management decision support. overview for today exam coming up next week… draft of project due fri...
TRANSCRIPT
Management Decision Support
Overview for Today
• Exam coming up next week…• Draft of project due Fri Apr 10…• Management & Decision Making
– Why decision making is hard
• Models to support decision making• Technologies to support decision making
So Just What is a DSS?
• Interactive systems that help decision makers use data and models to solve semi- & un-structured problems– A counter example: Towers of Hanoi– What are examples of these types of problems?
• Used by middle & upper level management since 1970’s for analytical & quantitative decisions
Difficulty of Decision Making
• ALL managerial jobs require decision making skills
• People are BAD at decision making (study from Gettys)
Difficulty of Decision Making
The Need for Decision Support
• Impossible to make decisions without information– What’s the relationship between quantity of information
and decision quality? – Moore’s law also relevant…
• New pressures/needs for improved decision making– What are these new pressures?– What are new needs of managers today?– What factors create these new pressures?
(From our environ, business partners, customers)
Modeling & Decision Making
• Modeling is one way to aid decision making• Generic tool, can be implemented w/o IT• The business case for modeling:
– Why do/should managers use models?– What are some benefits of modeling?– Are there any drawbacks to modeling?
Four Types of Models
• Mental: description of how you think about a situation, includes beliefs, assumptions, relationships, used to generate descriptions or make predictions, ex: “better to promote old workers than younger ones” - this is often a first step in modeling
• Scale: least abstract, physical replica of system, used for designing cars, planes, production lines, Bermuda…
Four Types of Models
• Analog: behaves like real system, doesn’t look like it, ex: org charts, topo maps, blueprints
Four Types of Models
• Mathematical: complex modeling of weather patterns, economic trends, physical systems, etc– Eisenhower vs. Stevenson, 1952– Bush vs. Gore in 2000; 2004– Airplane design
More Mathematical Models
Decision Support Technologies
• Information systems to support decision making:– Decision Support Systems– Group Decision Support Systems– Artificial Intelligence– Expert Systems
• Each provides a different set of tools to aid the decision maker
• Each is geared to a specific situation/context• Goal: match the appropriate tech with needs of the
situation
Characteristics of a DSS
• Typical Feature Set:– Often based on mathematical models (Mgmt 102)– Integrates human judgment & data warehousing– Is adaptable by the user over time– Models provide sensitivity analysis– Utilizes models to promote learning – especially when
you can’t “play” with reality… `
DSS Examples
• GM Healthcare program– Spent $4.5B in 2002, includes 127 providers– $1,360 per vehicle for healthcare & pensions
• Uses OLAP & DSS to help slow the growth of premiums– Compares diagnosis with treatments– Appropriate drug choices, generics, etc.– Correlate absenteeism with medical conditions– Allows ROI calculations for health care providers…
• “Good cop, Bad cop” system in LA
Group Decision Support Systems
• Similar to DSS with additional functionality:– Teams of people work together to solve complex
problems – Teams can be real or “virtual”– Provides tool set for group process such as: anonymity,
brainstorming, voting, ranking, categorizing, group consensus
– Tools help keep group coordinated/focused on task
• Examples of uses include:– Strategic planning– Support groups for victims of AIDS, rape…
Artificial Intelligence
• Attempts to represent human thought process with machines– Able to sense data, process it, draw its own
conclusions, act on those conclusions• Examples:
– Automatic categorization useful with GDSS applications: UA AI Categorizer
– “The Turing Test” (Alan Turing 1912-1954)
– IBM’s Watson, Deep Blue, Deep Jr.
AI Characteristics
• Capabilities:– Learn from past experience– “Sense Making” ambiguous / contradictory information– Quickly and successfully responding to a new situation– Infer rules from observed data– Use reasoning, logic as opposed to numeric formulas…
• Benefits– Increase speed & consistency of problem solving,
especially when data are incomplete, inconsistent – Helps in handling information overload by summarizing
or interpreting information
Expert Systems
• Allows employees to make better, faster decisions – Mimic human experts– Contains expertise from multiple individuals– Can support or replace decision makers– Can explain its recommendations– “Software IDs visible symptoms” story
• Some drawbacks– Expertise is hard to extract from people– Have very narrow fields of application– Construction is costly– Can be lack of trust by end users
Expert Systems
• Dept of the Treasury detects money laundering– Banks report cash xacts > $10,000 (200,000/week)– Don’t have the staff to examine each xact– ES detect suspicious transactions and changes in
patterns; 100 cases/year since 1993• State Street Bank and Trust Company
– Audits daily and month-end data against corresp GL account balance, highlighting exceptions
– Increased the productivity of the auditors as well as the quality of error detection
Automation of Mgmt’s Job
• Decision making involves specific tasks that can take a long time to perform– Automation can potentially save time, increase
consistency, enable better decisions– Can decision responsibilities be completely
automated? (top mgmt? middle mgmt? lower mgmt?)
– Decisions/tasks that can’t be automated?– What are advantages? Disadvantages?
Important Concepts to Know
• Management & Decision Making– Why decision making is hard
• Models to aid decision making– Mental, Analog, Scale, Mathematical Models
• Types of Decision Support Technologies– DSS, GDSS, AI, ES
For Next Time…
• No cases this time around• Exam Review on Monday
– Go through your notes– Re-do case studies– Make questions– Ask during class– Re-read “Exam Study Hints” on webpage