1. Decision Support Systems
Chapter 9
Decision Support Systems
McGraw-Hill/Irwin
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

2. Decision Support in Business
Companies invest in data-driven decision support application frameworks to help them respond to
Changing marketing conditions
Customer needs
Management information
Accomplished by several types of
Decision support
Other information systems

3. Levels of Managerial Decision Making

4. Information has three dimensions
Information Quality
Information products are made more valuable by their attributes, characteristics, or qualities
Outdated, inaccurate, or hard to understand information has much less value
Information has three dimensions
Time
Content
Form

5. Attributes of Information Quality

6. Decision Structure
Structured (operational)
The procedures to follow when a decision is needed can be specified in advance
Unstructured (strategic)
It is not possible to specify in advance most of the decision procedures to follow
Semi-structured (tactical)
Decision procedures can be pre-specified, but not enough to lead to the correct decision

7. Decision Support Systems
Management Information Systems
Decision Support Systems
Decision support provided
Provide information about the performance of the organization
Provide information and techniques to analyze specific problems
Information form and frequency
Periodic, exception, demand, and push reports and responses
Interactive inquiries and responses
Information format
Pre-specified, fixed format
Ad hoc, flexible, and adaptable format
Information processing methodology
Information produced by extraction and manipulation of business data
Information produced by analytical modeling of business data

8. Business Intelligence Applications

9. Decision Support Systems
To support the making of semi-structured business decisions, DSS uses
Analytical models
Specialized databases
Decision-maker’s own insights and judgments
Interactive, computer-based modeling process
DS systems
Ad hoc, quick-response systems
Initiated and controlled by decision makers

10. DSS Components

11. DSS Model Base Model Base Spreadsheet Examples A software component
Consists of models used in computational and analytical routines
Mathematically expresses relationships among variables
Spreadsheet Examples
Linear programming
Multiple regression forecasting
Capital budgeting present value

12. Applications of Statistics and Modeling
Supply Chain
Simulate & optimize supply chain flows, reduce inventory & stock-outs
Pricing
Identify the price that maximizes yield or profit
Product & Service Quality
Detect quality problems early in order to minimize them
Research & Development
Improve quality, efficacy, and safety of products and services

13. Management Information Systems
The original type of information system that supported managerial decision making
Produces information products that support many day-to-day decision-making needs
Produces reports, displays, and responses
Satisfies needs of operational and tactical decision makers who face structured decisions

14. Management Reporting Alternatives
Periodic Scheduled Reports
Pre-specified format, issued on a regular basis
Exception Reports
Reports about exceptional conditions, scheduled or on event
Demand Reports & Responses
Information is available on demand
Push Reporting
Information is pushed to a networked computer

15. Online Analytical Processing
OLAP
Enables managers and analysts to examine and manipulate large amounts of detailed and consolidated data from many perspectives
Done interactively, in real time, with rapid response to queries

16. Online Analytical Operations
Consolidation
Aggregation of data
Ex: sales office data, rolled up to the district level
Drill-Down
Display underlying detail data
Ex: sales figures by individual product
Slicing and Dicing
Viewing database from different viewpoints
Often performed along a time axis

17. Geographic Information Systems (GIS)
DSS uses geographic databases to construct and display maps and other graphic displays
Supports decisions affecting the geographic distribution of people and other resources
Often used with Global Positioning System (GPS) devices

18. Data Visualization Systems (DVS)
Represents complex data using interactive, three-dimensional graphical forms (charts, graphs, maps)
Helps users interactively sort, subdivide, combine, and organize data while it is in its graphical form

19. Using Decision Support Systems
Using a decision support system involves an interactive analytical modeling process
Decision makers are not demanding pre-specified information
They are exploring possible alternatives

20. Using Decision Support Systems
What-If Analysis
Sensitivity Analysis
Basic analytical modeling activities
Goal-seeking Analysis
Optimization Analysis
What-If Analysis
Observing how changes to selected variables affect other variables
Sensitivity Analysis
Observing how repeated changes to a single variable affect other variables
Goal-seeking Analysis
Making repeated changes to selected variables until a chosen variable reaches a target value
Optimization Analysis
Finding an optimum value for selected variables, given certain constraints

21. Data Mining Decision support through knowledge discovery
Analyzes vast stores of historical business data
Looks for patterns, trends, and correlations
Goal is to improve business performance
Types of analysis
Regression
Decision tree
Neural network
Cluster detection
Market basket analysis

22. Market Basket Analysis
One of the most common uses for data mining
Determines what products customers purchase together with other products
Typical applications of MBA
Cross-selling
Product placement
Affinity promotion
Survey analysis
Fraud detection
Customer behavior identification

23. Executive Information Systems (EIS)
Combines many features of MIS and DSS
Provides top executives with immediate, easy access to information
Identifies factors critical to accomplishing strategic objectives
So popular it was expanded to managers, analysis, and other knowledge workers

24. Features of an EIS
Information presented in forms tailored to the preferences of the executives using the system
Customizable graphical user interfaces
Exception reports
Trend analysis
Drill down capability

25. Enterprise Information Portals
A Web-based interface and integration of MIS, DSS, EIS, and other technologies
Available to all intranet users and select extranet users
Provides access to a variety of internal and external business applications and services
Typically tailored or personalized to the user or groups of users
Often has a digital dashboard
Also called enterprise knowledge portals

26. Enterprise Information Portal Components

27. Enterprise Knowledge Portal