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Mis chapter 2 infomation, management and decision making
Chapter II Chapter 2: Information, Management and Decision Making: Part A ( 1.5 hours) – Models of Decision Making - Classical, Administrative and Herbert Simons Models Part B (1.5 hours) - Attributes of information and its relevance to Decision Making - Types of information
Chapter II Chapter 2: Information, Management and Decision Making: Part A ( 1.5 hours) – Models of Decision Making - Classical, Administrative and Herbert Simons Models
Decision Making • Decision: a reasoned choice among alternatives • Examples: – Where to advertise a new product – What stock to buy – What movie to see – Where to go for dinner Decision Making: a process of choosing among alternative courses of action for the purpose of attaining a goal or goals • Decision making vs. problem solving? • ART or SCIENCE? 3
Business Decision Aspects Typical Business Decision Aspects • Decision may be made by a group • Several, possibly contradictory objectives • Hundreds or thousands of alternatives • Results can occur in the future • Attitudes towards risk • “What-if” scenarios • Trial-and-error experimentation with the real system: may result in a loss • Experimentation with the real system can only be done once • Changes in the environment can occur continuously 4
LEVELS OF DECISION MAKING 1. STRATEGIC: Long-term objectives; resources; policies 2. MANAGEMENT CONTROL: Monitor use of resources; performance 3. KNOWLEDGE-LEVEL: Evaluate potential innovations; knowledge 4. OPERATIONAL: How to carry out specific day-to-day tasks 4.19
Nature of Decision • Structured Problems – Routine and repetitive with standard solution – Well defined decision making procedure – Given a well-defined set of input, a well defined set of output is defined • Semi-structured Problems – Has some structured aspect – Some of the inputs or outputs or procedures are not well defined • Unstructured Problems – All phases of decision making process are unstructured – Not well defined input, output set and procedures 6
Decisions TypesFollowing are the types of Decision1. Programmed/Structured Decisions2. Semi Programmed/Structured Decision3. Non Programmed Decisions Structured Unstructured Level of decision making - Scope Strategic Managerial Operational 7
Programmed/Structured Decisions Nature of Programmed/ Structure Techniques used for taking these Decision: decision: 1. They are Routine/Structure 1. Habit 2. They are repetitive/short term 2. Standard Operating Procedures 3. Definite procedure is to be (SOP) followed 3. Organizational 4. There are laid down norms Hierarchy/structure 5. Situations are known 4. Operational research 6. They are taken at lower or 5. Computers operating levels in the organization.
Semi Programmed/Structured Decision • SEMISTRUCTURED: One or more factors not structured; risk
Non -Programmed/un-structured Decisions Nature of Non-programmed/ Techniques used for taking these unstructured Decision: decision: 1. Innovative 1. Judgment 2. New/complex situations 2. Intuition 3. Important and critical 3. Business acumen 4. Strategic 4. Complex/ specially designed 5. Long- term computer programmes 5. Training executives
INFO SYSTEMS, LEVE, DECISIONS ORGANIZATIONAL LEVEL TYPE OF DECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGICSTRUCTURED ACCOUNTS RECEIVABLE ELECTRONIC PRODUCTION SCHEDULING COST OVERRUNS TPS OAS MISSEMI- BUDGETSTRUCTURED PREPARATION PROJECT DSS SCHEDULING FACILITY LOCATION KWS ESSUNSTRUCTURED PRODUCT DESIGN NEW PRODUCTS NEW MARKETS
Decision Making Process 1. Recognizing and defining the situation 2. Identifying alternatives 3. Evaluation alternatives 4. Selecting the best alternative 5. Implementing the chosen alternative 6. Follow-up and evaluation
INDIVIDUAL MODELS OF DECISION MAKING 1. RATIONAL: Comprehensive rationality; evaluate all alternatives 2. SATISFICING: Bounded rationality; choose first “good” alternative 3. MUDDLING (mixed/confused): Successive comparison; marginal changes 4. PSYCHOLOGICAL: Cognitive types; manages differ in how they make choices
ORGANIZATIONAL MODELS OF DECISION MAKING/ Decision Making Styles1. RATIONAL ACTOR: Maximize organization’s benefits2. BUREAUCRATIC: Follow standard operating procedures (SOP)3. POLITICAL: Key groups compete and bargain4. “GARBAGE CAN”: Organizations not rational; solutions accidental5. Heuristic: is a method to help solve a problem, commonly an informal method. It is particularly used to rapidly come to a solution that is reasonably close to the best possible answer, or optimal solution.6. Analytic7. Autocratic8. Democratic9. Consultative (with individuals or groups)10. Combinations and variations
Decision Making Models A. Classical Model: Collecting all required information and taking the decision in the best interests of the organization. B. Administrative Model: Collecting all required information and taking the decision may not be in the best interests of the organization but it will be in the best interest of managers. C. Herbert Simon Model:
The Herbert Simon’s Model The decision Making process consists of following phases: 1. Intelligence phase: thinking of the problem as it comes a) Societal Environment b) Competitive Environment c) Organizational Environment 2. Design Phase: this consists for inventing, developing and analyzing the likely solutions a) Understanding the problem b) generating the solution c) Testing the feasibility of solution 3. Choice Phase: Selecting the specific alternative or solution 4. Implementation : Put decision into effect; allocate resources; control * Relevance of this model: 1) Provide the decision process 2) It provide the base for designing the MIS Limitation of this model: 1) It is specifies the decision process and will not go beyond choice 2) This model does not includes the feedback phase and corrective action.
Chapter II Chapter 2: Information, Management and Decision Making: Part B (1.5 hours) - Attributes of information and its relevance to Decision Making - Types of information
InformationDavid and Olson Defines, “Data that has been processed into a form that is meaningful to the recipient and it is of real or perceived value in current or prospective actions or decisions” INPUT PROCESS OUTPUT FEEDBACK
Overview Information Systems help companies achieve their goals. How do they do it? 1. By processing raw data into information 2. IS can add value to information by enhancing the attributes (11 of them).
11 Attributes of Information Usability Delivery 1. Timely 1. Relevant 2. Accessible 2. Simple 3. Secure 3. Flexible 4. Economical Quality 1. Accurate 2. Verifiable 3. Complete 4. Reliable
Information Spectrum • Data processing Information • Information intelligence Knowledge • Knowledge experience Wisdom
Information Process 1. Capturing - recording of events and transactions 2. Verifying - validation and checks for correctness 3. Classifying – specific categories 4. Arranging/Sorting – building sequencing 5. Summarizing – combining and aggregate 6. Calculating –Arithmetical and logical computation 7. Storing –storage media 8. Retrieving – searching and accessing the information 9. Reproducing – duplicating or copying of data. 10.Communication – transferring the data from one to another 11.Deleting/purging – removal or deleting the data
Types of Information A. Hierarchical 1. Information needed for Strategic Level 2. Information needed for Tactical Level 3. Information needed for Operational Level B . Planning and Controlling Perspective 1. Information needed for Planning 2. Information needed for Controlling 3. Information needed for solving problems 4. Information needed for execution
Sources of Information 1. Primary Source : a) First hand information received directly from the users, customers, employees ( survey , meeting, discussion, interviews etc.) 2. Secondary Sources a) Published :Government publications, Journals, Newspapers, Monographs and textbooks, Reference works, Audio Visual, Electronic media etc b) Unpublished: Human sources, Dissertations / Theses, Reports, Grey literature, Information on the Internet Email
Human as information Processor memory Input from Output Mental Channels Sensory Channels response Processing Receptors Inputs Outputs
Computer information processing system storage input Processor output
Information requirementInformation requirement is a detailed statement of the information needs that a system mustsatisfy. It involves identifying who needs what information, where, when and how.Information required at different level in the organization: 1. Organizational Level information requirements - Organization level information for planning, controlling and managing purpose. To get the information we need to a) Defining sub-systems, b) Developing managers sub system , and c) Defining and evaluating the information requirement by sub system 2. Data Base Requirements: Organizing and defining the data class, data types in the computer system 3. Application level information requirements: Unit level , department level, process level, information, form level information. a) Behaviors or role based requirements b) Technical requirements
Techniques for Assessing information Requirements 1. Asking questions 2. Deriving From an existing information system 3. Ends-means analysis : analyzing the end use of the information and then getting the information requirements 4. Critical Success Factors (CSFs): Collecting all the factors affecting and then collect the information requirement 5. Business System Planning (BSP): this is the organization wise information requirements which includes all units, functions, processes and data elements.