11. What is a decision-support system (DSS)?

How does it differ from a management information

system (MIS)?

A DSS assists management decision making by combining data, sophisticated analytical models, and
user-friendly software into a single, powerful system that can support semi-structured or
unstructured decision making. These systems help end users utilize data and models to discuss and
decide semi-structured and unstructured problems, but they do not solve the problems for the user.
Generally speaking, MIS provide routine, pre-specified, and formatted reports based on data
extracted and summarized from the firm's TPS. These reports provide information on the firm's
performance and are used to help monitor and control the business. In contrast, DSS provide
capabilities for addressing non-routine decisions and user control. DSS emphasize change, flexibility,
and rapid response and place a greater emphasis on models, assumptions, ad hoc queries, and
display graphics. Additionally, MIS primarily address structured problems, while DSS focus more on
supporting semi-structured and unstructured problems.

13. What are three components of DSS briefly describe each.

The three basic components of DSS Include DSS database, DSS Software system, and DSS users
interface. The DSS database is a collection of current or historical data from a number of application or
groups, organized for easy access by a range of applications. The DS database may be a small database
residing on a PC or it may be a massive data warehouse that is continuously updated by major
organizational TPS. The DSS software system is a collection of software tools used for data analysis,
including a collection of mathematical and analytical models, OLAP tools, and data mining tools.
Various kinds of models may be in the model base, including libraries of statistical, optimization,
sensitivity analysis, and forecasting models. The DSS user interface permits easy interaction between
users and the DSS software tools.

14. How can DSS help firms with supply chain management and customer relationship
management?

Supply chain decisions involve determining “who, what, when, and where” from purchasing and
transporting materials and parts through manufacturing products and distributing and delivering
those products to customers. DSS can help managers examine this complex chain comprehensively and
search among a huge number of alternatives for the combinations that are most efficient and cost-
effective. The prime management goal might be to reduce overall costs while increasing the speed and
accuracy of filling customer orders.

DSS for customer relationship management use data mining to guide decisions about pricing,
customer retention, market share, and new revenue streams. These systems typically consolidate
customer information from a variety of systems into massive data warehouses and use various
analytical tools to slice it into tiny segments for one-to-one marketing.

16. What is a geographic information system (GIS)? How does it use data visualization technology?
How can it support decision making?

Geographic information systems (GIS) are a special category of DSS that use data visualization
technology to analyze and display data for planning and decision making in the form of digitized maps.
The software can assemble, store, manipulate, and display geographically referenced
information, tying data to points, lines, and areas on a map. GIS can thus be used to support decisions
that require knowledge about the geographic distribution of people or other resources in scientific
research, resource management, and development planning. For example, GIS might be used to help
state and local governments calculate emergency response times to natural disasters or to help banks
identify the best locations for installing new branches or ATM terminals. GIS tools have become
affordable even for small business and some can be used on the web.

20 - 21. What is a group decision-support system (GDSS)? How does it differ from a DSS?

A GDSS is an interactive computer-based system that facilitates the solution of unstructured

problems by a set of decision makers working together as a group. GDSS have been developed in
response to the growing concern over the quality and effectiveness of meetings. In general, DSS focus
on individual decision making, while GDSS support decision making by a group.

24. A) Describe the three elements of GDSS.

Hardware, software tools, and people are the three GDSS elements. Hardware includes the
conference facility itself (room, tables, chairs) that is laid out to support group collaboration. It also
includes electronic hardware such as electronic display boards as well as audiovisual, computer, and
networking equipment. Software tools include electronic questionnaires, electronic brainstorming
tools, idea organizers, questionnaire tools, tools for voting or setting priorities, stakeholder
identification and analysis tools, policy formation tools, and group dictionaries. People include the
participants, a trained facilitator, and the staff to support the hardware and software.

18. Define and describe the capabilities of an executive support system (ESS).

Executive support systems (ESS) help managers make unstructured and semi structured decisions. ESS
focus on the information needs of senior management and combine data from both internal and
external sources. The ESS creates a generalized computing and communications environment that can
be focused on and applied to a changing array of problems. The ESS can help senior executives monitor
organizational performance, track activities of competitors, spot problems, identify
opportunities, and forecast trends.

19. What are the benefits of ESS? How do these systems enhance managerial decision making?

Although ESS benefits are not easily measured, several benefits are mentioned in the chapter. ESS
increase flexibility, provide the ability to analyze, compare and highlight trends, monitor performance,
can dramatically improve management performance, and can increase mgt’s span of control. ESS
flexibility allows mgt to shape the problems, using the system as an extension of their own thinking. ESS
offers executives the ability to analyze quickly and to compare and highlight trends, freeing up
executives and their staff for more creative analysis and decision making. ESS can and do change the
workings of organizations. Executives are better able to monitor activities below them, allowing them to
push decision making further down in the organization while expanding the executive’s span of control.

22. as a manager or user of information systems, what would you need to know to participate in the
design and use of a DSS or an ESS? WHY?

- Managers and users of information systems would want to specify what kinds of decisions the systems
should support and where the data for those decisions should come from. In a typical enterprise,
workers are capturing data, sharing data with other workers, retrieving insights from captured data and
managing the information and insight only when they can be easily captured, systematically stored,
properly retrieved, readily shared, and well-managed, data mgt, DSS, AND ESS represent the corner
stone of any data warehousing program.

Data warehouses have become a critical component in enabling mgt to make decisions quickly and
accurately, for example, telecommunication companies use it to manage churn and ensure the retention
of their customers, while retail firms rely on data mining to maximize product mix and shelf spaces and
government use it to manage federal welfare and healthcare programs. Across industries, data
warehousing programs have achieved a400 percent ROI on average, while increasing productivity,
reducing speeds of analysis, and revealing business opportunities that were otherwise hidden from mgt
among layers of unreachable data. However, if mgt is not part of the design and use of a DSS or ESS then
this information may not be available or utilized and if not the firm may not be able to gain or maintain
competitive advantage. One thing is for sure the competition is using these systems to enhance decision
making.

23. If business used DSS, GDSS and ESS more widely, would they make better decisions? Explain

Competitiveness increasingly depend on the quality of decision making, so naturally, companies often
rely on their own history and their past transactions and activities to male future decisions. When
businesses make decisions, it is usually helpful to use a decision-support system and firmware data.
These systems can automate certain decision procedures and they can offer information about different
aspects of the decision situation. They can also help managers question existing decisions procedures. It
can be useful to explore the outcomes of alternative organizational scenarios. And of course, using GDSS
can improve how groups make decisions, and also improve the decision that might have been made by
an independent person.

The size of the corporate information base is increasing at the rate of 400 percent every three years,
until recently; the ideas of analyzing years of accumulated transaction date in a single pass seemed
expensive and unachievable. In addition to the difficulties caused by the data format incompatibilities,
the computational requirements would have consumed much of the company’s data processing capacity
for days or even weeks. Analysis has been limited to fairly simple queries run after hours against
relatively small subjects of data. In recent years, scalable hardware and software technologies have
fueled data warehousing, enabling decision makers to unleash the power of analysis provided as a
result.

On the other hand, remember that these systems do not automatically lead to better decisions unless
the decision problem, or situation is clearly understood and the systems are appropriately designed.
52. How can a DSS support unstructured or semi-structured decision making?

Unstructured problems are novel, non-routine and have no predefined algorithms or solutions. DSS
help design and evaluate alternatives and monitor the adoption or implementation process. DSS
combine data with models to produce various alternative scenarios that can be used for making choices.
In large organizations, decision making is inherently a group process, and DSS can be designed to
facilitate group decision making by providing tools, procedures and technologies to help people working
on decisions as a group.

129. Describe MIS and DSS and differentiate between them.

MIS provide information on the firm’s performance to help managers monitor and control the business.
They typically produce hard copy, fixed, regularly scheduled reports based on data extracted and
summarized from the organization’s underlying transaction processing systems. DSS provide new sets
of capabilities for non routine decisions and user control. MIS accents reports based on routine flows of
data and assists in the general control of the organization. DSS emphasizes change, flexibility, and rapid
response to unstructured problems.

Your text states that many t managers use the new capabilities in DSS and ESS to obtain the same
information as before the new systems were implemented. . How would you induce a traditional
manager to use new DSS and ESS more effectively?

Managers must be trained to ask better questions of the data. This will require major changes in
traditional management thinking. Perhaps one way to induce a traditional manager to be more
interested in these systems would be a dog-and-pony show at a senior-level management retreat. Of
course, the introduction into mid-level management of people trained in the use of these systems could
also act as a spur.

122. Describe the two types of DSS. Explain circumstances in which one might be used. Give an
example of the use of each system.

Model-driven DSS were primarily stand-alone systems isolated from major organizational information
systems that used some type of model to perform “what-if” and other types of analyses. Their analysis
capabilities were based on a strong theory or model combined with a good user interface to make the
model easy to use. There are several examples in the textbook: the voyage-estimating DSS described in
chapter 2, the Gaps planning and forecasting system described at the beginning of this chapter, and
Continental Airlines system for cargo revenue optimization are mentioned on page 350.

The second type of DSS is a data-driven DSS. These systems analyze large pools of data found in major
organizational systems. They support decision making by allowing users to extract useful information
that was previously buried in large quantities of data. Often data from transaction processing systems
are collected in data warehouses for this purpose. OLAP and data mining can then be used to analyze
the data. WH Smith PLC’s system for online sales and profitability analysis described in the Window on
Organizations, p. 352, is an example of a data-driven DSS.

123. Describe/Define at least four types of information that data mining can yield. Give an
example of each one.

There are five types of information discussed in the text:

·Associations – are occurrences linked to a single event. Example: A study of supermarket purchasing
patterns might reveal that when corn chips are purchased, a cola drink is purchased 65 percent of the
time, but when there is a promotion; cola is purchased 85 percent of the time.

·Sequences – events are linked over time. Example: If a house is purchased, a new refrigerator will be
purchased within two weeks 65 percent of the time, and an oven will be bought within one month of
the home purchase 45 percent of the time.

·Classifications – recognizes patterns that describe the group to which an item belongs by examining
existing items that have been classified and by inferring a set of rules. Example: Businesses such as
credit card or telephone companies worry about the loss of steady customers. Classification can help
discover the characteristics of customers who are likely to leave and can provide a model to help
managers predict who they are so that they can devise special campaigns to retain such customers.

·Clusters – working in a manner similar to classification when no groups have yet been defined.
Example: A data-mining tool can discover different groupings within data, such as finding affinity groups
for bank cards or partitioning a database into groups of customers based on demographics and types of
personal investments.

·Forecasts – uses a series of existing values to forecast what other values will be. Example: Forecasting
might find patterns in data to help managers estimate the future value of continuous variables such as
sales figures.

124. Discuss the four types of models commonly found in model libraries.

Statistical modeling software can be used to help establish relationships, such as relating product sales
to differences in age, income, or other factors between communities. Optimization models, often using
linear programming, determined optimal resource allocation to maximize or minimize specified
variables such as cost or time. A classic use of optimization models is to determine the proper mix of
products within a given market to maximize profits. Forecasting models are often used to forecast sales.
The user of this type of model might supply a range of historical data to project future conditions and
the sales that might result from those conditions. Companies often use this software to predict the
actions of competitors. Sensitivity analysis models ask “what-if” questions repeatedly to determine the
impact of changes in one or more factors on outcomes.

125. How specifically does the digital firm use DSS? Discuss each use, giving examples.

DSS can help companies improve supply chain management and customer relationship management.
Some take advantage of the company-wide data provided by enterprise systems. DSS today can also
harness the interactive capabilities of the Web to provide decision-support tools to both employees and
customers.
126. List and describe at least three ways in which GIS can be used by modern business.

Geographic information systems are a special category of DSS that use data visualization technology to
analyze and display data for planning and decision-making in the form of digitized maps. GIS can best be
used to support decisions that require knowledge about the geographic distribution of people or other
resources in scientific research, resource management, and development planning. GIS have modeling
capabilities, allowing managers to change data and automatically revise business scenarios to find better
solutions. For instance, a company could display its customers on a map and then design the most
efficient delivery route for its products. A second way in which it could be used would be to analyze
demographic information to decide where to open branch restaurants. A third use could be customer
demographic data and map information to locate people who are likely to become customers for the
company’s services.

127. Describe and explain how a GDSS works to enhance group decision making. What are at least
four factors involved in the successful outcome of any group meeting?

Beyond three to five attendees the traditional meeting process breaks down. GDSS software tools
contribute to a more collaborative atmosphere by guaranteeing contributors’ anonymity so that
attendees can focus on evaluating the ideas themselves. The GDSS software tools follow structured
methods for organizing and evaluating ideas and for preserving the results of meetings, allowing non-
attendees to locate needed information after the meeting. The documentation of the meeting by one
group at one site can also be used as input to another meeting on the same project at another site. If
properly designed and supported, GDSS meetings can increase the number of ideas generated and the
quality of decisions while producing the desired results in fewer meetings.

The nature of electronic meeting technology is only one of a number of factors that affect meeting
processes and output. The outcome of group meetings depends upon the composition of the group, the
manner in which the problem is presented to the group, the facilitator’s effectiveness, the organization’s
culture and environment, the quality of the planning, the cooperation of the attendees, and the
appropriateness of tools selected for different types of meetings and decision problems.

128. List at least three factors to consider when planning an ESS.

A major challenge of building executive support systems has been to integrate data from systems
designed for very different purposes so that senior executives can review organizational performance
from a firm-wide perspective.

129, ESS must be designed so that high-level managers and others can use them without much
training.

One area that merits special attention is the determination of executive information requirements. ESS
need to have some facility for environmental scanning. A key information requirement of managers at
the strategic level is the capability to detect signals of problems in the organizational environment that
indicate strategic threats and opportunities. The ESS need to be designed so that both external and
internal sources of information can be used for environmental scanning purposes
Implementation of the DSS must be carefully managed to neutralize the opposition of managers at the
lower levels of the organization, because DSS potentially could give top executives the ability to examine
their work without their knowledge.

130. What is the balanced scorecard model? Why is it particularly useful? Where does it get its
information?

The balanced scorecard is a model for analyzing firm performance that supplements traditional financial
measures with measurements from additional business perspectives, such as customers, internal
business processes, and learning and growth. Managers can use balanced scorecard systems to see how
well the firm is meeting its strategic goals. Data to fill out the scorecard, from sources such as financial
ledger applications and client retention and market penetration ratios, feed a central data warehouse.
The data is mined and ad hoc reports can be create