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The six-step decision-making process

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Problem identification Data collection Solution generation Solution test Solution selection Solution implementation

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Problem Identification

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Define the problem as clearly and precisely as possible

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Data Collection

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Gather problem-related date, including who, what, where, when, why, and how. Be sure to gather facts, not rumors or opinions about the problem

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Solution Generation

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Detail every solution possible including ideas that seem farfetched

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Solution Test

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Evaluate solutions in terms of feasibility, suitability, and acceptability

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solution Selection

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Select the solution that best solves the problem and meets the needs of the business

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Solution Implementation

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if the solution solves the problem, then the decisions made were correct. If not, then the decisions were incorrect and the process begins again

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Operational Decision making

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employees develop, control, and maintain core business activities required to run the day to day operations

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structured decisions

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situations where established processes offer potential solutions

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Managerial decision making

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Employees evaluate company operations to identify, adapt to, and leverage change

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Semistructured decisions

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Occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision

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Strategic decision making

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Managers develop overall strategies, goals, and objectives

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Unstructured decisions

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Occurs in situations in which no procedures or rules exist to guide decision makers toward the correct choice

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Project

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A temporary activity a company undertakes to create a unique product, service, or result

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Metrics

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Measurements that evaluate results to determine whether a project is meeting its goals

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Critical success factors (CSFs)

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The crucial steps companies make to perform to achieve their goals and objectives and implement strategies *Create high-quality products *Retain competitive advantages *Reduce product costs *Increase customer satisfaction *Hire and retain the best professionals

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Key performance indicators (KPIs)

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The quantifiable metrics a company uses to evaluate progress toward critical success factors *Turnover rates of employees *Number of product returns *Number of new customers *Average customer spending

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Internal KPI Return on investment (ROI)

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Indicates the earning power of a project

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External KPI Market share

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The portion of the market that a firm captures (external)

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Efficiency MIS metrics

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Measure the performance of MIS itself, such as throughput, transaction speed, and system availability

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Effectiveness MIS metrics

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Measures the impact MIS has on business processes and activities, including customer satisfaction and customer conversation rates

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Benchmark

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Baseline values the system seeks to attain

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Benchmarking

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A process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance

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Model

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A simplified representation or abstraction of reality

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Models help managers to

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*Calculate risks *Understand uncertainty * Change variables *Manipulate time to make decisions

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Transaction processing system (TPS)

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Basic business system that serves the operational level and assists in making structured decisions

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Online transaction processing (OLTP)

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Capturing of transaction and event information using technology to process, store, and update

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Source document

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The original transaction record

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Online analytical processing (OLAP)

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Manipulation of information to create business intelligence in support of strategic decision making

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Decision support system (DSS)

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Models information to support managers and business professionals during the decision-making process

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Four quantitative models used by DSSs

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What-if analysis Sensitivity analysis Goal-seeking analysis Optimization analysis

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Executive information system (EIS)

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A specialized DSS that supports senior level executives within the organization *Granularity *Visualization *Digital dashboard

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Most EISs offering the following capabilities

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Consolidation Drill-down Slice-and-dice Pivot

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Artificial intelligence (AI)

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Simulates human intelligence such as the ability to reason and learn

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Intelligent system

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Various commercial applications of artificial intelligence

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Five most common categories of AI

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Expert system Neural Network Genetic algorithm Intelligent agent Virtual realit

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Expert system

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Computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems

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Neural Network

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Attempts to emulate the way the human brain works

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Fuzzy logic

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A mathematical method of handling imprecise or subjective information

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Genetic algorithm

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An artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem

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Shopping bot

answer

Software that will search several retailer websites and provide a comparison of each retailer's offerings including price and availability

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Intelligent agent

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Special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users

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Virtual reality

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A computer-simulated environment that can be a simulation of the real world or an imaginary world

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Customer facing process

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Results in a product or service that is received by an organization's external customer *Order Processing* *Customer Service *Sales Process *Customer Billing *Order Shipping

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Business facing process

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Invisible to the external customer but essential to the effective management of the business * Strategic Planning *Tactical Planning *Budget Forecasting * Training * Purchasing Raw Materials

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Business process modeling (or mapping)

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The activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities, in a structured sequence

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Business process model

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A graphic description of a process, showing the sequence of process tasks, which is developed for a specific

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Workflow

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Includes the tasks, activities, and responsibilities required to execute each step in a business process

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Business process improvement

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Attempts to understand and measure the current process and make performance improvements accordingly

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Automation

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The process of computerizing manual tasks

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Streamlining

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Improves business process efficiencies by simplifying or eliminating unnecessary steps

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Bottleneck

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Occur when resources reach full capacity and cannot handle any additional demands

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Redundancy

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Occurs when a task or activity is unnecessarily repeated

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Business process reengineering (BPR)

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Analysis and redesign of workflow within and between enterprises

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Dynamic Process

answer

throwing a bird in the air changing order levels based on currency rates cancelling business travel due to extreme weather managing layoffs of employees

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Static Process

answer

throwing a rock in the air Creating Financial Statements Calculating Taxes Payroll

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managerial decision making challenges

answer

analyze large amounts of information apply sophisticated analysis techniques make decisions quickly

question

decision making and problem solving occur at each level in an organization

answer

strategic managerial operational

question

input

answer

source documents asdf

question

process

answer

CRUD Calculate Summarize

question

output

answer

reports

question

Managerial Support Systems

answer

Input-TPS Process- What if, sensitivity, goal seeking, optimization output-forecasts, simulations, ad hoc reports

question

transaction Processing Systems

answer

Order Processing system-order entry Inventory Tracking System - Inventory Data Shipping Data - Distribution System

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Decision Support Systems

answer

Sales Data------------------------------- Manufacturing Data -- ---- --- --- -- Decision Supp. Sys Transportation Data-------------------

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Strategic Support Systems Information Levels throughout an Organization

answer

Fine---------> Coarse OLTP--------> OLAP Transactional----------> Analytical

question

Industry Specific Customer Facing Processes

answer

Banking-Loan Process Insurance- Claims processing Government-Grant Allocation Hotel-Reservation Handling Airline- Baggage Handling

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Managing Business Processes

answer

Step 1 Create Campaign, Check inventory Step 2 Place Order, Notify Production, Check Credit step 3 Manufacture Goods Step 4 Deliver Goods, Bill Customer Step 5 Support Sale

question

BPMN EVENT

answer

anything that happens during the course of a business process. Represented by a circle in a business process model. Includes customer requests, time requests, or the end of the process.

question

BPMN ACTIVITY

answer

task in a business process. An activity is any work that is being performed in a process. An activity is represented by a rounded corner rectangle. Includes checking availability, picking up the customers, and confirming the booking.

question

BPMN GATEWAY

answer

USED TO CONTROL THE FLOW OF A PROCESS. gateways HANDLE THE FORKING, MERGING, AND JOINING OF PATHS WITHIN A PROCESS. Gateways are represented by a diamond shape. Includes determining availability status or accepting/declining the request

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BPMN FLOW

answer

Display the path in which the process flows. Flows are represented by arrow

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Operational Business Processes Automation Steps in Business Process Improvement

answer

Document As Is process Establish Measures Follow Process Measure Performance Identify and Implement Improvements

question

Strategic Business Processes Reengineering

answer

Set Project Scope Study Competition Create New Processes Implement Solution

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Monitors processes to ensure tasks activities and responsibilities are executed as specified

answer

Workflow Control Systems

question

Managerial Business Processes

answer

Semi dynamic, Semi routine, monthly business processes such as resource allocation, sales strategy, or manufacturing process improvements

question

allows humans to interact with a computer through bodily sensations and movements

answer

Haptic Interface

question

Original Transaction Record

answer

Source Document

question

three structured decisions that are made frequently and are almost repetitive in nature and affect short term business strategies

answer

Creating the employee staffing schedule Recording inventory Creating the weekly production schedules

question

Analytical Information

answer

Market Projections Sales Trends Future growth projections

question

3 primary decision making challenges facing managers today

answer

analyze large amounts of information make decisions quickly apply sophisticated analysis techniques

question

work environment that is not located in any one physical space

answer

virtual workspace

question

3 primary types of business process change

answer

streamlining reengineering automation

question

three primary types of MIS decision making systems

answer

Executive Information Systems Decision Support Systems Transaction Processing System

question

Static, Routine, Daily business processes such as stocking inventory, checking out customers, or daily opening and closing processes

answer

operational

question

Wearable computer with an optical head mounted display (OHMD)

answer

Google Glass

question

Transactional Information

answer

Purchasing Stocks Withdrawing cash from an ATM Making Airline reservations

question

Virtual Reality

answer

working virtually around the globe

question

Intelligent Agents

answer

Environmental scanning and competitive intelligence

question

Genetic Algorithm

answer

Investment companies in trading decisions

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Expert Systems

answer

Playing Chess

question

rotates data to display alternative presentations of the data

answer

PIVOT

question

three characteristics of strategic decisions

answer

unstructured, non recruiting, one time decision types Senior management, presidents, leaders, and executives employee types long term, yearly, and multi year time frames

question

Decision Making Process

answer

1. Problem Identification 2. Data Collecion 3. Solution Gen 4. Solution test 5. Solution Selection 6. Solution Implem

question

core processes

answer

business processes, such as manufacturing goods, selling products, and providing, service, that make up the primary activities in a value chain

question

Throughput

answer

the amount of information that can travel through a system at any point in time

question

Usability

answer

ease with which people perform transaction/find info

question

customer satisfacion

answer

measured by satisfaction surveys

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conversion rate

answer

the # of customers an organization "touches"

question

financial

answer

such as return on investment

question

UNSTRUCTURED DECISION EXAMPS

answer

entering new market entering new industry

question

Input Process Output

answer

transaction processing sys what-if, sensitivity, goal-seeking, optimization forecasts, simulations, ad hoc

question

refers to the level of detail in the model or the decision making process

answer

granularity

question

BPMN notation is a task in a business process

answer

BPMN activity

question

strategic business process

answer

dynamic, nonroutine, long-term business processes

question

input process output

answer

time sheets, wage rates, benefits update employee records, calculate payroll summarize benefits

question

three characteristics of operational information

answer

structured, recurring, repetitive decision analysts and staff short term and day to day

question

three characteristics of managerial decisions

answer

semisrucured, ad hoc reporting decisions middle management and director employee short term, daily, monthly and yearly time frames

question

neural network

answer

credit card companies checking for fraud

question

two types of DSS

answer

system to diagnose patients system identifies risks for insurance companies

question

BPMN is a graphical notation that depicts the steps in a _____ process

answer

BUSINESS

question

three purposes of a business process model

answer

encourage conciseness expose process detail gradually focus attention on the process model interfaces

question

Efficiency

answer

focuses on the extent to which a firm is using its resources in an optimal way

question

Effectiveness

answer

focuses on how well a firm is achieving its goals and objectives

question

three opportunities managers can identify when focusing on reengineering

answer

is it crucial for productivity improvement is the process broken will savings from automation be visible

question

The structure of a typical organization is similar to a _____ and the ifferent levels require types of information to assist in decision making problem solving and opportunity capturing

answer

PYRAMID

question

three conditions that indicate the time is right to initiate a business process change

answer

the company is markedly below industry benchmarks on its core processes there has been a pronounced shift in the market the process was designed to serve to regain competitive advantages the company must leapfrog competition on key dimensions

question

efficiency and effectiveness where does a company want to operate

answer

upper right hand corner

question

primary difference between KPI's and CSF's

answer

KPIs are far more specific than CSF

question

HOw can a spreadsheet program, Microsoft office excel, help managers make decisions

answer

modeling relationships

question

three benefits an organization can identify by investigating business processes

answer

identify bottlenecks recognize smooth running processes remove redundant tasks

question

Company used business process reengineering to create a competitive advantage

answer

progressive insurance

question

what does fuzzy logic assign as values to vague or ambiguous information

answer

0 and 1

question

three features of a neural network

answer

coping with huge volumes of information with many dependent variables learning and adjusting to new circumstances on their own lending themselves to massive parallel processing

question

potential features in a included in a digital dashboard for a manufacturing team

answer

list of outstanding alerts list of KPI graph of stock market prices

question

TRUE OR FALSE MIS choices should drive business processes and should be based on business strategies and goals

answer

false

Chapter 2 Continued – Flashcards

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