Chapter 4 Notes

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Financial Accounting
Course Code
Tim Richardson

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Chapter 4 NotesIntroductionin business decision making has 4 distinct phases which are1Intelligence find what to fix Find or recognize a problem need or opportunity also called the diagnostic phase of decision making The intelligence phase involves detecting and interpreting signs that indicate a situation needs your attention These signs come in many forms consistent customer requests for new product features the threat of new competition declining sales rising costs an offer from a company to handle your distribution needs and so on2Design find fixes Consider possible ways of solving the problem filling the need or taking advantage of the opportunity In this phase you develop all the possible solutions you can3Choice pick a fix Examine and weigh the merits of each solution estimate the consequences of each and choose the best one which may be to do nothing at all The best solution may depend on such factors as cost ease of implementation staffing requirements and timing This is the prescriptive phase of decision makingits the stage at which a course of action is prescribed4Implementation apply the fix Carry out the chosen solution monitor the results and make adjustments as necessary Simply implementing a solution is seldom enough Your chosen solution will always need finetuning especially for complex problems or changing environmentsthere are 4 main types of decisions unstructured recurring structured and nonrecurringstructured decisions involve processing a certain kind of information in a specified way so that you will always get right answera nonstructured decision is one for which there may be several right answers and there is no precise way to get a right answera recurring decision is one that happens repeatedly and often periodically whether weekly monthly quarterly or yearlylastly a nonrecurring or ad hoc decision is one that is made infrequently perhaps only once and there may be different criteria for determining the best solution each timeDecision Support Systems DSSa DSS is a highly flexible and interactive IT system that is designed to support decision making when problem is not structureda DSS is an alliance between the decision maker and specialized support provided by ITIT brings speed vast amounts of info and sophisticated processing capabilities to help create info useful in making a decisionthe decision maker brings knowhow in the form of experience intuition judgment and knowledge of the relevant factorsadvantages of a DSS areincreased productivity understanding speed flexibility and reduced problem complexity
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