SYSTEMS AND DECISION STRUCTURE

Prof. Marimin, PhD

Bogor Agricultural University, Bogor,
Indonesia

E-mail: marimin_07@yahoo.com
• Information Cycle
INFORMATION
MIS DSS
NUMBER/
TERMS
DECISION
DATA ALTERNATIVES

MES

ACTION
DECISION

SOP

Note : MIS : Management Information System

DSS : Decision Support System
SOP : Standard Operation Procedure
MES : Monitoring and Evaluation System
 What is a System?
Environment

Feedback Feedback
Signals Signals
Control Control by Control
Signals Management Signals

Input of Manufacturing Output of

Raw Materials Process Finished Products

System Boundary
Other Systems
• System Definition

Element (E1) E2
Goal

E3
Sub
Goal

E4 E5

• System Philosophy
- Goal Oriented (Cybernetic)  C  S
- Holistic Not Partial  H
- Effectiveness Not Efficiency  E
System Definition

System is a set of an order inter-

related elements (components) for
achieving the goal/sub-goals.
• System Classification Matrix

System Input Process Output

Analysis √ √ ? Narrow aspect

? Wide aspect
Synthesis √ √

Design √ ? √

Control ? √ √

• Marketing system is a system…….?

• Production operation system is a system ……?
• Financial system is a system ….. ?
• Basic System Structure

 Open System

I(I) Output (O)

Process (P)

 Feed Back System

I O
P

Control
 Directive ES EIS
DSS

Strategic IS
MIS
Tactic DBMS

Operational EDP

Information system application in business

Computer Based Information Systems-CBIS

• ES : Expert System
• DSS : Decision Support Systems

• MIS : Management Information System

• DBMS : Data Based Management Systems

• EDP : Electronic Data Processing

• IS : Information Systems
 DSS Definition
 DSS is an interactive flexible and adaptable software

that utilizes decision rules, models and model base

coupled with a comprehensive database and the
decision maker’s own insight, leading to specific,
implement able decision in solving problems that
would not be amenable to management science
optimization model.
 DSS Supports complex decision making and

increase their effectiveness (Turban&Aronson, 2003)

 Decision Analysis
 Decision Problem

• Decision makers usually face situation which have

characteristics: unique, uncertain, complex, variable terms
(long, medium, short), and multi-level structures.

• Hierarchy and characteristic of Decision Problems:

 Directive
 Strategic
 Tactic
 Operasition
 Decision Structure

Management Function Hierarchy Characteristics

• Planning
Top • Directive
• “Staffing” Level
• Strategic
• Organizing Up Medium
Low • Tactical
• Actuating
• Operational
• Monitoring Lower
• Evaluation

 Methods
1. Intuitive decision
2. Normative decision (Decision Analysis)
ENVIRONMENT
Intelligence
• Uncertain • Choice
• Complex Intuition Decision Result
• Dynamic Perception • Infor.
Illogical
• Competition Preference
Philosophic
• Limited

Wonder Thinking Feel un- Action Blame Happy

comport przce
Sad

REACTION

Fig. Flow of intuitive decision making

 Normative Decision Analysis
Environment
Intelligence • Alternatives
• Uncertain • Choice
• Complex
Preference • Possibilities
• Dynamic • Infor. • Model Structure Logical Decision Result
• Competition
Philosophic • . Evaluation
• Limited Preference
• Time
preference
• Risk Preference

Information
Sensitivity

Wonder Thinking Un- Inner Action Prize Happy

comport looking Blame Sad

REACTION

Fig. Flow of rational decision making

Most Decision Problems are Multi criteria
(MCDM:Multi criteria decision Making)

• Maximize profits
• Satisfy customer demands
• Maximize employee satisfaction
• Satisfy shareholders
• Minimize costs of production
• Satisfy government regulations
• Minimize taxes
• Maximize bonuses
 Multiple Criteria Decision Making
(MCDM) Structure

Objective to be Achieved
Problems to be solved

Performance Decision
Criteria Maker

Alternatives
Tools/Plan/…
 Alternative

 Criteria/Factors

 Weight of Criteria

 Evaluation Model

 Computation Model

 Decision Makers Types

A set of option which we either wish to prioritize
and/or from which you wish to choose a best one
with respect to a specified set of criteria.

Examples:

. Choosing best product:

. Choosing best supplier:

. Choosing best industrial location:

Factors on which we base our decision– what we
think is important to consider when making an
informed choice.

Examples:

. Criteria for choosing product:

. Criteria for choosing supplier:

. Criteria for choosing industrial location:

The value we assign to a given criterion with respect
to a parent criterion. The value can be range to 0.0-1.0
or lies within range of the scale of the parent criteria.

Examples:

. Set of weight of 3 criteria : C1= 0.3; C2=0.5; C3= 0.2

. Set of weight of 3 criteria : C1= 3; C2=5; C3= 2

(3 = moderate; 5= very important = less important;

4 = ? ; 1 = ?)
 Alternative Criteria Value of alternative

# of audiences Effectiv Cost Method-1 Method-2

eness
1. Radio

2. Television

3. News paper

Weigh Method-1
t
Method-2
 Payoff Table
States Of Nature
Decision a b
(alternative)
1 Payoff 1a Payoff 1b
2 Payoff 2a Payoff 2b