Decision Support Systems


Decision makers are faced with increasingly stressful environments – highly competitive, fast-paced, near real-time, overloaded with information, data distributed throughout the enterprise, and multinational in scope. The combination of the Internet enabling speed and access, and the maturation of artificial intelligence techniques, has led to sophisticated aids to support decision making under these risky and uncertain conditions. These aids have the potential to improve decision making by suggesting solutions that are better than those made by the human alone. They are increasingly available in diverse fields from medical diagnosis to traffic control to engineering applications.

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Simon’s Model
External Intelligence Internal AI, EIS

Problem Identification


Qualitative Analysis


Quantitative Analysis


GDSS Decision ES


Stages of Decision Making (From Herbert Simon)
 Intelligence (in the military sense of gathering

information) Design (Identifying the alternatives, structuring how the decision will be made) Choice (Picking an alternative or making the judgment) [Implementation – later added by other authors] [Evaluation]

Intelligence Phase
 Organizational Objectives  Search and SCANNING Procedures  Data Collection  Problem Identification  Problem Classification  Problem Statement

Design Phase  Formulate a Model  Set Criteria for Choice  Search for Alternatives  Predict and Measure Outcomes .

Choice Phase  Solution to the Model  Sensitivity Analysis  Selection of best (good) alternative's  Plan for implementation (action)  Design of a control system .

or decision rule to accomplish the entire stage.Structured vs Unstructured Decision Stages  Each stage can be Structured (automated) or Unstructured  “Structured” means that there is an algorithm.  Any decision stage that is not structured is unstructured . mathematical formula. The algorithm can be implemented manually or it can be computerized. but the steps are so detailed that no little or no human judgment would be needed.

. documents.Decision Support System  A Decision Support System (DSS) is an interactive computer-based system or subsystem intended to help decision makers use communications technologies. data. and make decisions. knowledge and/or models to identify and solve problems. complete decision process tasks.  Decision Support System is a general term for any computer application that enhances a person or group’s ability to make decisions.

a source of data. it is possible to use Visual Basic for Applications (VBA) to make the system more efficient by automating interactive tasks that users would otherwise have to repeat routinely. .  VBA can also make the system more powerful by extending the functionality of a spreadsheet model and by customizing its use.  When a model is implemented in Excel. and a user interface.Spreadsheet-based decision support systems  A DSS is made up of a model (or models).

 At each part of the assessment. there may have to be iterative development to take account improvement in data that take place as the project proceeds.Decision making characteristics  Decision is made based on the information available.  A project will not go ahead unless there is adequate funding. .

 Management is considered as art: a talent acquired over years by trial-and-error.Management  Management is decision making  The manager is a decision maker  Organizations are filled with decision makers at different level.  However decision making today is becoming more complicated:  Technology / Information/Computers : increasing More alternative to choose  Structural Complexity / Competition : increasing larger cost of error  International markets / Consumerism : increasing more uncertainty about future  Changes. Fluctuations : increasing need for quick decision .

Management problems  Most management problems for which decisions are sought can be represented by three standard elements – objectives. decision variables. and constraints.  Objective  Maximize profit  Provide earliest entry into market  Minimize employee discomfort/turnover  Decision variables  Constraints  Determine what price to use  Determine length of time tests should be run on a new product/service  Determine the responsibilities to assign to each worker  Can’t charge below cost  Test enough to meet minimum safety regulations  Ensure responsibilities are at most shared by two workers .

Types of Problems  Structured: situations where the procedures to follow when a decision is needed can be specified in advance  Repetitive  Standard solution methods exist  Complete automation may be feasible      Unstructured: decision situations where it is not possible to specify in advance most of the decision procedures to follow One-time No standard solutions Rely on judgment Automation is usually infeasible  Semi-structured: decision procedures that can be pre specified. but not enough to lead to a definite recommended decision  Some elements and/or phases of decision making process have repetitive elements DSS most useful for repetitive aspects of semi-structured problems .

The DSS Focuses on Semistructured Problems Computer Solution Manager + Computer (DSS) Solution Manager Solution Structured Semistructured Unstructured DEGREE OF PROBLEM STRUCTURE .

provides an easy-to-use interface.  MODELS. and allows for the decision maker's own insights.DSS in Summary  A MANAGEMENT LEVEL COMPUTER SYSTEM Which:  COMBINES DATA.FRIENDLY SOFTWARE  FOR SEMISTRUCTURED & UNSTRUCTURED DECISION MAKING.  USER . It utilizes data. .

Why DSS?  Increasing complexity of decisions  Technology  Information:  “Data. and not the time to think!”  Number and complexity of options  Pace of change  Increasing availability of computerized support  Inexpensive high-powered computing  Better software  More efficient software development process  Increasing usability of computers . data everywhere.

Perceived benefits       decision quality improved communication cost reduction increased productivity time savings improved customer and employee satisfaction .

before gaining in intensity during the 1980s. . the concept of decision support has evolved from two main areas of research: the theoretical studies of organizational decision making done at the Carnegie Institute of Technology during the late 1950s and early 1960s.  It is considered that the concept of DSS became an area of research of its own in the middle of the 1970s.A brief history  Academic Researchers from many disciplines has been studying DSS for approximately 40 years. mainly carried out at the Massachusetts Institute of Technology in the 1960s. and the technical work on interactive computer systems.  According to Keen and Scott Morton (1978).

A brief history  In the middle and late 1980s. Executive Information Systems (EIS).  As the turn of the millennium approached.  Beginning in about 1990. new Web-based analytical applications were introduced. group decision support systems (GDSS). data warehousing and on-line analytical processing (OLAP) began broadening the realm of DSS. and organizational decision support systems (ODSS) evolved from the single user and model-oriented DSS. .

OR/MS. AI & cognitive science to support more effective decision .History of DSS Goal: Use best parts of IS.

 Interestingly enough.Approaches to the design and construction of DSS  Studies on DSS development conducted during the last 15 years have identified more than 30 different approaches to the design and construction of decision support methods and systems. none of these approaches predominate and the various DSS development processes usually remain very distinct and projectspecific.  This situation can be interpreted as a sign that the field of DSS development should soon enter in its formalization stage. .

A summary of commercial DSS system  A summary of commercial DSS system show seven types of DSS: File Drawer Systems:  They are the simplest type of DSS     Can provide access to data items Data is used to make a decision ATM Machine Use the balance to make transfer of funds decisions .

A summary of commercial DSS system       Data Analysis systems: Provide access to data Allows data manipulation capabilities Airline Reservation system No more seats available Provide alternative flights you can use Use the info to make flight plans .

Information from several files are combined Some of these files may be external We have a true “data base” The information from one file. can be combined with information from other files to answer a specific query.     .A summary of commercial DSS system Analysis Information systems: that provide access to a series of decision oriented databases and small models. table.

Use internal accounting data Provide accounting modeling capabilities Can not handle uncertainty Use Bill of Material  Calculate production cost  Make pricing decisions     .A summary of commercial DSS system Accounting and financial models: that calculates the consequences of possible actions.

     . Can incorporate uncertainty Uses models to solve decision problem using forecasts Can be used to augment the capabilities of Accounting models Use the demand data to forecast next years demand Use the results to make inventory decisions.A summary of commercial DSS system Representational model: that estimates the consequences of actions based on simulation models.

A summary of commercial DSS system Optimization models: that provide guidelines for action by generating an optimal solution Used to estimate the effects of different decision alternative Can incorporate uncertainty Assign sales force to territory Provide the best assignment schedule     .

A summary of commercial DSS system      Suggestion models: A descriptive model used to suggest to the decision maker the best action A prescriptive model used to suggest to the decision maker the best action May incorporate an Expert System Use the system to recommend a decision Ex: Applicant applies for personal loan .

. and Telecommunications. including (but not exclusively):       Database research. Simulation methods. Software engineering.A Multidiscipline Study  It is clear that DSS belong to an environment with multidisciplinary foundations. Human-computer interaction. Artificial intelligence.

data-driven DSS. . and model-driven DSS.Taxonomies  Using the mode of assistance as the criterion. knowledge-driven DSS. Power (2002) differentiates five types for DSS:      communication-driven DSS. document-driven DSS.

Model-driven DSS  A model-driven DSS emphasizes access to and manipulation of a statistical. Model-driven DSS use data and parameters provided by users to assist decision makers in analyzing a situation. or simulation model.  Other examples:  A spread-sheet with formulas in  A statistical forecasting model  An optimum routing model . they are not necessarily data intensive. Dicodess is an example of an open source model-driven DSS generator (Gachet 2004). optimization. financial.

. Data warehouses provide additional functionality.Data-driven (retrieving) DSS  A data-driven DSS or data-oriented DSS emphasizes access to and manipulation of a time series of internal company data and.  Simple file systems accessed by query and retrieval tools provides the elementary level of functionality. sometimes. external data. OLAP provides highest level of functionality.

Model and data-retrieving DSS  Examples:  Collect weather observations at all stations and forecast tomorrow’s weather  Collect data on all civilian casualties to predict casualties over the next month .

It supports more than one person working on a shared task.  examples include integrated tools like Microsoft's NetMeeting or Groove (Stanhope 2002).Communication-driven DSS  A communication-driven DSS use network and comminication technologies to faciliate collaboartion on decision making. Video conferencing.  It is related to group decision support systems. .

 Document database may include: Scanned documents. hypertext documents. . It manages.Document-driven DSS  A document-driven DSS uses storage and processing technologies to document retrieval and analysis. retrieves and manipulates unstructured information in a variety of electronic formats. images.  A search engine is a primary tool associated with document drivel DSS. sound and video.

rules. .Knowledge-driven DSS  A knowledge-driven DSS provides specialized problem solving expertise stored as facts. It suggest or recommend actions to managers. or in similar structures.  MYCIN: A rule based reasoning program which help physicians diagnose blood disease. procedures.

two examples being optimization models and goal-seeking models).Architecture  Three fundamental components of DSS:  the database management system (DBMS). or from the personal insights and experiences of individual users). and  the dialog generation and management system (DGMS).  the model management system (MBMS). facts.  the Model Management Component handles representations of events. from external sources such as the Internet. or situations (using various kinds of models.  the Data Management Component stores information (which can be further subdivided into that derived from an organization's traditional data repositories. and  the User Interface Management Component is of course the component that allows a user to interact with the system. .

the knowledge engine.A Detailed Architecture  Even though different authors identify different components in a DSS. academics and practitioners have come up with a generalized architecture made of six distinct parts:       the data management system. The user interface. and the user(s) . the DSS architecture and network. the model management system.

Typical Architecture     TPS: transaction processing system MODEL: representation of a problem OLAP: on-line analytical processing USER INTERFACE: how user enters problem & receives answers DSS DATABASE: current data from applications or groups DATA MINING: technology for finding relationships in large data bases for prediction TPS DSS DATA BASE EXTERNAL DATA   USER INTERFACE DSS SOFTWARE SYSTEM MODELS OLAP TOOLS DATA MINING TOOLS USER .

DSS Model base  Model base  A software component that consists of models used in computational and analytical routines that mathematically express relations among variables  Examples:  Linear programming models.  Multiple regression forecasting models  Capital budgeting present value models .

marketing for sustainable development.  A specific example concerns the Canadian National Railway system. and better allocation of business resources. principles. identification of negative trends.  a bank loan officer verifying the credit of a loan applicant  an engineering firm that has bids on several projects and wants to know if they can be competitive with their costs.Applications  There are theoretical possibilities of building such systems in any knowledge domain.  Clinical decision support system for medical diagnosis.  A growing area of DSS application.  DSS is extensively used in business and management. concepts. which tests its equipment on a regular basis using a decision support system.  A DSS can be designed to help make decisions on the . Executive dashboards and other business performance software allow faster decision making. and techniques is in agricultural production.

8. 12. 7. and implementation. DSS should be interactive ease of use. 3.Capabilities of DSS  The key DSS characteristics and capabilities are as follows: 1.Ease of development by end users.Standalone. 4. Support for interdependent or sequential decisions. 9.Complete control by decision-makers. 5. 10. integration and Web-based . Support managers at all levels. design. Support variety of decision processes and styles. 6. Support intelligence.Support modeling and analysis. 11. 13. 2. Support for decision makers in semistructured and unstructured problems. Effectiveness.Data access. Support individuals and groups. DSS should be adaptable and flexible. choice. 14. but not efficiency.

DSS Characteristics  Initial risk analysis (management science)  Model examination using experience. Allows managerial intuition and judgment . but incomplete  DSS provided very quick analysis  DSS: flexible and responsive. judgment. and intuition  Initial model mathematically correct.

and adaptable format Information generated by Information generated extraction and manipulation by analytical modeling of of business data business data . fixed format Interactive inquiries and responses Ad hoc. flexible. and key indicator reports and responses Prespecified. demand.Information Systems to support decisions Management Information Systems Decision support provided Information form and frequency Information format Information processing methodology Decision Support Systems Provide information about Provide information and the task output performance techniques to analyze of the organization specific problems Periodic. exception.

and observes the resulting changes in the values of other variables  Sensitivity Analysis  Value of only one variable is changed repeatedly and the resulting changes in other variables are observed .Using DSS  What-if Analysis  End user makes changes to variables. or relationships among variables.

Using DSS  Goal-Seeking  Set a target value for a variable and then repeatedly change other variables until the target value is achieved  Optimization  Goal is to find the optimum value for one or more target variables given certain constraints  One or more other variables are changed repeatedly until the best values for the target variables are discovered .

expanded to managers. analysts and other knowledge workers .Executive Information Systems  EIS  Combine many features of MIS and DSS  Provide top executives with immediate and easy access to information  About the factors that are critical to accomplishing an organization’s strategic objectives (Critical success factors)  So popular.

Features of an EIS  Information presented in forms tailored to the preferences of the executives using the system     Customizable graphical user interfaces Exception reporting Trend analysis Drill down capability .

Expert Systems  ES  A knowledge-based information system (KBIS) that uses its knowledge about a specific. complex application to act as an expert consultant to end users  KBIS is a system that adds a knowledge base to the other components on an IS .

Expert System Components  Knowledge Base  Facts about specific subject area  Heuristics that express the reasoning procedures of an expert (rules of thumb)  Software Resources  Inference engine processes the knowledge and makes inferences to make recommend course of action  User interface programs to communicate with end user  Explanation programs to explain the reasoning process to end user .

Web-Based Decision Support Systems  Web-based decision support systems  Decision support system software provides business intelligence through web browser clients that access databases either through the Internet or a corporate intranet .

 GDSS is used in problem solving  Electronic meeting system (EMS) is used for group interaction of all kinds. Example JAD session. .Group Decision Support Systems  Definition .a computer-based system that supports groups of people engaged in a common task (or goal) and that provides an interface to a shared environment.

nominal group technique.facilitate communication among group members.Group Decision Support Systems  Designed to support Group Communication and Decision processes. They furnish DSS modeling capabilities and software for activities such as brainstorming.contain communication features of Level I plus provide support for the decision making process. facilities for remote conferencing. Provide the technology necessary to communicate: decision rooms. or other group processes.  Level I . the delphi technique. .  Level II .

so that the GDSS can interface with other GroupWare. model.  Features for prompting and summarizing votes and ideas of participants  ability to have anonymous interactions to encourage participation by all group members. . e-mail.Characteristics of GDSS  Aside from database. they also contain a communication component that would interface with the organization’s LAN or WAN. etc. and dialog component.

Characteristics of GDSS contd.  Expanded model base for models supporting group decision processes.  Support for role of facilitator .  Ability to have a protocol or transcript of the group’s interactions for organizational memory.

or these users simply equate the notion of intelligent support of human decision making with automated decision making. decision making. this is too often forgotten by decision support system users.Conclusion  Decision support systems quite literally refer to applications that are designed to support. not replace.  Unfortunately. .

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