The Decision-Making Process

• Innovations in communication and globalization have dramatically increased the variables to consider when making decisions.
• Managers need to analyze both structured and unstructured big data.
• Managers must make decisions quickly due to time constraints.
• Managers need to apply sophisticated analysis techniques to make strategic decisions.
• An example of needing to analyze structured and unstructured big data is when analyzing data from 500 hotels to determine when to discount rooms based on occupancy patterns.
• An example of making decisions quickly is when an important customer shows up at a hotel that is fully booked, and the reservation is missing.
• An example of applying sophisticated analysis techniques is when implementing a loyalty program across 500 hotels.

The Decision-Making Process

• Problem identification involves defining the problem as clearly and precisely as possible.
• Data collection involves gathering problem-related data (who, what, where, when, why, and how), focusing on facts rather than rumors or opinions.
• Solution generation involves detailing every possible solution, including ideas that seem farfetched.
• Solution testing involves evaluating solutions in terms of feasibility, suitability, and acceptability.
• Solution selection involves selecting the solution that best solves the problem and meets the needs of the business.
• Solution implementation involves making decisions that correctly solve the problem.

Decision-Making Levels

• Strategic level (unstructured decisions): Managers develop overall business strategies, goals, and objectives as part of the company's strategic plan.
• Managerial level (semistructured decisions): Employees continuously evaluate company operations to hone the firm's abilities to identify, adapt to, and leverage change.
• Operational level (structured decisions): Employees develop, control, and maintain core business activities required to run the day-to-day operations.

Measuring Organizational Business Decisions

• Critical success factors are the crucial steps companies perform to achieve their goals, objectives, and strategies through actions such as increased customer satisfaction and high quality products.
• Key performance indicators are quantifiable metrics a company uses to evaluate progress toward critical success factors, such as turnover rates of employees.

Efficiency Metrics

• Throughput measures the amount of information that can travel through a system at any point in time.
• Transaction speed measures the amount of time a system needs to perform a transaction.
• System availability measures the number of hours a system is available for users.
• Information accuracy measures the extent to which a system generates the correct results when executing the same transaction numerous times.
• Response time measures the time it takes to respond to user interactions such as a mouse click.

Effectiveness Metrics

• Usability refers to the ease with which people perform transactions or find information.
• Customer satisfaction can be measured by satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.
• Conversion rates are the number of customers an organization touches for the first time and persuades to purchase its products or services.
• Financial metrics include return on investment, cost-benefit analysis, and break-even analysis.

Interrelationship Between Efficiency and Effectiveness

• The optimal area to operate is where there is high efficiency and high effectiveness.

Using MIS to Make Business Decisions

• Transaction processing systems appear across structured and operational parameters.
• Decision support systems appear across semistructured and managerial parameters.
• Executive information systems appear across unstructured and strategic parameters.

Managerial Support Systems

• Input includes TPS
• Process includes what if, sensitivity, goal seeking, and optimization
• Output includes forecasts, simulations, and ad hoc reports.

Managerial Support Systems

• Transaction processing systems:
  • Order entry reversibly leads to order processing systems.
  • Inventory data reversibly leads to inventory tracking system.
  • Shipping data reversibly leads to distribution system.
• Decision support systems:
  • Order processing systems reversibly leads to sales data.
  • Inventory tracking system reversibly leads to manufacturing data.
  • Distribution system reversibly leads to transportation data.
• All these data reversibly lead to decision support system, which further reversibly leads to managerial reports.

Strategic Support Systems

• Strategic level sits at the top.
• Managerial level sits in the middle.
• Operational level sits at the bottom.
• Granularity ranges from fine (at the bottom) through coarse (at the top).
• Processing ranges from OLTP (at the bottom) through OLAP (at the top).
• Processes range from transactional (at the bottom) through analytical (at the top).

Strategic Support Systems

• Transaction processing systems:
  • Order entry reversibly leads to order processing systems.
  • Inventory data reversibly leads to inventory tracking system.
  • Shipping data reversibly leads to distribution system.
• Executive information systems:
  • Order processing system reversibly leads to sales data.
  • Inventory tracking system reversibly leads to manufacturing data.
  • Distribution system reversibly leads to transportation data.
• External sources of information:
  • Industry information reversibly leads to industry outlook.
  • Stock market information reversibly leads to market outlook.
• All the three data and outlooks reversibly lead to EIS, which further reversibly leads to executive reports.

Strategic Support Systems

• Pie Chart
  • Denver - 40%
  • Detroit - 20%
  • Dallas - 40%
• Bar Chart
  • Denver - 40%
  • Detroit - 20%
  • Dallas - 40%
• Histogram
  • (S1, S2) - 19
  • (S1, S2) - 18
  • (S3, S5) - 9
  • (S5, S6) - 9
• Sparkline (in decreasing order): China, India, United States, Indonesia, Brazil, Pakistan, Bangladesh, Nigeria, Russia, Japan
• Time-Series Chart
  • Store sales year 1: The curve from (1, 1,300,000) and ends at (6, 2,400,000), showing decreasing trend at (5, 3,000,000).
  • Store sales year 2: The curve from (1, 1,300,000) and ends at (6, 2,500,000), showing increasing trend at (5, 2,400,000).
  • Store sales year 3: The curve from (1, 1,600,000) and ends at (6, 2,500,000), showing increasing trend at (3, 175,000).
  • Store sales year 4: The curve from (1, 1,600,000) and ends at (6, 2,650,000), showing increasing trend at (3, 155,000).

Managing Business Processes

• Accounting and finance includes creating financial statements, paying accounts payables, and collecting accounts receivables.
• Marketing and sales includes promoting discounts, communicating marketing campaigns, attracting customers, and processing sales.
• Operations management includes ordering inventory, creating production schedules, and manufacturing goods.
• Human resources includes hiring employees, enrolling employees in health care, and tracking vacation and sick time.

Managing Business Processes

• Step 1: Marketing: Create campaign and check inventory.
• Step 2: Sales: Place order, notify production, and check credit.
• Step 3: Operations Management: Manufacture goods.
• Step 4: Accounting and Finance: Deliver goods and bill customer.
• Step 5: Customer Service: Support Sale.

Managing Business Processes

• Customer-facing processes include order processing, customer service, sales processing, customer billing, and order shipping.
• Industry-specific customer-facing processes include banking: loan processing, insurance: claims processing, government: grant allocation, hotel: reservation handling, airline: baggage handling.
• Business-facing processes include strategic planning, tactical planning, budget forecasting, training, and raw materials purchasing.

Business Process Modeling

• As-Is Burger Order Process:
  • Customer approaches cashier.
  • Order burger.
  • Want fries? (If yes, order fries)
  • Want drink? (If yes, order drink)
  • Customer pays cashier.
• To-Be Burger Order Process:
  • Customer approaches cashier.
  • Order combo meal.
  • Customer pays cashier.

Business Process Modeling

• Customer: Customer order generated
• Sales: Order submitted
• Billing:
  • Order received
  • Credit checked (If no, credit issues assessed and order canceled in sales; If yes, credit approved)
  • Invoice prepared
  • Invoice sent
• Inventory:
  • Order entered
  • Check if inventory available (If no, inventory ordered; If yes, order picked and packaged)
  • Order shipped

Business Process Best Practices

• MIS can enable order to delivery, product realization, and customer acquisition.
• Order to delivery, product realization, and customer acquisition leads to MIS.
• In a Student management information system, a teacher can check/update attendance and grades, while a student can only check attendance and grades.

Business Process Best Practice

• Automation appears across operational.
• Streamlining appears between operational and managerial.
• Reengineering appears between managerial and strategic.

Strategic Business Processes Reengineering

• Company A: claims resolution process has a resolution cycle time of 3-8 weeks, beginning with the car being towed and ending with the car returned to the customer.
• Progressive Insurance: claims resolution process has a cycle time of 30 minutes-3 hours, beginning with the customer calling from the accident spot and ending with the customer getting an offer including on-site payment, towing services, and a ride home.

Strategic Business Processes Reengineering

• The customer accesses the website and completes a credit card transaction.
• Customer information is stored in a database.
• The warehouse operates following quality assurance, finally leading to shipping the product to customer.
• Customer service leads to quality assurance, which finally leads to the warehouse.

Strategic Business Processes Reengineering

• A customer places an online order or reaches a call center.
• The order is placed in the system where inventory is checked.
• If the item is not in stock, then customer is notified of back order.
• If the item is in stock, the item is packed, payment is processed, and the item is shipped.

Examples of Artificial Intelligence

• Automation: AI builds robots that can operate similar to humans.
• Complex analytics: Humans need AI's help analyzing massive data to find patterns.
• Fraud detection: Credit card companies use AI to detect unfamiliar spending patterns.
• Resource scheduling: AI schedules the use of resources to maximize efficiency.

Explore the decision-making process for managers, focusing on problem identification, data collection, and quick, strategic decisions. Learn the importance of analyzing structured and unstructured big data, such as occupancy patterns across multiple hotels, and applying sophisticated analysis techniques.