You've got the right idea. BO about 2-3" worth of sts at the underarms, then work front and back separately.
after that, most patterns have you dec at both edges of the row at the armhole edge, every other row, for about 4-6 times, depends on your gauge. Then you knit straight until the shoulder shaping. Zina's got a good idea, look at a similar pattern in the same size to give you numbers and how to work the neckline shaping.
sue- knitting heretic