DECISION SCIENCES

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DECISION SCIENCES

• KAM VI
• DECISION SCIENCES
• FOR
• WALDEN UNIVERSITY
• by
• Earl C. Joseph

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TOPICS COVERED

• SEMINAR GOALS
• DEFINITIONS
• DECISION-MAKING PROCESS
• DECISSION MAKING MODELS/THEORIES
• SOME DECISION-MAKING TOOLS
• BIBLIOGRAPHY

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KAM VI SEMMINAR

• KAM PURPOSE COMPARES CONTEMPORARY PROFESSIONAL
  PRACTICES, STRATEGIES, AND ETHICS IN THE DECISION
  SCIENCES
• THIS SEMINAR SURVEY OF QUALITATIVE
  NON-STATISTICAL TOOLS APPROACHES USEFUL TO
  SCHOLARLY PRACTITIONERS

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SOME DEFINITIONS

• TYPES OF DECISIONS
• PROGRAMMED OR NON-PROGRAMMED
• DECISIONS CRITERIA
• A CHOICE AMONGST ALTERNATIVES
• AN ALLOCATION OF RESOURCES
• A FORECAST WHEN FOLLOWED A BETTER FUTURE WILL
  RESULT
• TO SOLVE A PROBLEM
• TO AVOID A FUTURE THREAT
• TO CAPITALIZE ON AN OPPORTUNITY
• DECISION SCIENCE
• PHILOSOPHY, METHODS, AND PROCESSES OF DECISION
  MAKING

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DECISION-MAKING PROCESS

• UNDERSTAND THE PROBLEM AND SET GOALS
• CONSIDER A VARIETY OF POSSIBLE SOLUTION
  ALTERNATIVES AND COURSES OF ACTION
• COLLECT DATA AND ASSESS PROBABLE FUTURE OUTCOMES
  OF EACH
• WEIGH THE PRO AND CONS OF EACH, THEN DECIDE BY
  CHOOSING WHICH ONE BEST FITS YOUR GOALS

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DECISSION MAKING MODELS/THEORIES

• NATURALISTIC About how decisions are made, not
  how they should be made
• PRESCRIPTIVE Seeks to maximize expected value
• RATIONAL Interprets decisions and resulting
  actions as rational choices basic concepts
• Problem or opportunity clarity
• Goal oriented
• Known options
• Clear preferences
• Choice depends on which alternatives are
  considered
• Clear payoffs
• Forecast (or guess) about the future outcome of
  decision
• How the decision maker will feel about results
• RATIONAL WITH UNCERTAINTY Uncertainty of the
  future outcome consequences

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DECISION-MAKING TOOLS SWOTS

• SWOTS STRENGTHS, WEAKNESSES, OPPORTUNITIES,
  THREATS, STRATEGY
• PHILOSOPHY WHAT STRENGTHS CAN BE APPLIED TO
  OVERCOME OUR WEAKNESSES TO AVOID FUTURE THREATS
  CAPITALIZE ON OPPORTUNITIES
• PROCESS PERIODICALLY DEVELOP A SWOT AND USE TO
  DECIDE HOW TO ADJUST STRATEGY

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DECISION-MAKING TOOLSFEASIBILITY ANALYSIS

• GATHER DATA AND ANALYZE TO DETERMINE
• IS IT POSSIBLE?
• TECHNICALLY?
• ECONOMICALLY?
• IS THERE A MARKET?
• EXISTING?
• MUST IT BE DEVELOPED? ()
• DO WE HAVE THE RESOURCES?
• ECONOMIC?, PEOPLE?
• CORE COMPETENCIES (EXISTING OR OBTAINABLE)?

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DECISION-MAKING TOOLSBENCHMARKING

• ASSESS CURRENT PRACTICE
• DO COMPETITIVE BUSINESS INTELLIGENCE RESEARCH
  TO FIND OUT HOW COMPETITORS ARE BETTER FOR
  WHICH PRACTICE
• ASSESS TO DETERMINE WHICH PRACTICES NEED TO BE
  IMPROVED TO HAVE A COMPETITIVE ADVANTAGE

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ISHIKAWA CAUSE-EFFECT DIAGRAM- FISHBONE ANALYSIS

• TARGET A SPECIFIC EFFECT
• ESTABLISH GOALS FOR THE IMPACT
• SURVEY TO DRAW POTENTIAL CAUSES
• ANALYZE PRIORITIZE CAUSES
• SELECT CAUSES TO IMPACT AND ACHIEVE DESIRED EFFECT

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SHELL OIL CO. SCENARIO FORECASTING

• DETERMINE GOALS OBJECTIVES
• COLLECT TREND DATA ON ORGANIZATIONAL AND
  ENVIRONMENT VARIABLES RELEVANT TO GOALS
• ASSESS POTENTIAL FUTURE IMPACTS OF TRENDS ON THE
  ORGANIZATION
• CREATE MULTIPLE SCENARIOS SURPRISE FREE, EXTREME
  CASES, INTERMEDIATES
• FORECAST POTENTIAL IMPACT OF EACH
• MODIFY CURRENT STRATEGIES TO AVOID THREATS AND TO
  CAPITALIZE ON OPPORTUNITIES

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DECISION-TREE ANALYSIS

• APPLICATION IDENTIFY OPTIONS POTENTIAL
  OUTCOMES OF A DECISION
• PROCEDURE
• IDENTIFY DECISION ALTERNATIVES
• DIAGRAM THEM IN A DECISION TREE
• CALCULATE COSTS RETURNS
• ESTIMATE PROBABILITY OF EACH
• CHOOSE BEST ALTERNATIVE

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PROGRAM EVALUATION REPORTING TECHNIQUE (PERT)

• SELECT GOALS TO BE ACHIEVED AT A SPECIFIED DATE
• DRAW DECISION PATHS TO ACHIEVE GOALS
• ESTIMATE TIME NEEDED TO MAKE DECISIONS
• MAKE STRATEGIC IMPROVEMENTS
• FOR THOSE GOALS THAT CAN BE ACHIEVED AHEAD OF
  SCHEDULE, RELEASE SOME RESOURCES TO DELAY THEM
• APPLY RESOURCES TO GOAL PATHS THAT ARE ESTIMATED
  TO BE LATE

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ECONOMY OF SCALE SCOPE

• ECONOMY OF SCALE
• FIND OPTIMUM SIZE LIMITS
• ADJUST STRATEGY TO MAXIMIZE EFFICIENCY
• ECONOMY OF SCOPE
• LIST PRODUCTS OR PROJECTS
• FIND COMMONALITIES AND STANDARDIZE ACROSS
  BOUNDARIES

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CRITICAL SUCCESS FACTORS (CSFs)

• RESEARCH TO FIND CSFs
• ASSESS IMPORTANCE OF EACH CSFs
• ASSESS POSITIVE AND NEGATIVE IMPACTS OF INTERNAL
  EXTERNAL FACTORS TRENDS ON CSFs
• DEVELOP STRATEGIC OPTIONS

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STRATEGIC ISSUES MANAGEMENT

• PERIODICALLY IDENTIFY ISSUES
• MONITOR, TRACT, FORECAST, AND PRIORITIZE ISSUES
• WHEN AN ISSUE IS FORECASTED TO REACH A CRITICAL
  POINT
• ADJUST STRATEGIC PLANS TO AVOID OR SOFTEN
  THREATS AND TO CAPITALIZE ON OPPORTUNITIES

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DECISION MAKING TRENDS

• 1980s 90s PARTICIPATORY DECISION MAKING
  INVOLVING MUCH OF THE ORGANIZATION
• IN LAST FEW YEARS TREND IS TO INVOLVE MOSTLY
  UPPER MANAGEMENT
• PAST MANAGEMENT ABDICATED THEIR DECISION ROLE TO
  LOWER ECHELONS
• WHY THE CHANGE NOW EXPERIENCE, ESPECIALLY WITH
  THE DOT.COMS, POINTED-OUT THE FALACY OF ALLOWING
  IMPORTANT DECISIONS TO BE MADE BY LOWER STAFF

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BIBLIOGRAPHY gtGray, C. Larson, E. (1999).
Project management The managerial process
(Series in Operations and Decision Sciences). New
York Irwin/McGraw Hill. gtHiam, Alexender.
(1990). The vest-pocket CEO Decision-making
tools for executives. Englewood Cliffs, NJ
Prentice Hall. Laner, S., Lind L., Toldei, C.,
Fisk, S., Berger, D. (1996). Facilitator's
guide to participatory decision-making. New
Society Pub. gtSkul, F., Delbecq, A., Cummings,
L. (1970). Organizational decision making. New
York McGraw-Hill. gtVon Furstenberg, G. (1990).
Acting under uncertainty Multidisciplinary
conceptions. (Theory and Decision Library).
Kluwer Academic Publishers.