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Enhancing Management Decision Making

Enhancing Management Decision Making. Objectives. Differentiate Decision-Support Systems (DSS) from Group Decision Support Systems (GDSS) Describe the Components of DSS and GDSS Demonstrate How DSS and GDSS Enhance Decision Making Describe the Capabilities of Executive Support Systems (ESS)

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Enhancing Management Decision Making

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  1. Enhancing Management Decision Making

  2. Objectives • Differentiate Decision-Support Systems (DSS) from Group Decision Support Systems (GDSS) • Describe the Components of DSS and GDSS • Demonstrate How DSS and GDSS Enhance Decision Making • Describe the Capabilities of Executive Support Systems (ESS) • Assess the Benefits of ESS

  3. IBM CAPS • Semiconductor manufacturing • Needed a capacity planning system • Determine tools required to produce output to satisfy a given demand • Created a Decision Support System • Input • Production limits, required process steps, available tool capacity • Use • Adjust manufacturing capacity to meet demand forecasts

  4. MANAGEMENT CHALLENGES • Building Information Systems that actually fulfill executive information requirements • Creating a meaningful reporting and management decision making process

  5. DECISION SUPPORT SYSTEMS (DSS) • MANAGEMENT LEVEL COMPUTER SYSTEM • COMBINES DATA, MODELS, USER - FRIENDLY SOFTWARE • FOR SEMISTRUCTURED & UNSTRUCTURED DECISION MAKING

  6. MIS and DSS • Management Information Systems • Provide information about the firm’s performance to help managers in monitoring and controlling the business • Fixed reports based on transaction data • Decision Support System • Non routine decisions • Emphasize change and response to change

  7. DECISION SUPPORT SYSTEMS • MODEL DRIVEN DSS • Uses models for what-if and other analysis • Based on a theory of model • Example • CAPS • DATA-DRIVEN DSS • Allows extraction, analysis of information from databases • Example • Data mining

  8. PRODUCTS 1 PARTS Product_No 1 m Prod_Name Prod_type Prod_type Type Length 1 Width Hieght Wieght PURCHASE_ORDERS CUSTOMER_INVOICES Invoice_No m Invoice_Date m Linenumber Product_No Suppkey Cust_No Product_No Quantity m m Discount Address SUPPLIER 1 GEOGRAPHY suppkey CUSTOMER_ADDRESS Supp_Name Territory Address Country Cust_No 1 1 Phone_No Continent 1 Address Country Region Phone m Country m OLTP Online Transaction Processing is a "data handling method" Characteristics : detail oriented highly repetitive end-users next action is predictable to a certain degree Examples order entry payroll applications inventory management applications ... all applications that support "day-to-day" business requirements

  9. OLAP - Online Analytical Process

  10. OLTP vs OLAP Databases

  11. EXTERNAL DSS DATA TPS DATA BASE DSS SOFTWARE SYSTEM MODELS USER INTERFACE OLAP TOOLS DATAMINING TOOLS USER DECISION SUPPORT SYSTEM

  12. DECISION SUPPORT SYSTEM • 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 *

  13. DECISION SUPPORT SYSTEM • DATA MINING:Technology for finding relationships in large data bases for prediction • DSS SOFTWARE SYSTEM:Tools for data analysis • SENSITIVITY ANALYSIS:“What-if” questions about changes in model factors *

  14. DECISION SUPPORT SYSTEM APPLICATIONS: • SUPPLY CHAIN MANAGEMENT • CUSTOMER RELATIONSHIP MANAGEMENT • SIMULATING BUSINESS SCENARIOS *

  15. DECISION SUPPORT SYSTEM • GEOGRAPHIC INFORMATION SYSTEM (GIS): Software to display digital maps • WEB-BASED DSS: Available on Internet for decisions, information, software • CUSTOMER DSS (CDSS):System supports buying decisions of customers *

  16. DECISION SUPPORT SYSTEM EXAMPLES: • GENERAL ACCIDENT INSURANCE:Customer buying patterns, fraud detection • BANK OF AMERICA:Customer profiles • FRITO-LAY:Price, advertising, promotion selection *

  17. GROUP DECISION-SUPPORT SYSTEM (GDSS) INTERACTIVE COMPUTER-BASED SYSTEM FACILITATES SOLUTION OF UNSTRUCTURED PROBLEMS BY DECISION MAKERS WORKING AS GROUP *

  18. GDSS ENHANCED DECISION MAKING ALLOWS: Improved pre-planning • Increased participation • Open, collaborative atmosphere • Idea generation free of criticism • Evaluation objectivity • Idea organization & evaluation *

  19. GDSS ENHANCED DECISION MAKING ALLOWS: Setting priorities & decision making • Documentation of meetings • Access to external information • Preservation of organizational memory *

  20. TOOLS OF GDSS • ELECTRONIC QUESTIONNAIRES • ELECTRONIC BRAINSTORMING • IDEA ORGANIZERS • QUESTIONNAIRE TOOLS • TOOLS FOR VOTING, SETTING PRIORITIES *

  21. TOOLS OF GDSS • STAKEHOLDER IDENTIFICATION & ANALYSIS TOOLS • POLICY FORMATION TOOLS • GROUP DICTIONARIES *

  22. ELECTRONIC MEETING SYSTEM (EMS) COLLABORATIVE GDSS: Uses information technology to make group meetings more productive facilitates communication decision making *

  23. How GDSS Enhance Decision Making • Improved Preplanning • Increased Participation • Traditional meeting 3-5 participants is optimal • Open collaborative meeting atmosphere • Anonymity • High status individuals do not dominate • Criticism free idea generation • Participants are not afraid to contribute • Evaluation Objectivity • Ideas not accepted/rejected because of their source

  24. How GDSS Enhance Decision Making • Idea organization and evaluation • Setting priorities and decision making • Lower level individuals can have their positions considered • Documentation of meeting • Access to external information • Preservation of organizational memory • Non participants can use information

  25. EXECUTIVE SUPPORT SYSTEMS (ESS) STRATEGIC INFORMATION SYSTEM DESIGNED FOR UNSTRUCTURED DECISION MAKING THROUGH ADVANCED GRAPHICS AND COMMUNICATIONS *

  26. EXECUTIVE SUPPORT SYSTEMS • DRILL DOWN:ability to move from summary to lower levels of detail • Designed for specific needs of CEO • Extensive support staff • Executive has 24 hour per day ability to examine, control progress throughout organization *

  27. EXECUTIVE SUPPORT SYSTEMS BENEFITS: • FLEXIBILITY • ABILITY TO ANALYZE, COMPARE, HIGHLIGHT TRENDS • GRAPHICS HELP EXPLORE SITUATION • MONITOR PERFORMANCE • TIMELINESS, AVAILABILITY OF DATA ALLOWS PROMPT ACTION *

  28. EXECUTIVE SUPPORT SYSTEMS USES IN A DIGITAL FIRM: • BUSINESS INTELLIGENCE: Info on salespeople, distributors, retailers • MONITORING BUSINESS PERFORMANCE: Balanced scorecard shows perspectives of customers, internal processes, learning, growth • ENTERPRISE WIDE REPORTING & ANALYSIS *

  29. Summary • Differentiate between DSS and GDSS • Describe the components of DSS and GDSS • Describe how DSS and GDSS enhance decision making • Evaluate the capabilities and benefits of ESS

  30. Assignment • Case study chapter 13

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