1. Why do decision making situations arise?

Ans: - The concept of decision, therefore, is settlement, a fixed intention bringing to a

conclusive result, a judgment, and a resolution. A decision is the choice out of several options
made by the decision maker to achieve some objective in a given situation.The relevance of the
decision-making concepts is significant in the MIS design. The significance arises out of the
complexity of decision making, the human factors in the decision making, the organizational and
behavior aspects, and the uncertain environments.

2. Identify a few decisions in your life, where the outcomes are known with certainty, risk
And uncertainty.
Ans: 1) Certainty: Making a decision to invest idle funds into FD in a certain bank which
provides a fixed rate of return. I am well aware of what the returns after a year would be
considering the fact that I know it’s risk free as well as it’s fixed return.

2) Uncertainty: We know that if we toss an unbiased coin, one of two equally likely outcomes
(i.e., either head or tail) occur, and the probability of each outcome is prede­termined.

3) Risk: When one plans to start a business venture of its own, it can be considered as a Risky
decision. Entering business is considered full of risk without knowing what the possible
outcomes might be in the future. A business might do excellently well or it can go bust within no
time. Risk is undefined here.

3. Why do two people disagree on the choice of a decision? Is it then better to resort to?
Programmable decision making?
Ans: - It's better to resort to Programmable decision making because In decision making, we
know that there are two types of decisions- Programmable and Non-programmable. The
programmable decision, because of its rule base structure, can be computerized, as inputs,
processing methodology; analysis and choice of decision making are predetermined. Decision
support systems can be built around the rule in case of programmable decision situation.and
thus better in decision making.

4. Why is more time spent on problem analysis and problem definition as compared to the
Time spent on decision analysis?
Ans: - Decision Support Systems are an application of the Herbert Simon Model. As
explained earlier, the model has three phases, viz. Intelligence, Design and Choice.
The decision support system basically helps the information system in the intelligence phase
where the objective is to identify the problem and then go to the design phase for solution. The
choice of selection criterion varies from problem to problem. It is therefore required to go
through these phases again and again till a satisfactory solution is found. In the following three
phase cycle, you may use inquiry, analysis, and models or accounting systems to come to a
rational solution.
These systems are helpful where the decision maker calls for complex manipulation of data and
use of several methods to reach an acceptable solution using a different analysis approach.
The decision support system helps in making a decision and also in its performance evaluation.
These systems can be used to validate the decision by performing sensitivity analysis on
various parameters of the problem.

In decision making, we know that there are two types of decisions- Programmable and
Non-programmable.
The programmable decision, because of its rule base structure, can be computerized, as
inputs, processing methodology; analysis and choice of decision making are predetermined.
Decision support systems can be built around the rule in case of programmable decision
situations.
While in Non- programmable decisions, the rules are not fixed or predetermined, and require
every time the user to go through the decision making cycle as indicated in the Herbert Simon
Model.
Therefore more time is spent on problem analysis and problem definition compared to Time
spent on decision analysis

5. If a person is indecisive, is it due to lack of information support or some human factors

Or both?
Ans: A person is indecisive due to both the above reasons, lack of information support as well
as human factors.
Few reasons of a person's indecisiveness are:
1) Perfectionism: When you find yourself obsessing about the quality of your work, trips,
food, or anything really, this perfectionism can easily impact your decision making as
well.

2) Self-doubt: We all doubt ourselves sometimes, and those doubts can have a significant
impact on us when it comes to decision-making.Even if you know what decision you
want to make or what’s best for you, a lack of confidence can cause you to second
guess yourself. You might procrastinate because you feel like your thought process is
too flawed to make the right choice.

3) Fear: Unfortunately, fear often goes hand-in-hand with insecurity. No doubt, it’s easy to
be afraid of the unknown consequences of our actions.

4) Overthinking: Often, when you’re trying to think about too many options or too many
factors all at once, you might find yourself overthinking
 6. Why does the decision maker resort to bounded rationality in a decision making
situation? Can a decision be called right or wrong? What is the measure of correct
decision?
Ans: (A) A rational decision is the one which, effectively and efficiently, ensures the
achievement of the goal for which the decision is made.
For example, if it is raining, it is rational to look for a cover so that you do not get wet.
If you are in business and want to make profit, then you must produce goods and sell them at a
price higher than the cost of production. In reality, there is no right or wrong decision but a
rational or an irrational decision. The quality of decision making is to be judged on rationality
and not necessarily on the result it produces.
The rationality of the decision made is not the same in every situation. It will vary with the
organization, the situation and the individualís view of the business situation. Rationality,
therefore, is a multi-dimensional concept.
For example, the business decisions in a private organization and a Public Sector Undertaking
differ under the head of rationality. The reason for this difference in rationality is the different
objectives of the decision makers.

(B) Yes the decision can be called right or wrong by using the strategy below.

(C) The general strategy to measure decision-making ability is to ask a patient a series of
questions that assess that ability and to score those answers using criteria (for example:
adequate answer = 2, marginal answer = 1, inadequate answer = 0).

7. Can you automate the process of decision making? The answer is ëYesí and ëNoí.
Explain. What best must be aimed at?
Ans: The Automated decision making systems are mainly used in business analytics and
informatics.
Yes,the decision making systems can be automated by applying certain business rules
which are generated and operated by business analytics. The decisions taken by the automated
decision making systems are part of the business informatics.
The ADMS are very useful in situations which require solutions to repetitive problems using the
electronically available data.
The data required for the ADMS must be very clearly explained and structured. The business
problems that are applied to the ADMS must be clear and well understood.

The organization uses the ADMS to manage its interactions with its customers, employees and
suppliers. Organizations use the ADMS to improve its value, through each decision that is
taken. The main aim of using ADMS has five key attributes:-
● Precision
● Consistency
● Agility
● Reduced Time
● Cost of making Manual Decisions
 8. Explain the role of a model in problem solving. Explain the process of abstraction used In
constructing the model.
Ans: As its name implies, this model is the road map to follow to solve problems.

What makes something a problem?

a) When the process isn't doing what it is supposed to and people don't know why.
b) When things keep going wrong no matter how hard everyone tries.
c) When everyone believes that there is a problem to solve.

The first step in the model is to define the problem; it does not matter if it is late shipments,
stock outs, computer downtime, typos, lost messages, or an agreed upon "red bead" that
everyone keeps running into. Before you can solve the problem, you must truly understand what
it is.
After you have the problem defined, the model leads you through analyzing data you gather
about the process, determining the root cause of the problem, and identifying possible solutions
to the problem.
Solutions to the problem will either be changes to the process which eliminate special causes of
variation or changes which reduce common cause variation. After the best solution is
implemented, the model leads the team to monitor the impact of its revisions to make sure that
the problem is truly solved.

Abstraction is the process of filtering out - ignoring - the characteristics of problems

that are not needed in order to concentrate on those that are needed. It is also the
filtering out of specific details. From this, we can create an idea of what is to be solved.
Abstraction allows us to create a general idea of what the problem is and how to solve it. The
process instructs us to remove all specific details and any patterns that will not help us solve our
problem.
This helps us to form our idea of the problem. This idea is known as a ‘model’.

Illustration:
Consider the problem of creating a program to calculate the area of shapes. The problem could
first be decomposed into modules, each of which would be a particular shape, for example
rectangle, square and triangle. Abstraction can then be followed for each module.

For example, for the rectangle module the first step would be to notice that all rectangles share
general characteristics:
● A width
● A height
● Area = width × height
When abstracting, certain details are discarded but others are kept:
● All rectangles have a width, but for the program design the actual rectangle width is not
needed
● All rectangles have a height, but for the program design the actual rectangle height is not
needed
● Area is always width × height

To solve this problem, all the program needs to be able to do is receive a width and a height,
then calculate the area from those numbers.

The actual numbers are irrelevant - they change with every rectangle - so they are discarded.
A similar abstraction can be carried out for each module, resulting in a program with
self-contained subroutines and clear interfaces.

9. List the different criteria which can be used in decision making.

Ans: The decision criteria in a business setting are those variables or characteristics that are
important to the organization making the decision.
These are some typical decision criteria with illustrative examples:

1)Cost: A budget, cost constraint or preference for lower cost options. For example, a firm that
is procuring solar panels establishes a principle that the lowest cost bid will be accepted unless
the bid is judged to be low quality or high risk.

2)Opportunity Costs: Opportunity cost related criteria such as a student who decides they will
only accept a part time job that doesn't interfere with their commitments to a soccer team.

3)Time: Time requirements, such as a father shopping for dinner who decides to find something
that can be prepared in 20 minutes or less.

4)Quality: Quality criterion such as a shopper who has decided to give strong preference to
organic food in all purchase decisions.

5)Customer Experience: Customer Experience related criteria such as a traveller who

permanently rules out a particular airline due to several poor customer service experiences.

6)Efficiency: Efficiency criteria such as a specification of the required power efficiency of

cooling units for a building.

7)Style: Style related criteria such as a consumer who rules out modern looking furniture.
 10. Can the quality of decision making be improved? Explain how it can be improved
Ans: The quality of Decision Making can be improved in many ways. Some are as follows:

1)Learn from Experience:The best decision-makers treat decision-making as a science. They

record their decisions and the way they made them. They then follow that up with notes about
how events turned out.When you need to make a new decision, always see what you can learn
from the past. What decisions have you and your colleagues faced, which share one or more
salient characteristics with this one? We tend to believe that every decision is unique, and so
forget all of the value of experience. Wisdom comes from learning, generalizing, and then
applying to the specific.

2)Give Yourself Options:

Here’s a simple relationship,
P(Success) = F(Number of options)

What that means is that the probability of success is a function of the number of options you
consider.
In principle, the more options you have, the more likely you are to succeed. But, there’s a limit.
You don’t want too many… beyond around three or four options, and you hit psychologist Barry
Schwartz’s Paradox of Choice. This means you’ll find it too hard to make your decision.

3)Argue it Out: To make better decisions, encourage rigorous debate and argument. Set
different team members the task of building a case for each option. Set others the task of finding
flaws in the arguments.Track the argument, so you fully understand each choice and see it from
different perspectives. Spot whether the argument is about the data, how it is interpreted, or
about people, or vision, or values. Each of these has a different resolution… or none

4)Understand the Context to Your Decision: Do your homework, and explore all of the
background information you can get. The more you go back to the base information, the more
reliable your judgment will be.
Look for different sources of information and different modes of gathering it:
● Talk to people
● Read reports
● Make visits
● Observe

5)Bring in Outsiders:
Bring outsiders into your decision-making. Lots of research show they can improve decisions,
through these effects:
● Being different, they think differently. They know less, and therefore ask the simple questions
you have ignored. As long as you take the time to answer those questions, you can learn from
them.
● Difference also creates a distinct point of view and new insights. They can apply their own
experiences and maybe offer creative alternatives: either new ways of testing the decision, or
new choices.

● They are objective, and therefore will care more about the decision than about egos and
relationships. Group think is one of the greatest risks to good decision-making. If people in the
group are too concerned about causing conflict, they can subconsciously pace harmony above a
rigorous discussion. Outsiders are less prone to this.