Nature of Problems
Decision making may be simple or complex depending upon the nature of the problem. It may be repetitive or non-repetitive, structured or unstructured. And each problem type requires different approach, problem-solving technique and subjectivity.
(A)Recurring/ Repetitive problems:
Recurring decisions are taken very frequently and do not require in-depth analysis and evaluation every time. Employees at the lower level of hierarchy are empowered to take these decisions on their own because a standard procedure is followed to tackle such problems.
(B)Non-repetitive problems:
Non repetitive decisions are taken once in a while. Non-repetitive problems may or may not be difficult to tackle but they are not regular. Difficult problems are taken care of by the upper levels of management while the non-complex ones are solved by lower management.
(C)Structured problems:
Structured problems can be quantified and therefore, can be solved using computational techniques. Structured problems may occur frequently as these are generic in nature.
(D)Non-structured problems:
Non-structured problems are hard to quantify, making it difficult to decide the tangible objectives that a solution should achieve. These do not occur frequently. Although the decisions can be automated, but a thorough involvement of decision makers is also required. These decisions typically require creativity and human cognizance along with automated solution.
Like decisions made in each department at each level are different, similarly a decision support system analyst must take into consideration the type of decisions and distinguished factors influencing decision-making before going to the drawing board and designing the architecture. Understanding the context in which decisions are made is an important consideration in building a decision support system. Let us take a closer look at the factors that a DSS analyst should take into account:
Types of Managerial Decisions
As said earlier, decisions are made at all levels of hierarchy. Therefore, it’s important to understand what type of decisions a decision support system is going to support.
1-Strategic decisions:
As strategic decisions are not related to general functioning of an organization, these are non-repetitive in nature and require a lot of time to be arrived at. Generally taken by the highest level of hierarchy, strategic decisions involve careful analysis of the situation and consequences.
Examples: Evaluation of an investment proposal, decisions related to mergers and acquisitions, resource allocations, fund raising, etc.
2-Operational decisions:
These types of decisions fall under two categories. Decisions pertaining to plant location, production volume, distribution channel and policies are taken by top management. These are long term decisions that directly impact the functioning of a business. The second category of decisions is related to day-to-day functioning, which are taken by middle and lower level managers.
3-Managerial decisions:
These decisions pertain to resource allocation, talent management, research and development, new product introduction, withdraw or revamp old products. These are combined decisions taken by top and upper middle management.
Each type of decision requires different level of support. A decision support analyst needs to analyze – what types of decisions need to be supported; who are involved in decision making process; and whether alternative courses of actions are required to be shown.
