CH 2.1 - Making organizational business decisions

Regardless of what process is measured, how it is measured, and whether it is performed for the sake of efficiency or effectiveness, managers must set ____

benchmarks

baseline values the system seeks to attain

benchmarks

example of neural network

credit card companies checking for fraud

____ is one of the most important/ challenging aspects of management

decision making

A common tool that supports visualization is a ?

digital dashboard

tracks KPIs and CSFs by compiling information from multiple sources and tailoring it to meet user needs.

digital dashboard

KPIs can focus on what two things?

external and internal measurements

an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.

genetic algorithm

is essentially an optimizing system: It finds the combination of inputs that gives the best outputs.

genetic algorithm

uses technology allowing humans to interact with a computer through bodily sensations and movements—for example, a cell phone vibrating in your pocket

haptic interface

What do benchmarks help asses?

help assess how an MIS project performs over time

a special-purpose, knowledge-based information system that accomplishes specific tasks on behalf of its users.

intelligent agent

example of Genetic algorithm

investment companies in trading decisions

A common external KPI

market share

the proportion of the market that a firm captures

market share

a simplified representation or abstraction of reality.

model

help managers calculate risks, understand uncertainty, change variables, and manipulate time to make decisions.

models

analyze large quantities of information to establish patterns and characteristics when the logic or rules are unknown.

neural network

is a category of AI that attempts to emulate the way the human brain works.

neural network

are considered structured decisions

operational decisions

example of expert systems

playing chess

a common internal KPI

return on investment (ROI)

indicates the earning power of a project

return on investment (ROI)

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

semistructured decisions

cover short- and medium-range plans, schedules, and budgets along with policies, procedures, and business objectives for the firm. They also allocate resources and monitor the performance of organizational subunits, including departments, divisions, process teams, project teams, and other work groups. these type of decisions are considered ?

semistructured decisions that occur in the managerial level

Using systems thinking, we can see that the inputs for a TPS are what?

source documents

the original transaction record

source documents

Managers develop overall business strategies, goals, and objectives as part of the company's strategic plan

strategic level

involve situations in which established processes offer potential solutions; are made frequently and are almost repetitive; affect short-term business strategies

structured decisions

Reordering inventory and creating the employee staffing and weekly production schedules are examples of what?

structured decisions in the operational level

the greater the granularity, the _____

the deeper level of details

The most common example of this is an operational accounting system such as a payroll system or an order-entry system.

transaction processing system (TPS)

is the basic business system that serves the operational level (analysts) and assists in making structured decisions.

transaction processing system (TPS)

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

unstructured decisions

strategic decisions are highly

unstructured decisions

They are infrequent, extremely important, and typically related to long-term business strategy -Examples include the decision to enter a new market or even a new industry over, say, the next three years

unstructured decisions in the strategic level

a work environment that is not located in any one physical space

virtual workplace

it is usually in a network of several places, connected through the Internet, without regard to geographic borders.

virtual workplace

example of virtual reality

working virtually around the globe

common types of efficiency metrics

- throughput - transaction speed - system availability - information accuracy - response time

common types of effectiveness metrics

- usability - customer satisfaction - conversion rates - financial

what are the digital dashboard analytical capabilities?

-consolidation -drill-down -slice- and- dice - pivot

three primary Decision-making challenges managers face:

1. Managers need to analyze large amounts of information 2. Managers must make decisions quickly 3. Managers must apply sophisticated analysis techniques to make strategic decisions

what is the interaction between TPS and DSS to support semistructured decisions

1. TPSs supply transactional data to a DSS 2. DSS then summarizes and aggregates the info --> which assist managers in making semistructured decisions

what are the two core metrics?

1. critical success factors 2. key performance indicators

five categories of AL systems

1. expert systems 2. neural networks 3. genetic algorithms 4. intelligent agents 5. virtual reality

the three different levels of the structure of a typical organization

1. operational level (bottom of pyramid) 2. managerial level (middle) 3. strategic level (top)

the six step decision-making process

1. problem identification 2. data collection 3. solution generation 4. solution test 5. solution selection 6. solution implementation

_______ is primarily implemented and applied in virtual reality environments and is used in virtual workplaces to enable employees to shake hands, demonstrate products, and collaborate on projects.

A haptic interface

increase the speed and consistency of decision making, solve problems with incomplete information, and resolve complicated issues that cannot be solved by conventional computing.

AI systems

A specialized DSS that supports senior-level executives and unstructured, long-term, nonroutine decisions requiring judgment, evaluation, and insight. these decisions do not have a right or wrong answer, only effect and effective answers

An executive information system (EIS)

encompasses all organizational information, and its primary purpose is to support the performance of managerial analysis or semistructured decisions.

Analytical information

is the science of fact-based decision making

Analytics

Executive information systems are starting to take advantage of _________ to facilitate unstructured strategic decision making

Artificial intelligence (AI)

simulates human thinking and behavior, such as the ability to reason and learn; Its ultimate goal is to build a system that can mimic human intelligence.

Artificial intelligence (AI)

viewing of the physical world with computer-generated layers of information added to it

Augmented reality

is a process of continuously measuring system results, comparing those results to optimal system performance, and identifying steps and procedures to improve system performance.

Benchmarking

are the most successful solutions or problem-solving methods that have been developed by a specific organization or industry.

Best practices

-create high-quality products -retain competitive advantages -increase customer satisfaction - hire and retain the best business professionals examples of what?

Critical success factors (CSFs)

are the crucial steps companies perform to achieve their goals and objectives and implement their strategies

Critical success factors (CSFs)

Analyzing complex relationships among thousands or even millions of data items to discover patterns, trends, and exception conditions is one of the key uses associated with this

Decision support systems (DSSs)

Model information using OLAP, which provides assistance in evaluating and choosing among different courses of action.

Decision support systems (DSSs)

difference between DSS and EIS

EIS requires data from external sources to support unstructured decisions

focuses on how well a firm is achieving its goals and objectives -doing the right things, getting the most from each resource

Effectiveness

measure the impact MIS has on business processes and activities, including customer satisfaction and customer conversion rates.

Effectiveness MIS metrics

focuses on the extent to which a firm is using its resources in an optimal way -doing things right, getting the most from each resource

Efficiency

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

Efficiency MIS metrics

two ways to measure MIS projects

Efficiency and effectiveness

are computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems.

Expert systems

most common form of AL in the business arena bc they fill the gap when human experts are difficult to find or retain or are too expensive

Expert systems

is a mathematical method of handling imprecise or subjective information.

Fuzzy logic

a wearable computer with an optical head-mounted display (OHMD); it adds an element of augmented reality to the user's world by displaying information in a smart phone-like hands-free format.

Google glass

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

Granularity

are various commercial applications of artificial intelligence.

Intelligent systems

-turnover rates of employees - percentage of help desk cells answered in the first minute - number of product returns - number of new customer spending

Key performance indicators (KPIs):

are the quantifiable metrics a company uses to evaluate progress toward critical success factors.

Key performance indicators (KPIs):

_______ rely on models for computational and analytical routines that mathematically express relationships among variables.

MIS support systems

Employees are continuously evaluating company operations to hone the firm's abilities to identify, adapt to, and leverage change

Managerial level

_______ helps determine the best practices for an industry.

Measuring MIS projects

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

Metrics

is the process within a genetic algorithm of randomly trying combinations and evaluating the success (or failure) of the outcome.

Mutation

is the manipulation of information to create business intelligence in support of strategic decision making.

Online analytical processing (OLAP)

is the capture of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, and (3) update existing information to reflect the new information.

Online transaction processing (OLTP)

Employees develop, control, and maintain core business activities required to run the day-to-day operations.

Operational level

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

Project

encompasses all the information contained within a single business process or unit of work, and its primary purpose is to support the performance of daily operational or structured decisions.

Transaction information

is created, for example, when customers are purchasing stocks, making an airline reservation, or withdrawing cash from an ATM

Transaction information

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

Virtual reality

is a fast-growing area of artificial intelligence that had its origins in efforts to build more natural, realistic, multisensory human-computer interfaces.

Virtual reality

Executive information systems use this to deliver specific key information to top managers at a glance, with little or no interaction with the system.

Visualization

produces graphical displays of patterns and complex relationships in large amounts of data.

Visualization

Intelligent agents example

a shopping bot

is software that will search several retailer websites and provide a comparison of each retailer's offerings, including price and availability.

a shopping bot

Managers use this when making important semistructured decisions such as whether the organization should build a new manufacturing plant or hire additional sales reps. -examples of this: trends, sales, product statistics, and future growth projections.

analytical information