Chap 2- Decison Support System(1)

Importance of Decision Making

• Levels of Management:

  • Operational Level: Executes day-to-day activities using structured decisions.

  • Managerial Level: Evaluates company operations with semi-structured decisions.

  • Strategic Level: Develops overall strategies with unstructured decisions.

Decision-Making Challenges for Managers

1. Analyzing Large Amounts of Information:

   • Globalization increases the variables to consider for decisions.

   • Example: Choosing discount strategies by analyzing data from 500 hotels.

2. Quick Decision-Making Required:

   • Time constraints lead to the necessity of swift decisions.

   • Example: Handling a reservation for a fully booked hotel.

3. Applying Analysis Techniques:

   • Managers need to incorporate strategic frameworks such as Porter's strategies.

   • Example: Implementing a loyalty program across multiple hotels.

The Decision-Making Process

• Six-Step Process:

  1. Problem Identification: Clearly define the problem (e.g., product return issues).

  2. Data Collection: Gather relevant information (facts only).

  3. Solution Generation: Brainstorm multiple possible solutions.

  4. Solution Test: Evaluate feasibility, suitability, and acceptability.

  5. Solution Selection: Choose the best solution for implementation.

  6. Solution Implementation: Carry out the decision, assess its effectiveness.

Decision-Making Essentials

• Strategic Level: Handles unstructured decisions related to business strategies.

• Managerial Level: Focus on semi-structured decisions to improve operations.

• Operational Level: Involves structured decisions for daily operations.

Measuring Organizational Business Decisions

• Critical Success Factors (CSFs):

  • Essential steps to achieving goals (e.g., quality products, low costs).

• Key Performance Indicators (KPIs):

  • Quantifiable metrics to evaluate progress toward CSFs (e.g., employee turnover, customer satisfaction).

Metrics for Evaluation

Efficiency Metrics:

• Measure internal performance:

  • Throughput: Volume of data processed.

  • Transaction Speed: Time for completing transactions.

  • System Availability: Operational hours for users.

  • Information Accuracy: Correctness of repeated transactions.

Effectiveness Metrics:

• Measure impact on business:

  • Usability: User-friendliness of processes.

  • Customer Satisfaction: Evaluated via feedback and revenue.

  • Conversion Rates: Effectiveness of customer engagement strategies.

Decision Support Systems (DSS)

• Definition: Tools to support managers with decision-making.

• Types:

  • Operational Support Systems: Transaction Processing Systems (TPS) for structured decision-making.

  • Managerial Support Systems: Decision Support Systems (DSS) for semi-structured situations.

  • Strategic Support Systems: Executive Information Systems (EIS) for unstructured decisions.

AI in Business Decision Making

• Artificial Intelligence (AI): Simulates human intelligence for various applications.

  • Expert Systems: Model expert reasoning processes to solve specific problems.

  • Algorithms: Mathematical functions for data analysis.

  • Genetic Algorithms: Mimic evolutionary processes to improve solutions.

Machine Learning in AI

• Types:

  • Supervised Learning: Requires labeled training data.

  • Unsupervised Learning: Finds patterns in unlabeled data.

  • Transfer Learning: Builds on previously learned knowledge.

Managing Business Processes

• Value of Business Processes: Comparison of customer-facing vs. business-facing processes.

• Business Process Modeling: Use of BPMN to visualize processes.

  • As-Is vs. To-Be Models: Current state versus improved processes.

Business Process Improvement Techniques

• Automation: Implementing digital solutions to streamline processes.

• Robotic Process Automation: Using AI to manage repetitive tasks.

• Reengineering: Radical redesign of processes to achieve dramatic improvements.

(Additional details streamlined from the original slides for clarity and focus on essential content.)