DECISION SUPPORT SYSTEM

BY: Surabhi

Decision Support Systems

Decision support systems (DSS)
Offer potential to assist in solving both semistructured and unstructured problems

Decision Support in Business

Companies invest in data-driven decision support application frameworks to help them respond to Changing marketing conditions Customer needs

Management information Accomplished by several types of Decision support Other information systems

Decision Structure
Structured (operational) The procedures to follow when a decision is needed can be specified in advance It is not possible to specify in advance most of the decision procedures to follow Decision procedures can be pre-specified, but not enough to lead to the correct decision

Unstructured (strategic)

Semi-structured (tactical)

Information Quality
Information products are made more valuable by their attributes, characteristics, or qualities Outdated, inaccurate, or hard to understand information has much less value Information has three dimensions Time Content Form

Attributes of Information Quality

Decision Support Trends

Personalized decision support

Modeling

Information retrieval

Data warehousing

What-if scenarios

Reporting

Decision Support Trends

Business Intelligence Applications

Difference between DSS- BI connection

Business Intelligence BI is more appropriate for large organizations (DWH is expensive) BI implies to use data warehouse. It provide accurate and timely information and support DSS. It has an executive & strategy orientation, especially in BPM and dashboards Decision Support System DSS can be appropriate to any type of organization. DSS may or may not have such feature. DSS are constructed to directly support specific decision making. DSS is oriented towards analysts.

Business Intelligence BI is constructed with commercial available tools and components.

Decision Support System They may have constructing solutions to very unstructured problem. In this more programming may be needed to customize solution. DSS methodologies & even some tools were developed mostly in academic world.

BI methodologies and tools were developed mostly by software companies.

Decision Making as a Component of Problem Solving

Intelligence Decision making Design Choice Implementation Monitoring Problem solving

Solution Types
Optimization model
Finding the best solution

Satisficing model
Finding a good -- but not necessarily the best - solution to a problem

Heuristics
Commonly accepted guidelines or procedures that usually find a good solution

Problem Solving Factors

Multiple decision objectives Increased alternatives Increased competition The need for creativity Social and political actions International aspects Technology Time compression

Characteristics of a DSS (1)

Handles large amounts of data from different sources Provides report and presentation flexibility Offers both textual and graphical orientation

Characteristics of a DSS (2)

Supports drill down analysis Performs complex, sophisticated analysis and comparisons using advanced software packages Supports optimization, satisfying, and heuristic approaches

Characteristics of a DSS (3)

Performs different types of analyses
What-if analysis
Makes hypothetical changes to problem and observes impact on the results

Simulation
Duplicates features of a real system

Goal-seeking analysis
Determines problem data required for a given result

Goal Seeking Example

You know the desired result You want to know the required input(s) Example:
Microsoft Excel s Goal Seek and Solver functions

Capabilities of a DSS (1)

Supports
Problem solving phases Different decision frequencies

Merge with another company?

How many widgets should I order?

low

high

Capabilities of a DSS (2)

Highly structured problems
Straightforward problems, requiring known facts and relationships.

Semi-structured or unstructured problems

Complex problems wherein relationships among data are not always clear, the data may be in a variety of formats, and are often difficult to manipulate or obtain

Standalone Integration and Web- based

Semi structured and Unstructured problems

Support managers at all levels

Data access

Support individuals and groups

Modeling and analysis

Interdependent or Sequential decisions

DSS
Ease of development by end users Support Intelligence, design, choice, implementation Support variety Of decision processes and styles Effectiveness, not efficiency Interactive ease of use Adaptable and flexible

Human control the process

Decision Making Levels

Strategic-level managers involved with long-term decisions Operational-level Tactical managers involved with daily decisions Operational High Low Strategic Decision Frequency

Integration of TPS, MIS, and DSS

In many organizations they are integrated through a common database Separation of DSS transactions in the database from TPS and MIS transactions may be important for performance reasons

DIFFERENCE BETWEEN MIS AND DSS

Management Information Systems Decision support provided Information form and frequency Information format Information processing methodology Provide information about the performance of the organization Periodic, exception, demand, and push reports and responses Pre-specified, fixed format Information produced by extraction and manipulation of business data Decision Support Systems Provide information and techniques to analyze specific problems Interactive inquiries and responses Ad hoc, flexible, and adaptable format Information produced by analytical modeling of business data

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

DSS Components

Components of a DSS
Model management software (MMS)
Coordinates the use of models in the DSS

Model base
Provides decision makers with access to a variety of models

Dialogue manager
Allows decision makers to easily access and manipulate the DSS

Database

Model base

DBMS

MMS

Access to the internet, networks, and other computer systems

External database access

External databases

Dialogue manager

Model Base
Model Base
Provides decision makers with access to a variety of models and assists them in decision making

Models
Financial models Statistical analysis models Graphical models Project management models

Advantages and Disadvantages of Modeling

Advantages
Less expensive than custom approaches or real systems. Faster to construct than real systems Less risky than real systems Provides learning experience (trial and error) Future projections are possible Can test assumptions

Disadvantages
Assumptions about reality may be incorrect Accuracy of predications often unreliable Requires abstract thinking

TYPES of DSS

Objectives
 Describe seven basic types of DSS.  Discuss different categories of DSS.
 Based on support  Based on nature of decision situation  Based on number of users

 Understand where different types of DSS fit into Simon s model of decision making.

The DSS Hierarchy

 Suggestion systems  Optimization systems  Representational models  Accounting models  Analysis information systems  Data analysis systems  File drawer systems

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

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

Analysis Information Systems

Information from several files are combined Some of these files may be external We have a true data base The information from one file, table, can be combined with information from other files to answer a specific query.

Accounting Models
Use internal accounting data Provide accounting modeling capabilities Can not handle uncertainty Use Bill of Material
Calculate production cost Make pricing decisions

Representational Model
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.

Optimization Systems
Used to estimate the effects of different decision alternative Based on optimization models Can incorporate uncertainty Assign sales force to territory Provide the best assignment schedule

Suggestion Systems
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

DSS Categories
Support-based categories (Alter 1980) Support Data-based DSS Data Model-based DSS Model-

Nature of the decision situation (Donovan & Madnick 1977)

Institutional Ad hoc

User-based categories (Keen 1980) User Individual Multi-individual Multi Group

DSS Categories
 Support based DSS
 Data-based DSS Data Model-based DSS Model-

Structured Model-based DSS

Semi-structure Data-based DSS Unstructured

DSS Categories
 Based on the nature of the decision situation
 Institutional
 Culture of the organization  Regularly used  Used by more than one persons

 Ad hoc
 One of kind  One-time use One Used by single individual

DSS Categories
 Based on number of users
 Individual  Multi-individual Multi Group Benefits
Improving personal efficiency Expediting problem solving Facilitating communication Promoting learning Increasing control

Individual H L L M L

Multi- Group individual H L M L H H H H H M

Simons Model
External Intelligence Internal AI, EIS

Problem Identification

ES Design

Qualitative Analysis

DSS

Quantitative Analysis

DbDSS, MbDSS

GDSS

Choice

Decision

ES

Usage Modes
Subscription Mode Terminal Mode Clerk Mode Intermediary Mode

Subscription Model
Decision maker receives outputs from the DSS on regular basis

Terminal Mode
Direct use of the DSS by the decision maker Access is through individual terminals May be user specific requirements

Clerk Mode
Decision maker fills out a form requesting output from DSS A clerk accesses the DSS Sends the output to the decision maker

Intermediary Mode
Decision maker uses the DSS with the help of a professional, knowledgeable assistant The assistant can be either a:
Staff Assistant Technical Support Staff Business Analyst