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