ISP688/ITS674:INTELLIGENT DECISION MAKING SUPPORT SYSTEMS

Model and Analysis

in Decision Support
Systems

HASLINDA BINTI NORADZAN

UiTM CAWANGAN N.SEMBILAN KAMPUS SEREMBAN
Lesson Outcomes
o Understand the conceptual foundations of decision making
o Understand the nature of model in decision n making
o Understand Simon’s four phases of decision making
o Differentiate between the concepts of making a choice and
establishing a principle of choice
o Learn how DSS provides supports for decision making in practice

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 Decision
Support Making
Decision Support
Systems (DSS)
System

Models and Data

Characteristics of Decision Making
• Groupthink
• Evaluating What-if scenario
• Experimentation with a real system
• Changes in the decision making environment may occur
continuously
• Time pressure on the decision maker
• Analysing a problem takes time / money
• Insufficient or too much information

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Characteristics of Decision Making
➢ Better decisions
Tradeoff: accuracy versus speed
➢ Fast decision may be detrimental

Areas suffering most from fast decisions (Horgan 2001)

✓ personnel/human resources (27%)
✓ budgeting/finance (24%)
✓ organizational structuring (22%)
✓ quality/productivity (20%)
✓ IT selection and installation (17%)
✓ process improvement (17%)

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Decision Making
Process of choosing among two or more alternative
courses of action for the purpose of attaining goal(s)

Managerial decision making is synonymous with the

entire management process- Simon 1977

Planning – What should be done? When? Where?

Why? How? By whom?

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Problem
Does not meet established goals

occurs when Does not yield expected result

a system:
Does not work as planned

✓ Problem is the difference between the desired and actual outcome

✓ Problem solving also involves identification of new opportunities

Model
Overview of Model
▸ A simplified representation of reality
▸ Canrepresentsystems/problems at various
degree ofabstraction
▸ Benefits:
▹ Ease ofmanipulation
▹ Compression oftime
▹ Lower cost of analysis
▹ Evaluation ofmany alternatives
▹ Reinforce learning and training
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 Types of Model
Less Degree of Abstraction More

▸ Iconic models ▸ Analog Models ▸ Mental Models MathematicalModels

(scale models) ▸▹ Symbolic ▹ Descriptive ▹ Quantitative
▹ Least representation representation of model
abstract of reality decision making ▹ Complex problem
▹ Eg: model ▹ 2D chart / situations
of airplane, diagram ▹ Eg: Airplane’spilot
car ▹ Eg: blueprintof consider whether
a house, stock to fly (past
market chart experience)

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Benefits of Model
✓ Ease of manipulation
✓ Compression of time
✓ Lower cost of analysis on models
✓ Cost of making mistakes on
experiments
✓ Inclusion of risk/uncertainty
✓ Evaluation of many alternatives
✓ Reinforce learning and training

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Simon’s Decision
Making Process
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 Intelligence

Phases of Design
Decision
Making Choice

Implementation
Phase 1 :Intelligence
Scan the environment :
intermittently or continuously

Identify problem situationsor

opportunities

Monitor the result of the

implementation
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Phase 1 :Intelligence
Potential issues in data / information collection and estimation:

Lack of Cost of Inaccurate Data Data may Key data Data

data Data /imprecise estimation be may be change
Collection data – insecure qualitative over time
subjective

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Phase 1 :Intelligence

Problem Problem Problem

Classification Decomposition Ownership

Outcome of Intelligence Phase : A Formal Problem Statement

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Phase 2 :Design
▸ Finding and analysing possible courses of
action
▸ Model will be –constructed, tested,validated
▸ Modelling –conceptualizing the problem and
abstracting into quantitative or qualitative
form

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Phase 2 :Design
Selection of a Principle of Choice
• It is a criterion that describes the
acceptability of a solution approach
• Reflection of decision-making objective(s)
• In a model, it is the result variable
• Choosing and validating against
o High-risk versus low-risk
o Optimize versus satisfice
• Criterion is not a constraint

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Phase 3 :Design
Normative Model • The chosen alternative is demonstrably
= Optimization the best of all possible alternatives

Heuristic Model = • The chosen alternative the best of only a

suboptimization subset of possible alternative

Descriptive • Describe things as they are or as they are

Model believed to be (mathematical based)

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Phase 3 :Choice
▸ Actual decision and commitment are madehere –
follow certain course of action
▸ Boundary between Design and Choice phase –
generate alternatives while performingevaluation
(overlapping)

Search Evaluation Recommendation

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Phase 3 :Choice

▸ Search Approach
▹ Analytic techniques(solving ▸ Additional Activities
with formula) ▹ SensitivityAnalysis
▹ Algorithm(step bystep ▹ What-if Analysis
procedure) ▹ Goal seeking
▹ Heuristic (ruleof thumb)
▹ Blind search (trulyrandom
search)

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Phase 4 :Implementation
▸ Putting arecommended solution to work
▸ Not necessarily implementing a computersystem
▸ Issues:
▹ Resistance tochange
▹ Degree of support from top management
▹ User training

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How decision are
supported?
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Support of Intelligence Phase
▸ Enabling continuousscanning of external and internal information
sources to identify problem/opportunity
▸ Resources/Technologies :Web,ES, OLAP, data warehousing, data,
text,web mining,EIS,KSMGSS,GIS
▸ Business Activity Monitoring(BAM)
▸ Business Process Management(BPM)
▸ Product life-cycle management(PLM)

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Support of Design Phase
▸ Enabling generating alternative courses of action,
determining the criteria for choice
▸ Generating alternatives:
▹ Structured /simple problem - standard /special
model
▹ Unstructured / complex problem –human
experts,ES, KMS,brainstorming/GSS,OLAP,
data/text mining

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Support of Choice Phase
▸ Enabling selection of the best alternative given
acomplex constraint structure
▸ Use sensitivity analysis, what-if analysis, goal
seeking
▸ Resources:
▹ KMS
▹ CRM, ERP,SCM
▹ Simulation and otherdescriptive model

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Support of Implementation Phase
▸ Enabling implementation /deployment of the selected
solution to the system
▸ Decision communication, explanation and justification
to reduce resistance to change
▸ Resources:
▹ Corporateportal, Web2.0 / Wikis
▹ Brainstorming /GSS
▹ KSM,ES

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New Technologies to
Support Decision Making
▸ Web-basedsystem
▸ M-Commerce
▸ Smartphone, tablet
▸ GSSwith visual/immerse presence
▸ RFIDand otherwireless/sensor technologies
▸ Faster computingpower with better
algorithm

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Let’s do some
brainstorming =)
“ ▸ You are about to open a new
branch of your company. List
typical activities in each phase of
the decision
▹ Intelligence, Design,
Choice, Implementation

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