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GNIM 1

Decision Support Systems

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GNIM 2

Decision

A decision involves the complete process of

gathering and evaluating information about a

situation, identifying a need for a decision,

identifying or in other ways defining relevant

alternative courses of action, choosing the "best",

the "most appropriate" or the "optimum" action, and

then applying the solution and choice in the

situation.

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GNIM 31-3

Factors Affecting Decision-Making

New technologies and better information distribution haveresulted in more alternatives for management.

Complex operations have increased the costs of errors,causing a chain reaction throughout the organization.

Rapidly changing global economies and markets are producinggreater uncertainty and requiring faster response in order tomaintain competitive advantages.

Increasing governmental regulation coupled with politicaldestabilization have caused great uncertainty.

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GNIM 41-4

What do Decision SupportSystems Offer?

Quick computations at a lower cost

Group collaboration and communication

Increased productivity

Ready access to information stored in multiple databases

and data warehouse

Ability to analyze multiple alternatives and apply risk

management

Enterprise resource management Tools to obtain and maintain competitive advantage

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5

Decision Models

Strategic models

Tactical models

Operational models

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GNIM 6

Integration of TPS, MIS, and DSS

In many organizations they are

integrated through a common database

Separation of DSS transactions in thedatabase from TPS and MIS

transactions may be important for

performance reasons

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GNIM 8

Decision Making Levels

Operational-level

managers involved with

daily decisions

Strategic-level managers

involved with long-term

decisions

LowHigh

Decision Frequency

Strategic

Tactical

Operational

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GNIM 99

Working Definition of DSS

A DSS is an interactive, flexible, and adaptable CBIS, specially

developed for supporting the solution of a non-structured

management problem for improved decision making. It utilizes

data, it provides easy user interface, and it allows for the

decision makers own insights

DSS may utilize models, is built by an interactive process

(frequently by end-users), supports all the phases of the decision

making, and may include a knowledge component

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GNIM 1010

Keen (1980)

DSS apply to situations where a final system can

be developed only through an adaptive process of

learning and evolution

Central Issue in DSS

support and improvement of decision making

Decision Support Systems

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GNIM 111-11

Decision SupportFrameworks

Type of Control

Type ofDecision:

Operational Control Managerial Control Strategic Planning

Structured

(Programmed)

Accounts

receivable,accounts payable,order entry

Budget analysis,

short-termforecasting,personnel reports

Investments,

warehouse locations,distribution centers

Semistructured Productionscheduling,inventory control

Credit evaluation,budget preparation,project scheduling,rewards systems

Mergers andacquisitions, newproduct planning,compensation, QA, HRpolicy planning

Unstructured

(Unprogrammed)

Buying software,approving loans,help desk

Negotiations,recruitment,hardwarepurchasing

R&D planning,technologydevelopment, socialresponsibility plans

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GNIM 1313

Characteristics and Capabilities of

DSS

1. Provide support in semi-structured and unstructured

situations, includes human judgment and computerized

information

2. Support for various managerial levels

3. Support to individuals and groups

4. Support to interdependent and/or sequential decisions

5. Support all phases of the decision-making process

6. Support a variety of decision-making processes andstyles

(more)

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Cont

7. Are adaptive

8. Have user friendly interfaces

9.

Goal: improve effectiveness of decision making10. The decision maker controls the decision-making

process

11. End-users can build simple systems

12. Utilizes models for analysis13. Provides access to a variety of data sources,

formats, and types

GNIM 14

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GNIM 1515

Handles large amounts of data from different sources

Provides report and presentation flexibility Offers both textual and graphical orientation

Supports drill down analysis

Performs complex, sophisticated analysis and comparisons

using advanced software packages

Supports optimization and heuristic approaches

Decision makers can make better, more

consistent decisions in a timely manner

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GNIM 16

Functions of DSS : which facilitates

managerial decision making

What-if analysis

Makes hypothetical changes to problem and

observes impact on the results Mangers can prepare themselves to face a

dynamic business environment by developing a

group of scenarios (best case , worst case etc.).

Spreadsheet packages such as excel etc. havewhat if application

16

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Cont....

Model building Duplicates features of a real system

It allows decision makers to identify mostappropriate model for solving the problem

A model builder uses a framework to identify

variables like : demand , cost, profit etc. and

analysis the relationship among these variablesand identify assumptions if any.

GNIM 17

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Cont

Risk analysis it allows mangers to access the risks associated with various

alternatives. Decisions can be classified as low medium and high risk.

Graphical analysis help managers to quickly digest large volumes of data and visualizethe impact various courses of action.

They recommend the use of graph when:

Seeking a quick summary of data

Detecting trends over time Forecasting activities

Comparing various patterns etc

GNIM 19

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GNIM 20

DSS Parts

User Someone who makes decisions

Could be you

System software Operating system

Easy to use

Data

Internal& external Decision models three basic types

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GNIM 21

Capabilities of a DSS (1)

Supports Problem solving phases

Different decision frequencies

Frequency

low high

Merge with

another

company?

How many

widgets

should I order?

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GNIM 22

Capabilities of a DSS (2)

Highly structured problems Straightforward problems, requiring known

facts and relationships. Semi-structured or unstructured problems

Complex problems wherein relationships

among data are not always clear, the data

may be in a variety of formats, and are often

difficult to manipulate or obtain

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GNIM 24

Excel

demo

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GNIM 25

Components of a DSS

Model management software (MMS) Coordinates the use of models in the DSS

Model base Provides decision makers with access to a

variety of models

Dialogue manager Allows decision makers to easily access

and manipulate the DSS

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GNIM 26

Database Model base

External database

access

Access to theinternet, networks,

and other computer

systems

Dialogue manager

DBMS MMS

External

databases

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GNIM 27

Model Base

Model Base Provides decision makers with

access to a variety of models

and assists them in decision

making

Models Financial models

Statistical analysis models

Graphical models

Project management models

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GNIM 28

Advantages and Disadvantages

of Modeling

Advantages Less expensive than custom approaches or real systems. Faster to construct than real systems

Less risky than real systems Provides learning experience (trial and error) Future projections are possible Can test assumptions

Disadvantages Assumptions about reality may be incorrect Accuracy of predications often unreliable Requires abstract thinking

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GNIM 29

Group Decision Support

System

Group Decision Support System (GDSS) Contains most of the elements of DSS plus

software to provide effective support ingroup decision-making settings

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GNIM 30

Databases

Model base GDSS processor GDSS software

Dialogue

manager

External database

access

Users

Access to the internet

and corporate intranet,

networks, and othercomputer system

External

databases

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GNIM 31

Characteristics of a GDSS (1)

Special design Ease of use

Flexibility Decision-making support

Delphi approach (decision makers aregeographically dispersed)

Brainstorming Group consensus Nominal group technique

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GNIM 32

Characteristics of a GDSS (2)

Anonymous input

Reduction of negative group behaviour

Parallel communication

Automated record keeping

Cost, control, complexity factors

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GNIM 33

Group Results Matrix

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GNIM 34

Components of a GDSS and GDSS

Software

Database Model base

Dialogue manager Communication capability Special software (also called GroupWare) E.g., Lotus Notes

people located around the world work on the sameproject, documents, and files, efficiently and at thesame time

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GNIM 35

GDSS Alternatives

Local area

decision network

Wide area

decision network

Decision

roomTeleconferencing

Location of group members

close distant

high

low

Decisionfrequ

ency

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GNIM 36

Decision Room

Decision Room For decision makers located in the same geographic

area or building

Use of computing devices, special software,

networking capabilities, display equipment, and a

session leader

Collect, coordinate, and feed back organized

information to help a group make a decision

Combines face-to-face verbal interaction with

technology-aided formalization

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GNIM 37

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GNIM 38

Wide Area Decision Network

Characteristics Location of group members is distant

Decision frequency is high Virtual workgroups

Groups of workers located around the world

working on common problems via a GDSS

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GNIM 39

Discussion Questions

Name and discuss the five common functions of most organizations.

Discuss the roles of the three kinds of management in a corporation.

What are the four most common computer-based information

systems?

Describe the different reports and their roles in managerial decision

making.

What is the difference between an office automation system and a

knowledge work system?