Chapter 10

Decision Support Systems

Decision Support in Business
• Changing market conditions and Customer needs require Companies to invest in decision support to help them a competitive advantage • This is accomplished by several types of Systems
– Management information System Reports – Online Analytical Processing – Decision support – Using Data Warehousing – Data Mining – Using Knowledge Management System – Using Expert System , may include help of Artificial Intelligence

Levels of Managerial Decision Making 10-3 .

but not enough to lead to the correct decision (partly structured) 10-4 .Decision Structure • Structured (operational) – The procedures to follow when decision is needed are specified in advance • Unstructured (strategic) – It is not possible to specify in advance most of the decision procedures to follow • Semi-structured (tactical) – Some parts of decision procedures can be pre-specified.

Business Intelligence Applications 10-5 .

quick-response systems that are initiated and controlled by decision makers 10-6 .Decision Support Systems • Decision support systems use the following to support the making of semistructured business decisions – Analytical models – Specialized databases – A decision-maker’s own insights and judgments – An interactive. computer-based modeling process • DSS systems are designed to be ad hoc.

DSS Components 10-7 .

DSS Model Base • Model Base – A software component that consists of mathematical models used in computational and analysis – Using Spreadsheet (MS Excel) – Linear programming – Multiple regression forecasting – Capital budgeting present value 10-8 .

Management Information Systems • The original type of information system that supported managerial decision making – Produces information products that support many day-to-day decision-making needs – Produces reports. and responses – Satisfies needs of operational and tactical decision makers who face structured decisions 10-9 . display.

Management Reporting Alternatives • Periodic Scheduled Reports – Prespecified format on a regular basis • Exception Reports – Reports about exceptional conditions – May be produced regularly or when an exception occurs • Demand Reports and Responses – Information is available on demand • Push Reporting – Information is pushed to a networked computer 10-10 .

with rapid response to queries 10-11 . in real time.Online Analytical Processing (OLAP) • Enables managers and analysts to examine and manipulate large amounts of detailed and consolidated data from many perspectives • Done interactively.

Online Analytical Operations • Consolidation – Aggregation of data – Example: data about sales offices rolled up to the district level • Drill-Down – Display underlying detail data – Example: sales figures by individual product • Slicing and Dicing – Viewing database from different viewpoints – Often performed along a time axis 10-12 .

Geographic Information Systems (GIS) • DSS uses geographic databases to construct and display maps and other graphic displays • Supports decisions affecting the geographic distribution of people and other resources • Often used with Global Positioning Systems (GPS) devices 10-13 .

Using Decision Support Systems • Using a decision support system involves an interactive analytical modeling process – Decision makers are not demanding pre-specified information – They are exploring possible alternatives • What-If Analysis – Observing how changes to selected variables affect other variables 10-14 .

Using Decision Support Systems • Sensitivity Analysis – Observing how repeated changes to a single variable affect other variables • Goal-seeking Analysis – Making repeated changes to selected variables until a chosen variable reaches a target value • Optimization Analysis – Finding an optimum value for selected variables. given certain constraints 10-15 .

Data Mining • Provides decision support through knowledge discovery – Analyzes vast stores of historical business data – Looks for patterns. and correlations – Goal is to improve business performance • Types of analysis – – – – – Regression Decision tree Neural network Cluster detection Market basket analysis 10-16 . trends.

Market Basket Analysis • One of the most common uses for data mining – Determines what products customers purchase together with other products • Results affect how companies – – – – – Market products Place merchandise in the store Lay out catalogs and order forms Determine what new products to offer Customize solicitation phone calls 10-17 .

analysts.Executive Information Systems (EIS) – Combines many features of MIS and DSS – Provide top executives with immediate and easy access to information – Identify factors that are critical to accomplishing strategic objectives (critical success factors) – So popular that it has been expanded to managers. and other knowledge workers 10-18 .

Features of an EIS • Information presented in forms tailored to the preferences of the executives using the system – Customizable graphical user interfaces – Exception reports – Trend analysis – Drill down capability 10-19 .

Enterprise Information Portals • An EIP is a Web-based interface and integration of MIS. EIS. DSS. and other technologies – Available to all users and select extranet users – Provides access to a variety of internal and external business applications and services – Typically tailored or personalized to the user or groups of users – Often has a digital dashboard – Also called enterprise knowledge portals 10-20 .

Enterprise Knowledge Portal 10-21 .

hear. and feel as well 10-22 . talk. walk.Artificial Intelligence (AI) • AI is a field of science and technology based on – – – – – – Computer science Biology Psychology Linguistics Mathematics Engineering • The goal is to develop computers than can simulate the ability to think – And see.

or erroneous information 10-23 . incomplete.Attributes of Intelligent Behavior – – – – – – – – Think and reason Use reason to solve problems Learn or understand from experience Acquire and apply knowledge Exhibit creativity and imagination Deal with complex or perplexing situations Respond quickly and successfully to new situations Recognize the relative importance of elements in a situation – Handle ambiguous.

Domains of Artificial Intelligence 10-24 .

Expert Systems • An Expert System (ES) – A knowledge-based information system – Contain knowledge about a specific. complex application area – Acts as an expert consultant to end users 10-25 .

recommends course of action – User interface programs communicate with the end user – Explanation programs explain the reasoning process to the end user 10-26 .Components of an Expert System • Knowledge Base – Facts about a specific subject area – Heuristics that express the reasoning procedures of an expert (rules of thumb) • Software Resources – An inference engine processes the knowledge.

Components of an Expert System 10-27 .

Limitations of Expert Systems • Limited focus • Inability to learn • Maintenance problems • Development cost • Can only solve specific types of problems in a limited domain of knowledge 10-28 .