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Chapter 12 Decision Support Systems

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Learning Objectives List and explain the steps in decision making Articulate the difference ... knowledge Trade secrets The ... Decision aid for map ... – PowerPoint PPT presentation

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Title: Chapter 12 Decision Support Systems


1
Chapter 12Decision Support Systems
2
Learning Objectives
  • List and explain the steps in decision making
  • Articulate the difference between structured and
    unstructured decision making
  • Describe the typical software components that
    decision support systems comprise
  • Describe the typical elements of geographic
    information systems
  • Identify business situations in which decisions
    can be supported by geographic information
    systems

3
Decision Support Aids
  • Organizations success depends on quality of
    managers decisions
  • When decisions involve large amounts of
    information and processing, computer-based
    systems can make the process effective and
    efficient.
  • Applications now called business analysis tools
    or business intelligence applications

4
The Decision-Making Process
  • Three decision-making phases
  • Intelligence
  • Design
  • Choice
  • Models to analyze data
  • Maps, mathematical equations of variables

5
The Decision-Making Process (Cont.)
6
Structured and Unstructured Problems
7
Structured Problems
  • Proven set of steps for solution
  • Algorithm
  • Parameters
  • Most mathematical and physical problems are
    structured
  • Programmable problems feasible to write a
    program to solve them

8
Unstructured Problems
  • No algorithm to follow to reach optimal solution
  • Multiple potential solutions
  • Unstructuredness is closely related to
    uncertainty

9
Semistructured Problems
  • Neither fully structured nor totally unstructured
  • Managers and Semistructured Problems
  • Most common type of problem for managers
  • Task is to choose one alternative that will bring
    about the best outcome
  • Often rely on decision support applications to
    select the best course of action

10
Decision Support System (DSS)
  • Computer-based information systems that help
    managers select one of many solutions
  • Automates some of decision-making process
  • Sophisticated and fast analysis
  • Used at all management levels

11
Decision Support System (DSS) Components
  • Three Major Components
  • Data management module
  • Model management module
  • Dialog management module

12
Decision Support System (DSS) Components (Cont.)
  • Together, DSS modules
  • Help enter request conveniently
  • Search vast amounts of data
  • Use data in desired models
  • Present results in readable manner

13
The Data Management Module
  • Gives user access to databases or data warehouses
  • Allows decision maker to conduct intelligence
    phase of decision making

14
Decision Support System Components (Cont.)
15
Decision Support System Components
  • Closely intertwined with other organizational
    systems
  • Data warehouses
  • Data marts
  • ERP systems
  • Draw relevant data for decision-making

16
The Model Management Module
  • Selects appropriate model to analyze data
  • Linear regression model
  • May be built by the organization based on
    accumulated knowledge
  • Trade secrets

17
The Model Management Module (Cont.)
18
The Model Management Module (Cont.)
  • Creating New Models
  • Data mining techniques do not rely on
    predetermined models
  • No hypothesis on relationships of data required
  • Software looks for the relationships
  • Results in a new model or set of relationships

19
The Dialog Module
  • Interface between user and other modules
  • Prompts user to select a model
  • Allows database access and data selection
  • Lets user enter/change parameters
  • Displays analysis results
  • Textual, tabular, and graphical displays

20
The Dialog Module (Cont.)
21
Types of DecisionSupport Systems
  • Personal Decision Support Systems
  • Individual Knowledge worker uses in daily work
  • Raw data entered into a program either by user or
    drawn from other sources
  • Tax preparation software is an example

22
Types of Decision Support Systems (Cont.)
  • Group Decision Support Systems
  • Promote brainstorming and group decision making
  • Located in conference room or on networked
    computers
  • Weigh votes to overcome impasses

23
Types of Decision Support Systems (Cont.)
24
Sensitivity Analysis
  • Tests degree to which result is affected by
    change in parameters
  • What-if analysis
  • Can change multiple parameters at once

25
Executive Information Systems
  • Alleviate information overload for executives
  • Select most relevant data for analysis
  • Drilling down
  • Consolidate and summarize data
  • Display data graphically

26
Effective EIS features
  • An easy-to-use and easy-to-learn graphical user
    interface
  • On-request drill-down capability
  • On-demand financial and other ratios, and other
    indicators
  • Easy-to-use but sophisticated tools to allow
    navigation in databases and data warehouses

27
Effective EIS Features (Cont.)
  • Statistical analysis tools
  • The ability to respond to ad hoc queries and
    sensitivity analyses
  • Access to external data pools
  • The ability to solve diverse business problems

28
Developing Decision Support Systems
  • When Should a DSS Be Built?
  • What is the type problem and how structured is
    it?
  • Are the required data available in databases and
    data warehouses?
  • How often do managers encounter the problem?
  • Who will use the system?
  • Can the prospective users spare adequate time for
    the development process?

29
The Electronic Spreadsheet A DSS Tool
  • Provide two facilities for building DSS
  • Preprogrammed functions
  • Ability to use IF-THEN statements
  • Most widely used tool
  • Inexperienced users can use to develop DSSs

30
GeographicInformation Systems
  • Decision aid for map-related decisions
  • Typical GIS contains
  • database of quantitative and qualitative data
  • database of maps
  • program to display information on maps

31
Ethical and Societal IssuesDecisions by Machines
  • Automated decisions can affect individuals
  • Mortgage companies, credit card companies,
    employers, banks, etc.
  • European Protection
  • Automated Individual Decisions Directive

32
Ethical and Societal IssuesDecisions by Machines
  • Who Needs Protection
  • Determining creditworthiness
  • Efficient
  • Effective
  • Hidden Injustice
  • Mistakes on records
  • Decisions final

33
Summary
  • Decisions are made in three steps intelligence,
    design, and choice
  • Structured and unstructured are two types of
    decision-making techniques and are based on the
    type of problem to be solved
  • Decision support systems have typical components
  • Geographic information systems use certain
    elements
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