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1414 DECISION MAKING DECISION MAKING

IN A DIGITAL AGEIN A DIGITAL AGE

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Review of Decision Making

• Stages– Intelligence– Design– Choice– Implementation

• Models– Rational - Bureaucratic– Cognitive - Political

• Systematic - Garbage Can• Intuitive

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Decision Support Systems

Management level computer system combines data, models, user – friendly software for semistructured & unstructured

decision making

• Model-driven DSS– Performs “what-if” analysis

• Data-driven DSS: Permit extraction & analysis of large pools of data. Includes tools for:– on-line analytical processing (OLAP)

– Datamining

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OLAP

• Powerful querying tools for reporting on data• Top down approach that is user driven• Ex: show me total sales of canister and upright

vacuum cleaners for the past three years. • Typically deals with dimensions relating to firms’

products, locations and times• Time-->year-->quarter-->month-->week-->days• Location-->country-->region-->province-->city

-->store

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OLAP ctd.

• Ex. Total sales of books for western canada for fall ‘01

Product Amount Region TimeAll Books $3,264,329 Western canada Fall ‘01

Product Amount Region TimeFiction $1,847,000 Western canada Fall ‘01

Non Fiction $657,000 Western canada Fall ‘01

Periodicals $425,000 Western canada Fall ‘01

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Datamining• Automatically find hidden patterns & relationships

in large databases– Associations: associate a particular conclusion (ex.

Purchase of a product) with a set of conditions (ex. Purchase of other products)

– Classification/Prediction: patterns that describe a group that exhibits certain behaviour (ex. Credit card co. can determine class of customer who is likely to leave to another co.)

– Sequences: events that are linked over time (ex. After purchase of new tv, within 3 months a dvd player is purchased 30% of the time)

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How Does Datamining Work?

• Neural Networks: hardware/software that emulates processing patterns of the human brain.– Excellent for classifications

• Genetic Algorithms (more next week)

• Case-Based Reasoning

• Machine Learning

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DSS Components #1

• DSS database– Frequently data drawn from TPS or data warehouse

– Usually a subset of all the data

– May be combined with external data (e.g., prime rate)

• DSS software system– Models: abstractions of reality to represent the real thing

• Physical (3-D)

• Mathematical (y=mx+b)

• Verbal or narrative (explanatory paragraph or article)

• Graphical (chart or diagram)

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DSS Components #2– Libraries of statistical models

• Statistical (means, std. deviations)• Financial (NPV, ROI)• Optimization (maximize revenues, minimize costs)• Forecasting (trends from historical data)

– What-if & sensitivity analysis– OLAP tools: software to assist the user in OLAP– Datamining tools: software to assist the user in

extracting & analyzing data from a data warehouse

• User interface: typically Windows based (a few are menu based)– User: must be trained in using the DSS

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Examples of DSS #1

• Help people with disabilities make work transition decisions (WorkWORLD)

• Supply chain management– Economic order quantity determination– Production & shipping schedules

• Customer relationship management– Customer profiling and retention– Web site design, dynamic page execution plan

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Examples of DSS #2

• Geographic information systems (GIS)– Analyze & display data for decision making

using digital maps, including modeling capabilities

– Example: traffic flow, crime analysis.

• Web-based– On-line access to DSS & DSS data & models– Example: assist customer in determining

investment portfolio allocation

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Group Decision Support Systems (GDSS)

• An interactive, computer-based information systems that facilitates solution of problems by a set of decision makers working together as a group

• Arose out of concern about problems with meetings– Too many– Too long– Too many attendees

• Group Think

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Tools of GDSS

• Electronic questionnaires• Electronic brainstorming tools• Idea organizers• Tools for voting, setting priorities• Policy formation• Group dictionaries

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Electronic Meeting System (EMS)

• Collaborative GDSS

– Uses information technology to make group meetings more productive by facilitating communication as well as decision making

– Meetings can be at same place and time, or different place and time

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GDSS Enhance Group Decision Making

• Improved pre-planning

• Increased participation

• Open, collaborative atmosphere

• Evaluation objectivity

• Idea organization & evaluation

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GDSS Enhance Group Decision Making

• Documentation of meetings• Access to external information• Preservation of organizational memory

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What is different about executive (or top) decision making?

• External focus• Time frame (long term vs. short or medium term)• Impact on firm (survival?)• Who are executives stereotypically?

– Older

– Not part of the “computer generation”

– Not comfortable with “hands-on” technology?

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Executive Support Systems (ESS)

• Aid top managers in making decisions– External focus/data– Long term focus– Ability to drill down– User-friendly GUI (graphical user interface)– Customized to user– Use of graphics & models to present information– Can be used for communication & scheduling among

executives

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Benefits of ESS

• Free executives from gathering data & putting together models

• Allows executives to focus on the issues at hand

• Timeliness & availability of data

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ESS Example: Balanced Scorecard

• Supplements traditional financial models with measurements from additional biz perspectives– Customer perspective– Internal perspective– Learning and Growth perspective

• What you measure is what you get

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