Chapter 7: Supporting Decision Making Flashcards
type of information required by decision makers in a company is directly related to the ______________ and the amount of structure in the decision situations they face
level of management decision making
T or F. It is important to understand that the framework of the classic managerial pyramid applies even in today’s downsized organizations and flattened or nonhierarchical organizational structures
True
T or F.
Levels of management decision making still exist, but their size, shape, and participants
continue to change as today’s fluid organizational structures evolve
True
Enumeration:
levels of managerial decision making
● Strategic Management
● Tactical Management
● Operational Management
Typically, a board of directors and an executive committee of the CEO and top
executives develop overall organizational goals, strategies, policies, and
objectives as part of a strategic planning process
Strategic Management
They also monitor the strategic performance of the organization and its overall
direction in the political, economic, and competitive business environment
Strategic Management
business professionals in self-directed teams as well as business unit
managers develop short- and medium-range plans, schedules, and budgets and
specify the policies, procedures, and business objectives for their subunits of the
company
Tactical Management
They also allocate resources and monitor the performance of their organizational
subunits, including departments, divisions, process teams, project teams, and
other workgroups.
Tactical Management
The members of self-directed teams or operating managers develop short-range
plans such as weekly production schedules
Operational Management
They direct the use of resources and the performance of tasks according to
procedures and within budgets and schedules they establish for the teams and
other workgroups of the organization.
Operational Management
T or F.
People need information of high quality, that is, information products whose
characteristics, attributes, or qualities make the information more valuable to them.
True
What characteristics of information products make them valuable and useful to you?
Information Quality
T or F.
Information that is outdated, inaccurate, or hard to understand is not very meaningful,
useful, or valuable to you or other business professionals.
True
Information that is outdated, inaccurate, or hard to understand is not very meaningful,
useful, or valuable to you or other business professionals.
Information Quality
Enumeration:
Time Dimensions
- Timeliness
- Currency
- Frequency
- Time Period
Enumeration:
Content Dimensions
- Accuracy
- Relevance
- Completeness
- Conciseness
- Scope
- Performance
Enumeration:
Form Dimensions
- Clarity
- Detail
- Order
- Presentation
- Media
Information should be provided when it is needed
Timeliness
Information should be up-to-date when it is provided
Currency
Information should be provided as often as needed
Frequency
Information can be provided about past, present, and future time period
Time Period
Information should be free from errors
Accuracy
Information should be related to the information needs of a specific recipient for a specific location
Relevance
All the information that is needed should be provided
Completeness
Only the information that is needed should be provided
Conciseness
Information can have a broad or narrow scope, or an internal or external focus
Scope
Information can reveal performance by measuring activities accomplished, progress made, or resources accumulated
Performance
Information should be provided in a form that is easy to understand
Clarity
Information can be provided in detail or summary form
Detail
Information can be arranged in a predetermined sequence
Order
Information can be presented as narrative, numeric, graphic, or other forms
Presentation
Information can be provided in the form of printed paper documents, video displays, or other media
Media
One way to understand decision making is to look at ______________
decision structure
T or F.
Decisions made at the operational management level tend to be more unstructured, those at the tactical level are more semi structured, and those at the strategic management level are more structured
False
involve situations in which the procedures to follow, when a decision is needed, can be specified in advance. The inventory reorder decisions that most businesses face are a typical example
Structured decisions
involve decision situations in which it is not possible to specify in advance most of the decision procedures to follow. Most decisions related to long-term strategy can be thought of as unstructured
Unstructured decisions
that is, some decision procedures
can be pre-specified but not enough to lead to a definite recommended decision. For
example, decisions involved in starting a new line of e-commerce services or making
major changes to employee benefits would probably range from unstructured to
semi structured.
semi-structured decisions
are those for which no procedures or rules exist to guide the decision makers toward the correct decision. In these types of decisions, many sources of information must be accessed, and the decision often rests on experience and “gut feeling.”
Unstructured decisions
decision makers at the strategic management level may look to ___________ to provide them with more summarized, ad hoc, unscheduled reports, forecasts, and external intelligence to support their more unstructured planning and policymaking responsibilities
decision support systems (DSS)
Decision makers at the operational management level, in contrast, may depend on
______________ to supply more prespecified internal reports emphasizing detailed current and historical data comparisons that support their more structured responsibilities in day-to-day operations
management information systems (MIS)
Decision support provided: Provide information about the performance of the organization
management information systems (MIS)
Information form and frequency: periodic, exception, demand, and push reports and responses
management information systems (MIS)
Information format: Prespecified, fixed format
management information systems (MIS)
Information processing methodology: Information produced by extraction and manipulation of business data
management information systems (MIS)
Decision support provided: Provide information and decision support techniques to analyze specific problems or opportunities
Decision Support Systems (DSS)
Information form and frequency: Interactive inquiries and response
Decision Support Systems (DSS)
Information format: Ad hoc, flexible, and adaptable format
Decision Support Systems (DSS)
Information processing methodology: Information produced by analytical modeling of business data
Decision Support Systems (DSS)
date originated classic management
information systems
1960s
date originated decision support systems
1970s
date originated executive
information systems
1980s
Who proposed BI as an umbrella term
to describe “concepts and methods to improve business decision making by using fact-based support systems.”
Howard Dresner
In what year Howard Dresner proposed BI as an umbrella term to describe “concepts and methods to improve business decision making by using fact-based support systems.”
1989
concepts and methods to improve business decision making by using fact-based support systems.
Business Intelligence (BI)
It is considered a necessary and mission critical element in crafting and executing
a firm’s strategy
Business Intelligence (BI)
It is rapidly becoming the mainstay for business decision making in the modern
organization.
Business Intelligence (BI)
As with all concepts in business-related technologies, business intelligence has evolved
from Dresner’s original definition focusing on concepts and methods to a more action-oriented approach referred to as ______________
business analytics
It refers to the skills, technologies, applications, and practices applied to a continuous iterative exploration and investigation of a business’s historical performance to gain insight and drive the strategic business planning process.
Business Analytics (BA)
It focuses on developing new insights and understanding of business performance based on data and statistical methods.
Business Analytics (BA)
It traditionally focuses on using a consistent set of metrics to both measure past performance and guide business planning, which is also based on data and statistical methods
Business Intelligence (BI)
_________ makes much more extensive use of data, statistical and quantitative
analysis, explanatory and predictive modeling, and fact-based management to drive
decision making
Business analytics
____________ is more associated with querying, reporting, online analytical
processing (OLAP), and “alerts.”
Business intelligence
In other words, querying, reporting, OLAP, and alert tools can answer the questions:
- what happened;
- how many;
- how often;
- where;
- where exactly is the problem; and
- what actions are needed
Business intelligence
______________, in contrast, can answer the questions:
- why is this happening;
- what if these trends continue;
- what will happen next (that is, predict); and
- what is the best that can happen (that is, optimize).
Business analytics
Enumeration:
Business intelligence applications
- Decision Support Systems
- Knowledge Management Systems
- Online Analytical Processing
- Data Mining
- Management Information Systems
are computer-based information systems that provide interactive information support to managers and business professionals during the decision making process.
Decision Support Systems
Enumeration:
Decision support systems use:
- analytical models,
- specialized databases,
- a decision maker’s own insights and judgments, and
- an interactive, computer-based modeling process to support semi structured
business decisions
are thus able to support directly the specific types of decisions and the personal decision-making styles and needs of individual executives, managers, and business professionals.
Decision support systems
rely on model bases, as well as databases, as vital system resources
decision support systems
A _________________ is a software component that consists of models used in computational
and analytical routines that mathematically express relationships among variables.
DSS model base
A _______________ could also include models and analytical techniques used to express
much more complex relationships.
DSS model base
enables managers and analysts to interactively examine and manipulate large amounts of detailed and consolidated data from many perspectives.
Online Analytical Processing
involves analyzing complex relationships among thousands or even millions of data
items stored in data marts, data warehouses, and other multidimensional databases to
discover patterns, trends, and exception conditions.
Online Analytical Processing
An _____________ session takes place online in real time, with rapid responses to a manager’s or analyst’s queries, so that the analytical or decision-making process is undisturbed.
Online Analytical Processing (OLAP)
provides a user-friendly environment for interactive data analysis. One of the most
popular front-end applications for____________ is a PC spreadsheet program
Online Analytical Processing (OLAP)
performs aggregation on a data cube either by climbing up the hierarchy or by dimension reduction.
Roll-up (drill-up)
Roll-up operation
n is the reverse of roll-up. That means lower level summary to higher level
summary.
Drill-down
Enumeration:
Drill-down can be performed either by:
a. Stepping down a concept hierarchy for a dimension
b. By introducing a new dimension.
performs a selection on one dimension of the given cube, resulting in a subcube.
slice operation
slice
Reduces the dimensionality of the cubes.
slice
defines a sub-cube by performing a selection on two or more dimensions
dice operation
dice
is also known as rotate. It rotates the data axis to view the data from different perspectives.
Pivot
Enumeration:
Common business areas where OLAP can solve complex problems include
○ Marketing and sales analysis
○ Clickstream data
○ Database marketing
○ Budgeting
○ Financial reporting and consolidation
○ Profitability analysis
○ Quality analysis
A decision support system involves an interactive __________ process.
analytical modeling
Enumeration:
Four basic types of analytical modeling activities are involved in using a decision support system:
- what-if analysis,
- sensitivity analysis,
- goal-seeking analysis, and
- optimization analysis
user makes changes to variables, or relationships among variables, and observes the resulting changes in the values of other variables.
What-If Analysis
This type of analysis would be repeated until the manager was satisfied with what
the results revealed about the effects of various possible decisions
What-If Analysis
A managerial user would be able to observe and evaluate any changes that
occurred to the values in the spreadsheet, especially to a variable such as net
profit after taxes.
What-If Analysis
To many managers, net profit after taxes is an example of the __________, that is,
a key factor in making many types of decisions.
bottom line
the value of only one variable is changed repeatedly, and the resulting
changes on other variables are observed
Sensitivity Analysis
special case of what-if analysis.
Sensitivity Analysis
a case of what-if analysis that involves
repeated changes to only one variable at a time
Sensitivity Analysis
decision makers use______________ when they are uncertain about the assumptions made in estimating the value of certain key variables.
Sensitivity Analysis
reverses the direction of the analysis done in what-if and sensitivity analyses.
Goal Seeking Analysis
Instead of observing how changes in a variable affect other variables, _________________(also called how-can analysis) sets a target value (goal) for a variable and then repeatedly changes other variables until the target value is achieved
Goal Seeking Analysis
is another important method of decision support.
Goal Seeking Analysis
is a more complex extension of goal-seeking analysis.
Optimization Analysis
Instead of setting a specific target value for a variable, the goal is to find the
optimum value for one or more target variables, given certain constraints
Optimization Analysis
Then one or more other variables are changed repeatedly, subject to the specified
constraints, until you discover the best values for the target variables.
Optimization Analysis
Changes to such variables could be subject to constraints, such as the limited
capacity of a production process or limits to available financing.
Optimization Analysis
The main role of data mining is to provide decision support to managers and business
professionals through a process referred to as _________________.
knowledge discovery
analyzes the vast stores of historical business data that have been prepared for analysis in corporate data warehouses and tries to discover patterns, trends, and correlations hidden in the data that can help a company improve its business performance
Data mining software
may perform regression, decision tree, neural network, cluster detection, or market basket analysis for a business.
Data mining software
T or F. The data mining process can highlight buying patterns, reveal customer tendencies, increase redundant costs, or uncover unseen profitable relationships and opportunities.
False
