What would managers used to make structured decisions at the operational level?

Decision Making and Decision-Support Systems (DDS)

Decisions are made at all levels of the firm. Some decisions are very common and routine but exceptionally valuable. Although the value of improving any single one of these decisions may be small, improving hundreds of thousands of these small decisions adds up to a large annual value.

Decisions are classified according to type:

• Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insights into the problem definition.
• Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient.
• Semistructured decisions are those 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, and unstructured decision making is more common at higher levels.

There are different types of decision-making at different levels:

• Senior executives face many unstructured decision situations, such as establishing the firm's five or ten-year goals
• Middle management faces more structured decision scenarios but their decisions may include unstructured components.
• Operational management and rank-and-file employees tend to make more structured decisions.

Figure 12-1

FIGURE 12-1 INFORMATION REQUIREMENTS OF KEY DECISION-MAKING GROUPS IN A FIRM Senior managers, middle managers, operational managers, and employees have different types of decisions and information requirements.

There are four different stages in decision making:

1. Intelligence: Consists of identifying and understanding a problem
2. Design: Involves exploring various solutions
3. Choice: Consists of choosing among available solutions
4. Implementation: Involves making the chosen alternative work and monitoring how the solution is working.

Figure 12-2

FIGURE 12-2 STAGES IN DECISION MAKING The decision-making process can be broken down into four stages.

Although information systems supporting decision-making can lead to higher ROIs, they cannot improve all the different kinds of decision making in an organization or in all managerial roles.

The classical model of management describes 5 functions of managers: Planning, organizing, coordinating, deciding, and controlling.

Contemporary behavioral models of management state that the actual behavior of managers appears to be less systematic, more informal, and less well organized than the classical model envisions.

Managerial roles fall into three categories:

• Interpersonal roles: Managers act as figureheads, leaders, liaisons.
• Informational roles: Managers act as a nerve center, information disseminators, and spokespersons.
• Decisional roles: Managers act as entrepreneurs, disturbance handlers, resource allocators, and negotiators.

In some of these roles, information systems are not helpful for improving decisions, such as for the roles of figurehead, leader, entrepreneur, or disturbance handler.

Additionally, IT investments for supporting decision making may not produce positive results for three main reasons:

• Information quality: High-quality decisions require high-quality information regardless of information systems. There are seven dimensions of information quality when designing decision-support systems: Accuracy, integrity, consistency, completeness, validity, timeliness, and accessibility. Even with timely, accurate information, some managers make bad decisions.
• Management filters: Managers filter by turning off information they do not want to hear because it does not conform to their prior conceptions.
• Organizational inertia and politics: Organizations are bureaucracies with limited capabilities and competencies for acting decisively. When environments change and new business models should be followed, strong forces within organizations resist making decisions calling for major change.

DRAFT: This module has unpublished changes.

Jian Fang

BTC200

Dr. Lisa Leff

October 21, 2015

Chapter 9 assignment

1. Explain the importance of decision making for managers at each of the three primary organization levels along with the associated decision characteristics.

A: Decision making is one of the most important and challenging aspects of management. Decisions range from routine choices, such as how many items to order or how many people to hire, to unexpected ones such as what to do if a key employee suddenly quits or needed materials do not arrive.

The following shows the importance of Managerial decision making:

1. Managers need to analyze large amounts of information: Innovations in communication and

globalization have resulted in a dramatic increase in the variables and dimensions people need to consider when making a decision, solving a problem, or appraising an opportunity.

1. Managers must make decisions quickly: Time is of the essence and people simply do not

have time to sift through all the information manually.

1. Managers must apply sophisticated analysis techniques, such as Porter’s strategies or

forecasting, to make strategic decisions: Due to the intensely competitive global business environment, companies must offer far more than just a great product to succeed.

2. Classify the different operational support systems, managerial support systems, and strategic support systems, and explain how managers can use these systems to make decisions and gain competitive advantages.

A: Operational support system is transaction processing system (TPS): basic business system that serves the operational level and assists in making structured decision.

Managerial support systems are online analytical processing (OLAP) and decision support system (DSS).

Strategic support systems are executive information system (EIS). Strategic is at the top of the pyramid (operational, managerial, strategic).

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. Structured decisions are made frequently and are almost repetitive in nature; they affect short-term business strategies. Reordering inventory and creating the employee staffing and weekly production schedules are examples of routine structured decisions.

Managerial At the managerial level, employees are continuously evaluating company operations to hone the firm’s abilities to identify, adapt to, and leverage change. A company that has a competitive advantage needs to constantly adjust and revise its strategy to remain ahead of fast-following competitors. Managerial decisions cover short- and medium-range plans, schedules, and budgets along with policies, procedures, and business objectives for the firm. They also allocate resources and monitor the performance of organizational subunits, including departments, divisions, process teams, project teams, and other work groups. These types of decisions are considered semi structured decisions; they occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision. For example, decisions about producing new products or changing employee benefits range from unstructured to semi structured.

Strategic At the strategic level, managers develop overall business strategies, goals, and objectives as part of the company’s strategic plan. They also monitor the strategic performance of the organization and its overall direction in the political, economic, and competitive business environment. Strategic decisions are highly unstructured decisions, occurring in situations in which no procedures or rules exist to guide decision makers toward the correct choice. They are infrequent, extremely important, and typically related to long-term business strategy.

3.Describe artificial intelligence and identify its five main types.

A: Artificial Intelligence (AI) simulates human intelligence such as the ability to reason and learn.

There are five most common categories of AI systems: Expert System, Neural Network, Fuzzy Logic, Genetic Algorithm, Intelligent Agent and Virtual Reality.

4.Applying this process to a real life type scenario/business-Use a sample business to answer questions and follow the 6-step process (Each student is the CEO of one of these company’s struggling with some processes in the business): examples: a coffee shop, a wholesale warehouse, an accounting firm, a gas & oil company, etc.

A: The six-step decision-making processes are: problem identification, data collection, solution generation, solution test, solution selection, and solution implementation.

5. Have any of you have ever worked with a DSS, EIS, or AI system. What types of models are they using today at their jobs or in their personal lives?

A: No, I haven’t worked with a DSS, EIS or AI system.

There are a number of Decision Support Systems: What-if analysis, Sensitivity analysis, Goal-seeking analysis, and Optimization analysis.

EIS models are Granularity, visualization, and Digital dashboard. EIS models contain routine and special statistical, financial, and other ... Several types of interfaces can be available to the EIS structure.

There are five most common categories of AI systems: Expert System, Neural Network, Fuzzy Logic, Genetic Algorithm, Intelligent Agent and Virtual Reality.

6. Analysts typically use TPS to perform their daily tasks.

A: Most of an organization’s daily activities are recorded and processed by its transaction processing system (TPS), which receives input data and converts them into output—information—intended for various users. Input data are called transactions Financial and nonfinancial events that affect a business. A financial transaction is an economic event: it affects the firm’s assets, is reflected in its accounting statements, and is measured in monetary terms. Sales of goods to customers, purchases of inventory from suppliers, and salaries paid to employees are all financial transactions. Everything else is a nonfinancial transaction. The marketing department, for example, might add some demographic data to its customer database. The information would be processed by the firm’s TPS, but it wouldn’t be a financial transaction.

7. Why would a manager want to view a TPS in terms of systems thinking?

A: Systems Thinking in service organizations represents a paradigm shift in terms of thinking about design and management of the work, and as such it represents a great lever for

Improvements of service design.

A business or company management system consists of input, process, output, and feedback. Applying that to manufacturing would mean that a production line is a system since it has input, process, output, and feedback. It would also mean that each operation in the production line is a system since it also has its own input, process, output and feedback elements.
       A system could also mean the entire company process of receipt of an order, ordering of material, scheduling of the factory, receipt of the ordered materials, the manufacturing process, quality control, packaging, shipping and invoicing the customer. This total system approach can be presented in the form of a value stream map which includes all the areas. In this case, Systems Thinking covers all these activities since they are part of the overall business system.
8. What types of TPS are used at your college?

A: In my college LaGuardia Community College is using students’ EMPID system, CUNY FIRST and BLACKBOARD to be the TPS.

9. Compare sensitivity analysis, what-if analysis, and goal-seeking analysis and to provide a business example of when they would use each type?

A:  Sensitivity analysis is a technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions. This technique is used within specific boundaries that will depend on one or more input variables, such as the effect that changes in interest rates will have on a bond's price. Sensitivity analysis is a way to predict the outcome of a decision if a situation turns out to be different compared to the key prediction(s).

What-if analysis is the process of changing the values in cells to see how those changes will affect the outcome of formulas on the worksheet. Three kinds of what-if analysis tools come with Excel: scenarios, data tables, and Goal Seek. Scenarios and data tables take sets of input values and determine possible results.

Goal seeking is the ability to calculate backward to obtain an input that would result in a given output. This can also be called what-if analysis or back-solving. It can either be attempted through trial and improvement or more logical means. The process of finding the correct input when only the output is known. A goal-seeking entrepreneur might ask him or herself: "How much money do I have to earn per hour to gross $100,000 this year?" He or she knows the desired output, $100,000, but will have to work backwards to determine the desired input by figuring out how many hours he or she is able and willing to work in a year and then how much he or she needs to earn per hour, along with any other factors which may affect the final output.

10. How would expert systems could be used in the medical field.

A: A field of research in Artificial Intelligence is the field of "Expert Systems"(ESes). An ES comprised of a knowledge base(KB) which encompasses the knowledge of various experts on some subjects and a "Deduction Engine" that could create new facts based on the input and the KB.

One of the first applications of ES was in medicine and diagnosing the diseases of patients using the KB created by knowledge (experiences) of expert doctors, it could provide people with faster, cheaper, more accurate(in some cases) treatment of patients in developing countries like mine(Iran) but at the moment ES  is not popular as much as some other fields of study in AI.

These systems guide the user to collect easily the patient information, based on those information points that can lead to a possible diagnose and to the adapted treatment of the diseases. They guide the user during the medical examination (physical) that will be done on the patient showing the definitions, images, sounds and/or videos of the signs associated to their disease and verify that the doctor does not forget to examine none of the criteria diagnoses even though is the first time that he sees or knows this sign.

Once the patient data collected, the diagnose is based on the stored medical knowledge. The data on symptoms or signs, special data of laboratory or tests or radiological images are process by the system using defined rules to obtain the possible diagnoses. Additional data such as the presence or absence of certain signs and symptoms help to make a final diagnose. The rules of these Expert systems include the diagnose criteria from world-wide Associations, as well as algorithms designed by members of the Laboratory of Intelligent Systems of the University of The Andes. The qualities of this system are:

1. It can diagnose of one or more diseases and suggests the appropriate therapy.

2. It diagnoses the absolute absence of anyone of these diseases.

3. It can find some symptoms or signs due to any exogenous cause (a differential diagnose).

4. It notifies to the doctor that the patient does not fill the minimum criteria for some of the diseases and in this case, suggests a new evaluation.

5. It suggests send the patient to a specialist.

The reasoning for establishing diagnoses or hypotheses of diagnoses is given as well as the plans for other examinations and for patient treatment. Also it is indicated when there are inexplicable signs, symptoms or laboratory data. They include the realization of a set of questions individualized for each subject and the selection of data that is going to be acquired answering the questions.

What are the examples of structured decisions?

A structured decision is one that is made quite often, and one in which the decision is based directly on the inputs. With structured decisions, once you know the necessary information you also know the decision that needs to be made. For example, inventory reorder levels can be structured decisions.

What is a structured decision?

Structured decision-making (SDM) is an approach to child protective services that uses clearly defined and consistently applied decision-making criteria for screening for investigation, determining response priority, identifying immediate threatened harm, and estimating the risk of future abuse and neglect.

What are the types of decision structure?

There are two major types of decision structures: conditionals and loops. Code contained in a conditional block may or may not be executed; the decision is made at runtime based on a given condition. Code contained in a loop is repeated; how many times is also decided at runtime.

What are the characteristics of structured decisions?

Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient. Semistructured decisions are those in which only part of the problem has a clear-cut answer provided by an accepted procedure.

What decisions are made at the operational level?

What is a structured decision in management?

Are operational decisions considered structured decisions?

What is used by senior managers in unstructured decision making?