 Every Information System aims at meting information needs of the users  DSS is different from other IS in that it does not provide any information directly, but provides some capabilities to the user to analyze the decision problem and generate some meaningful information for decision-making Decision Support System(DSS)

Why Computerized Decision Support Systems (DSS)?  Speedy computations at a lower cost  Overcome human cognitive limits in processing (i.e, problem-solving capability) and storage  Increased productivity  Ready access to information stored in multiple databases and data warehouse  Ability to analyze multiple alternatives and apply risk management The MANAGERS are always responsible for the decision-making, not the DSS.

Decision Support Systems Concepts  DSS are computer-based information systems that use data and models to interactively support semi- structured or unstructured decisions made by managers.  DSS couple the intellectual resources of individuals with the capabilities of the computer to improve the quality of decisions.  It is a computer-based support system for management decision-makers who deal with semi- or un-structured problems.  DSS is used, therefore, as an umbrella term to describe any and every computerized system used to support decision-making in an organization.

Decisions Three types of Decisions  Structured Structured decisions are those for which a set of rules and procedures for the decision- making process can be determined and utilized in subsequent decision situation Many structured decisions can be made by the system itself (e.g. rejecting a customer order if the customer's credit with the company is less than the total payment for the order). Payroll, accounts receivable, budget analysis, are examples of structured tasks.

 Semi-Structured  Semi structured problems solution involve a combination of both standard solution procedures and individual judgment.  Decision support system is mainly used with semi-structured problems.  E.g. Selecting the location to build a new warehouse. –Here the information requirements for the decision such as land cost, shipping costs are known, –but aspects such as local labor attitudes or natural hazards still have to be judged and evaluated by the manager.

 Unstructured  Unstructured processes are fuzzy, complex problems for which there are no cut and dried solutions.  In an unstructured problem human intuition is frequently the basis of decision- making.  E.g.…. Typical unstructured problem include planning of new services to be offered, or choosing a set of research and development projects for next year.

 tend to be unique (e.g. policy formulation for the allocation of resources):  the information needed for decision making is unpredictable;  no fixed methodology exists;  multiple alternatives are involved;

Examples of Decisions Structured decision – Do you give credit to a customer? Based upon known information about the customer available in a database - The rules are standardized and largely absolute Semi-structured decision – Why have sales in a particular branch declined over the last year? Part structured - e.g. access to internal company data Part unstructured - e.g. knowledge of local economic conditions

Contd. Unstructured decision – Do we use Mac, Apple or Microsoft to distribute our online music? A good decision requires judgment as to the likely future state of the industry

Working Definition of DSS  A DSS is an interactive, flexible, and adaptable CBIS, specifically 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 maker’s own insights  Central Issue in DSS is: Support and improve decision-making

DSS  A DSS is: –Flexible; –Adaptive; –Interactive; –GUI-based; –Employs modeling.

Key Characteristics & Capabilities of DSS

Characteristics 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 sequential decisions 5. Support all phases of the decision-making process 6. Support a variety of decision-making processes and styles

Contd. 7. Are adaptive and flexible 8. Have user friendly interfaces 9. Improve effectiveness of decision-making 10. The decision maker controls the decision- making process 11. End-users can build simple systems 12. Utilizes models for analysis 13. Provides access to a variety of data sources, formats, and types

Type of Control Type of Decision: Operational ControlManagerial ControlStrategic Planning Structured (Programmed) Accounts receivable, accounts payable, order entry Budget analysis, short-term forecasting, personnel reports Investments, warehouse locations, distribution centers Semi structuredProduction scheduling, inventory control Credit evaluation, budget preparation, project scheduling, rewards systems Mergers and acquisitions, new product planning, compensation, QA, HR policy planning Unstructured (Un programmed) Buying software, approving loans, help desk Negotiations, recruitment, hardware purchasing R&D planning, technology development, social responsibility plans Egs of Decisions

Components of DSS 1. DSS Database 2. Model Base 3. The Hardware 4. The Software 5. People resource

DSS use Analytical models. Specialized databases. A decision maker’s own insights and judgments Interactive, computer-based modeling process to support the making of semi- structured and unstructured decisions by individual managers.

Framework of DSS

Development of DSS 3 methods for developing DSS in the organisation 1. DSS generator ---- they are readymade packages and can be used as DSS in the org. E.g.---EXCEL, FOCUS, LOTUS DSS Shell ---- they are programs used to build customized DSS. 3. Custom-made S/W ----Designed and developed in the organization using the languages like C,C++, FOCUS. But it is expensive and time consuming.

Uses or Functions of DSS What If-Analysis Sensitivity Analysis Goal-Seeking Analysis Scenario Analysis Important Decision Support Systems Analytical Models Important Decision Support Systems Analytical Models

What -If Analysis : Observes how changes in some variables can affect other variables. Business Applications: If we change the tax rate & the sales growth rate, what will happen to the net profit after tax? Sensitivity Analysis : Observes how a change in one variable can affect other variable Business Applications: If we increase advertising budget, what will happen to our firm's sales, assuming all other factors remain the same?

Goal-seeking Analysis : Set a target value first for the dependent variable, then attempt to determine a right value for the independent variable Business Applications: Set the sales goal first, then figure out how much to be allocated to the advertising amount. Scenario Analysis : Analyzes different scenarios of the organization. Try to determine whether it is best case or worst case