Decision support system

• Interactive computer-based systems that help people use computer

communications, data, documents, knowledge and models to solve problems
and make improved decisions.
• Combine information portals, knowledge management, business intelligence,
data mining, data warehousing, on-line analytical processing, e-business
technologies, world-wide web and information technologies
Type of decisions
• Programmed decisions
– repetitive and routine
– have a definite procedure
• Nonprogrammed decisions
– Novel and unstructured
– No cut-and-dried method for handling problem
Problem solving phases
• Intelligence
– Searching environment for conditions calling for a solution
• Design
– Inventing, developing, and analyzing possible courses of action
• Choice
– Selecting a course of action from those available
• Review
– Assessing past choices

Characteristics of DSS
• Should support rather than automate decision making
• Should respond quickly to changing moods of decision makers
• The computer must support the manager and not replace his judgment.
• Semi-structured problem where parts if analysis can be systematized by
computer
• Effective problem solving is interactive by a dialogue between user and
system
• Supports decision making at any level in an organization (operations,
financial management and strategic decision-making)
• DSS can support a manager using a single PC or a large group of managers in
a networked client-server or web environment
Types of DSS and their functions
n Suggestion systems
n Optimization systems
n Representational models
n Accounting models
n Analysis information systems
n Data analysis systems
n File drawer systems
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
• The information from one file, table, can be combined with information from
other files to answer a specific query in the database or datawarehouse
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 increase the capabilities of Accounting models
• Use the demand data to forecast next years demand for product or service,
determining quality of products.
• Use the results to make inventory decisions.
Optimization Systems
• Used to estimate the effects of different decision alternative
• Based on optimization models (Artificial neural networks)
• Can incorporate uncertainty
• Assign sales force to territory
• Provide the best assignment schedule
Suggestion Systems
• A descriptive or 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
– Data-based DSS
– Model-based DSS
• Nature of the decision situation
- Institutional
– Ad hoc
• User-based categories
– Individual
– Multi-individual
 – Group
• Support based DSS
– Data-based DSS-Query a database or data warehouse to seek specific
answers for specific purposes
– Model-based DSS-Complex systems that help analyse decisions or
choose between different options
• 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 Benefits
• Based on number of users
– Individual
– Multi-individual
– Group

Components of DSS
Improving personal efficie
• Database Management System. DBMS manipulates, updates, maintains
and disseminates data.
-internal data generated by TPS Expediting problem solvin
-external data from newspapers,census data, tax codes, census figures,
competitors
-online data services
Facilitating communicatio
-databases (finance, marketing, HR and others)
• Used by Three Software Subsystems
– Report writers
• Special reports
• Periodic reports
• DBMS
Promoting learning
– Mathematical models
• Simulations
• Special modeling languages
– Groupware or GDSS Increasing control
• Model Management systems –A complex model used to suggest to the
decision maker the best action
• Expert knowledge –Expert systems
• What-if-analysis –Assess Impact of changes to model variables. Used for
semi-structured and unstructured problems. Develop(best-case scenario,
worst-case scenario and realistic scenario)
-Spreadsheet packages such as Excel, Lotus 1-2-3
• Goal seeking –determining input values to achieve goals
• Risk analysis-Assess risks. Decisions can be low-risk, medium-risk and high-
risk.
• Graphical analysis-Visualize impacts of action, forecast activities, detect
trends e.g. line or bar charts, grouped line or bar charts
 • Support tools -Online help, pull-down menus,user interfaces, graphical
analyses, error-correction mechanisms – facilitates user’s interactions with
the system. Interfaces –important support tools
-
Knowledge Base
• Description of problem domain
• Rules
– Knowledge representation technique
– ‘IF:THEN’ logic
– Networks of rules
• Lowest levels provide evidence
• Top levels produce 1 or more conclusions
• Conclusion is called a Goal variable.
Development of a DSS
• SQL –relational database systems such as ORACLE, ACCESS
• 3 methods of developing a DSS
-DSS generator- data management tools, spreadsheets, report generators,statistical
packages, graphical packages, model-building tools - Excel
-DSS shells – Program to build customized DSS e.g. financial software to forecast
incomes,project cash flow, balance sheets, analyze financial data
-Custom made software- Use language such as C to develop procedures. Expensive
and time-consuming
Use of DSS in Organizations
• Organizational effectiveness – greater growth, better innovation,
increased profitability, technical excellence, return on investment
• Organizational Efficiency- Cost savings, increased productivity, greater
team work, time savings
• Decision making effectiveness –examination of alternatives, rationality of
process,reduction in time taken for decision making, improvements in
predictive accuracy, greater focusing on key issues
• Quality use of DSS- Application in major problem area, repeat use,
widespread use, utilization
• Information Quality- Accuracy, communication, timeliness
Artificial Intelligence
The activity of providing such machines as computers with the ability to display
behavior that would be regarded as intelligent if it were observed in humans e.g.
expert system

User Interface
• User enters:
– Instructions
– Information
• Expert system provides:
– Solutions
– Explanations of
• Questions
• Problem solutions
Group Decision Support Systems
• Computer-based system that supports groups of people engaged in a
common task (or goal) and that provides an interface to a shared
environment.
• Used in problem solving
• Related areas
– Electronic meeting system (EMS)
– Voting software
- Idea categorization –Software –Problem statement entered for comment.
Anonymous consolidation of comments. Idea ranking
– Computer-supported cooperative work (CSCW)
– Group support system (GSS)
– Groupware- information sharing and collaborative work-,network,
videoconferencing, web meeting

How GDSS Contributes to Problem Solving

– Improved communications
– Improved discussion focus
– Less wasted time
GDSS Environmental Settings
• Synchronous exchange
– Members meet at same time
– Committee meeting is an example
• Asynchronous exchange
– Members meet at different times
– E-mail is an example
• More balanced participation.
GDSS Types
• Decision rooms
– Small groups face-to-face
– Parallel communication
– Anonymity
• Local area decision network
– Members interact using a LAN
• Legislative session
– Large group interaction
• Computer-mediated conference
– Permits large, geographically dispersed group interaction
Advantages of GDSS
• Conducive to decision making
• Allows all group members to participate
• Greatly enhances efficiency of group meetings
• Generates and processes ideas in parallel
Groupware
• Functions
– E-mail
– FAX
– Voice messaging
– Internet access
 • Lotus Notes
– Popular groupware product
– Handles data important to managers

E-commerce
• Buying and selling of products or services over electronic systems such as
the Internet and other computer networks.
• Electronic funds transfer, supply chain management, internet marketing,
online transaction processing, electronic data interchange (EDI), inventory
management
• Create a website that promotes products
obtain an Internet address (html and URL(uniform resource locator)
• Hire space on a web-hosting company
tp upload pages and host on internet
• Add a payment system (online)
• Use various promotion services to get site noticed
• To sell a product - in stock
• Website connect to back-office operation so that orders are processed as
they are placed
• e-catalog to be changed easily to add new products or change prices
• Website guides customers around site and can help in their making
purchases.
• Electronic catalog -Manages product information so that it is presented to
customers in the most attractive and organized way.

Inventory
• Is the inventory in stock or “virtual” stock is being sold? E-Commerce system
should automatically update inventory count each time an order is received.

Order entry
• Once the order is taken, no need to re-enter it in a different system to
process the order. System should automatically and seamlessly pass it
through the operation.

Financials
• -Now that the order has been placed and the inventory has been allocated, it
should be able to create a payable, an invoice, and it should post to the
General Ledger.

Warehousing
• Now ordering center must communicate with shipping department.
• Customers and vendors
• -Linked to outside world
• E-business
• automate sales and accounting, billing, purchasing, inventory, warehousing,
and shipping.
 • How fast is business on the Net growing?
• How is the Net being used by business?
• What strategic value is the Net to business?
• The Business to Business Evolution
• The Business to Consumer Revolution
• What will change with E-commerce?
•
Delivery of information, products, services and payments electronically.
All types of business activity using computers and networks including:
• Electronic banking
• Electronic purchasing & inventory management
• Electronic payment
Trade in digital goods & services
• Custom/customized product ordering
• Advertising
• Internal employee communications
• Recruiting and employment
• Warranty registrationE-business will affect:
• Customers, competition, customer loyalty
• geographic boundaries - trading area
• The laws governing operations and products, ability to deliver product
• strategies in providing service
• Critical suppliers
• Enhanced products to include information value
Better customer service (24 x 7)
• Access to greater market
• Faster product/service delivery
• Lower transaction costs
• Competitive advantage
• Business survival
• Shift in power from Seller to Buyer
• Value is being redefined by the Net
• Price Competition Becomes a Way of Life
• Physical value -> Information value
• Economies of scale à Economies of scope
• Mass production----à Mass customization
• Local market----à Global market
• Supplier service-----à Self-service
• Compare prices online and click on bargain prices
B2C versus B2B
• B2C
• Few Web-based purchases
• Search and research
• Many different Vendors
• Registration process
• Business to Business
• B2B
• Many purchases over the Web
• Known product requirements and marketplace
• Concentration on a select/established vendors
 • Pre-existing registration
Business to Business
• New market spaces
• Supplier/buyer
• Expanded marketplace
• Global
• New distribution channels
• Alliances
• Techniques (auctioning, portals)
• New sales channels
• Web page
• Push technology
• New market spaces
• Expanded marketplace

New distribution channels

e.g. A real estate agent uses alliances with tax accountants and lawyers to sell real
estate tips on website
• New sales channels
- A website allows for the auctioning of products and services (e-bay)
• Faster reaction time
• Products –price controlled
• Additional products and services
• Supply chain integration
• Reduction of investment in inventory
• Direct shipping
• Ability for SME’s to compete
• Geographically - Globally
• Product lines - Virtual warehouses
• Size - Value adds over the Internet
• Legal obligations
• Contracts Governance
• Business obligations
• Privacy
• Disclosure
• Business imperatives
• Advertising
• Website
• Business plan
B2C
• Reasons for Shopping On-line
• Convenience
• Not available locally
• Better selection
• Could download product
• Only available on website
• Not go through sales agent
• Lower price
• Faster delivery
 • E.g.Shoppers Buy Books On-line
• Books cost less on-line
• Couldn’t find book elsewhere
• Convenient - did not have to go to store
• Book shipped directly to buyer
• Book shipped directly as a gift
• Buy every other book by the author
• Web site recommended
Role of internet in shopping
• Comparison shopping for products or services which were subsequently
purchased elsewhere
• Purchasing products or services
• Conducting on-line transactions with a financial institution