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Managing Information Systems

Enhancing Management Decision Making


Part 1
Section 13.1

1
Objectives
• To understand types of decision-support
systems
• To understand the components of a
decision-support system

2
Decision-support Systems
• What is a decision-support system (DSS)?

3
MIS or DSS?
• Management Information Systems:
– Routine reports (periodic)
– Assist control of an organisation
• Decision-support Systems:
– Non-routine
– Support flexibility and rapid response
– Semi-structured or unstructured data

4
Types of DSS
• Model-driven
– Uses a model to perform ‘what if’ analysis
– Typically standalone
– In-house or departmental
– Strong theory or model

5
Types of DSS
• Data-driven
– Analyse large amounts of data
– Data from TPS into data warehouses
– Use
• On-line Analytical Processing (OLAP)
• Data mining

6
Data-driven Examples
• Contrast
– How many widgets were shipped in December?
• With
– Compare the sales of widgets to the sales plan
by quarter and sales region for the last two
years?

7
DSS Components
DSS External
TPS Data
Database

DSS Software System:


Models
User
OLAP Tools
Interface
Data Mining Tools

User

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DSS Models
• Abstract representation that illustrates the
components or relationships of the problem
– Physical: model of an airplane
– Mathematical: profit = revenue - costs
– Verbal: description of a procedure

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DSS Models
• Statistical (typical)
• Optimisation
• Forecasting
• Sensitivity analysis
– “What if”
– Repeatedly modify parameters of model to
determine outcome

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OLAP
(On-line Analytical Processing)
• Dynamic multi-dimensional analysis of
enterprise data
• Just-in-time information
• Wide variety of views of information
• Transformation of raw data:
– Reflects the ‘real’ dimensionality of enterprise

11
OLAP
• Data:
– Loading – bulk and operational, internal and external
– Aggregation
• Processing:
– Application of business models and statistics
• Querying:
– Complex
– Drill-down through hierarchies
– Ad-hoc

12
Data Mining
• Provides a way of finding hidden insight
not obtained by traditional techniques.
• Uses:
– Statistical analysis
– Neural networks
– Fuzzy logic
– Genetic Algorithms
– Rule-based systems

13
Data Mining
• Associations
– Occurrences linked to a single event
• Example
– Supermarket purchases
– When crisps are bought, 85% of the time a can
of Coca-cola is bought

14
Data Mining
• Sequences
– Events linked over time
• Example
– House purchase
– Within two weeks, 65% of the time a
refrigerator is bought
– Within one month, 45% of the time an oven is
bought
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Data Mining
• Classification
– Recognise pre-defined patterns to group similar
items
• Example
– Telephone operators
– Recognise those attributes of customers who
are likely to leave

16
Data Mining
• Clustering
– Recognise patterns to cluster similar items
without pre-defined groups
• Example
– Bank customer details
– Partitioning data into groups by demographics
or investments

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Data Mining
• Forecasting
– Use existing data to forecast future values
• Example
– Past performance to predict sales figures

18
DSS Examples
• Supply Chain Management
– Who, what, when and where?
– Purchasing, manufacture and distribution
• Customer Relationship Management
– Pricing
– Customer retention
– New revenue streams

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DSS Examples
• Business Scenarios
– Sensitivity analysis of business parameters
– Cost / benefit analysis
• Geographic Information Systems (GIS)
– Display information geographically
– Demographics, customers, crime

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Example
Questions Analysis
1. Who are our most 1. Use statistical
frequent customers? analysis to find top
2. Do they live close 25% most frequent
to our shops? Customer data warehouse customers.
3. How can we re- •Legacy data 2. Establish correlation
segment those •Website transactions between location
customers? •Call centre data and sales
4. How can we better •External data 3. Verify new
reach those customer segments
segments? 4. Query database on
customer
information per
segment
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