An%20Overview%20of%20Decision%20Making%20And%20Decision%20Support%20Systems

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An Overview of Decision MakingAndDecision
Support Systems
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Simons Model of Decision Making
1. Intelligence

• Is there a Problem ??

• Should I get dressed today ??

2. Design

• What Alternatives Are there ??

• Should I wear Black Socks? Blue
  Socks? Red Socks? No Socks??

3. Choice

• OK The Red Socks!

4. Implementation

• Put on the socks already!

5. Review

• How do they Look? Was it a good choice?

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But what steps do actually we take when making a
decision?
Simons Model corresponds to the Scientific
Approach, which indicates the specific tasks
needed AND also corresponds to the Systems
Development Life Cyle (SDLC)
Simon
Systems Approach
SDLC
System Investigation
Intelligence
Define Problem
Design
Develop Alternatives
System Analysis
System Design
Choice
Select Solution
Design Solution
Implement Solution
Imple-mentation
Implementation
Maintenance
Review
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Consider The Following Situation

• Grandpa John passed away at the ripe old age of
  102. He left a pleasant surprise to his 5
  great-grandchildren. He had dabbled in the stock
  market and accumulated enough to leave
  10,000,000 after taxes to his great-grandchildren
  .

The will contained one stipulation The money
could not be divided for 20 years. It was the
responsibility of the great-grandchildren to
manage the investment collectively.
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From Simons Perspective
Is there a problem??

• Only if the Great-Grandchildren want to
  maximize their Inheritance

From The Systems Approach
Define the Problem

• We need to find an optimal portfolio that would
  maximize return on investment over a 20 year
  period

What do we do ???
Ennumerate/Develop Alternatives

• Nothing

• Go to Las Vegas

• Put the money in savings

• Buy Lottery Tickets

• Put the money in Bonds

• Give the money to Charity

• Put the money in Stocks

• Manage the money collectively

• Invest in Property

• Cede control to one member

• Hire a Financial manager

• Buy a Racehorse

• Consult a Fortune Teller

• Develop a Portfolio of Investments

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This first step is called Brainstorming

• focus on a specific problem

• deliberately come up with as many unusual
  solutions as possible and push the ideas as far
  as possible.

• Brainstormers should not only come up with new
  ideas in a brainstorming session, but should also
  'spark off' from associations with other people's
  ideas and develop other peoples ideas.

• Ideas MUST NOT be criticized or evaluated during
  the brainstorming session.

• Criticism introduces an element of risk for a
  group member in putting forward an idea.

• Criticism stifles creativity and cripples the
  free running nature of a good brainstorming
  session

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Brainstorming may be individual or done in groups

• Individual brainstorming tends to produce a wider
  range of ideas, but tends not to develop the
  ideas as effectively, as individuals run up
  against problems they cant solve.

• Group brainstorming develops ideas more deeply
  and effectively since another person's creativity
  and experience can be used to break creative
  blocks.

• Group brainstorming tends to produce fewer ideas
  (as time is spent developing ideas in depth) and
  can lead to the suppression of creative but quiet
  people by loud and uncreative ones.

• Individual and group brainstorming can be mixed,
  perhaps by defining a problem, and then letting
  team members initially come up with a wide range
  of possibly shallow solutions which can then be
  enhanced and developed by group brainstorming.

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So now that we have decided on all options, we
can choose one, right ???
It wouldnt make much sense to choose one without
analyzing each of them.
??? HOW ???
That is NOT so easy. There are four basic models
of Decision making

• The Rational Model

• The Political Model

• The Process Model

• The Garbage Can Model

Which one to use depends on what you are trying
to achieve
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The Rational Model

• based upon an economic view of decision making.

• It is grounded on goals/objectives, alternatives,
  consequences and optimality.

• assumes that complete information regarding the
  decision to be made is available and one correct
  conception of a problem, or decision to be made
  can be determined.

• assumes that the decision-makers consistently
  assess the advantages and disadvantages of any
  alternatives with goals and objectives in mind.

• assumes that the decision-makers then evaluate
  the consequences of selecting or not selecting
  each alternative.

• assumes that the alternative that provides the
  maximum utility (i.e., the optimal choice) will
  be selected.

??? Isnt this how all decisions are made ???
Not Really
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The Political Model

• considers the preconceived notions that
  decision-makers bring to the table in the
  decision process.

• the individuals involved do not accomplish the
  decision task through rational choice in regard
  to objectives.

• The decision makers are motivated by and act on
  their own needs and perceptions.

• involves a cycle of bargaining among the decision
  makers in order for each one to try to get his or
  her perspective to be the one of choice.

• More specifically, this process involves each
  decision-maker trying to sway powerful people
  within the situation to adopt his or her
  viewpoint and influence the remaining
  decision-makers

??? Who would ever use that ???
Ever heard of the US Congress?
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The Process Model
If A then B

• decisions are made based upon standard operating
  procedures, or pre-established guidelines within
  the organization.

• the organization of past, present, and future
  events, as well as conformity, are integral parts
  to this model because they can be used as a
  consistent foundation for decision making.

• Conformity is an integral part of the process
  model since it is the means by which doubt, or
  incertitude is dealt with during the decision
  task.

• If decision makers are uncertain as to the
  potential effectiveness or the results of a
  decision, they conform to the pre-established
  standard.

??? Where would this be used ???
Ever heard of unions?? Civil Service ??
Government Agencies ??
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The Garbage Can Model

• Used for judgment tasks participant involvement
  participants fluctuates in the amount of time and
  effort given, choices are inconsistent and not
  well defined

• an opportunity to make a decision is described as
  a garbage can into which many types of problems
  and solutions are dropped independently of each
  other as these problems and solutions are
  generated.

• The problems, solutions and decision makers are
  not necessarily related to each other.

• The components are the combination of options
  available at a given time, the combination of
  problems, the combination of solutions needing
  problems, and the external demands on the
  decision makers

??? How would this work ???
Ever see what goes on here in the college at the
end of the year if departments have excess funds
to spend (or lose them if they dont)?
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?? How do Decision Support Systems (DSS) fit in??

• A DSS is intended to

• Provide Support for individual (or Group), Ad hoc
  (impromptu), decision making

• Provide Support primarily for semi-structured or
  unstructured decision making (unlike standard
  Management Information Systems)

• Combine data, analytical models and tools, and
  software into a single system

• Note that a DSS is NOT intended to

• Provide the solution (it is only tool)

• Be used over and over again (It was designed for
  unique decision making)

• Always used the same analytical models and tools
  (The decision maker chooses the models and tools
  based on the problem at hand)

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Is there a theory to support the use of Decision
Support Systems?
Yes, And No --
NO - There is not really a theory of Decision
Support Systems
YES - There are a series of propositions (by our
old friend Simon), that lay the foundations for
DSS Usage
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Simons Propositions
(First from his 1945 Text on Administrative
Behavior)
Proposition 1 Information stored in computers
can increase human rationality if it accessible
when needed for making decisions
Proposition 2 Where a particular item of
knowledge is needed repeatedly in decision, the
organization can anticipate this need and, by
providing the individual with this knowledge
prior to decision, can extend his area of
rationality. This is particularly important when
there are time limits on decisions.


Proposition 3 Specialization of decision-making
functions is largely dependent upon the
possibility of developing adequate channels of
communication to and from decision centers
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Simons Propositions
(Next from his 1973 Text on Applying Information
Technology)
Proposition 4 In a post-industrial society, the
central problem is not how to organize to produce
efficiently but how to organize to make decisions
-- that is, to process information.
Proposition 5 For information processing,
division of labor means breaking-up the decisions
to be made into relatively independent
subsystems, each one designed with only minimal
concern for its interactions with the others.
Proposition 6 The key to the successful
information systems design lies in matching the
technology to the limits of the human capability.
In general, an additional component (man or
machine) of an information-processing system will
improve the system's performance only if
1. It conserves attention instead of making
additional demands on attention
2. It incorporates processes that automatically
select and filter information for subsequent
transmission
3. It incorporates analytical models that not
only store and retrieve information, but also
assist in solving problems, evaluating solutions,
and making decisions.
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SO??
What does all that mean?

• It outlines the basic components needed for a DSS
  AND how they should be constructed.

• Lets Consider each of the propositions
  separately

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Proposition 1 Information stored in computers
can increase human rationality if it accessible
when needed for making decisions
The implication here is that there MUST be a
database of facts available prior to making a
decision
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Proposition 2 Where a particular item of
knowledge is needed repeatedly in decision, the
organization can anticipate this need and, by
providing the individual with this knowledge
prior to decision, can extend his area of
rationality.
The implication here is that unanticipated data
and facts must be made available as the need
arises (It must be flexible)
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Proposition 3 Specialization of decision-making
functions is largely dependent upon the
possibility of developing adequate channels of
communication to and from decision centers
The implication here is that information must be
shared between the decision makers
GDSS
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Proposition 4 In a post-industrial society, the
central problem is not how to organize to produce
efficiently but how to organize to make decisions
-- that is, to process information.
The implication here is that there must be DSS
software that will consolidate models and
analytical tools

• Sensitivity Analysis

• Statistical Models

• Spreadsheets

• Regression Analysis

• Forecasting

• Data Mining

• Time Series

• Pattern Recognition

• Optimization

• Fuzzy Logic Models

• LP, IP, Optimal Flow

• AI Shells

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Proposition 5 For information processing,
division of labor means breaking-up the decisions
to be made into relatively independent
subsystems, each one designed with only minimal
concern for its interactions with the others.
The implication here is that the DSS will
flexible enough to deal with various problems
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Proposition 6 The key to the successful
information systems design lies in matching the
technology to the limits of the human capability.
The implication here is that the DSS will support
the individuals (or groups) manner of thinking
and preferences
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?? How could a DSS help in our Inheritance
situation??
We might first use it to help generate
alternatives

• same-time-same-place conferences (decision rooms)
  are oriented toward business meetings and
  decision making.

• All DSS software and brainstorming and groupware
  (e.g., Lotus-Notes) included

• participants simultaneously type in ideas

• The GDSS sorts the ideas, and the participants
  then vote or comment on which ideas they like or
  they dislike.

??? Advantages ???

• Time Saving The GDSS Organizes and sorts all
  inputs

• Anonymity Users identities not given, and hence
  free to propose anything

• No one can dominate the meeting No fear of
  repercussions

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?? Are there any Disadvantages ??
Of Course

• Groupthink (buy-in by group members without
  thinking) can lead to bad decisions.

• There may be many alternatives to consider

• There are often several conflicting objectives

• The result of a business decision usually
  materializes in the future. No one is a perfect
  predictor of the future, especially in the long
  run.

• Most (if not all) decisions involve risk.
  Different people have different attitudes toward
  risk.

• There may not be sufficient information to make
  an intelligent decision.

• There may be TOO MUCH information (information
  Overload).

• Gathering information and analyzing the problem
  takes time and is expensive. It is difficult to
  determine when to stop this and make a decision.

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?? What does the group have to decide on ??

• Identify the uncertainties (Risk Rating).

• Identify the alternative courses of action (can
  they be combined?) and the criteria that should
  be considered in making a decision.

• What are the possible results of the decision?
  Why might the results be difficult to predict?

• Can the decision be changed if the economic
  environment changes? How hard or easy would it
  be to change the decision once it is made? What
  could it cost?

?? How does the GDSS Help with that ??

• It cant help in all situations, but it can help
  with some

• It can order objectives by ratings

• It can Provide summaries of activities

• It can Provide Analysis tools for the
  group/individual members to use

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?? What Analytical Tools are available ??
As we noted earlier, that depends, but the more
the merrier
?? But which should we Choose ??
That depends on the decision maker

• A DSS SUPPORTS, NOT decides, the decision to be
  made

• A DSS SUPPORTS the Decision Makers style of
  thinking (it does NOT change it)

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?? Are All DSS the Same ??
There are three Basic Classifications of DSSs

• Model-Driven DSS

• The DM selects the Tool to be used (e.g.,
  Spreadsheed, Optimization)

• The DM selects the Method to be used (e.g.,
  Sensitivity Analysis, Maximize)

• The DM Uses various parameters (e.g., Interest
  Rate Intervals, Constraints)

• Data-Driven DSS

• Due to Technology Advances, Large amounts of data
  can be analyzed

• The DM can compare various datasets

• Compare Sales of Product A in Regions 1, 2 and
  3, relative to operating costs

• Often done using External Database and On-Line
  Analytical Processing (OLAP) systems

• Often used in conjunction with datamining

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?? Are All DSS the Same ??
There are three Basic Classifications of DSSs

• Discovery-Driven DSS (Datamining)

• The DSS looks for patterns and relationships in
  large data sets due to

• Associations between occurrences which can be
  linked to an event (e.g., Overcoat sales)

• Sequences in events over time (e.g., increases in
  new home sales lead to a 30 increase in the
  number of refrigerators sold)

• Classification of patterns (e.g., State employees
  were less likely to purchase life insurance than
  non-state employees)

• Clustering of groups that have not been defined
  (e.g., Females, The Elderly, and Europeans might
  be more likely to purchase a certain item)

• Uses statistical analysis tools such as

• Neural Networks

• Expert Systems

• Fuzzy Logic

• GIS

• Genetic Algorithms

• Other AI Systems

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????????????? Any Questions (Please !!!)
?????????????
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