Managers are not always looking for the best cost-benefit in their decisions. Th

Question

Managers are not always looking for the best cost-benefit in their decisions. There are other considerations. Companies have strategic objectives to gain market share, for example, which may cause them to price below their competitors. Perhaps a company's mission statement requires it to behave in ways that are not the highest cost benefit. Additionally, managers themselves may have goals that suggest the best cost-benefit is not always the principle of choice. When we go to buy a car, we don't choose the highest gas mileage at the lowest cost. Consider how you would choose to buy a car. What are the elements that would go into your decision? Describe how you would model a "Car Buying DSS" that anyone could use. What elements go into that DSS model?

Explanation / Answer

decision support systems are a set of manual or computer-based tools that assist in some decision-making activity. In today's business environment, however, decision support systems (DSS) are commonly understood to be computerized management information systems designed to help business owners, executives, and managers resolve complicated business problems and/or questions. Good decision support systems can help business people perform a wide variety of functions, including cash flow analysis, concept ranking, multistage forecasting, product performance improvement, and resource allocation analysis. Previously regarded as primarily a tool for big companies, DSS has in recent years come to be recognized as a potentially valuable tool for small business enterprises as well.

THE STRUCTURE OF DECISIONS

In order to discuss the support of decisions and what DSS tools can or should do, it is necessary to have a perspective on the nature of the decision process and the various requirements of supporting it. One way of looking at a decision is in terms of its key components. The first component is the data collected by a decision maker to be used in making the decision. The second is the process selected by the decision maker to combine this data. Finally, there is an evaluation or learning component that compares decisions and examines them to see if there is a need to change either the data being used or the process that combines the data. These components of a decision interact with the characteristics of the decision being made.

Structured Decisions

Many analysts categorize decisions according to the degree of structure involved in the decision-making activity. Business analysts describe a structured decision as one in which all three components of a decision—the data, process, and evaluation—are determined. Since structured decisions are made on a regular basis in business environments, it makes sense to place a comparatively rigid framework around the decision and the people making it.

Structured decision support systems may simply use a checklist or form to ensure that all necessary data are collected and that the decision making process is not skewed by the absence of data. If the choice is also to support the procedural or process component of the decision, then it is quite possible to develop a program either as part of the checklist or form. In fact, it is also possible and desirable to develop computer programs that collect and combine the data, thus giving the process a high degree of consistency or structure. When there is a desire to make a decision more structured, the support system for that decision is designed to ensure consistency. Many firms that hire individuals without a great deal of experience provide them with detailed guidelines on their decision making activities and support them by giving them little flexibility. One interesting consequence of making a decision more structured is that the liability for inappropriate decisions is shifted from individual decision makers to the larger company or organization.

Unstructured Decisions

At the other end of the continuum are unstructured decisions. While these have the same components as structured ones—data, process, and evaluation—there is little agreement on their nature. With unstructured decisions, for example, each decision maker may use different data and processes to reach a conclusion. In addition, because of the nature of the decision there may only a limited number of people within the organization qualified to evaluate the decision.

how you would choose to buy a car.

1. How long will you be keeping the car?

The projected length of ownership may have a huge bearing on what kind of vehicle you are going to purchase. Customers are keeping their cars longer than they used to, so be sure to do your research on quality ratings and long term ownership experiences.

2. Do Some Recon Work

Go check out the cars in person. A car may look good on paper (or on your computer screen), but you may hate the way it drives. Or hate the blind spot in the back. Or the way the seat is configured. Start your research online, and narrow it down to a few different vehicles. Then go see them and drive them. You will be tremendously upset if you spend weeks narrowing all your choices down to one specific car and then hate it when you finally drive it. You’ll have to start all over again.

3. Ownership costs

When buying a car, many customers determine the value that a vehicle offers by comparing the price tag vs. the features and benefits. For example, if one car costs a bit more money but has better gas mileage and more cargo room, most would consider that a good value. Based solely on that criteria, they would be correct. However, most customers don’t consider all the costs that go into a vehicle. One of the sites I always encourage customers to check out is Intellichoice.com. They do a great 5-Year Cost of Ownership projection for new and even used cars. This projection takes all of the different factors into account includingdepreciation, financing costs, repairs, maintenance, fuel, and insurance. It totals them all up over the cost of 5 years, and compares that to the industry average for that vehicle's class. Depending on how far above (or below) the total number is from the average, Intellichoice places a rating on the car. All of Toyota’s vehicles are labeled “Excellent” whereas most of Jeep’s vehicles are labeled “Poor” or “Below Average.”

4. Fuel Economy (REALLY!)

People nowadays really want to maximize fuel economy. Understandably so. However,people don’t stop to consider the monetary value that is equated with each mile per gallon. A great resource that I use almost daily is FuelEconomy.gov. This site has a ton of information about fuel economy, hybrid powertrains, and how the EPA rates cars. The most useful part is the ability to compare cars side-by-side. You can select up to four vehicles and compare them all to each other in terms of fuel economy. It offers helpful information like the cost to drive 25 miles, the size of the tank, the carbon footprint of the vehicle, your expected annual fuel costs, and a lot more. It even allows you to personalize all the fuel economy numbers based on your annual mileage and driving habits. This information may help you realize that maybe you SHOULD consider a hybrid, or transversely, maybe you should get the V6 instead of the 4-Cyl because it really won’t cost that much more in gas. Either way, it will help.

5. It’s Not Just About Price!!!!

It’s true that you can buy exactly the same car at several different dealerships. However, remember that who you do business with should be a big part of your decision. Do business with a dealer that you trust. Making phone calls and sending emails is convenient, but go visit these places. Feel them out. See how you’re treated. Our philosophy is that if you buy a car from us, you are part of the family. If something goes wrong with your car in the future, we feel obligated to take care of you! Not all dealerships operate that way. If you need service on your car, you want it done quickly, correctly, and with as little hassle as possible. If you had a bad sales experience, chances are your service experiences will be poor as well. Go check out their facility. What does their showroom look like? How clean and organized is their service department? Will they even let you see the service department? All of these factors can form a pretty good barometer on how this dealership conducts business and treats its customers. A modern facility with an organized showroom and a spotless service department is a good sign. The company has pride in its appearance and is methodical in maintaining an efficient facility for their customers. Believe me, it’s better to spend a few extra dollars on your car when you are buying the car from a place that you are happy with.

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