Is 533 Homework 4

Topics: Decision theory, Decision making, Decision engineering Pages: 7 (2023 words) Published: November 25, 2012
1. What is meant by a symptom versus a problem? Relate these ideas to the case. (5 points) In the Intelligence Phase of the Decision Making Process, the decision maker, Elena, attempts to determine whether a problem exists, identify its symptoms, determine its magnitude and explicitly define it. What is described as a problem may only be a symptom, or measure, of a problem.

In the case, MMS sales are off by 10 percent, which is the main problem. In the intelligence phase, the CEO calls the Board of Directors to search through the procedures in order to state and classify the problem. She consults Directors to reach the main reason for the problem or to find the real problem which the off-sales are symptoms of it. 2. Why is problem ownership so important? (5 points)

A problem exists in an organization only if someone or some group takes on the responsibility of attacking it and if the organization has the ability to solve it. The assignment of authority to solve the problem is called problem ownership.

When problem ownership is not established, except for professional employees, there will be an uncertainty of who is responsible to solve the problem and role diffusions/shifting, tendency to avoid form responsibility may occur easily. Problem ownership ensures accountability. 3. Even though the problem was not identified at the end of the intelligence phase, what was? (5 points)

Effects were identified and problem ownership was established. Effects of the problem:
1. Rentals did not increase while the total market did. (CMO) 2. Sales are dropping fastest on primary markets. (CFO)
3. Advertising expenditures are up. GMC Spiders should be a hot seller but they are off by 50 percent. All the new cars came on in on schedule and inventory is OK from CLAUDIA. (CEO) 4. Half of the GMC Spiders are rented although some local agencies set the prices 15 percent less. Rentals are down 8 percent nationally on the other classes of cars. (COO) Problem Ownerships:

COO assumes the ownership of the problem. CIO will look at the underlying structures and parameters of the forecasting models (for weird economic trends or events); CMO will look into the advertising for external events, trends or reports on the cars that could affect the rentals

4. How was the design phase performed in this case? (10 points) Search and Scanning Procedures:
1. The problem statement has not been clearly stated. So the next step is the investigation of symptoms.
2. A collaboration group is formed with analysts from different departments: Operations and Marketing.
Data Collection:
3. Databases of Operational and Economic Data were checked by data mining tools; relationships and assumptions in the forecasting models and RMS were verified; artificial neural networks, clustering analysis algorithms and statistical regression models were also benefited. It was noticed that the neural networks outperformed the regression-based systems a bit. 4. An information system and marketing group was set up to look into how they could improve the regression-based models with neural networks.

5. An e-meeting was held to decide on what they were going to do next and sharing information.

Problem Identification:
6. After the meeting OLAP (Online Analytical Processing) software was used to “slice” multidimensional data. The group noticed a slight inverse relationship with sales and advertising and the followings:

a. There is a problem in the distribution. Over half of the cars are in the wrong places. b. GMC Spider was entered to the system as a four-seat compact with two doors. System automatically decides this car ideal for a small family or a single business person. This decision rent well rent in Midwest in the secondary markets but badly in the convention areas where there are men and women who like to rent sporty cars.

Problem Statement /Search for Alternatives/Create Models:
7. After further analysis and...
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