Chapter 10 Decision
Support Systems
Learning Objectives
Use of decision support in business
Identify the role and reporting alternatives of MIS
Describe how online analytical processing (OLAP) can
meet key information needs of managers
How DSS it differs from traditional MIS
Executive information systems, Enterprise information
portals and Knowledge management systems
Identify how neural networks, fuzzy logic can be used in
business
Give examples of several ways expert systems can be
used in business decision-making situations
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Decision Support in Business
Companies are investing in data-driven decision
support application frameworks to help them
respond to
Changing market conditions
Customer needs
This is accomplished by several types of
Management information
Decision support
Other information systems
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Levels of Managerial Decision
Making
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Information Quality
Information products made more valuable by
their attributes, characteristics, or qualities
Information that is outdated, inaccurate, or
hard to understand has much less value
Information has three dimensions
Time
Content
Form
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Attributes of Information Quality
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Decision Structure
Structured (operational)
The procedures to follow when decision
is needed can be specified in advance
Unstructured (strategic)
It is not possible to specify in advance
most of the decision procedures to follow
Semi-structured (tactical)
Decision procedures can be pre-specified,
but not enough to lead to the correct decision
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Decision Support Systems
Management Information Decision Support
Systems Systems
Decision Provide information about the Provide information and
support performance of the organization techniques to analyze
provided specific problems
Information form Periodic, exception, demand, Interactive inquiries and
and frequency and push reports and responses
responses
Information Pre-specified, fixed format Ad hoc, flexible, and
format adaptable format
Information Information produced by Information produced by
processing extraction and manipulation of analytical modeling of
methodology business data business data
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Business Intelligence Applications
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DSS Components
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Applications of Statistics and
Modeling
Supply Chain: simulate and optimize supply
chain flows, reduce inventory, reduce stock-
outs
Pricing: identify the price that maximizes
yield or profit
Product and Service Quality: detect quality
problems early in order to minimize them
Research and Development: improve
quality, efficacy, and safety of products and
services
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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, display, and responses
Satisfies needs of operational and tactical
decision makers who face structured
decisions
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Management Information System Reports
Periodic
Periodic Scheduled
Scheduled
Reports
Reports
Exception
Exception Reports
Reports
Demand
Demand Reports
Reports
Major
and
and Responses
Responses
Management
Information
Systems Reports Push
Push Reports
Reports
Management Reporting Alternatives
Periodic Scheduled Reports
Pre-specified 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
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Online Analytical Processing
OLAP
Enables managers and analysts to examine
and manipulate large amounts of detailed and
consolidated data from many perspectives
Done interactively, in real time, with rapid
response to queries
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Online Analytical Processing
Data is retrieved from corporate databases
and staged in an OLAP multi-dimensional
database
Corporate
Databases
Client PC
OLAP
Server
Multi- •Operational DB
dimensional •Data Marts
Web-enabled OLAP database •Data Warehouse
Software
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
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Geographic Information Systems
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
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Data Visualization Systems
Represents complex data using interactive,
three-dimensional graphical forms
(charts, graphs, maps)
Helps users interactively sort, subdivide,
combine, and organize data while it is in its
graphical form
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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
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
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Data Mining
Provides decision support through knowledge
discovery
Analyzes extensive historical business data
Looks for patterns, trends, and correlations
Goal is to improve business performance
Types of analysis
Regression
Decision tree
Neural network
Cluster detection
Market basket analysis
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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
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Executive Information Systems
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, analysis, and other knowledge
workers
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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
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Enterprise Information Portals
An EIP is a Web-based interface and integration
of MIS, DSS, EIS, and other technologies
Available to all intranet 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
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Dashboard Example
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Enterprise
Information
Portal
Components
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Enterprise Knowledge Portal
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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 that can
simulate the ability to think
And see, hear, walk, talk, and feel as well
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Attributes of Intelligent Behavior
Some of the 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, incomplete, or erroneous
information
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Domains of Artificial Intelligence
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Cognitive Science
Applications in the cognitive science of AI
Expert systems
Knowledge-based systems
Adaptive learning systems
Fuzzy logic systems
Neural networks
Genetic algorithm software
Intelligent agents
Focuses on how the human brain works
and how humans think and learn
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Robotics
AI, engineering, and physiology are the basic
disciplines of robotics
Produces robot machines with computer
intelligence and humanlike physical
capabilities
This area include applications designed to
give robots the powers of
Sight or visual perception
Touch
Locomotion
Navigation
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Latest Commercial Applications
of AI
Decision Support
Helps capture the why as well as the what of
engineered design and decision making
Information Retrieval
Converts information into simple
presentations
Database mining
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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
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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
and recommends a course of action
User interface programs communicate with
the end user
Explanation programs explain the reasoning
process to the end user
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Components of an Expert System
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Benefits of Expert Systems
Captures the expertise of an expert or group of experts in a
computer-based information system
Faster and more consistent than an expert
Can contain knowledge of multiple experts
Does not get tired or distracted
Cannot be overworked or stressed
Helps preserve and reproduce the knowledge
of human experts
An example of an expert system used by many people is
the Microsoft Windows operating system troubleshooting
software located in the "help" section in the taskbar menu.
Microsoft has designed their expert system to provide
solutions, advice, and suggestions to common errors
encountered throughout using the operating systems.
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Limitations of Expert Systems
The major 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
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Neural Networks
Computing systems modeled after the brain’s
mesh-like network of interconnected processing
elements (neurons)
Interconnected processors operate in parallel
and interact with each other
Allows the network to learn from the data it
processes
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Fuzzy Logic
Fuzzy logic
Resembles human reasoning
Allows for approximate values and
inferences and incomplete or ambiguous data
Used more often in Japan than in the U.S.
Used in fuzzy process controllers used in
subway trains, elevators, and cars
Fuzzy set theory defines fuzzy operators on
fuzzy sets.
Rules are usually expressed in the form:
IF variable IS property THEN action
e.g IF temperature IS very cold THEN stop fan.
Chapter 10 Decision Support Systems 41
Thank You
