Principles of Decision Support Systems

Abe FeinbergCalifornia State University,

Northridge

Introduction to Decision Support Systems

1

Managers and Managerial Work

Managing within an Organization Definition: A System of Resources

Structured by Power Centers to Achieve some Objectives within an Environment

Orientation: Public <---> Private Size of the Organization Durability of the Organization

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Structuring the Resources

Money

MaterialsPeople

Knowledge

Funds

ProductsServices

Knowledge

Monetary ResourcesMaterial ResourcesHuman Resources

Knowledge Resources

INPUTS ORGANIZATION OUTPUTS

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Organizational Aspects

Power CentersOrganizational Purposes or

ObjectivesOrganizational Environment:

External and Internal

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Managerial Functions

Planning Organizing Commanding Coordinating Controlling

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Mangerial Roles

Informational Interpersonal Decisional: Entrepreneur;

Disturbance Handler; Resource Allocator; and Negotiator

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Types of Knowledge

Descriptive: Information or Data– Examples: Demand for Service,

Inventories, Personnel Records Procedural: How to do something

or steps to follow to do something or an Algorithm

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Decisions

What is Decision Making? Choosing among Alternatives? Generating Alternatives? Selecting a Course of Actions? Handling Risk? All of the Above!!

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Decision Context

Organizational Setting: Planning vs. Control

Emergent vs. Established Situation Timing of Decisions Organizational Design: Centralized

vs. Decentralized Decision Type: Strategic or Tactical

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Decision Structuredness

Programmed Structured Semi-Structured Unstructured The Degree of Structuredness Can

Change over Time Negotiated vs. Unilateral Decisions

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Contributions of DSS’s

Answering What-If Questions Assessing Potential Outcomes Aiding Negotiations Providing Consistent Decisions Evaluating and Limiting Risk

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Some DSS examples

Forecasting Demand for Service Staffing Resource Allocation Project Management Vehicle Routing Waste Disposal

11A

DECISION MAKING AND COMPUTERIZED SUPPORT

Management Support Systems (MSS)Computerized technologies

Objectives– Support managerial work

– Support decision making

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Management Support Systems

An OverviewEmerging and Advanced Computer Technologies

for Supporting Managerial Problem Solution

Changing Organizational Structure Enabling Business Transformation Changing Management Methods

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Managers and Decision Making:

Why Computerized Support?

Competition

Speed

The MANAGERS are always responsible for decision making

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Factors AffectingDecision Making

Technology / Information / Computers Structural Complexity / Competition International Markets / Political Stability

/ Consumerism Changes, Fluctuations

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Managers and Computerized Support

Information Technology: vital to the business

Support technologies extensively implemented

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Computer Applications Evolvingfrom Transaction Processing Systems (TPS) and

MISto Proactive Applications (DSS)

New modern management tools in

Data access Online analytical processing (OLAP) Internet / Intranet / Web

for decision support

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Need for Computerized Decision Support and the Supporting Technologies

Speedy computations Overcome cognitive limits in processing and storage Cognitive limits may restrict an individual’s

problem-solving capability Cost reduction Technical support Quality support Competitive edge

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Decision Support Technologies

Management Support Systems (MSS) Decision Support Systems (DSS) Group Support Systems (GSS) Enterprise (Executive) Information Systems (EIS) Enterprise Resource Planning (ERP) and Supply-

Chain Management (SCM) Knowledge Management Systems Expert Systems (ES) Artificial Neural Networks (ANN) Hybrid Support Systems Intelligent DSS

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Decision Support Framework

Type of Control

Operational Managerial Strategic Control Control Control

Type of Decision

Structured

Semi-structured

Unstructured

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A/R, order entry

Scheduling

Brochure Design

Tech Support Needed

BudgetAnalysis

MISMgt. Science

DSS, ES, EISMgt. Science

EIS, ESNeural Nets.

Fin. Mgt.,Distribution

TechSupp.NeedsMIS, OR,TP

Negotiating,Recruiting

DSS

DSSES,N Nets

Budget Prep.,Facility LayoutProject Sched.

Build NewFacility, QuaityAssurance

New Tech.Devel., SocialResp. Planning

Unstructured problem has no structured phases

Semistructured problem has some (or some parts with) structured phases

Structured problem has all structured phases– Procedures for obtaining the best solution are known– Objectives are clearly defined

– Management support systems can be useful

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Unstructured problems often solved with human intuition

Semistructured problems in betweenSolve with standard solution procedures and human

judgment

A Decision Support System can help managers understand problems in addition to providing solutions

Goal of DSS: Increase the effectiveness of decision making

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Computer Support for Structured Decisions

Since the 1960s Repetitive in nature High level of structure Can abstract and analyze them, and classify

them into prototypes Solve with quantitative formulas or models Management Science (MS) / Operations

Research (OR)

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Management Science

Scientific approach to automate managerial decision making1. Define problem2. Classify problem 3. Construct mathematical model4. Find and evaluate potential solutions5. Choose and recommend a solution

Modeling: Transforming the real-world problem into an appropriate prototype structure

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Decision Support Systems Concept

DSS are interactive computer-based systems, which help decision makers utilize data and models to solve unstructured problems

Decision support systems couple the intellectual resources of individuals with the capabilities of the computer to improve the quality of decisions. It is a computer-based support system for management decision makers who deal with semi-structured problems

Content-free expression There is no universally accepted definition of DSSUmbrella term vs. narrow definition (specific technology)

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Major DSS Characteristics

DSS Example for Mineral Exploration

Initial risk analysis (management science) Model scrutiny using experience, judgment, and intuition Initial model mathematically correct, but incomplete DSS provided very quick analysis DSS: flexible and responsive. Allows managerial intuition and

judgment

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Why Use DSS?

Perceived benefits– decision quality

– improved communication

– cost reduction

– increased productivity

– time savings

– improved customer and employee satisfaction

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Major Reasons Unstable economy Difficulty in tracking numerous business objectives Increased competition Electronic commerce Existing systems did not support decision making IS Department is too busy Special analysis Need accurate information Organizational winner New or timely information needed Mandated by management Cost reductions End-user computing

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Group Support Systems (GSS)

Decisions often made by groups Supports groupwork, anytime, anyplace

Also called Groupware Electronic meeting systems Collaborative computing

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Executive Information (Support) Systems (EIS,

ESS) Organizational view Information needs of executives / managers Customized user seductive interface Timely and effective tracking and control Drill down Filter, compress, and track critical data /

information Identify problems / opportunities

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EIS Mid-1980s - large corporations

Now global

Affordable to smaller companies

Serves managers as enterprise-wide systems

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Expert Systems (ES) Experts solve complex problems Experts have specific knowledge and experience

Expert systems mimic human experts ES performance comparable to or better than

experts in a specialized and usually narrow problem area

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Intelligent Agents

Help automate various tasks Increase productivity and quality Learn how you work

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Artificial Neural Systems

Artificial Neural Networks (ANN):

Mathematical models of the human brain

ANN learn patterns in data

ANN can work with partial, incomplete, or inexact information

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Knowledge Management Systems

(KMS) Capture and reuse knowledge at the

organizational level Knowledge repository for storage Organizational impacts can be dramatic

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ERP and SCM

Enterprise Resource Planning (Management)

Supply Chain Management including Customer Resource Management (CRM)

Enterprise-level cost cutters

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Cutting Edge Intelligent Systems

Genetic AlgorithmsWork in an evolutionary fashion

Fuzzy LogicContinuous logic (NOT just True / False)

Intelligent AgentsIn search engines, e-mail, electronic commerce

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Hybrid Support Systems Combines MSS technologies Use strengths of each Goal: successful solution of the managerial

problem

Tools support each other

Tools can add intelligence to traditional MSS

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Computerized Decision Aids Evolution and Attributes

Computerized procedures development aids decision making

– Early: Calculations– Intermediate: Find, organize and display

information– Current: Decision relevant computations,

displays and interactions– Starting: Complex fuzzy decision support,

collaborative decision making and machine learning

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DSS supports specific questions

Raw Data & Status General Analysis Repres. & Causal Models Solution Suggestions/ Evals. Solution Selection

What is …?

What is or Why?

What will be?Why?

What if?

What if?

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Evolutionary View of CBIS 1. Time Sequence mid-1950s Transaction Processing Systems (TPS)

1960s MIS

1970s Office Automation Systems DSS

1980s DSS ExpandedCommercial applications of expert systems Executive Information Systems

1990s Group Support Systems Neural Computing Integrated, hybrid computer systems

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2. Computer evolved over time

3. Systemic linkages in how each system processes data into information

Relationship among these and other technologies

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Relationship Among Technologies

Each technology unique Technologies interrelated Each supports some aspects of managerial decision

making Ever expanding role of information technology

improving management Interrelationship and coordination evolving

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Summary

DSS has many definitions

Complexity of managerial decision making is increasing

Computer support for managerial decision making

Several MSS technologies including hybrids

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