DECISION

SUPPORT SYSTEMS
 DSS helps the IS in the intelligence phase where
objective is to identify problem & go to design
phase for solution.
 Are application of herbert simon model
(intelligence, design, choice)
 Data from IS is used as input to DSS
 Use of DSS is to test the decision alternaltives
& to test the sensitivity of the result to the
change in the system & assumptions
 DSS designed to read, measure, monitor, evaluate,
analyze & act as per the decision embedded in the
system.
 E.g. order processing system
 Decisions like new product launch, price revision,
appointing new dealers, change of product design or
change in the manufacturing process are strategic
decisions requiring critical analysis of data, careful
evaluation of various alternatives & selecting one of
them for implementation on given criteria.
 DSS: Concept & Philosophy

 A highly flexible & interactive support system that

utilizes a
- knowledge base
- decision models
- a decision maker’s own thoughts
in order to create “what-if” scenarios that support
decision-making when problems are unstructured

 Used in order to analyze business data and present it

so that users can make business decisions more easily
in unstructured decision making situations
 Typical information that a DSS application
might gather & present are:
- comparative sales figures between fiscal
quarters
- projected revenue figures based on sales
assumptions
- consequences of different decision
alternatives in ‘what-if’ scenarios using
past experience
 Decision support system features include:
- data query and collection from the
knowledge base
- analysis of data against decision models
- presentation of resulting data for ‘best’
solutions
 Characteristics Of DSS
 DSS is based on several assumptions about the role
of the computer is effective decision making
1. The computer must SUPPORT the manager but
not replace his judgement
2. The main payoff of computer support is for
SEMISTRUCTURED problems – parts of the
problems can be systematised for the
computer, but where the decision maker’s
insight and judgement are needed to control
the process
3. Effective problem solving is INTERACTIVE
and is enhanced by a dialog between the user &
system
 Attributes of Decision Support
System

Flexibility Simple Models Database

The system is The systems use DSS needs

flexible so that simple models of databases
semi-structured decision making
or unstructured The system calls
decision making The choice of a for several inputs
situation can be models depends from database for
tackled with upon the decision making
ease and speed complexity of
decision making
 Types of Decision Support
System

Status Data Information

inquiry analysis Analysis
Accounting Model
systems systems systems
systems based
Based on Data is systems
No analysis. comparative analyzed and
No choice. analysis. Use information
Ask & get of a formula, Not necessarily Simulation
reports are
information. rule, law. required for models or
generated.
Act as per Simple data decision making. optimisation.
These
status value. processing. Refer to norms Provide
reports are
Business developed by general
used for
rules management guidelines to
decision
required for control & management
making
(Cashflow,inv decision (product
(SA,AR,MRA,
entory (cash,inventory) mix, material
MRP)
analysis) mix, job
 Deterministic system

Selects one &

Management Makes a Decision

Decision Support System

Tools Models

Database

Business Management Operation

Management Science Research
Advantage of DSS

1. used in sensitizing the decisions & assessing its

implications on the result/ business performance.

2. focusing on the critical issues in business.

3. provides higher management ability to delegate

decision making to the lower level once tools & models
are tested.
 Components Of DSS

DSS Database

Components Of
DSS Software System
DSS

User Interface
 DSS Database
Collection of current and historical data from a number of applications
It may be a small database residing on a PC that contains a subset of
corporate data that has been downloaded and possibly combined with
external data
Alternatively it may be a massive data warehouse that is continually
updated by a major organisational TPS
Data in databases are generally extracts or copies of production
databases so that using the DSS does not interfere with other critical
operational system
 DSS Software System
Contains the software tools that are used for data analysis
May contain various OLAP tools, datamining tools or a collection of
mathematical and analytical models that can easily be made accessible
to the DSS user

Model
Abstract representation that illustrates the components or
relationships of a phenomenon
 Using DSS
 Using a DSS involves an interactive analytical
modelling process which may be

What-if Analysis

Sensitivity Analysis

Goal Seeking

Optimisation Analysis
 What-If Analysis

An end-user makes changes to variables or relationships among

variables and observes the resulting changes in the values of other
variables
 If you are using a spreadsheet, you might change a revenue amount (a
variable) or a tax rate formula (a relationship among variables)
 Then you could command the spreadsheet to instantly recalculate all
affected variables in the spreadsheet
 Managerial user would be very interested in observing and evaluating
any changes that would occur to the values in the spreadsheet
 This type of analysis would be repeated until the manager was satisfies
with what the results revealed about the effects of various possible
decisions
 Sensitivity Analysis

 Is a special case of What-If analysis

 Typically, the value of only one variable is changed repeatedly, and the
resulting changes on other variables are observed
 Thus it a case of sensitivity analysis involving repeated changes to only
one variable at a time
 Used when decision makers are uncertain about the assumptions made
in estimating the values of certain key variables
 Goal-Seeking Analysis

 Reverses the direction of the analysis done in What-If and sensitivity

analysis
 Instead of observing how changes in a variable affect other variables,
Goal-seeking analysis sets a target for a variable and then repeatedly
changes other variables until the target is achieved
 Example: Specify a target of Rs.200000 for net profit after taxes for
a business venture. Then you could repeatedly change the value of the
revenue or expenses in a spreadsheet model until the result of
Rs.200000 is achieved
 This form of modelling, thus helps answer the question “How can we
achieve Rs.200000 in net profit after taxes?”
 Optimisation Analysis

 Is a more complex extension of goal seeking analysis

 Instead of setting a specific target for a variable, the goal is to find
the optimum value for one or more target variables, given certain
constraints
 Then, one or more other variables are changed repeatedly, subject to
the specified constraints until the best values for the target variables
have been discovered
 Example: You could try to determine the highest possible figure of
profits that could be achieved by varying the values for selected
revenue sources & expense categories. Changes to such variables could
be subject to constraints such as limited capacity of production
processes or limits to available financing
GDSS: Group Decision Support Systems
 So much work is accomplished in groups within
organisations that a special category of systems
called GDSS has been developed to support group &
organisational decision making

Definition
A GDSS is an interactive computer-based system to facilitate the
solution of unstructured problems by a set of decision makers working
together as a group
GDSS provides tools and technologies geared explicitly toward group
decision making and were developed in response to a growing concern
over the quality and effectiveness of meetings
 EXECUTIVE
INFORMATION
SYSTEMS
EIS: Executive Information Systems
Definition & Example
An EIS is a MIS tailored to the strategic needs of top management
Goal of a computer-based EIS is to provide top management with
immediate and easy access to selective information about key factors
that are critical to accomplishing a firm’s strategic objectives
EIS provide information about the current status and the projected
trends for key factors selected by top executives
It combines many of the features of the MIS and DSS
Example: Executives of a department store chain would probably
consider factors such as its sales promotion efforts and its product
line mix to be critical to its survival and success
 Information Sources

Letters EXECUTIVES

Memos Social
Activities

Periodicals Telephone
Calls

Manual
Reports Meetings
System
Reports
 Information
Presentation

Presented in a form tailored to the preferences of the executives using the

system

Exception Trend
GUI
Reporting Analysis

Ability to DRILL DOWN, which allows executives to quickly retrieve displays

of related information is another important capability
Information System specialists have capitalised on advances in computer
technology to develop attractive, easy-to-use ways to provide executives
with the information they need

Resulting in

EIS spreading into the ranks of middle management

More executives coming to recognise their feasibility and benefits

Resulting in

More features – Web browsing

- Electronic mail
- Groupware tools
- DSS
- Expert System capabilities
being added to make the EIS more useful to managers
 EXECUTIVE ROLES AND
DECISION MAKING
 Strategic Planning

 Tactical Planning

 Fire Fighting

 Control
 CHARACTERRISTICS OF
INFORMATION USED IN EXECUTIVE
DECISION MAKING

 Lack Of Structure
 High Degree Of Uncertainty
 Future Orientation
 Informal Sources
 TELECONFERENCING

 It refers to electronic meeting that involves

people who are at physically different sites.

 Telecommunication technology system allows

meeting participant to interact with one
another without traveling to the same location.
 Types of Teleconferencing

 Video conferencing

 Computer conferencing

 Audio Conferencing

 Telecommuting
 Advantages & Disadvantages
 Advantages
1. It is more fastest way of communication.
2. It saves substantial time of traveling.

 Disadvantages
1. It is more expensive way of communication.
2. Every time we can not substitute for meeting
physically with a man.[E.g:- In case of
problem of client. Or conflict with client]
Problems

EIS are still faced with

resistance by some
executives

EIS are plagued with

high costs