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MB0047 Q6. Distinguish between closed decision making system & open decision making system? What is ‘What – if‘ analysis? Why is more time spent in problem analysis & problem definition as compared to the time spends on decision analysis?

Answer:Closed decision-making system :

The decision-making systems can be classified in a number of ways. There are two types of systems based on the manager's knowledge about the environment. If the manager operates in a known environment then it is a closed decision-making system. The conditions of the closed decision-making system are:
a) The manager has a known set of decision alternatives and knows their outcomes fully in terms of value, if implemented. b) The manager has a model, a method or a rule whereby the decision alternatives can be generated, tested, and ranked for selection. c) The manager can choose one of them, based on some goal or
objective criterion.
Few examples are a product mix problem, an examination system to declare pass or fail, or an acceptance of the fixed deposits.

Open decision-making system
If the manager operates in an environment not known to him, then the decision-making system is termed as an open decision-making system. The conditions of this system in contrast closed decision-making system are:
a) The manager does not know all the decision alternatives. b) The outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one. c) No method, rule or model is available to study and finalise one decision among the set of decision alternatives.
d) It is difficult to decide an objective or a goal and, therefore, the manager resorts to that decision, where his aspirations or desires are met best.
Deciding on the possible product diversification lines, the pricing of a new product, and the plant location, are some decision-making situations which fall in the category of the open decision-making systems.
The MIS tries to convert every open system to a closed decision-making system by providing information support for the best decision. The MIS gives the information support, whereby the manager knows more and more about environment and the outcomes, he is able to generate the decision alternatives, test them and select one of them. A good MIS achieves this.

What if analysis
Decisions are made using a model of the problem for developing various solution alternatives and testing them for best choice. The model is built with some variables and relationship between variables. In reality, the considered values of variables or relationship in the model may not hold good and therefore solution needs to be tested for an outcome, if the considered values of variables or relationship change. This method of analysis is called 'what if analysis.'
For example, in decision-making problem about determining inventory control parameters (EOQ, Safety Stock, Maximum Stock, Minimum Stock, Reorder level) lead time is assumed fairly constant and stable for a planning period. Based on this, the inventory parameters are calculated. Inventory manager wants to know how the cost of holding inventory will be affected if lead time is reduced by one week or increased by one week. The model with changed lead time would compute the cost of holding inventory under new conditions. Such type of analysis can be done for purchase price change, demand forecast variations and so on. Such analysis helps a manager to take more learned decisions. ‘What if analysis’ creates confidence in decision-making model by painting a picture of outcomes under different conditions?

Decision Analysis
A decision is made but such decision needs to be analysed for conditions and assumptions considered in the decision model. The process is executed through analytical modelling of problem and solution.

Problem Definition
The starting point of a problem definition is the information gathered in the problem analysis stage. The different aspects surrounding the design problem have been analysed and should be taken into account in the problem definition.
For defining a problem this implies that it is not sufficient to describe the existing state. Therefore, we speak consciously of the situation someone is or is not content with. A description of the situation is therefore a description of a state plus the relevant causal model(s), including the assumed patterns of behaviour of the people and organizations involved. A situation is only a problem if the problem-owner wishes to, and want to do something about it. This implies that a situation must be conceivable that is more desirable than the present one: the goal situation. The existing situation, however, can also be formulated in such a manner that a problem does arise. A problem definition is usually set up at the end of the problem analysis phase.

Problem Analysis
You can use problem analysis to gather information that helps you determine the nature of a problem encountered on your system.
The problem analysis information is used to:
• Determine if you can resolve the problem yourself.
• Gather sufficient information to communicate with a service provider and quickly determine the service action that needs to be taken.

The method of finding and collecting error information depends on the state of the hardware at the time of the failure. This procedure directs you to one of the following places to find error information:
• Hardware Management Console (HMC) error logs
• The operating system's error log
• The control panel

• Advanced System Management Interface (ASMI) error logs Hence more time is spent Problem Analysis and Problem Definition.


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