e-Commerce

Problem Solving and Decision Making

Problem is always considered negative if not given a solution at the early stage. The negative impact it creates to the firm affects the bottomline ("Net Profit"). Most often the negative effect to company's performance is dependent on how the trouble shooters and strategist come up with solutions.

Herbert A. Simon, a Nobel prize-winning management scientist, is credited with defining four basic phases of problem solving that are universally recognized. The following are the phases of problem-solving:

• Intelligence Activity. Searching the environment for conditions calling for a solution.
• Design Activity. Inventing, developing, and analyzing possible courses of actions.
• Choice Activity. Selecting a particular course of action from those available .
• Review Activity. Assessing past choices.

In understanding these problem-solving phases, please relate these to the flowchart above.

Dimensions of Information

The following desirable dimensions contribute to the value of information:

• Relevancy
  

The user must be able to segregate from a volume of data, the pertinent information that is needed for timely decision-making. One author says that when a data is relevant to decision -making that is the only time that it should be called "information".

• Accuracy
  

Ideally, it is important to provide accurate information but let us remember that assurance of accuracy on information and reports requires additional cost. Cost that would increase the operating expenses and thereby decreasing the net profit. This is the reason why some companies settle for less than 100% accuracy for some applications example economic forecasts and statistical reports.

• Timeliness
  

Information should be made available to the concerned parties prior to the decision making process. Eventually, these data are used as basis for the appreciation of the problems at hand. It can help parties analyze effectively and be able to set priorities.

• Completeness
  

The user should be able to obtain the information that presents a complete picture of a problem or a solution. However in doing so, he must be able to determine the amount of details needed to avoid information overload.

In your work experiences, you might have encoutered similar scenarios that given the appropriate details of the information, you could provided a more cost-effective solution.