Decision Support Systems

Introduction to BI, Decision Support

Systems

What is Business Intelligence?

Business Intelligence is the processes, technologies,
and tools that help us change data into information,
information into knowledge and knowledge into
plans that guide organization

Technologies for gathering, storing,

analyzing and providing access to data to
help enterprise users make better business
Decisions

What is Business Intelligence?

(Contd.)
It provide to access data for professionals and
help them make better business decisions.
The ability of depth analysis and data mining
of detailed business data to provide real and
significant information to users.
The software allows users to access and
review large amounts of complex data

What is Business Intelligence?

(Contd.)
Business intelligence is complicated yet
helpful applications.
It include the ability to effectively act the
exploitation of information and human
resources.
In this Business Intelligence environment one
also needs to analyze and present right
information, which enables them to take right
action, or make right decisions.

Major Branches of AI (1)

Perceptive system
A system that approximates the way a human sees, hears, and
feels objects

Vision system
Capture, store, and manipulate visual images and pictures

Robotics
Mechanical and computer devices that perform tedious tasks with
high precision

Expert system
Stores knowledge and makes inferences

Major Branches of AI (2)

Learning system
Computer changes how it functions or reacts to situations based
on feedback

Natural language processing

Computers understand and react to statements and commands
made in a natural language, such as English

Neural network
Computer system that can act like or simulate the functioning of
the human brain

Schematic

Artificial
intelligence

Vision
systems

Learning
systems

Robotics

Expert systems

Neural networks
Natural language
processing

Artificial Intelligence (1)

The branch of computer science concerned with making computers
behave like humans. The term was coined in 1956 by John McCarthy
at the Massachusetts Institute of Technology. Artificial intelligence
includes

games playing: programming computers to play games such as

chess and checkers
expert systems : programming computers to make decisions in real-life
situations (for example, some expert systems help doctors diagnose
diseases based on symptoms)
natural language : programming computers to understand natural
human languages

Artificial Intelligence (2)

neural networks : Systems that simulate intelligence by attempting

to reproduce the types of physical connections that occur in animal
brains
robotics : programming computers to see and hear and react to
other sensory stimuli

Currently, no computers exhibit full artificial intelligence (that is, are

able to simulate human behavior). The greatest advances have
occurred in the field of games playing. The best computer chess
programs are now capable of beating humans. In May, 1997, an IBM
super-computer called Deep Blue defeated world chess champion

Artificial Intelligence (3)

Gary Kasparov in a chess match.
In the area of robotics, computers are now widely used in assembly
plants, but they are capable only of very limited tasks. Robots have
great difficulty identifying objects based on appearance or feel, and
they still move and handle objects clumsily.
Natural-language processing offers the greatest potential rewards
because it would allow people to interact with computers without
needing any specialized knowledge. You could simply walk up to a

Artificial Intelligence (4)

computer and talk to it. Unfortunately, programming computers to
understand natural languages has proved to be more difficult than
originally thought. Some rudimentary translation systems that
translate from one human language to another are in existence, but
they are not nearly as good as human translators. There are also
voice recognition systems that can convert spoken sounds into
written words, but they do not understand what they are writing;
they simply take dictation. Even these systems are quite limited -you must speak slowly and distinctly.

Artificial Intelligence (5)

In the early 1980s, expert systems were believed to represent the
future of artificial intelligence and of computers in general. To date,
however, they have not lived up to expectations. Many expert
systems help human experts in such fields as medicine and
engineering, but they are very expensive to produce and are helpful
only in special situations.
Today, the hottest area of artificial intelligence is neural networks,
which are proving successful in a number of disciplines such as voice
recognition and natural-language processing.

Artificial Intelligence (6)

There are several programming languages that are known as AI
languages because they are used almost exclusively for AI
applications. The two most common are LISP and Prolog.

Why BI?

What happened?
What is happening?
Why did it happen?
What will happen?
What do I want to happen?

Past
Present
Future

Why do we need BI?

Business Intelligent implementation, businesses can
make decisions and feel comfortable that they are
provided with the proper tools and data needed to
believe in their decisions.

Without correct BI solution even well planned and

executed data warehouse architectures can fail.
BI is decision support system and database that can
provide professional with the information they need
to make the most effective decisions for their
organization.

Contd.
It also provides data about the organizations
details, such as customers , product, and
services.
When one action rapidly it take appropriate
action or make the right decision business
success is realized.

Who uses Business Intelligence?

BI having wide scope of data.
Data can be demographic trends( info like
personal details), product line profitability,
fine tuning of pricing options, identifying of
top customer and tracking product trends.
Most organizations could benefit from
Business intelligence software.
It include restaurant chains, retails, or even
professional sports teams.

Contd.
BI tool is not easily affordable therefore they
are most commonly used in large
corporations, rather than small business.
Business Intelligence tools provide significant
value of considering benefit they will have to
organization.

The characteristics of a Business

intelligence solution
Single point of access to information
Timely answers to Business questions
Using BI in all Departments of an organization

Early days system

BI system

Key Stages

Benefits

Improve Operational efficiency

Eliminate report backlog and delays
Find root causes and take action
Negotiate better contracts with suppliers and customers
Identify wasted resources and reduce inventory costs
Sell information to customers, partners, and suppliers
Leverage your investment in your ERP or data warehouse
Improve strategies with better marketing analysis
Give users the means to make better decisions
Challenge assumptions with factual information

Limitations

Very high software cost.

Expensive and time consuming training.
A wide Variety of technology experts.
Extensive system upgrade and maintenance.
Movement of data between disparate data
source.
Queries done out of BI systems can be
cumbersome and time-consuming to run for end
users

Decision Support Systems

Introduction

Decision makers are faced with increasingly stressful environments

highly competitive, fast-paced, near real-time, overloaded with
information, data distributed throughout the enterprise, and
multinational in scope.
The combination of the Internet enabling speed and access,
and the maturation of artificial intelligence techniques, has led
to sophisticated aids to support decision making under these
risky and uncertain conditions.
These aids have the potential to improve decision making by
suggesting solutions that are better than those made by the
human alone.
They are increasingly available in diverse fields from medical
diagnosis to traffic control to engineering applications.

Decision Support System

A Decision Support System (DSS) is an interactive
computer-based system or subsystem intended to help
decision makers use communications technologies, data,
documents, knowledge and/or models to identify and
solve problems, complete decision process tasks, and
make decisions.
Decision Support System is a general term for any
computer application that enhances a person or groups
ability to make decisions.
Also, Decision Support Systems refers to an academic
field of research that involves designing and studying
Decision Support Systems in their context of use.

A brief history
Academic Researchers from many disciplines has been
studying DSS for approximately 40 years.
According to Keen and Scott Morton (1978), the concept of
decision support has evolved from two main areas of
research: the theoretical studies of organizational decision
making done at the Carnegie Institute of Technology during
the late 1950s and early 1960s, and the technical work on
interactive computer systems, mainly carried out at the
Massachusetts Institute of Technology in the 1960s.
It is considered that the concept of DSS became an area of
research of its own in the middle of the 1970s, before
gaining in intensity during the 1980s.

A brief history
In the middle and late 1980s, Executive Information
Systems (EIS), group decision support systems (GDSS), and
organizational decision support systems (ODSS) evolved
from the single user and model-oriented DSS.
Beginning in about 1990, data warehousing and on-line
analytical processing (OLAP) began broadening the realm of
DSS.
As the turn of the millennium approached, new Web-based
analytical applications were introduced.

History of DSS

Goal: Use best parts of IS, OR/MS, AI & cognitive science to support
more effective decision

Why DSS?
Increasing complexity of decisions
Technology
Information:
Data, data everywhere, and not the time to think!
Number and complexity of options
Pace of change

Increasing availability of computerized support

Inexpensive high-powered computing
Better software
More efficient software development process

Increasing usability of computers

Perceived benefits
decision quality
improved communication
cost reduction
increased productivity
time savings
improved customer and employee satisfaction

Spreadsheet-based decision
support systems
A DSS is made up of a model (or models), a source of
data, and a user interface.
When a model is implemented in Excel, it is possible to
use Visual Basic for Applications (VBA) to make the
system more efficient by automating interactive tasks
that users would otherwise have to repeat routinely.
VBA can also make the system more powerful by
extending the functionality of a spreadsheet model and
by customizing its use.

A Hypothetical Decision Making

Example
A third world country is going to build a railway system to connect a
potential inland industrial area and a good agricultural area with a
port.
An international development agency recommended that the iron in
the area should be mined and refined locally and melt using industries
which has to be established.
The refined iron is possibly exported to Germany and Japan for car
industry.
For success of project it requires supply of skilled labor. To overcome
this problem a training center has to be established to train workers by
the time plant gets ready.
The development agency also recommends the fertile land in the area
should be prepared for intensive farming to provide food for the
consumption of the people working in the industry.
The railway should link the industrial area, farm and port.

Issues dealt with

Is the route optimum? Are all likely users connected? What are the possible
routes?
Growth of traffic: To what extent does development of railway depends on
development of port, new town, airport, industrial area and agricultural area?
Competition: To what extent would development of an improved road would
eliminate the need for railway?
Engineering problems: How much electricity is needed for electrical train?
Supply problem: Where will supply of equipment and constructors sought
from?
Operational problem: With inadequate supply of local skilled workers where
will operating team be obtained from? Will foreign operating contactors be
used?
Time Scale: When to start the project and when it will be finished?
Cost: What will the total cost of project be?
Infrastructure: Will services available include: telephone, fire, water, radio
communication, hospitals, hotels and housing?

Essential steps in the process of

making a decision
Step 1

Concept of Project is Identified

Decision To Proceed

Step 2

Project assessment. Taking

account of all issues involved
Decision To Proceed

Step 3

Decision To Abandon

Tender Accepted. Construction

Starts
Decision To Proceed

Step 5

Decision To Abandon

Project Goes to Detail

Specification For Tender
Decision To Proceed

Step 4

Decision To Abandon

Decision To Abandon

Operation Starts
Decision To Proceed

Decision To Abandon

Step 1
The conceptual need for a project arise mainly as a result
of an basement of future requirements.
It may be made by a team of experts.
Typically a conceptual study will identify the technical
solution required, the economic merits, and acceptability
of project in socio political terms.
It may require discussion with financial institutions
wither or not they will provide necessary funds.

Step 2
Assuming the decision has been made to develop the project further
then a detailed assessment will have to be made of all technical,
economic and socio-political factors.
The details may be quantitative and based on subjective knowledge.
A major decision making is about novelty of project.
A project may technically be novel ( making a new airplane ).
The project may employ an established technology in novel environment (
using electrical train in third world country).

In this step the degree of uncertainty associated with each factor will
begin to emerge.
An understanding of uncertainty associated with any proposal is
essential for a feasible decision making.

Step 3
If the outcome of step 2 is to proceed the project, then a tender
specification has to be prepared.
It should define, exactly what work the tender is required to do. Ideally
it has to define every thing that has to be done.
The magnitude of uncertainty associated with this stage is a reason for
possible variations in cost and duration of projects.
Before a tender specification is issued it is prudent to confirm that the
project is acceptable to regulatory authorities and that the adequate
finance is available.
The financer need to be convinced that the project is viable, that the
proposer is sound and has the experience and capability to derive the
project to a successful conclusion.

Step 4 ,5
Step 4
The first action is to decide if one of the tender should be
accepted.
The tenderer should have the appropriate experience, capability
and adequate financial resources.

Step 5
Assuming all steps completed satisfactorily, a decision has to be
taken to start the project.
Even if the project starts, it might have to be stopped if the
environment it operates is changed.

Decision making characteristics

Decision is made based on the information
available.
At each part of the assessment, there may
have to be iterative development to take
account improvement in data that take place
as the project proceeds.
A project will not go ahead unless there is
adequate funding.

Management

Management is decision making

The manager is a decision maker
Organizations are filled with decision makers at different level.
Management is considered as art: a talent acquired over years by
trial-and-error.
However decision making today is becoming more complicated:
Technology / Information/Computers : increasing More
alternative to choose
Structural Complexity / Competition : increasing larger cost of
error
International markets / Consumerism : increasing more
uncertainty about future
Changes, Fluctuations : increasing need for quick decision

Management problems

Most management problems for which decisions are sought can be

represented by three standard elements objectives, decision variables, and
constraints.
Objective
Maximize profit
Provide earliest entry into market
Minimize employee discomfort/turnover

Decision variables
Determine what price to use
Determine length of time tests should be run on a new product/service
Determine the responsibilities to assign to each worker

Constraints
Cant charge below cost
Test enough to meet minimum safety regulations
Ensure responsibilities are at most shared by two workers

Types of Problems

Structured: situations where the procedures to follow when a decision is

needed can be specified in advance
Repetitive
Standard solution methods exist
Complete automation may be feasible

Unstructured: decision situations where it is not possible to specify in advance

most of the decision procedures to follow

One-time
No standard solutions
Rely on judgment
Automation is usually infeasible

Semi-structured: decision procedures that can be pre specified, but not

enough to lead to a definite recommended decision
Some elements and/or phases of decision making process have repetitive elements

DSS most useful for repetitive aspects of semi-structured problems

A Multidiscipline Study
It is clear that DSS belong to an environment
with multidisciplinary foundations, including
(but not exclusively):
Database research,
Artificial intelligence,
Human-computer interaction,
Simulation methods,
Software engineering, and
Telecommunications.

Approaches to the design and

construction of DSS
Studies on DSS development conducted during the last 15
years have identified more than 30 different approaches to
the design and construction of decision support methods
and systems.
Interestingly enough, none of these approaches
predominate and the various DSS development processes
usually remain very distinct and project-specific.
This situation can be interpreted as a sign that the field of
DSS development should soon enter in its formalization
stage.

Model-driven DSS
A 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
(Gachet 2004).
Other examples:
A spread-sheet with formulas in
A statistical forecasting model

An optimum routing model

Data-driven (retrieving) DSS

A data-driven DSS or data-oriented DSS emphasizes access to and
manipulation of a time series of internal company data and, sometimes,
external data.
Simple file systems accessed by query and retrieval tools provides the
elementary level of functionality. Data warehouses provide additional
functionality. OLAP provides highest level of functionality.
Examples:
Accessing AMMIS data base for all maintenance Jan89-Jul94 for CH124
Accessing INTERPOL database for crimes

by .

Accessing border patrol database for all incidents in Sector ...

Model and data-retrieving DSS

Examples:
Collect weather observations at all stations and
forecast tomorrows weather
Collect data on all civilian casualties to predict
casualties over the next month

Communication-driven DSS
A communication-driven DSS use network
and comminication technologies to faciliate
collaboartion on decision making. It supports
more than one person working on a shared
task.
examples include integrated tools like
Microsoft's NetMeeting or Groove (Stanhope
2002), Vide conferencing.
It is related to group decision support systems.

Document-driven DSS
A document-driven DSS uses storage and
processing technologies to document retrieval
and analysis. It manages, retrieves and
manipulates unstructured information in a
variety of electronic formats.
Document database may include: Scanned
documents, hypertext documents, images,
sound and video.
A search engine is a primary tool associated
with document drivel DSS.

Knowledge-driven DSS
A knowledge-driven DSS provides specialized
problem solving expertise stored as facts,
rules, procedures, or in similar structures. It
suggest or recommend actions to managers.
MYCIN: A rule based reasoning program which
help physicians diagnose blood disease.

Architecture
Three fundamental components of DSS:
the database management system (DBMS),
the model management system (MBMS), and
the dialog generation and management system (DGMS).
the Data Management Component stores information (which can be
further subdivided into that derived from an organization's traditional
data repositories, from external sources such as the Internet, or from
the personal insights and experiences of individual users);
the Model Management Component handles representations of
events, facts, or situations (using various kinds of models, two
examples being optimization models and goal-seeking models); and
the User Interface Management Component is of course the
component that allows a user to interact with the system.

DSS Components

A Detailed Architecture
Even though different authors identify different
components in a DSS, academics and practitioners
have come up with a generalized architecture
made of six distinct parts:

the data management system,

the model management system,
the knowledge engine,
The user interface,
the DSS architecture and network, and
the user(s)

Typical Architecture

TPS: transaction
processing system
MODEL:
representation of a
problem
OLAP: on-line
analytical processing
USER INTERFACE: how
user enters problem &
receives answers
DSS DATABASE:
current data from
applications or groups
DATA MINING:
technology for finding
relationships in large
data bases for
prediction

TPS

USER
INTERFACE

DSS DATA
BASE

EXTERNAL
DATA

DSS SOFTWARE SYSTEM

MODELS
OLAP TOOLS
DATA MINING TOOLS

USER

DSS Model base

Model base
A software component that consists of models
used in computational and analytical routines that
mathematically express relations among variables

Examples:
Linear programming models,
Multiple regression forecasting models
Capital budgeting present value models

Applications
There are theoretical possibilities of building such systems in any
knowledge domain.
Clinical decision support system for medical diagnosis.
a bank loan officer verifying the credit of a loan applicant
an engineering firm that has bids on several projects and wants to
know if they can be competitive with their costs.
DSS is extensively used in business and management. Executive
dashboards and other business performance software allow faster
decision making, identification of negative trends, and better
allocation of business resources.
A growing area of DSS application, concepts, principles, and
techniques is in agricultural production, marketing for sustainable
development.
A specific example concerns the Canadian National Railway system,
which tests its equipment on a regular basis using a decision support
system.
A DSS can be designed to help make decisions on the stock market, or
deciding which area or segment to market a product toward.

Characteristics and Capabilities

of DSS

The key DSS characteristics and capabilities are as follows:

1. Support for decision makers in semistructured and unstructured
problems.
2. Support managers at all levels.
3. Support individuals and groups.
4. Support for interdependent or sequential decisions.
5. Support intelligence, design, choice, and implementation.
6. Support variety of decision processes and styles.
7. DSS should be adaptable and flexible.
8. DSS should be interactive ease of use.
9. Effectiveness, but not efficiency.
10. Complete control by decision-makers.
11. Ease of development by end users.
12. Support modeling and analysis.
13. Data access.
14. Standalone, integration and Web-based

DSS Characteristics
(DSS In Action 1.5: Houston Minerals Case)
Initial risk analysis (management science)
Model examination 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

Information Systems to support

decisions
Management
Information
Systems

Decision Support
Systems

Decision
support
provided

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

Prespecified, fixed format

Ad hoc, flexible, and

adaptable format

Information
processing
methodology

Information produced by
Information produced by
extraction and manipulation analytical modeling of
of business data
business data

Definitions
DBMS - System for storing and retrieving data and processing queries
Data warehouse - Consolidated database, usually gathered from
multiple primary sources, organized and optimized for reporting and
analysis
MIS - System to provide managers with summaries of decision-relevant
information
Expert system - computerized system that exhibits expert-like behavior
in a given problem domain
Decision aid - automated support to help users conform to some
normative ideal of rational decision making
DSS - provide automated support for any or all aspects of the decision
making process
EIS (Executive information system) - A kind of DSS specialized to the
needs of top executives

Management Information
Systems
MIS
Produces information products that support
many of the day-to-day decision-making needs
of managers and business professionals
Prespecified reports, displays and responses
Support more structured decisions

MIS Reporting Alternatives

Periodic Scheduled Reports
Pre-specified format on a regular basis
Exception Reports
Reports about exceptional conditions
May be produced regularly or when exception
occurs
Demand Reports and Responses
Information available when demanded
Push Reporting
Information pushed to manager

Online Analytical Processing

OLAP
Enables mangers and analysts to examine and
manipulate large amounts of detailed and
consolidated data from many perspectives
Done interactively in real time with rapid response

OLAP Analytical Operations

Consolidation
Aggregation of data

Drill-down
Display detail data that comprise consolidated data

Slicing and Dicing

Ability to look at the database from different
viewpoints

Geographic Information Systems

GIS
DSS that uses geographic databases to construct
and display maps and other graphics displays
That support decisions affecting the geographic
distribution of people and other resources
Often used with Global Position Systems (GPS)
devices

Data Mining
Main purpose is to provide decision support to
managers and business professionals through
knowledge discovery
Analyzes vast store of historical business data
Tries to discover patterns, trends, and
correlations hidden in the data that can help a
company improve its business performance
Use regression, decision tree, neural network,
cluster analysis, or market basket analysis

Data Visualization Systems

DVS
DSS that represents complex data using interactive
three-dimensional graphical forms such as charts,
graphs, and maps
DVS tools help users to interactively sort, subdivide,
combine, and organize data while it is in its
graphical form.

Executive Information Systems

EIS
Combine many features of MIS and DSS
Provide top executives with immediate and easy
access to information
About the factors that are critical to accomplishing
an organizations strategic objectives (Critical
success factors)
So popular, expanded to managers, analysts and
other knowledge workers

Features of an EIS
Information presented in forms tailored to the
preferences of the executives using the system
Customizable graphical user interfaces
Exception reporting
Trend analysis
Drill down capability

Enterprise Interface Portals

EIP
Web-based interface
Integration of MIS, DSS, EIS, and other technologies
Gives all intranet users and selected extranet users
access to a variety of internal and external business
applications and services

Typically tailored to the user giving them a

personalized digital dashboard

Knowledge Management
Systems
The use of information technology to help
gather, organize, and share business knowledge
within an organization
Enterprise Knowledge Portals
EIPs that are the entry to corporate intranets that
serve as knowledge management systems

Expert Systems
ES
A knowledge-based information system (KBIS)
that uses its knowledge about a specific,
complex application to act as an expert
consultant to end users
KBIS is a system that adds a knowledge base to
the other components on an IS

Expert System Components

Knowledge Base
Facts about specific subject area
Heuristics that express the reasoning procedures of an expert
(rules of thumb)

Software Resources
Inference engine processes the knowledge and makes inferences
to make recommend course of action
User interface programs to communicate with end user
Explanation programs to explain the reasoning process to end user

Using DSS
What-if Analysis
End user makes changes to variables, or
relationships among variables, and observes the
resulting changes in the values of other variables

Sensitivity Analysis
Value of only one variable is changed repeatedly
and the resulting changes in other variables are
observed

Using DSS
Goal-Seeking
Set a target value for a variable and then repeatedly
change other variables until the target value is
achieved

Optimization
Goal is to find the optimum value for one or more
target variables given certain constraints
One or more other variables are changed repeatedly
until the best values for the target variables are
discovered

Note on DSS
Decision support systems quite literally refer
to applications that are designed to support,
not replace, decision making.
Unfortunately, this is too often forgotten by
decision support system users, or these users
simply equate the notion of intelligent
support of human decision making with
automated decision making.

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

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

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

Attributes of Information
Quality

Decision Support Trends

Personalized
decision
support

Modeling

Information
retrieval

Data
warehousing

What-if
scenarios

Reporting

Decision Support Trends

Business Intelligence
Applications

Difference between DSS- BI

connection
Business Intelligence
BI is more appropriate for
large organizations (DWH is
expensive)
BI implies to use data
warehouse.
It provide accurate and
timely information and
support DSS.
It has an executive &
strategy orientation,
especially in BPM and
dashboards

Decision Support System

DSS can be appropriate to
any type of organization.
DSS may or may not have
such feature.
DSS are constructed to
directly support specific
decision making.
DSS is oriented towards
analysts.

Business Intelligence
BI is constructed with
commercial available tools
and components.

BI methodologies and tools

were developed mostly by
software companies.

Decision Support System

They may have constructing
solutions to very
unstructured problem. In
this more programming may
be needed to customize
solution.
DSS methodologies & even
some tools were developed
mostly in academic world.

Decision Making as a Component

of Problem Solving
Intelligence
Decision
making

Design

Choice

Implementation

Monitoring

Problem
solving

Solution Types
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

Problem Solving Factors

Multiple decision objectives

Increased alternatives
Increased competition
The need for creativity
Social and political actions
International aspects
Technology
Time compression

Characteristics of a DSS (1)

Handles large amounts of data from different
sources
Provides report and presentation flexibility
Offers both textual and graphical orientation

Characteristics of a DSS (2)

Supports drill down analysis
Performs complex, sophisticated analysis and
comparisons using advanced software
packages

Supports optimization, satisfying, and

heuristic approaches

Characteristics of a DSS (3)

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

Capabilities of a DSS (1)

Supports
Problem solving phases
Different decision frequencies

Merge with
another
company?

low

How many
widgets
should I order?

high

Capabilities of a DSS (2)

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

Standalone
Integration and
Web- based

Semi structured
and
Unstructured
problems

Support managers
at all levels

Support individuals
and groups

Data access

Modeling
and analysis

Interdependent or
Sequential decisions

DSS
Ease of
development
by end users

Support
Intelligence,
design, choice,
implementation
Support variety
Of decision
processes and styles

Human control
the process

Effectiveness,
not efficiency

Interactive ease
of use

Adaptable and
flexible

Decision Making Levels

Strategic

Strategic-level managers
involved with long-term
decisions

Tactical
Operational-level
managers involved with
daily decisions

Operational
High

Low
Decision Frequency

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

DIFFERENCE BETWEEN MIS

AND DSS
Management Information
Systems

Decision Support Systems

Decision
support
provided

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 produced by
extraction and manipulation of
business data

Information produced by
analytical modeling
of business data

Information
processing
methodology

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

Database

Model base

DBMS

Access to the
internet, networks,
and other computer
systems

MMS

External database
access

Dialogue manager

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

TYPES of DSS

File Drawer Systems

They are the simplest type of DSS

Can provide access to data items
Data is used to make a decision
ATM Machine
Use the balance to make transfer of funds
decisions

Data Analysis Systems

Provide access to data

Allows data manipulation capabilities
Airline Reservation system
No more seats available
Provide alternative flights you can use
Use the info to make flight plans

Analysis Information Systems

Information from several files are combined

Some of these files may be external
We have a true data base
The information from one file, table, can be
combined with information from other files
to answer a specific query.

Accounting Models

Use internal accounting data

Provide accounting modeling capabilities
Can not handle uncertainty
Use Bill of Material
Calculate production cost
Make pricing decisions

Representational Model
Can incorporate uncertainty
Uses models to solve decision problem using
forecasts
Can be used to augment the capabilities of
Accounting models
Use the demand data to forecast next years
demand
Use the results to make inventory decisions.

Optimization Systems
Used to estimate the effects of different
decision alternative
Based on optimization models
Can incorporate uncertainty
Assign sales force to territory
Provide the best assignment schedule

Suggestion Systems
A descriptive model used to suggest to the
decision maker the best action
A prescriptive model used to suggest to the
decision maker the best action
May incorporate an Expert System
Use the system to recommend a decision
Ex: Applicant applies for personal loan

DSS Categories
Support-based categories (Alter 1980)
Data-based DSS
Model-based DSS

Nature of the decision situation (Donovan &

Madnick 1977)
Institutional
Ad hoc

User-based categories (Keen 1980)

Individual
Multi-individual
Group

DSS Categories
Support based DSS
Data-based DSS
Model-based DSS

Structured

Semi-structure

Data-based
DSS

Unstructured

Model-based
DSS

DSS Categories
Based on the nature of the decision situation
Institutional
Culture of the organization
Regularly used
Used by more than one persons

Ad hoc
One of kind
One-time use
Used by single individual

DSS Categories
Based on number of users
Individual
Multi-individual
Group

Benefits

Individual

MultiGroup
individual
H
L

Improving personal efficiency

Expediting problem solving

Facilitating communication

Promoting learning

Increasing control

Simons Model
External

Intelligence

ES
Design

Internal

AI, EIS

Problem Identification

Qualitative
Analysis

DSS

Quantitative
Analysis

GDSS

Choice

Decision

ES

DbDSS,
MbDSS

Usage Modes

Subscription Mode
Terminal Mode
Clerk Mode
Intermediary Mode

Subscription Model
Decision maker receives outputs from the
DSS on regular basis

Terminal Mode
Direct use of the DSS by the decision maker
Access is through individual terminals
May be user specific requirements

Clerk Mode
Decision maker fills out a form requesting
output from DSS
A clerk accesses the DSS
Sends the output to the decision maker

Intermediary Mode
Decision maker uses the DSS with the help
of a professional, knowledgeable assistant
The assistant can be either a:
Staff Assistant
Technical Support Staff
Business Analyst

DSS in Summary

A MANAGEMENT LEVEL COMPUTER SYSTEM Which:

COMBINES DATA,
MODELS,
USER - FRIENDLY SOFTWARE

FOR SEMISTRUCTURED & UNSTRUCTURED DECISION

MAKING.
It utilizes data, provides an easy-to-use interface, and
allows for the decision maker's own insights.

A summary of commercial DSS

system
A summary of commercial DSS system show seven types of DSS:
File Drawer Systems, that provide access to the data items.
Data Analysis systems, that support manipulation of data by
computerized tools for a specific task.
Analysis Information systems, that provide access to a series of
decision oriented databases and small models.
Accounting and financial models, that calculates the consequences of
possible actions.
Representational model, that estimates the consequences of actions
based on simulation models.
Optimization models, that provide guidelines for action by generating
an optimal solution
Suggestion models, that perform the logical processing to a specific
suggested decision for a task.