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Information products are made more valuable by their attributes, characteristics, or qualities Outdated, inaccurate, or hard to understand information has much less value Information has three dimensions Time Content Form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

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

‡ BI methodologies and tools were developed mostly by software companies. ‡ DSS methodologies & even some tools were developed mostly in academic world.Business Intelligence ‡ BI is constructed with commercial available tools and components. . In this more programming may be needed to customize solution. Decision Support System ‡ They may have constructing solutions to very unstructured problem.

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 -.solution to a problem ‡ Heuristics ± Commonly accepted guidelines or procedures that usually find a good solution .but not necessarily the best .

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 .

sophisticated analysis and comparisons using advanced software packages ‡ Supports optimization. and heuristic approaches . satisfying.Characteristics of a DSS (2) ‡ Supports drill down analysis ‡ Performs complex.

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 .

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Capabilities of a DSS (1) ‡ Supports ± Problem solving phases ± Different decision frequencies Merge with another company? How many widgets should I order? low high .

and are often difficult to manipulate or obtain .Capabilities of a DSS (2) ‡ Highly structured problems ± Straightforward problems. the data may be in a variety of formats. ‡ Semi-structured or unstructured problems ± Complex problems wherein relationships among data are not always clear. requiring known facts and relationships.

choice. implementation Support variety Of decision processes and styles Effectiveness.Standalone Integration and Web. not efficiency Interactive ease of use Adaptable and flexible Human control the process . design.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.

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 .

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 . MIS.Integration of TPS.

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. and push reports and responses Pre-specified. flexible. and adaptable format Information produced by analytical modeling of business data . 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. exception. demand.

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. and other computer systems External database access External databases Dialogue manager . networks.

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.  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.  Discuss different categories of DSS. .

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 .

Group individual H L M L H H H H H M .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.

Simon¶s 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 .

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