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42 Part I • Decision Making and Analytics: An Overview

degree oF struCturedness The left side of Figure 1.2 is based on Simon’s (1977) idea
that decision-making processes fall along a continuum that ranges from highly structured
(sometimes called programmed) to highly unstructured (i.e., nonprogrammed) decisions.
Structured processes are routine and typically repetitive problems for which standard
solution methods exist. Unstructured processes are fuzzy, complex problems for which
there are no cut-and-dried solution methods.
An unstructured problem is one where the articulation of the problem or the solu-
tion approach may be unstructured in itself. In a structured problem, the procedures
for obtaining the best (or at least a good enough) solution are known. Whether the prob-
lem involves finding an appropriate inventory level or choosing an optimal investment
strategy, the objectives are clearly defined. Common objectives are cost minimization and
profit maximization.
semistructured problems fall between structured and unstructured problems, hav-
ing some structured elements and some unstructured elements. Keen and Scott-Morton
(1978) mentioned trading bonds, setting marketing budgets for consumer products, and
performing capital acquisition analysis as semistructured problems.

types oF Control The second half of the Gorry and Scott-Morton framework
(refer to Figure 1.2) is based on Anthony’s (1965) taxonomy, which defines three
broad categories that encompass all managerial activities: strategic planning, which
involves defining long-range goals and policies for resource allocation; manage-
ment control, the acquisition and efficient use of resources in the accomplishment of
organizational goals; and operational control, the efficient and effective execution of
specific tasks.

the deCision support matrix Anthony’s and Simon’s taxonomies are combined in the
nine-cell decision support matrix shown in Figure 1.2. The initial purpose of this matrix
was to suggest different types of computerized support to different cells in the matrix.
Gorry and Scott-Morton suggested, for example, that for semistructured decisions and
unstructured decisions, conventional management information systems (MIS) and man-
agement science (MS) tools are insufficient. Human intellect and a different approach to
computer technologies are necessary. They proposed the use of a supportive information
system, which they called a DSS.
Note that the more structured and operational control-oriented tasks (such as
those in cells 1, 2, and 4) are usually performed by lower-level managers, whereas
the tasks in cells 6, 8, and 9 are the responsibility of top executives or highly trained
specialists.

Computer support for structured decisions

Computers have historically supported structured and some semistructured decisions,
especially those that involve operational and managerial control, since the 1960s.
Operational and managerial control decisions are made in all functional areas, especially
in finance and production (i.e., operations) management.
Structured problems, which are encountered repeatedly, have a high level of struc-
ture. It is therefore possible to abstract, analyze, and classify them into specific catego-
ries. For example, a make-or-buy decision is one category. Other examples of categories
are capital budgeting, allocation of resources, distribution, procurement, planning, and
inventory control decisions. For each category of decision, an easy-to-apply prescribed
model and solution approach have been developed, generally as quantitative formulas.
Therefore, it is possible to use a scientific approach for automating portions of manage-
rial decision making.

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