoc decisions- one that you make infrequently (perhaps only once) but there is different information to consider each time this decision comes about Examples: should I build a new distribution center?...
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