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Role of Information Technology in Decision Making

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There are different types of decision, they include programmed decision and a non-programmed decision. There are different models for decision making such as classical economic model,administrative …

There are different types of decision, they include programmed decision and a non-programmed decision. There are different models for decision making such as classical economic model,administrative model and Herbert Simons model of decision making.

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  • 1. I.T. for Management Section2Chapter 9Role of information indecision making
  • 2. Role of Information in Decision MakingConceptual model of Decision Making Managers deal with problems posing threatsand offering opportunities. Managers can be problem avoiders, problemsolvers, or problem seekers. Managers display systematic and intuitiveproblem-solving styles. Managers make decisions under conditions ofcertainty, risk, and uncertainty. Managers solve problems with programmedand non programmed decisions.
  • 3. Role of Information in Decision Making Types of DecisionCertain Environment offers complete information on possible action alternatives and their consequences.Risk Environment lacks complete information but offers probabilities of the likely outcomes for possible action alternatives.Uncertain Environment lacks so much information that it is difficult to assign probabilities to the likely outcomes of alternatives.
  • 4. Role of Information in Decision Making Types of DecisionDecision a choice among possible alternative courses of action.Programmed Decision applies a solution from past experience to a routine problem.Non programmed Decision applies a specific solution crafted for a unique problem.
  • 5. Role of Information in Decision Making Types of Decision
  • 6. Role of Information in Decision Making Conceptual model of Decision makingClassical Economic modelThis nominative model is based on the followingassumptions:•All decisions and outcomes are completely known•The model states that the decision maker alwaysseeks to maximize profit or utility•The decision maker is infinitely sensitive todifference in utility among outcome•Decision making in the business context is nothingbut a set of tradeoffs
  • 7. Role of Information in Decision Making Conceptual model of Decision makingAdministrative modelIt works on the concept of bounded rationalityIt assumes that the decision maker•Does not know all the alternatives and outcomes•Makes a limited search to discover a fewsatisfactory alternatives•Makes a decision which satisfies his or heraspiration The decision maker has to do a balancing actbetween the conflicting trade-off’s
  • 8. Role of Information in Decision Making Conceptual model of Decision making•Human expectations and decision making•Humans display a variety of responses in decision-making•Anticipatory regret is a psychological response toalternatives,it inhibits the decision maker from making adecision without contemplating the consequences.•Decision making under psychological stress•This concept is important to the design of informationsystems,because a decision support system to be used underconditions of decision conflict & may not effective unless ittakes care of behavior under psychological stress
  • 9. Role of Information in Decision Making Conceptual model of Decision makingHerbert Simons model of decision makingThis model divides the process into 3 phases •Intelligence phase Searching the environment conditions calling for decision data inputs are obtained ,processed & examined for clues that may identify problems or opportunities •Design phase Inventing ,developing possible course of actions •Choice phase Selecting one of alternative,or course of actions
  • 10. Role of Information in Decision MakingHerbert Simons model of decision making
  • 11. Role of Information in Decision Making Herbert Simons model of decision makingStep 1 is to identify and define the problem.Step 2 is to generate and evaluate alternative courses of action.Step 3 is to decide on a preferred course of action.Step 4 is to implement the decision.Step 5 is to evaluate results.
  • 12. Determining Information Need Data Flow Methods End of chapter 9