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Decision Support System

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  • MIS-410: Decision Support System (DSS)Ashis TalukderLecturer, MISDhaka University

  • Book:DECISION SUPPORT AND BUSINESS INTELLIGENCE SYSTEMSEfraim TurbanJay E AronsonTeng-Peng LiangReamesh Sharda

  • Chapter 1: Decision Support System and Business IntelligenceDECISION SUPPORT SYSTEMS AND BUSINESS INTELLIGENCE

  • Learning Objectives Understand todays turbulent business environment and describe how organizations survive and even excel in such an environmentUnderstand the need for computerized support of managerial decision makingUnderstand an early framework for managerial decision makingLearn the conceptual foundations of the decision support systems (DSS) methodology

  • Learning ObjectivesDescribe the business intelligence (BI) methodology and concepts and relate them to DSSDescribe the concept of work systems and its relationship to decision supportList the major tools of computerized decision supportUnderstand the major issues in implementing computerized support systems

  • Changing Business Environments and Computerized Decision Support The business pressures-responses-support model has 3 components:The business environment Organizational responses: be reactive, anticipative, adaptive, and proactive Computerized support

  • Managerial Decision Making

  • Managerial Decision Making The nature of managers work (Mintzbergs Classic Study, 1980)Interpersonal (figurehead, leader, liaison)Informational (monitor, Disseminator, Spokesperson)Decisional (Entrepreneur, Disturbance Handler, Resource Allocator, Negotiator)

    To do that s/he needs information in time (to computer, laptop, pda, cellphone by network, web)

  • Managerial Decision MakingThe process of 4-step decision makingDefining the problem (a decision situation that may deal with some difficulty or with an opportunity)Constructing a model that describes the real-world problemIdentifying possible solutions to the modeled problem and evaluating the solutionsComparing, choosing, and recommending a potential solution to the problem

  • Managerial Decision MakingDecision support systems (DSS) A conceptual framework for a process of supporting managerial decision- making, usually by modeling problems and employing quantitative models for solution analysis

  • Computerized Support for Decision Making Why use computerized decision support systems Speedy computations Improved communication and collaboration Increased productivity of group members Improved data management Managing giant data warehouses

  • Computerized Support for Decision Making Why use computerized decision support systemsQuality support Agility support Overcoming cognitive limits in processing and storing information Using the Web Anywhere, anytime support

  • Computerized Support for Decision Making Cognitive limitsThe limitations of the human mind related to processing information

  • An Early Framework for Computerized Decision SupportFour Phase Decision making process (Simon 1977 stated 3 later last one added)Intelligence: searching for conditions that call for decisionDesignInventing, developing and analyzing possible alternative actions (solutions) Choice: selecting a course of action among thoseImplementation: Adopting the selected course of action in decision situation

  • An Early Framework for Computerized Decision Support

  • An Early Framework for Computerized Decision Support Unstructured ProblemsNone of the above 4 phases is structuredFuzzy, complex problemsNo cut-and-dried solution exists Structured ProblemTypically repeated for which standard solution method existAll phases re structuredProcedure for best (at least good enough) solution is known

    Semi-structured ProblemFall between above twoHave some structured elements, some unstructured elementsTrading bonds, setting marketing budget for consumers

  • An Early Framework for Computerized Decision Support

  • An Early Framework for Computerized Decision Support Gorry & Scott-Morton (1971) proposed the classical frame work of 33 matrixThen Simons (1977) idea addedDegree of structuredness Four-phase decision making process Intelligence: searching for conditions that call for decisionDesignInventing, developing and analyzing possible alternative actions (solutions) Choice: selecting a course of action among thoseImplementation: Adopting the selected course of action in decision situation

  • An Early Framework for Computerized Decision Support Types of control in all managerial activitiesStrategic planningLong range of goals and policies for resource allocationManagement controlAcquisition and efficient use of resources for organization goalOperational control Efficient and effective execution of specific task.The decision support matrix For semi-structured decisions and unstructured decisions, conventional MIS and MS (mgt Sc) tools are insufficient Decision support systems (DSS) are used for unstructured problems.

  • An Early Framework for Computerized Decision Support

  • An Early Framework for Computerized Decision Support Computer support for structured decisions Structured problems encountered repeatedlyPossible to abstract, analyze, and classify into specific categories for high level of structure

  • An Early Framework for Computerized Decision Support Computer support for structured decisions Management science (MS) or operations research (OR) The application of a scientific approach and mathematical models to the analysis and solution of managerial decision situations (e.g., problems, opportunities)By 4-step-systematic process (mentioned earlier)

  • An Early Framework for Computerized Decision Support Computer support for structured decisions Management science (MS) process adds a new step 2 to the process:Defining the problem (a decision situation that may deal with some difficulty or with an opportunity)Classify the problem into a standard category.Constructing a model that describes the real-world problemIdentifying possible solutions to the modeled problem and evaluating the solutionsComparing, choosing, and recommending a potential solution to the problem

  • An Early Framework for Computerized Decision Support Computer support for structured decisions Automated decision systems (ADS)A business rules-based system uses intelligence to recommend solutions to repetitive decisions (such as pricing)

  • An Early Framework for Computerized Decision Support

  • An Early Framework for Computerized Decision Support Computer support for unstructured decisions Partially supported by STD computerized methods so, need Customized solutionsintuition and judgment play large role in this types of decisionsComputerized communication and collaboration technologies may helpKnowledge management may help

  • An Early Framework for Computerized Decision Support Computer support for semistructured problems A combination of both standard solution procedures and human judgmentManagement Science (MS) can provide models for the structured portion For the unstructured portion, a DSS can improve the quality of the information on which the decision is based by providing a range of alternative solutions along with their potential impacts

  • An Early Framework for Computerized Decision Support The benefits of computerized decision support Companies work in an unstable or rapidly changing economy.There are difficulties in tracking the numerous business operations.Competition has increased especially global competition.Electronic commerce is changing the ways business is done.Existing information systems do not fully support decision making.

  • An Early Framework for Computerized Decision Support The benefits of computerized decision support The Information systems department is too busy to address all of managements inquiries.Special analysis of profitability and efficiency is needed.Accurate information is needed.Computerized support is viewed as an organizational winner.New information is needed.

  • An Early Framework for Computerized Decision Support The benefits of computerized decision support Management mandates computerized decision support.Higher decision quality is needed.Improved communication.Improved customer and employee satisfaction.Timely information is provided.Cost reduction is achieved.Employees productivity has been improved.

  • The Concept of Decision Support Systems (DSS) Gorry & Scott-Morrison, 1971Interactive computer-based systems, which help decision makers to utilize data and models to solve unstructured problemKeen & Scott-Morrison, 1978Decision 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 fro management decision makers who deal with semi-structured problems

  • The Concept of Decision Support Systems (DSS) DSS as an Umbrella term: Describes any computerized system that supports decision making in an organization DSS as a specific application The architecture of DSSDataModels manipulate data as related to a specific situation Knowledge componentUsersUser interface

  • The Concept of Decision Support Systems (DSS)

  • The Concept of Decision Support Systems (DSS) Data1st component of DSS architectureNeeds data to solve problemsData can come from different sources including webEvery problem to be solved, every opportunity or strategy to be analyzed, requires dataModels manipulate data as related to a specific situation 2nd Component of DSS architectureData related to specific situation are manipulated by a modelModels can be standard or customized

  • The Concept of Dec