DECISION SUPPORT SYSTEM

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CONTENTS

Introduction Characteristics Components Tools /models used Linear programming: mathematical model Advantages/disadvantages Conclusion

INTRODUCTION

Definition:

Computer-based information system.

Supports business or organizational decision-making activities.

DSSs serve the management, operations, and

planning levels of an organization.

INTRODUCTION

What is a decision?

Decision is a choice from two or more alternatives.

Is the first part of problem solving exercise.

Two types: Programmed. Non programmed.

DSS helps in decision making.

DSSs include knowledge-based systems.

Can be used to validate the decision by performing sensitivity analysis on various parameter of the problem.

CHARACTERISTICS

Handle large amounts of data from different sources.

Provide report and presentation flexibility.

Offer both textual and graphical orientation.

Support drill-down analysis.

Perform complex, sophisticated analysis and comparisons using advanced software packages.

COMPONENTS

Database management system (DBMS).

Model-base management system (MBMS).

Dialog generation and management system (DGMS).

TYPE OF TOOLS/MODELS

Behavioral models.

Management science models.

Operations research (OR) models .

LINEAR PROGRAMMING: MATHEMATICAL MODEL

Linear programming (LP, or linear optimization) is a mathematical method for determining a way to achieve the best outcome.

Tool used in operational model.

Used to make the best possible decision under given constraints.

LINEAR PROGRAMMING: MATHEMATICAL MODEL

Assumptions made: Proportionality

No extra startup charge at the beginning.

Additivity

Divisibility

A calculator company produces a scientific calculator and a graphing calculator. Long-term projections indicate an expected demand of at least 100 scientific and 80 graphing calculators each day. Because of limitations on production capacity, no more than 200 scientific and 170 graphing calculators can be made daily. To satisfy a shipping contract, a total of at least 200 calculators much be shipped each day. If each scientific calculator sold results in a $2 loss, but each graphing calculator produces a $5 profit, how many of each type should be made daily to maximize net profits?

x: number of scientific calculators producedy: number of graphing calculators produced

two constraints, x > 0 and y > 0.

x > 100 and y > 80.

The exercise also gives maximums: x < 200 and y < 170.

The minimum shipping requirement gives x + y > 200; in other words, y > –x + 200

R = –2x + 5y, subject to : 100 < x < 200 80 <  y < 170 y > –x + 200 

To optimize

ADVANTAGES

Time savings

Enhance effectiveness

Improve interpersonal communication

Cost reduction

ADVANTAGES

Increase decision maker satisfaction

Promote learning

Increase organizational control

DISADVANTAGES

Overemphasize decision making

Assumption of relevance

Transfer of power

Unanticipated effects

DISADVANTAGES

Obscuring responsibility

False belief in objectivity

Status reduction

Information overload

CONCLUSIONS

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