DECISION MAKING PROCESS The process of decision making involves the following steps.

(1) (2) (3) (4) (5) (6) Identifying the problem. Analyzing the problem. Developing alternative solutions. Comparing the alternative solutions Choosing the best alternative. Implementing and verifying the decision.

This process is more applicable in the case of non programmed decisions which involve thinking and problem solving. Programmed or routine decisions do not involve all these steps in the decision making process as they are made within the framework of policies, rules and standard operating procedures. (1) Identifying the Problem : The most important steps in decision making is to identify the problems. For example : If our car does not start in the morning. The first thing is that we do is to find out why it is not starting. This step in decision making is complicated because the fact that often what seems to be the problem is not really the problem but is symptom. For example when you are running the temperature. The temperature is not the problem but some kind of infection. In defining the problem the manager has therefore, to be a diagnostician who should look for the problem underlying the apparent symptoms. Analyzing the problems : The next step in decision making is Analyzing the problem. Once the problem has been correctly Identified now the next is to analyze i.e. Important aspect of problem analysis is to find the limiting factor another factor in analyzing the problem is to find the nature of decision whether it is programmed or non programmed. Developing alternative solutions : As we know that there are many ways to solve a problem. There is not a single problem which cannt be solved in more than one way. This process cannot be unending due to limitation of time & cost of decision maker is satisfied that he has alternative then he starts the next step. Weighting alternative solutions : Now the next step is to compare various alternative against one other on the basis of different criterion. Such as desired Rate of return sales volume etc. number of quantitative tools have been developed to help the manager

(2)

(3)

(4)

(5)

evaluating the solutions for example cost benefit analysis, decision etc. Choosing the Best Alternative : After evaluation of all the available. Manager choose the best alternative by comparing each solution with another in terms by predetermined objectives. gives 4 criteria for selecting bes 2 among the various

DRUCKER alternatives. (1) Risk (3) Timing

(2) (4)

Economy of effects Limitation of Resources

Manager must consider the availability of existing and potential resources. The most precious resources of an organization is manpower abilities, competence, motivation etc. (6) Implementing and verifying the Decision : This is last but most important step in decision making process because it is entirely possible that a good decision may be hurt by poor implementation. Many difficulties arises in implementing a decision when it requires significant changes is methods of work. Interpersonal and group relations in such cases. Organization should be prepared to accomadate change before implementing the decision. It is good to involve all people in decision making process who are affected by it. DSS can be defined as interactive computer based systems, which help decision makers utilize data and models to solve unstructured problems. It can also be defined as an affective blend of human intelligence, information technology, and software which interact closely to solve complex problems. It is an information system that utilizes decision models, a database and a decision makers own insights in an adhoc, alternative analytical modeling. DSS involves the models of a business activity. They are often quite complex. They are also dynamic.

Architecture of DSS Data from the organization, TPS and MIS applications are input to the DSS programs, along with data from external sources and DSS model data. The user interacts with the DSS online, requests are made, models are created, or adjusted and data is manipulated etc. The outputs of DSS can be either text, structured reports as graphics. The programs supported by DSS include spread sheet programs, personal database management systems, word processing packages, statistical pack ages. DSS are often used to respond on an adhoc basis to problems and opportunities they develop. As such, flexibility and adaptability are crucial. DSS often involves models of business activity. Characteristics of a Decision Support system Following are the characteristics of DSS : Ability to support the solution of complex problems : A DSS aids the solution of complex, problems that cannot be solved by other computerized appoarches or can be solved at a much slower pace. Fast response to unexpected situations that results in changed inputs : It enables a through quantitative analysis in a very short time. Even major changes in a senario can be evaluated objectively in a timely manner. Designed to help support decision that are formulated as semi structured, complex problems : Here problems remain resistant to complete computerization. May be constructed to support one time decisions : Helpful to those that are infrequent, however, the type of problem or opportunity best addressed through use of a DSS is one that requires human judgement. DSS is typically designed for either a particular decision maker or a group of decision makers :

This allows the system designer to customize important system features to adapt to the type of representations. Allows the decision maker to interact in a natural manner due to the careful design of the interface. DSS generator (software) can be used : Rather than building a specific DSS from scratch, a system analyst can use a package of interrelated hardware and a software called DSS generator. It is a way to organize information intended for use in decision making : It involves the use of a database for a specific making process. A DSS does not just automate transformations performed on data nor simply provide output in the form of reports. Rather a DSS supports the decision makers problem solving approach and application needs. It neither replaces judegement nor makes a decision for the user. A decision support system is best conceptualized as a process instead of a product : The following figure shows the product orientation of traditional MIS versus the process oriented DSS. Ability to quickly and objectively try different strategies under different configurations : A complete what-if analysis is carried out to examine the down side risk. The user can be exposed to new insights through the composition of the model and an extensive sensitivity/what if analysis. The new insights can help in training inexperienced managers and other employees as well. Facilitates communication : Data collection and model construction/experimentation are executed with active users participation, thus greatly facilitating communication among managers. The objectivity and logic of the decision process can be used to satisfy skeptics and, in turn, improve teamwork and implementation. Consistent and objective decision :

DSS provides more consistent and objective than complex decisions that are made intuitively. The other characteristics are : Cost saving Improving managerial effectiveness Extensive range of support of management Support of individual/groups. Graphical disply. Designed and run by managers; incorporated data and models. Contains a database drawn from internal files/external environment. Concerned with a small area of managerial activity or a small part of a large problem. Permits managers to test the probable results of alternative decisions. Supports either semi structured or instructured executive decision making. Data and associated models are organized around the executives decisions rather than around existing database. Specializes in easy to use software that utilizes natural languages. Employs interative processing that permits rapid response times. Use and control rests with the user, not with the information management department. Flexible and adaptable to changes in the external environment or in the executive style. Support, rather than replace, managerial judgement.

Improve the effectiveness of the decision, but not the efficiency with which the decisions are made. Components of a Decision Support System (DSS) DSS is a coordinated collection of data, systems, tools and techniques with the necessary software and computer hardware through which an organization gathers and interprets relevant information from the business and environment and turns into information that can be acted upon. Three distinct elements of DSS are : (i) DSS tools (ii) DSS generators (iii) Specific DSS

DSs tools are programs or codes which are the foundations used to create the DSS generators and in turn specific DSS. These are the building blocks of the dss which as a user interface eg : Electrronic Spread Sheets, 4 GLS, RDBMS etc. The combaination of DSS tools in the computer hardware is known as DSS generators. Database : The inelligence function develops and coordinates the flow of information from the multitude of external and internal resources. The primary task is to capture the data that can be used with the other components of the DSS to make decisions. A critical objective is to centralize all data in proper form and in sufficient detail so that it is accessible for decision making. Decision models : A model may be nothing more sophisticated than a rule of thumb, for example, for each 1 percent decline in territorial market share, trade promotion advertising should be increased by 5%. Models may be complicated computer driven mathematical equations. These are quantitative or qualitative conceptualizations of how a system operates. The model expresses perceptions as to that data and variables are important and how the variable are related. Statistics and manipulations : This aspect of the DSS produces meaningful information by relating the data into the models. The typical operations involve segregating numbers into groups, aggregating them, taking ratios, ranking them, plotting, making tables and so forth. General managerial models (preformed profit and loss statements, budget statements, forecasting statements etc.) and more complex models (marketing mix planning, product portfolio analysis, new product traking) are aspects of data analysis in this process.

Display : This function is the interface between the business manager and the DSS. Since flexibility and ease of use are important in DSS, GUIs are becoming the standard for DSS applications. Database is normally through SQI. Model management The command processor receives the commands from the dialogue management components and delivers those commands to either the model base management system or the model execution system. Database management Two functions for this are, first, it stores and manipulates the database as directed by either the model management component or the dialogue management component. Second it maintains an interface with data sources that are external to the DSS viz., TPS database, inter enterprise systems, external data utilities and other DSS applications. The Structure of Decision Support Systems DSS is composed of four major components : (i) (ii) (iii) (iv) The database and its management. The model base and its management. The hardware (only portions shown) The user system interface.

Fundamental DSS Program Structure : Users interface with the dialogue management component, which is a set of program that manages the user interface and translates the users requests into commands for the other two components. The model management component maintains and executes models of business activity. Examples of models are spreadsheets, or models, financial models and simulation models. It is used to create, store and modify models and to cause them to be involved. The data management component maintains DSS data. Its tasks include managing the DSS database, which contains both intermediary and final results

of DSS studies, and managing interfaces to enterprise data, which is external to the DSS and data from external sources. Limitations of DSS It has several basic limitations : (i) (ii) (iii) Due to its small memories and limited storage capacities, DSS has definite computational constraints. It is slow, compared to the speed of large mainframes. Most DSSs ae designed for individual use but they can be designed so that several computers can be liked for limited information sharing.