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Week 4
Management and decision-making (2)
Management roles and functions
Categories of management decisions
Support required from MSS
 Management decision-making
◦ nature of decisions made by business managers

 Business strategy
◦ introduction to some strategic planning techniques

 Consequences for management decision-making

◦ how can strategic planning inform key management
decisions?
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 Room not big enough!
 People sitting in the aisles
◦ Health & Safety Problem
 Solution required...
◦ redistribute attendance between days?
 not popular
◦ move to main lecture theatre in same building?
 already booked
◦ find another lecture room in another building?
 nothing free at the same time
◦ change time and lecture room?
 success!
3
CC6052 Assignment: Management Report

Group components (40%)

Title and contents
Management summary
1.Introduction
2.Organisation chart
3.Data cleansing
4.ODDS MSS database Design
5.Use of feedback
6.Group critique
7.Individual contributions 4

8.Software implementation environment

CC6052 Assignment: Management Report

Individual components (60%)

9.Selected management decision
10.Data and information requirements
11.Technical design
12.Test plan and results
13.Outline solution
14.References
15.Software with printouts

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 Management
◦ functions, roles, levels, productivity
 Decisions
◦ categories, disciplines, cognitive style, etc.
 Decision-making
◦ theory, phases, approaches, models
 Data and information
◦ types, sources, processes, value, characteristics
 Support for management decision-making
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 Fayol’s five functions of management

plan

control
organise
communication

coordinate command 7

Classical model: Fayol (1916)

Management: functions

 Behavioural model
Based on observations of what managers actually do
and this indicates that managers are
less systematic, reflective, well-organised
and
more informal, reactive, frivolous
than the classical model suggests

(Laudon & Laudon, 2004)

Management: roles

Mintzberg (1971, 1980, 1993) identified 10 roles:

 Interpersonal

◦ figurehead, leader, liaison

 Informational
◦ monitor, disseminator, spokesperson
 Decisional
◦ entrepreneur, disturbance handler,
resource allocator, negotiator

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Management: levels

 Strategic
Determines long-term
objectives, resources and
policies of the organisation

 Tactical
Concerned with efficient and
effective use of resources in
achieving objectives

 Operational
Carrying out specific day-to-day
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tasks, transactions
Management: productivity (1)

“Management is a process by which

organisational goals are achieved
through the use of resources”
(Turban, 2001)

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 Management: productivity (2)

 If resources = inputs
and
 attainment of goals = outputs
then

Success of organisation (and a manager’s job)

=
Outputs / Inputs
=
Attainment of goals / Resources
=
Productivity 12
Management: productivity (3)

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 Management: productivity (4)

 Effectiveness
 the degree to which goals are achieved
 i.e. “doing the right thing”

 Efficiency
 a measure of the use of resources to achieve
these goals
 i.e. “doing the thing right”
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Decisions: categories (1)

 Levels (or type of control): decisions can be

◦ Strategic
 unstructured, long-term, large impact, infrequent

◦ Tactical
 semi-structured, medium-term, medium impact, not uncommon
 between the two extremes of strategic and operational

◦ Operational
 structured, short-term, small impact, frequent
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Decisions: categories (2)
 Type of decision:
 Unstructured (or non-programmable)
 fuzzy, complex problem for which no clear solution procedure
exists

 Semi-structured
 between the two extremes; i.e. some structured elements and
some unstructured elements

 Structured (or programmable)

 standard procedures for obtaining the best (or good enough)
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solution are known
Decisions: categories (3)
Decisions can be made in the face of:

 Uncertainty
◦ Several possible outcomes for each course of action
◦ Decision-maker does not know (and cannot estimate) probabilities

 Risk
◦ Decision-maker must consider several possible outcomes for each
course of action
◦ Probabilities of given outcomes are known or can be estimated

 Certainty
◦ Assumes full and complete knowledge is available
◦ Decision-maker knows the outcome of each course of action 17
Decisions: cognitive styles, etc.

“Cognitive style is the subjective process through

which people
 perceive,
 organise and

 change information
during the decision-making process.”
(Turban, 2001)
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 Decisions: cognitive styles, etc.

 Need to consider varying cognitive styles

 Compare systematic versus…

…intuitive decision-makers
(Laudon & Laudon, 2004)

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Making Decisions

 Tempting to assume a ‘rational model’ of

decision making behaviour

◦ “people engage in basically

 consistent,
 rational,
 value-maximising calculations.”
(Laudon & Laudon, 2004)

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Making Decisions

 But…

 people cannot specify all options...

 people do not have singular goals, many decisions
are too complex...
 people select the first option that moves them
towards their ultimate goal or adopt a policy that is
most like the previous policy...
 decision-making is a continuous process…
process
 decisions are often made by consensus...
consensus

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Decisions and management
(1)

 Turban (2001): “According to Simon (1977),

managerial decision-making is synonymous with
the whole process of management.”
management "=" decision-making

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Decisions and management
(2)

 “A problem occurs when a system does not meet

its established goals… or does not work as
planned.
 Problem solving may also deal with identifying
new opportunities”
problem solving  decision making

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Decision-making: theory

 Decision-making involves selecting the correct

(or best available) action from a series of choices

 The business rules governing the correct action may be complex;

diagrams and tables help

◦ Flow charts
◦ Decision trees
◦ Decision tables
◦ Structured English, etc.

 Only useful for the structured elements of a decision...

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(Chaffey, 2003)
Decision-making: consider the
following (sequence of) decisions

A product (toaster )is passed as fit for sale if it passes:

◦ a mechanical test (slices can be lowered and raised)
and
◦ an electrical test (it heats the bread)
and
◦ has the correct dimensions (the slices fit the slots) 25
Decision-making: consider the
following (sequence of) decisions
If it fails
either the mechanical test
or the electrical test (but not both),
it is sent back to the workshop for repair

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Decision-making: consider the
following (sequence of) decisions
Inall other cases, the product is rejected
as it would be too expensive to repair

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Decision-making: consider the
following (sequence of) decisions

There are three tests

 mechanical test

 electrical test

 correct dimensions 28
 Yes Accept

Decision tree... Yes

Elec. test
OK?
No Repair

Mech. test
OK? Yes Repair
Yes
No Elec. test
OK?
No Reject

Dimensions
OK?
Yes Reject
Elec. test
Yes OK?
No No Reject
Mech. test
OK?
Yes Reject
No Elec. test 29
OK?
No Reject
 Decision table
Each action in the decision table is equivalent to a terminal node in the decision tree:
1 accept
2 repair
5 remaining actions reject

Correct dimensions? Y Y Y Y N N N N
Passed mechanical test? Y Y N N Y Y N N
Passed electrical test? Y N Y N Y N Y N
Accept product X
Repair product X X
Reject product X X X X X
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 Yes Accept
Decision tree... Dimensions
OK to have questions Yes OK?
Reject
in a different order No
Mech. test
OK? Yes Repair
Yes
No Dimensions
OK?
No Reject

Elec test
OK? Yes Repair
Dimensions
Yes OK?
No No Reject
Mech. test
OK?
Yes Reject
No Dimensions 31
OK?
No Reject
 Yes Accept
Decision tree... Elec. test
OK to have questions Yes OK?
No Repair
in a different order
Dimensions
OK?
Yes Reject
Yes
No Elec. test
OK?
No Reject

Mech. test
OK? Yes Repair
Elec. test
Yes OK?
No No Reject
Dimensions
OK?

Yes Reject
No Elec. test 32
OK?
No Reject
 Yes Accept
Decision tree... Mech. test
OK to have questions Yes
OK? Repair
in a different order No
Elec. test
OK?
Yes Repair
Yes
No Mech. test
OK?
No Reject

Dimensions
OK?
Yes Reject

Yes Mech. test

OK?
No No Reject
Elec. test
OK?
Yes Reject
No Mech. test 33
OK?
No Reject
Decision trees & decision tables

 Decision trees
 enable all possible options to be considered
 Decision tables
 enable all possible options to be considered
 Decision trees and decision tables
 equivalent to one another
 each column in the table matches a path in the tree
 different forms of representation
 can be “pruned” to remove redundancy 34
Decision tree... Yes Accept
Elec. test
(original) Yes OK?
Repair
No
Mech. test
OK? Yes Repair
Yes
No Elec. test
OK?
No Reject

Dimensions
OK?
Yes Reject
Elec. test
Yes OK?
No No Reject
Mech. test
OK?
Yes Reject
No Elec. test 35
OK?
No Reject
 Decision table
Each action in the decision table is equivalent to a terminal node in the decision tree:
1 accept
2 repair
5 remaining actions reject

Correct dimensions? Y Y Y Y N N N N
Passed mechanical test? Y Y N N Y Y N N
Passed electrical test? Y N Y N Y N Y N
Accept product X
Repair product X X
Reject product X X X X X
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 Yes Accept

Decision tree... Yes

Elec. test
OK?
No Repair

Mech. test
OK? Yes Repair
Yes
No Elec. test
OK?
No Reject

Dimensions
OK?
Yes Reject
Elec. test
Yes OK?
No No Reject
Mech. test
OK?
Yes Reject
No Elec. test 37
OK?
No Reject
 Decision table
Each action in the decision table is equivalent to a terminal node in the decision tree:
1 accept
2 repair
5 remaining actions reject

Correct dimensions? Y Y Y Y N N N N
Passed mechanical test? Y Y N N Y Y N N
Passed electrical test? Y N Y N Y N Y N
Accept product X
Repair product X X
Reject product X X X X X
38
 Yes Accept

Decision tree... Yes

Elec. test
OK?
No Repair

Mech. test
OK? Yes Repair
Yes
No Elec. test
OK?
No Reject

Dimensions
OK?
Yes Reject
Elec. test
Yes OK?
No No Reject
Mech. test
OK?
Yes Reject
No Elec. test 39
OK?
No Reject
 Decision table
Each action in the decision table is equivalent to a terminal node in the decision tree:
1 accept
2 repair
5 remaining actions reject

Correct dimensions? Y Y Y Y N N N N
Passed mechanical test? Y Y N N Y Y N N
Passed electrical test? Y N Y N Y N Y N
Accept product X
Repair product X X
Reject product X X X X X
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 Decision tree: Yes Accept
removing redundancy Elec. test
Yes OK?
No Repair

Mech. test
OK? Yes Repair
Yes
No Elec. test
OK?
No Reject
No
Dimensions Reject If dimensions
OK? are wrong,
Yes Reject
we don’t
Elec. test need
Yes OK? mechanical &
A single
No No Reject electrical
line with
“No” Mech. test tests: just
replaces OK? reject
this part of Yes Reject
the tree No Elec. test 41
OK?
No Reject
 Decision table: removing redundancy
Each action in the decision table is equivalent to a terminal node in the decision tree:
1 accept
2 repair
If dimensions are wrong, we
5 remaining actions reject
don’t need mechanical &
Now add “don’t care” condition (“-”)
electrical tests - just reject
it doesn’t matter whether it is Y or N

Correct dimensions? Y Y Y Y N N N N N
Passed electrical test? Y Y N N N Y N N -
Passed mechanical test? Y N Y N N N Y N -
Accept product X
Repair product X X
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Reject product X X X X X X
 Decision table: components (1)

Correct dimensions?
Passed electrical test? 1. Conditions
Passed mechanical test?
Accept product
Repair product 2. Actions
Reject product

3. Number of rules = 2N
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where N is the number
of conditions, i.e….
 Decision table: components (2)

4. Condition entries

Correct dimensions? Y Y Y Y N N N N
Passed electrical test? Y Y N N Y Y N N
Passed mechanical test? Y N Y N Y N Y N
Accept product
Repair product
Reject product

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 Decision table: components (3)

Correct dimensions? Y Y Y Y N N N N
Passed electrical test? Y Y N N Y Y N N
Passed mechanical test? Y N Y N Y N Y N
Accept product X
Repair product X X
Reject product X X X X X

5. Action entries 45
 Decision table: components (4)

Decision table with redundancy identified and removed

Correct dimensions? Y Y Y Y N
Passed electrical test? Y Y N N -
Passed mechanical test? Y N Y N -
Accept product X
Repair product X X
Reject product X X

6. Redundancy identified and removed

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(“-” = don’t care conditions)
Decision-making: phases

 Intelligence
◦ Problem/Opportunity exists
◦ Decision must be made
 Design
◦ Identify and examine possible solutions
 Choice
◦ Rank solutions and select best option
 Implementation… (do it!)
◦ ...and evaluate success of decision
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Decision-making: intelligence phase

 Problem identification
 Problem classification
 Problem decomposition
 Problem ownership

 Problem statement
◦ identification and impact
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Decision-making: design phase

 Trial and error

 Modelling Real-world Logical
problem problem
◦ Simulation
(physical) (model)
◦ Goal-seeking
◦ Optimisation
◦ What-if? analysis
◦ Heuristics Real-world Logical
◦ Like SSM… solution solution
(see Checkland) (physical) (model)

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Decision-making: choice phase

 Criteria of choice
 Search for best option

(based on comparison with criteria of choice)

◦ Blind search - complete or partial
◦ Heuristic search
 Search until you find a “good enough” solution
(known as satisficing)

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Decision-making: implementation phase

 Test the solution

 Is it working?
 If not, may need to return to
design, choice or intelligence stage
 Perhaps we are solving the “wrong” problem
 Can it be improved?
 Fine-tune the solution
 Monitor progress
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Data and information: types, sources

 Types of data: Managers need information to

◦ qualitative support their decision-making
◦ quantitative i.e. any management decision
 Sources of data: will have associated
◦ internal ‘information needs’
◦ external
◦ private
 Information:
◦ data processed for a purpose
◦ reduces uncertainty about a situation

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(Chaffey, 2003)
 Data is processed to produce information

 Examples of data processes:

◦ classification
◦ rearranging / sorting
◦ aggregating
◦ performing calculations
◦ selection
◦ exceptions
◦ presentation (graph / table / chart / diagram)

 Information produced can be used to support

decision-making 53
(Chaffey, 2003)
 Information is a resource with value
for the manager and the organisation
◦ tangible value
◦ intangible value

 As well as value, information comes at a cost:

Value of information - Cost of gathering information

or

Improvements in decision behaviour - Cost of gathering information

(Chaffey, 2003)

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Information supports decision-making at all levels in an organisation:

 Strategic
◦ Wide time period, infrequent, primarily external,
less certain, wide in scope, summarised

 Tactical
◦ Medium time/frequency/source/certainty/scope/detail
between the two extremes

 Operational
◦ Narrow time period, frequent, primarily internal,
more certain, narrow in scope, detailed
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 Chaffey, D. (ed.), 2003, Business Information Systems, 2nd ed., FT
Prentice Hall

 Laudon, K. & Laudon, J., 2004, Management Information Systems, 8th ed.,
Pearson Prentice Hall

 Lucey, T., 2009, Management Information Systems, 10th ed., Continuum

 Turban E. & Aronson J.E., 2001, Decision Support Systems and Intelligent
Systems (6th edition), Prentice Hall Business Publishing

 Turban, E., Sharda, R., Delen, D., 2010, Decision Support and Business
Intelligence Systems, 9th edition, Pearson, ISBN-10  0132453231, ISBN-13
978-0132453233
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 Whiteley, D., 2004, Introduction to Information Systems, Palgrave