CHAPTER 9 - ENABLING THE ORGANIZATION - DECISION MAKING

Decision Making

•Reasons for growth of decision-making information systems

1. People need to analyze large amounts of information—Improvements in technology itself, innovations in communication, and globalization have resulted in a dramatic increase in the alternatives and dimensions people need to consider when making a decision or appraising an opportunity.

2. People must make decisions quickly—Time is of the essence and people simply do not have time to sift through all the information manually.

3. People must apply sophisticated analysis techniques, such as modeling and forecasting, to make good decisions—Information systems substantially reduce the time required to perform these sophisticated analysis techniques.

Six - Step Decision Making

1. Problem identification : Define the problem as clearly and precisely as possible.
2. Data collection : Gather problem-related data, including who,what,where,when,why, and how. Be sure to gather facts, not rumors or opinions about the problem.
3. Solution generation : Detail every solution possible, including ideas that seem farfetched.
4. Solution test : Evaluate solutions in terms of feasibility (can it be completed?), suitability (is it a permanent or a temporary fix?), and acceptability (can all participants form a consensus?).
5. Solution selection : Select the solution that best solves the problem and meets the needs of the business.
6. Solution Implementation : If the solution solves the problem, then the decisions made were correct. If not, then the decision were incorrect and the process begins again.

OPERATIONAL

• At the operational level, employees develop, control, and maintain core business activities required to run the day-to-day operations.
• Operational decisions are considered structured decisions, which arise in situations where established processes offer potential solutions.

MANAGERIAL

•  At the managerial level, employees are continuously  evaluating company operations to hone the firm's abilities to identify, adapt to, and leverage change.
• these types of decision are considered semistructured decisions-occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision.

STRATEGIC

• Managers develop overall business strategies, goals, and objectives as part of the company's strategic plan.
• strategic decisions are highly unstructured decisions- occuring in situations which no procedures or rules exist to guide decision makers toward the correct choices.

Enhancing Decision Making with MIS

Model - is a simplified representation or abstraction of reality.

Operational Support Systems

• Transactional information encompasses all the information contained within a single business process or unit of work.
• Its primary purpose is to support the performance of daily operational or structured decisions.

Online transaction processing (OLTP) – the capturing of transaction and 

event information using technology to (1) process the information 

according to defined business rules, (2) store the information, (3) update 

existing information to reflect the new information

Online analytical  processing (OLAP)  - the manipulation of information

to create business   intelligence in support of strategic decision                                       making

Decision support systems ( DSS )

- Decision support system (DSS) – models information to support managers and business professionals during the decision-making process

- Three quantitative models used by DSSs include:

1.Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model

2.What-if analysis – checks the impact of a change in an assumption on the proposed solution

3.Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output

Executive information system ( EIS )

•Executive information system (EIS) – a specialized DSS that 

supports senior level executives within the organization

•Most EISs offering the following capabilities:

–Consolidation – involves the aggregation of information

 and features simple roll-ups to complex groupings of 

interrelated information

–Drill-down – enables users to get details, and details of 

details, of information

–Slice-and-dice – looks at information from different 

perspectives

                   

                  Interaction between a TPS and an EIS

Digital dashboard - integrates information from multiple component and present it in a unified display.

ARTIFICIAL INTELLIGENCE

- Artificial intelligence (AI) stimulates human thinking and behavior, such as the ability to reason and learn.

- Intelligence systems are various commercial applications of artificial intelligence. 

CATEGORIES OF AI SYSTEMS :

1. Expert systems 
   - computerized advisory programs that imitate the reasoning processess of experts in solving difficult problems.
2. Neural network
   - also called an artificial neural network, is a category of AI that attempts to emulate the way the human brain works.
   - fuzzy logic is a mathematical method of handling imprecise or subjective information.
3. Genetic algorithms
   - is an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.
4. Intelligent agents
   - is a special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users.
   - shopping bot is software that will search several retailer websites and provide a comparison of each retailer's offerings including price and availability.
5. Virtual reality
   - is a computer-simulated environment that can be a simulation of the real world or an imaginary world.