Page 28 - DCAP208_Management Support Systems

Unit 2: Decision Support

Self Assessment Notes

Fill in the blanks:
4. .................... is the result of the interaction of the implementation of a decision strategy
with the states of nature.

5. The rows are .................... choices a manager can make while the columns represent decision
outcomes.
6. A .................... is analyzed in reverse order from right to left going back chronologically.

2.3 Models

The different types of models are discussed below:

2.3.1 Rational-Economic (or Classical) Model

The Rational-Economic (or Classical) Model consists of the following features:

It is prescriptive in that it focuses on how decisions ought to be made.
Assumes the decision maker is completely rational (i.e., seeks to maximize the payoff and
utilizes a search process that proceeds in a planned, orderly and consistent fashion) and
unbiased.

Assumes that the decision maker has available all the information needed to make a
decision and that all possible alternatives are considered.

The decision maker selects the optimum or best choice.
Decision making proceeds through the following sequence of steps: problem identification,
development of criteria against which alternative solutions can be evaluated, identification
of alternative courses of action, evaluation of alternatives, selection of the best alternative,
and implementation.

2.3.2 Administrative (or Behavioral) Model

The Administrative (or Behavioral) Model consists of the following features:

It is descriptive in that it describes how decisions are actually made.
Decision makers seek to simplify problems and make them less complex because they are
constrained by their individual capabilities (e.g., limited information processing ability)
and by organizational conditions (e.g., availability of resources).
Assumes that decision makers operate with limited (or “bounded”) rationality; this means
that decision makers are rational within a simplified model which contains fewer
components (e.g., fewer decision making criteria, fewer options, etc.).

Assumes that decision makers identify a limited number of decision making criteria, that
they examine a limited range of alternatives (only those which are easy to find, highly
visible, have been tried before or are only slightly different from the status quo) and that
they do not possess all the information needed to make a decision.
The decision maker selects a satisficing alternative. This is an alternative that is “good
enough” or satisfactory in that it meets the minimum criteria established for a desired
solution.

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