Chapter 12 Decision Support Systems

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Chapter 12Decision Support Systems
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Learning Objectives

• List and explain the steps in decision making
• Articulate the difference between structured and
  unstructured decision making
• Describe the typical software components that
  decision support systems comprise
• Describe the typical elements of geographic
  information systems
• Identify business situations in which decisions
  can be supported by geographic information
  systems

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Decision Support Aids

• Organizations success depends on quality of
  managers decisions
• When decisions involve large amounts of
  information and processing, computer-based
  systems can make the process effective and
  efficient.
• Applications now called business analysis tools
  or business intelligence applications

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The Decision-Making Process

• Three decision-making phases
• Intelligence
• Design
• Choice
• Models to analyze data
• Maps, mathematical equations of variables

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The Decision-Making Process (Cont.)
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Structured and Unstructured Problems
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Structured Problems

• Proven set of steps for solution
• Algorithm
• Parameters
• Most mathematical and physical problems are
  structured
• Programmable problems feasible to write a
  program to solve them

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Unstructured Problems

• No algorithm to follow to reach optimal solution
• Multiple potential solutions
• Unstructuredness is closely related to
  uncertainty

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Semistructured Problems

• Neither fully structured nor totally unstructured
• Managers and Semistructured Problems
• Most common type of problem for managers
• Task is to choose one alternative that will bring
  about the best outcome
• Often rely on decision support applications to
  select the best course of action

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Decision Support System (DSS)

• Computer-based information systems that help
  managers select one of many solutions
• Automates some of decision-making process
• Sophisticated and fast analysis
• Used at all management levels

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Decision Support System (DSS) Components

• Three Major Components
• Data management module
• Model management module
• Dialog management module

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Decision Support System (DSS) Components (Cont.)

• Together, DSS modules
• Help enter request conveniently
• Search vast amounts of data
• Use data in desired models
• Present results in readable manner

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The Data Management Module

• Gives user access to databases or data warehouses
• Allows decision maker to conduct intelligence
  phase of decision making

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Decision Support System Components (Cont.)
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Decision Support System Components

• Closely intertwined with other organizational
  systems
• Data warehouses
• Data marts
• ERP systems
• Draw relevant data for decision-making

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The Model Management Module

• Selects appropriate model to analyze data
• Linear regression model
• May be built by the organization based on
  accumulated knowledge
• Trade secrets

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The Model Management Module (Cont.)
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The Model Management Module (Cont.)

• Creating New Models
• Data mining techniques do not rely on
  predetermined models
• No hypothesis on relationships of data required
• Software looks for the relationships
• Results in a new model or set of relationships

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The Dialog Module

• Interface between user and other modules
• Prompts user to select a model
• Allows database access and data selection
• Lets user enter/change parameters
• Displays analysis results
• Textual, tabular, and graphical displays

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The Dialog Module (Cont.)
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Types of DecisionSupport Systems

• Personal Decision Support Systems
• Individual Knowledge worker uses in daily work
• Raw data entered into a program either by user or
  drawn from other sources
• Tax preparation software is an example

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Types of Decision Support Systems (Cont.)

• Group Decision Support Systems
• Promote brainstorming and group decision making
• Located in conference room or on networked
  computers
• Weigh votes to overcome impasses

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Types of Decision Support Systems (Cont.)
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Sensitivity Analysis

• Tests degree to which result is affected by
  change in parameters
• What-if analysis
• Can change multiple parameters at once

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Executive Information Systems

• Alleviate information overload for executives
• Select most relevant data for analysis
• Drilling down
• Consolidate and summarize data
• Display data graphically

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Effective EIS features

• An easy-to-use and easy-to-learn graphical user
  interface
• On-request drill-down capability
• On-demand financial and other ratios, and other
  indicators
• Easy-to-use but sophisticated tools to allow
  navigation in databases and data warehouses

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Effective EIS Features (Cont.)

• Statistical analysis tools
• The ability to respond to ad hoc queries and
  sensitivity analyses
• Access to external data pools
• The ability to solve diverse business problems

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Developing Decision Support Systems

• When Should a DSS Be Built?
• What is the type problem and how structured is
  it?
• Are the required data available in databases and
  data warehouses?
• How often do managers encounter the problem?
• Who will use the system?
• Can the prospective users spare adequate time for
  the development process?

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The Electronic Spreadsheet A DSS Tool

• Provide two facilities for building DSS
• Preprogrammed functions
• Ability to use IF-THEN statements
• Most widely used tool
• Inexperienced users can use to develop DSSs

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GeographicInformation Systems

• Decision aid for map-related decisions
• Typical GIS contains
• database of quantitative and qualitative data
• database of maps
• program to display information on maps

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Ethical and Societal IssuesDecisions by Machines

• Automated decisions can affect individuals
• Mortgage companies, credit card companies,
  employers, banks, etc.
• European Protection
• Automated Individual Decisions Directive

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Ethical and Societal IssuesDecisions by Machines

• Who Needs Protection
• Determining creditworthiness
• Efficient
• Effective
• Hidden Injustice
• Mistakes on records
• Decisions final

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Summary

• Decisions are made in three steps intelligence,
  design, and choice
• Structured and unstructured are two types of
  decision-making techniques and are based on the
  type of problem to be solved
• Decision support systems have typical components
• Geographic information systems use certain
  elements