HRMIS Decision Support System chapter 7 p
- 1. Chapter 7 : Decision Making
- 2. Introduction to Decision Making • Introduction • Definition of Decision-Making
- 3. • Decision-making is the selection based on some criteria from two or more possible alternatives. “-—George R.Terry • A decision can be defined as a course of action consciously chosen from available alternatives for the purpose of desired result —J.L. Massie • A decision is an act of choice, wherein an executive forms a conclusion about what must be done in a given situation. A decision represents a course of behaviour chosen from a number of possible alternatives. -—D.E. Mc. Farland
- 4. Following elements can be derived from the above mentioned definitions: • 1. Decision–making is a selection process and is concerned with selecting the best type of alternative. • 2. The decision taken is aimed at achieving the organisational goals. • 3. It is concerned with the detailed study of the available alternatives for finding the best possible alternative. • 4. Decision making is a mental process. It is the outline of constant thoughtful consideration. • 5. It leads to commitment. The commitment depends upon the nature of the decision whether short term or long term.
- 5. Features or Characteristics of Decision- Making: • 1. Rational Thinking: • 2. Process: • 3. Selective: • 4. Purposive: • 5. Positive: • 6. Commitment: • 7. Evaluation:
- 6. Environment of Decision Making •Certainty •Uncertainty •Risk
- 7. Types of Decisions • Strategic Decisions and Routine Decisions • Programmed Decisions and Non-Programmed Decisions • Policy Decisions and Operating Decisions • Organizational Decisions and Personal Decisions • Individual Decisions and Group Decisions
- 8. Steps of Decision Making Process
- 9. Step 1: Identification of the purpose of the decision • What exactly is the problem? • Why the problem should be solved? • Who are the affected parties of the problem? • Does the problem have a deadline or a specific time-line?
- 10. •Step 2: Information gathering •Step 3: Principles for judging the alternatives •Step 4: Brainstorm and analyse the different choices •Step 5: Evaluation of alternatives •Step 6: Select the best alternative •Step 7: Execute the decision •Step 8: Evaluate the results
- 11. Rational Decision-Making Rationality in decision making Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. The word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.
- 12. The approach follows a sequential and formal path of activities Path includes: 1. Formulating a goal(s) 2. Identifying the criteria for making the decision 3. Identifying alternatives 4. Performing analysis 5. Making a final decision.
- 13. Assumptions of the Rational Decision-Making Model The rational model also assumes: • An individual has full and perfect information on which to base a choice. • Measurable criteria exist for which data can be collected and analyzed. • An individual has the cognitive ability, time, and resources to evaluate each alternative against the others.
- 14. Critiques of the Rational Model Claim that this model makes unrealistic and over-simplified assumptions. • Their objections to the rational model include: • People rarely have full (or perfect) information. • Individual rationality is limited by their ability to conduct analysis and think through competing alternatives. • People choose an acceptable option rather than the optimal one.
- 15. Alternative Theories of Decision-Making •Prospect Theory •Bounded Rationality NB: Research on the Non-Rational Decision Making
- 16. DECISION MAKING AND INFORMATION SYSTEMS • MANAGEMENT INFORMATION SYSTEMS ENHANCING DECISION MAKING • DECISION MAKING AND INFORMATION SYSTEMS
- 17. • Decision making in businesses used to be limited to management. • Today, lower level employees are responsible for some of these decisions, as • Information Systems make information available to lower level of business.
- 18. TYPES OF DECISIONS •Structured Decisions •Semi -structured Decisions •Unstructured Decisions
- 19. STRUCTURED DECISIONS •Are repetitive and routine decisions and have a definite procedure for handling them. Structured Decisions do not have to be treated as if they are new .
- 20. UNSTRUCTURED DECISIONS •Nonroutine decisions in which the decision maker must provide judgment. Evaluation, and insights into the problem definition; There is no agreed upon procedures for making such decisions.
- 21. SEMISTRUCTURED DECISIONS •Decisions in which only part of the problem has a clear cut answer provided by an accepted procedure. •In general Structured Decisions are more prevalent at Lower Organizational Levels, whereas unstructured problems are more common to Higher Levels of organization.
- 22. INFORMATION REQUIREMENTS OF KEY DECISION MAKING GROUPS •Senior Managers, •Middle Managers, •Operational Managers and •Employees
- 26. MANAGERIAL ROLES •INTERPERSONAL ROLE •INFORMATIONAL ROLES •DECISIONAL ROLE
- 27. SYSTEMS FOR DECISION SUPPORT •Management Information Systems (MIS) •Decision Support Systems (DSS) •Executive Support Systems (ESS) •Group Decision Support Systems (GDSS)
- 28. 1.MANAGEMENT INFORMATION SYSTEMS (MIS) • Provide routine reports and summaries of transaction level data to the Middle and Operational level managers. • MIS provide answers to Structured and Semi structured decision problems. Help managers monitor and control the business by providing information on the firm’s performance. • Produce fixed, regularly scheduled reports based on data extracted and summarized from the underlying Transaction Processing Systems (TPS).
- 29. 2. DECISION SUPPORT SYSTEMS (DSS) • Provide Analytical Models or Tools for analyzing large quantities of data for Middle managers who face semi structured and unstructured decision situation. • The earliest DSS were heavily Model driven. • Their analysis capabilities were based on a strong theory. • Some contemporary DSS are Data drive, using Online Analytical Processing (OLAP), Data Mining and Excel Spreadsheet Pivot table to analyze pools of data.
- 30. Components Of DSS • DSS Database • may be a small Database residing on a PC or on a large Data Warehouse. • DSS User Interface • Permits easy interaction between Users and the DSS Software tools. • DSS Software System • Software tools that are used for data analysis such as OLAP tools, Data Mining Tools, or collection of Mathematical and Analytical Models (e.g. Equation), or Verbal Model (such as Description of a procedure for writing an order).
- 31. BUSINESS VALUE OF DSS • DSS Systems are helping companies with decisions • Customer Relationship Management • Supply Chain Management. • DSS Systems take advantage of Company wide data provided by Enterprise Systems • Harness the interactive capabilities of the Web to provide Decision Support tools to both employees and customers.
- 32. Research on the… • Benefits and challenges in Decision making