Download Decision Support Systems

Chapter 9
Decision Support Systems
McGraw-Hill/Irwin
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Decision Support in Business
Companies invest
in data-driven
decision support
application
frameworks to help
them respond to
Changing marketing conditions
Customer needs
Management information
Accomplished by
several types of
Decision support
Other information systems
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Levels of Managerial Decision Making
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Information Quality
Information products are made more valuable
by their attributes, characteristics, or qualities
Outdated, inaccurate, or hard to understand
information has much less value
Information has three dimensions
Time
Content
Form
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Attributes of Information Quality
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Decision Structure
Structured
(operational)
The procedures to follow when a
decision is needed can be
specified in advance
Unstructured
(strategic)
It is not possible to specify in
advance most of the decision
procedures to follow
Semi-structured
(tactical)
Decision procedures can be
pre-specified, but not enough to
lead to the correct decision
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Decision Support Systems
Management Information
Systems
Decision Support Systems
Provide information about
the performance of the
organization
Provide information and
techniques to analyze
specific problems
Information
form and
frequency
Periodic, exception, demand,
and push reports and
responses
Interactive inquiries and
responses
Information
format
Pre-specified, fixed format
Ad hoc, flexible, and
adaptable format
Information
processing
methodology
Information produced by
extraction and manipulation
of business data
Information produced by
analytical modeling
of business data
Decision
support
provided
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Business Intelligence Applications
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Decision Support Systems

To support the making of semi-structured
business decisions, DSS uses
– Analytical models
– Specialized databases
– Decision-maker’s own insights and judgments
– Interactive, computer-based modeling process

DS systems
– Ad hoc, quick-response systems
– Initiated and controlled by decision makers
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DSS Components
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DSS Model Base

Model Base
– A software component
– Consists of models used in computational
and analytical routines
– Mathematically expresses relationships
among variables

Spreadsheet Examples
– Linear programming
– Multiple regression forecasting
– Capital budgeting present value
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Applications of Statistics and Modeling
Supply Chain
Simulate & optimize supply chain
flows, reduce inventory & stock-outs
Pricing
Identify the price that maximizes
yield or profit
Product & Service
Quality
Detect quality problems early in
order to minimize them
Research &
Development
Improve quality, efficacy, and safety
of products and services
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Management Information Systems
The original type of information system
that supported managerial decision making
Produces information products that support
many day-to-day decision-making needs
Produces reports, displays, and responses
Satisfies needs of operational and tactical
decision makers who face structured decisions
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Management Reporting Alternatives
Periodic Scheduled
Reports
Pre-specified format, issued
on a regular basis
Exception Reports
Reports about exceptional
conditions, scheduled or on event
Demand Reports &
Responses
Information is available on demand
Push Reporting
Information is pushed to a
networked computer
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Online Analytical Processing

OLAP
– Enables managers and analysts to examine
and manipulate large amounts of detailed and
consolidated data from many perspectives
– Done interactively, in real time, with rapid
response to queries
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Online Analytical Operations
Consolidation
Aggregation of data
Ex: sales office data, rolled up to the district level
Drill-Down
Display underlying detail data
Ex: sales figures by individual product
Slicing and Dicing
Viewing database from different viewpoints
Often performed along a time axis
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Geographic Information Systems (GIS)
DSS uses geographic databases to construct
and display maps and other graphic displays
Supports decisions affecting the geographic
distribution of people and other resources
Often used with Global Positioning
System (GPS) devices
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Data Visualization Systems (DVS)
Represents complex data using interactive, threedimensional graphical forms (charts, graphs, maps)
Helps users interactively sort, subdivide, combine,
and organize data while it is in its graphical form
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Using Decision Support Systems

Using a decision support system involves
an interactive analytical modeling process
– Decision makers are not demanding
pre-specified information
– They are exploring possible alternatives
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Using Decision Support Systems
What-If
Analysis
Sensitivity
Analysis
Basic analytical modeling activities
Goal-seeking
Analysis
Optimization
Analysis
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Data Mining

Decision support through knowledge discovery
– Analyzes vast stores of historical business data
– Looks for patterns, trends, and correlations
– Goal is to improve business performance

Types of analysis
– Regression
– Decision tree
– Neural network
– Cluster detection
– Market basket analysis
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Market Basket Analysis

One of the most common uses for data mining
– Determines what products customers
purchase together with other products

Typical applications of MBA
– Cross-selling
– Product placement
– Affinity promotion
– Survey analysis
– Fraud detection
– Customer behavior identification
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Executive Information Systems (EIS)
Combines many
features of
MIS and DSS
Provides top executives
with immediate, easy
access to information
Identifies factors
critical to
accomplishing
strategic objectives
So popular it was
expanded to managers,
analysis, and other
knowledge workers
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Features of an EIS

Information presented in forms tailored to
the preferences of the executives using
the system
– Customizable graphical user interfaces
– Exception reports
– Trend analysis
– Drill down capability
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Enterprise Information Portals

A Web-based interface and integration of
MIS, DSS, EIS, and other technologies
– Available to all intranet users and select
extranet users
– Provides access to a variety of internal and
external business applications and services
– Typically tailored or personalized to the user
or groups of users
– Often has a digital dashboard
– Also called enterprise knowledge portals
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Enterprise Information Portal Components
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Enterprise Knowledge Portal
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