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Decision Support System:
Managerial decision making and IS, Phases of
Decision making process, Concept of DSS and its
need, characteristics and capabilities of DSS
B.B.Mishra
Phases of Managerial Decision Making
DecisionDecision--makingmaking phasephase Intelligence stage (first stage)
Identify and define potential problems and/or opportunities
Design stage (second stage) Develop alternative solutions to
the problem
Choice stage (last stage) Select a course of action
SolutionSolution TypesTypes 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
Intelligence
Design
Choice
Implementation
Monitoring
Problem
solving
Decision
making
Problem Solving Factors
Multiple decision objectives
Increased alternatives
Increased competition
The need for creativity
Social and political actions
International aspects
Technology
Time compression
DSS Development Methodology
Prototyping
Iterative design
Evolutionary development
Middle out process
Adaptive design
Incremental design
DSS Prototyping
Short steps Planning
Analysis
Design
Prototype
Immediate stakeholder feedback
Iterative In development of prototype
Within the system in general
Evaluation integral part Control mechanism
DSS Prototyping
Advantages User and management
involvement
Learning explicitly integrated
Prototyping bypasses information requirement
Short intervals between iterations
Low cost
Improved user understanding of system
Disadvantages Changing requirements
May not have thorough understanding of benefits and costs
Poorly tested
Dependencies, security, and safety may be ignored
High uncertainty
Problem may get lost
Reduction in quality
Higher costs due to multiple productions
DSS Technology Levels DSS primary tools
Fundamental elements Programming languages, graphics, editors, query systems
DSS generator (engine) Integrated software package for building specific DSS
Modeling, report generation, graphics, risk analysis
Specific DSS DSS application that accomplishes the work
DSS primary tools are used to construct integrated tools that are used to construct specific tools
DSS Hardware
PCs to multiprocessor mainframes
Software
Involves multiple criteria
Develop in house, outsource, or buy off the shelf
Off the shelf software rapidly updated; many on market
Prices fluctuate
Different tools available Team developed DSS requires substantial effort to build and manage End user developed DSS
Decision-makers and knowledge workers develop to solve problems or enhance productivity Advantages
Short delivery time User requirements specifications are eliminated Reduced implementation problems Low costs
Risks Quality may be low May have lack of documentation Security risks may increase
DSS is much more than just a DBMS, MBMS, GUI, interface, and knowledge Component
DSS Concept DSS is an interactive, flexible and adaptable computer based
information system that utilizes decision rules, model base,
database, decision-makers own insights to solve complex, semi-
structured or unstructured business problems in an organization. Example: Airlines Industry or Logistics (Buy v/s Lease)
Note: Decision Tree
Architecture of Generic DSS Application
ExternalExternal
DataData
MIS Data DSS
Models
Graphs Reports
DSS ProgramDSS Program
DSS UserDSS User
TPSTPS
DataData
Responses
Data Request
Models
Continued
DSS Program shown in the figure in the previous slide
include the following:
Spreadsheet Programs such as MS Excel
Personal Database Management System
Model Base Management System (MBMS)
Word Processing Packages such as MS Word
Statistical Packages such as SPSS, MAT Lab etc.
Frequency
low high
Merge with
another
company?
How many
widgets
should I order?
Levels of Managerial Decision Making
Decision support system A decision support system (DSS) is a computer-based
information system that supports business or organizational decisiondecision--makingmaking activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance.
DSSs include knowledge-based systems. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions.
Typical information that a decision support application might gather and present are:
inventories of information assets (including legacy and relational data sources, cubes, data warehouses, and data marts),
comparative sales figures between one period and the next,
projected revenue figures based on product sales assumptions.
Characteristics of a DSS
Handles large amounts of data from different sources
Provides report and presentation flexibility
Offers both textual and graphical orientation
Supports drill down analysis
Performs complex, sophisticated analysis and comparisons using advanced software packages
Supports optimization, satisficing, and heuristic approaches
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
Types of DSS Using the relationship with the user as the criterion, DSS is differentiated as passivepassive,
activeactive, and cooperativecooperative DSSDSS.
A passivepassive DSSDSS is a system that aids the process of decision making, but that cannot bring out explicit decision suggestions or solutions.
An activeactive DSSDSS can bring out such decision suggestions or solutions.
A cooperativecooperative DSSDSS allows the decision maker (or its advisor) to modify, complete, or refine the decision suggestions provided by the system, before sending them back to the system for validation. The system again improves, completes, and refines the suggestions of the decision maker and sends them back to him for validation. The whole process then starts again, until a consolidated solution is generated.
Communication-driven DSS supports more than one person working on a shared task; examples include integrated tools like Microsoft's NetMeeting or Groove
Data-driven DSS or data-oriented DSS emphasizes access to and manipulation of a time series of internal company data and, sometimes, external data.
Document-driven DSS manages, retrieves, and manipulates unstructured information in a variety of electronic formats.
Knowledge-driven DSS provides specialized problem-solving expertise stored as facts, rules, procedures, or in similar structures.
Model-driven DSS emphasizes access to and manipulation of a statistical, financial, optimization, or simulation model. Model-driven DSS use data and parameters provided by users to assist decision makers in analyzing a situation; they are not necessarily data-intensive. Dicodess is an example of an open source model-driven DSS generator.
Characteristics or Benefits of DSS
Ability to support the solutions of complex problems.
Fast response to unexpected situations that results in changed inputs.
Designed to help support decisions that are formulated as semi-structured, or complex problems.
May be constructed to support one time decision.
DSS is typically designed for either a particular decision-maker or a group of decision-makers.
Ability to quickly try different strategies under different configurations. Eg: what-if analysis
Consistent and objective decisions
Other Characteristics or Benefits
Cost Savings
Improving managerial effectiveness
Support to management
Supports individual/groups
Designed and run by managers, incorporated data and models.
Graphical Display
Supports either semi-structured or unstructured executive decision making.
Employs interactive processing that permits rapid responses.
Decision Making Levels
Operational-level
managers involved with
daily decisions
Strategic-level managers
involved with long-term
decisions
Low High Decision FrequencyDecision Frequency
Strategic
Tactical
Operational
Capabilities of a DSS
Supports
Problem solving phases
Different decision
frequencies
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
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
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
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
External database
access
Access to the
internet, networks,
and other computer
systems
Dialogue manager
DBMS MMS
External
databases
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
Components of DSS
Manager
User Interface (Display)
Database
Environment
Decision Models
Statistics & Manipulation
DSS
Continued DatabaseDatabase: It can be used to capture the data that can be used with
other components of DSS to make decisions. The objective is to
centralize all data so that it is accessible for decision-making.
DecisionDecision ModelsModels: These are complicated computer driven mathematical
equations or models which are derived from previous instances or
situations. The model expresses perceptions as to what data and
variables are important and how the variables are related. Ex: Financial
Model, Graphical Model, Mathematical Model etc.
StatisticsStatistics && ManipulationManipulation: It produces meaningful information by
relating the data into the models. General managerial models such as
P/L statements, budget statement etc and more complex models such
as product portfolio analysis, new product launch are aspects of data
analysis in this process.
DisplayDisplay: It is the interface between the business manager and the DSS.
DSS Program Structure or
DSS Structure
Dialogue
Management
Model
Management
Data
Management
Model
Base
DSS
Database
Enterprise
Data External
Data
UserUser
Components of
DSS Program Dialogue Management
Model Management
Data Management
DSS Program Components
Model Model
BaseBase
External DataExternal Data
SourceSource
Enterprise Enterprise
DataData
DSS DSS
DatabaseDatabase
User
User User
InterfaceInterface
DialogueDialogue
ControlControl
RequestRequest
TranslatorTranslator
a. Dialogue Management a. Dialogue Management
Model Base Model Base
ManagementManagement
Database InterfaceDatabase Interface
Command Command
ProcessorProcessor
Model Model
ExecutionExecution
Database Command Database Command
ProcessorProcessor
DBMSDBMS Data DictionaryData Dictionary
Interface toInterface to
Data ServicesData Services
b. Model Managementb. Model Management
c. Data Managementc. Data Management
Dialogue Management
It has got three subsystem User Interface: It controls the appearance of the screen and
accepts input from the user and displays the results.
Dialog Control: Controls the flow of information.
Request Translator: It translates the user command into actions
for model management or data management components, and
the results into a format and language understandable by the
user. Model Management
Command Processor: It receives commands from request
translator of dialogue management and delivers those commands
to either model base management or model execution.
Model Execution: It is the process by which a given situation can
be analyzed to come up with a solution for the user.
Data Management
There are couple of functions carried out by data
management:
It stores and manipulates the database as directed by
either model management component or dialogue
management component.
It maintains an interface with data sources that are
external to DSS such as enterprise data, and other DSS
applications.
Conceptual Model of DSS
Graphical
Display
Manager
Printer Plotter
Decision
Support
Database
E
X
T
R
A
C
T
I
O
N
External Sources
Finance
Marketing
Personnel
Production
Database Management
Retrieval Enquiry Creation & Generation
Decision
Support
Model Base
Model base Management System
Manipulation Maintenance Update Creation & Generation
Data Management Model Management
Strategic Model
Operational Model
Statistical Model
Financial Model
Marketing Model
Model Building
Model Base Blocks
Dialogue Generation Management
Interactive
Decision Support
Four Major Components
Database & its Management
Model-base & its Management
Hardware of DSS
User System Interface
Database & its Management A database is a collection of data that is organized in such a
way that it corresponds to needs and structure of a company
and can be used for more than one application.
DBMS: It is a series of software programs which has the
following features:
Capabilities of obtaining answers to queries
Quick retrieval and update of data
Data security
Model-base & its Management
Model-base is divided into two major parts:
Pre-written computer program which include mathematical
models such as linear programming, regression analysis. This
also include various other models such as strategic models,
financial models, statistical models along with simulation
program.
Model building block are pre-written programs that can be
used to construct new models for the present problem looking
into various other models that already exists.
Model-base Management System (MBMS)
It is a software system that generates new routines and
reports, model updates and changes and data manipulation. It
is also capable of inter-relating models with the appropriate
linkages through database.
Hardware of DSS
Mainframe Computer
Micro-computers
GUI
Display in the form of charts, graphs, diagrams which may be 3-D.
User System Interface
There are two parts in this component:
Query Language: It is a non-procedural language which
means that statements in the models describe the desired
results only and they may be entered in any order.
Example: Interactive Financial Planning System (IFPS)
Display: GUI screen for entering the problem or situation in
any form and getting the desired results.
Capabilities of DSS
Can update or manipulate the database and also select data
from database.
Create special reports in a desired format. These reports once
constructed may be stored in the model base for future
reference.
Perform calculations and execute aggregation of data.
Construct mathematical models that describe a problem or a
situation visualized by the user.
Perform simulation.
Perform analysis on various mathematical models such as
regression analysis, time series analysis etc.
Limitations of DSS
It is slow as compared to the high speed mainframes.
The cost of building a DSS is considerably higher than other
systems used in the organization.
Major Functions of DSS
Predicting decision outcomes.
Developing models for business processes.
Computing optimum mixes.
Facilitate group communication.
Three Distinct Elements of DSS
DSS Tools
DSS Generators
Specific DSS
Constructing DSS with DSS Generator
Specific DSS application can be constructed with a DSS
generator, infrequently supported by special DSS tools.
DSS Tools
DSS Generator
DSS for specific application
DSS Generators
DSS Generators is a software package used to build specific
DSS application.
Example: IBMs GADS (Geodata Analysis & Display System) which
displays a map showing the location of equipment, machines etc.
Other Examples: Lotus 1-2-3, Quattro etc
Lotus 1-2-3
Lotus 1-2-3 for DOS
DSS Tools
Construction of DSS application and creation of DSS
generator is facilitated by special software elements called DSS
Tools. The tools include:
Color Graphics
Software Packages
Special editors
Random number generators
Continued
Database
Software
Model-base
software
Data Analysis
software
Display
software
SQL
Oracle
MS-Access
FOCUS
Lotus 1-2-3
Foresight
Omnicalc
SAS
SPSS
MS-Excel
ChartMaster
SAS-GRAPH
TELL-A-
GRAPH
Comparison between MIS & DSS
MIS DSS
1. MIS focuses on structured
tasks & routine decisions.
2. The emphasis is on data
storage & retrieval.
3. MIS works on improving
efficiency.
4. DSS reports are usually screen
oriented.
5. MIS operates at the
Operational level in the organization.
1. DSS focuses on semi-
structured tasks, requiring
managerial judgment.
2. The emphasis is on data
manipulation.
3. DSS works on improving
effectiveness.
4. MIS reports are generally
oriented towards printers.
5. DSS operates at the
Management level in the organization
GDSS (Group Decision Support System)
It is an interactive, computer-based system that facilitates
solution of unstructured problems by a set of decision makers
working together as a group.
Components: Hardware, Software, People, Procedure
Two ways group can take decisions:
Physical Meeting
Virtual Meeting Movie 2012
Architecture of GDSS
DSS Models
DSS
Database
DSS Processor
Group User
Dialogue
Manager
Decision Group
Workstation
Resource Pooling
Who takes a better decision individual or group ??
Contributing ideas and suggestions by group members.
Looking into a problem from different perspective.
The contribution of ideas and suggestions from different
individual in a group is called Resource Pooling.
Example: Designing of future cars by GM, Discovery, Future cars
Synergy ??
1+1 = ?
Example: Mumbai Indians in IPL 3
Techniques of Group Decision Making
Brainstorming
Technique to stimulate idea generation for decision making.
Brainstorming group may consist of 10-15 members.
Problem should be clearly stated before the session starts
Nominal group technique
Structured group meeting to resolve a problem.
Each member of the group writes down his/her ideas and presents the
best single idea on the problem.
All ideas are discussed and put into a rank, and the best one is selected
for implementation.
Continued
Delphi Technique
There is no face to face interaction.
Decision is arrived through written communication, generally by filling up
questionnaires by mails.
Consensus Technique
Already the list of ideas is generated.
Several task group are involved and a consensus is reached.
Models of Organizational Decision Making Process
Rational Model
Satisfying Model
Muddling Model
Psychological Model
Comparison of four Models
Name Basic Concept Inference Pattern
Rational Model Comprehensive
Rationality
Establish goals,
examine all
alternatives and
choose the best
alternative
Satisfying Model Successive
Comparison
Examine alternatives
to establish a mix of
goals &
consequences.
Muddling &
Psychological Model
Cognitive Types All decision-makers
choose goals, but
they differ in terms of
gathering and
evaluating
information.
Stages or Phases of Decision Making
(Simons Model)
Intelligence
Design
Choice
Clues that can lead to problem
or opportunity recognition
Solutions are developed and
tested for feasibility
Choice is made among the
alternatives and then
implemented
Imp Questions What is TPS & Architecture of TPS
Types of TPS
Time Sharing
End-user Computing & its Components
Information Center & its functions
Define DSS. Architecture of DSS application. Characteristics of DSS.
Components of DSS with explanation.
Components of DSS program.
Conceptual Model of DSS with sketch
What is Model Base Management System (MBMS)
Capabilities & Limitations of DSS
What is GDSS. Architecture of GDSS with sketch
DSS Generator. Explain the construction of DSS using DSS generator.
Difference Between MIS & DSS.
Resource Pooling
Models of Decision Making
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