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Chapter 12 Decision Support Systems

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  1. Chapter 12Decision Support Systems Management Information Systems, 4th Edition

  2. Learning Objectives • List and explain the steps in decision making • Articulate the difference between structured and unstructured decision making • Describe the typical software components that decision support systems comprise • Describe the typical elements of geographic information systems • Identify business situations in which decisions can be supported by geographic information systems Management Information Systems, 4th Edition

  3. Decision Support Aids • Organization’s success depends on quality of managers’ decisions • When decisions involve large amounts of information and processing, computer-based systems can make the process effective and efficient. • Applications now called business analysis tools or business intelligence applications Management Information Systems, 4th Edition

  4. The Decision-Making Process • Three decision-making phases • Intelligence • Design • Choice • Models to analyze data • Maps, mathematical equations of variables Management Information Systems, 4th Edition

  5. The Decision-Making Process (Cont.) Management Information Systems, 4th Edition

  6. Structured and Unstructured Problems Management Information Systems, 4th Edition

  7. Structured Problems • Proven set of steps for solution • Algorithm • Parameters • Most mathematical and physical problems are structured • Programmable problems: feasible to write a program to solve them Management Information Systems, 4th Edition

  8. Unstructured Problems • No algorithm to follow to reach optimal solution • Multiple potential solutions • Unstructuredness is closely related to uncertainty Management Information Systems, 4th Edition

  9. Semistructured Problems • Neither fully structured nor totally unstructured • Managers and Semistructured Problems • Most common type of problem for managers • Task is to choose one alternative that will bring about the best outcome • Often rely on decision support applications to select the best course of action Management Information Systems, 4th Edition

  10. Decision Support System (DSS) • Computer-based information systems that help managers select one of many solutions • Automates some of decision-making process • Sophisticated and fast analysis • Used at all management levels Management Information Systems, 4th Edition

  11. Decision Support System (DSS) Components • Three Major Components • Data management module • Model management module • Dialog management module Management Information Systems, 4th Edition

  12. Decision Support System (DSS) Components (Cont.) • Together, DSS modules: • Help enter request conveniently • Search vast amounts of data • Use data in desired models • Present results in readable manner Management Information Systems, 4th Edition

  13. The Data Management Module • Gives user access to databases or data warehouses • Allows decision maker to conduct intelligence phase of decision making Management Information Systems, 4th Edition

  14. Decision Support System Components (Cont.) Management Information Systems, 4th Edition

  15. Decision Support System Components • Closely intertwined with other organizational systems • Data warehouses • Data marts • ERP systems • Draw relevant data for decision-making Management Information Systems, 4th Edition

  16. The Model Management Module • Selects appropriate model to analyze data • Linear regression model • May be built by the organization based on accumulated knowledge • Trade secrets Management Information Systems, 4th Edition

  17. The Model Management Module (Cont.) Management Information Systems, 4th Edition

  18. The Model Management Module (Cont.) • Creating New Models • Data mining techniques do not rely on predetermined models • No hypothesis on relationships of data required • Software looks for the relationships • Results in a new model or set of relationships Management Information Systems, 4th Edition

  19. The Dialog Module • Interface between user and other modules • Prompts user to select a model • Allows database access and data selection • Lets user enter/change parameters • Displays analysis results • Textual, tabular, and graphical displays Management Information Systems, 4th Edition

  20. The Dialog Module (Cont.) Management Information Systems, 4th Edition

  21. Types of DecisionSupport Systems • Personal Decision Support Systems • Individual Knowledge worker uses in daily work • Raw data entered into a program either by user or drawn from other sources • Tax preparation software is an example Management Information Systems, 4th Edition

  22. Types of Decision Support Systems (Cont.) • Group Decision Support Systems • Promote brainstorming and group decision making • Located in conference room or on networked computers • Weigh votes to overcome impasses Management Information Systems, 4th Edition

  23. Types of Decision Support Systems (Cont.) Management Information Systems, 4th Edition

  24. Sensitivity Analysis • Tests degree to which result is affected by change in parameters • What-if analysis • Can change multiple parameters at once Management Information Systems, 4th Edition

  25. Executive Information Systems • Alleviate information overload for executives • Select most relevant data for analysis • Drilling down • Consolidate and summarize data • Display data graphically Management Information Systems, 4th Edition

  26. Effective EIS features • An easy-to-use and easy-to-learn graphical user interface • On-request “drill-down” capability • On-demand financial and other ratios, and other indicators • Easy-to-use but sophisticated tools to allow navigation in databases and data warehouses Management Information Systems, 4th Edition

  27. Effective EIS Features (Cont.) • Statistical analysis tools • The ability to respond to ad hoc queries and sensitivity analyses • Access to external data pools • The ability to solve diverse business problems Management Information Systems, 4th Edition

  28. Developing Decision Support Systems • When Should a DSS Be Built? • What is the type problem and how structured is it? • Are the required data available in databases and data warehouses? • How often do managers encounter the problem? • Who will use the system? • Can the prospective users spare adequate time for the development process? Management Information Systems, 4th Edition

  29. The Electronic Spreadsheet: A DSS Tool • Provide two facilities for building DSS • Preprogrammed functions • Ability to use IF-THEN statements • Most widely used tool • Inexperienced users can use to develop DSSs Management Information Systems, 4th Edition

  30. GeographicInformation Systems • Decision aid for map-related decisions • Typical GIS contains: • database of quantitative and qualitative data • database of maps • program to display information on maps Management Information Systems, 4th Edition

  31. Ethical and Societal IssuesDecisions by Machines • Automated decisions can affect individuals • Mortgage companies, credit card companies, employers, banks, etc. • European Protection • “Automated Individual Decisions” Directive Management Information Systems, 4th Edition

  32. Ethical and Societal IssuesDecisions by Machines • Who Needs Protection • Determining creditworthiness • Efficient • Effective • Hidden Injustice • Mistakes on records • Decisions final Management Information Systems, 4th Edition

  33. Summary • Decisions are made in three steps: intelligence, design, and choice • Structured and unstructured are two types of decision-making techniques and are based on the type of problem to be solved • Decision support systems have typical components • Geographic information systems use certain elements Management Information Systems, 4th Edition

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