1. McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Decision Support Systems
Chapter 10
Decision Support Systems

3. Learning Objectives
Identify the changes taking place in the form and use of decision support in business
Identify the role and reporting alternatives of management information systems
Describe how online analytical processing can meet key information needs of managers
Explain the decision support system concept and how it differs from traditional management information systems

4. Learning Objectives
Explain how the following information systems can support the information needs of executives, managers, and business professionals
Executive information systems
Enterprise information portals
Knowledge management systems
Identify how neural networks, fuzzy logic, genetic algorithms, virtual reality, and intelligent agents can be used in business

5. Learning Objectives
Give examples of several ways expert systems can be used in business decision-making situations

6. Decision Support in Business
Companies are investing in data-driven decision support application frameworks to help them respond to
Changing market conditions
Customer needs
This is accomplished by several types of
Management information
Decision support
Other information systems

7. Levels of Managerial Decision Making

8. Information Quality
Information products made more valuable by their attributes, characteristics, or qualities
Information that is outdated, inaccurate, or hard to understand has much less value
Information has three dimensions
Time
Content
Form

9. Attributes of Information Quality

10. 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
Prespecified, 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

11. Business Intelligence Applications

12. Decision Support Systems
Decision support systems use the following to support the making of semi-structured business decisions
Analytical models
Specialized databases
A decision-maker’s own insights and judgments
An interactive, computer-based modeling process
DSS systems are designed to be ad hoc, quick-response systems that are initiated and controlled by decision makers

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, display, and responses
Satisfies needs of operational and tactical decision makers who face structured decisions

14. Management Reporting Alternatives
Periodic Scheduled Reports
Prespecified format on a regular basis
Exception Reports
Reports about exceptional conditions
May be produced regularly or when an exception occurs
Demand Reports and 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
Example: data about sales offices rolled up to the district level
Drill-Down
Display underlying detail data
Example: 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 Systems (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
What-If Analysis
Observing how changes to selected variables affect other variables

20. Using Decision Support Systems
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 Provides 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
Results affect how companies
Market products
Place merchandise in the store
Lay out catalogs and order forms
Determine what new products to offer
Customize solicitation phone calls

23. Executive Information Systems
EIS
Combines many features of MIS and DSS
Provide top executives with immediate and easy access to information
Identify factors that are critical to accomplishing strategic objectives (critical success factors)
So popular that it has been 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
An EIP is 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. Dashboard Example

27. Expert Systems An Expert System (ES)
A knowledge-based information system
Contain knowledge about a specific, complex application area
Acts as an expert consultant to end users

28. Components of an Expert System
Knowledge Base
Facts about a specific subject area
Heuristics that express the reasoning procedures of an expert (rules of thumb)
Software Resources
An inference engine processes the knowledge and recommends a course of action
User interface programs communicate with the end user
Explanation programs explain the reasoning process to the end user

29. Neural Networks
Computing systems modeled after the brain’s mesh-like network of interconnected processing elements (neurons)
Interconnected processors operate in parallel and interact with each other
Allows the network to learn from the data it processes

30. Fuzzy Logic Fuzzy logic Resembles human reasoning
Allows for approximate values and inferences and incomplete or ambiguous data
Uses terms such as “very high” instead of precise measures
Used more often in Japan than in the U.S.
Used in fuzzy process controllers used in subway trains, elevators, and cars

31. Genetic Algorithms Genetic algorithm software
Uses Darwinian, randomizing, and other mathematical functions
Simulates an evolutionary process, yielding increasingly better solutions to a problem
Being uses to model a variety of scientific, technical, and business processes
Especially useful for situations in which thousands of solutions are possible

32. Virtual Reality (VR) Virtual reality is a computer-simulated reality
Fast-growing area of artificial intelligence
Originated from efforts to build natural, realistic, multi-sensory human-computer interfaces
Relies on multi-sensory input/output devices
Creates a three-dimensional world through sight, sound, and touch
Also called telepresence