Unit V

Decision Support Systems

Coverage : Decision Support Systems (DSS)

Concept and philosophy,

Using Decision Support systems
What-if analysis, sensitivity analysis, Goal-seeking analysis,
Optimization analysis.
Introduction to Data Warehouse:
 Architecture,
 Organization and Management of Data Warehouse, Implementation,
Data Mining for Decision support,
Executive Information systems,
Enterprise Information portal and knowledge management
systems,
Introduction to Artificial Intelligent Systems, Knowledge Based
Expert systems, GIS
Business and Decision Support

To succeed, companies need information

systems that can support the diverse
information and decision-making needs of
their managers and business professionals.
Business and Decision Support (continued)

Information, Decisions, & Management

 The type of information required by decision

makers is directly related to the level of
management and the amount of structure in the
decision situations.
Business and Decision Support (continued)
e-Business Decision Support Applications

Supply Chain Enterprise Performance

Management Monitoring

Employee-
Manager/
Customer Customer/Partner Situation: What-if
Relationship Scenario Analysis
Management

Knowledge/Innovation
Management
Type of decisions

Structured decisions (Programmed Decision)

 Itinvolve definite procedures and are not
necessarily very complex.
 They follow predetermined set of rules.
 These decisions are often repetitive and routine in
nature.
 The choice phase of programmed decision follows
the condition and rules for action. Some times this
process is also called as “If-Then-Else” process
Unstructured Decision (Non-Programmed
Decision)
 The decision in a business organization also
involve situation were predefined reaction to
situation cannot be specified.
 Such decision cannot be made on the predefined
rules.
 There are no standard sets of rules that can be
followed.
 The choice stage depends on variety of factors.
Business and Decision Support

Semi structured decisions

 Some decision procedures can be specified in advance,
but not enough to lead to a definite recommended
decision
 Only part of decision has clear-cut answers provided
by accepted procedures
 Examples: Allocate resources to managers; develop
a marketing plan
 Systems for Decision Support

There are four kinds of systems that support the

different levels and types of decisions:

• Management Information Systems (MIS)

• Decision-Support Systems (DSS)

• Executive Support Systems (ESS)

• Group Decision-Support Systems (GDSS)

Stages of Decision-Making (Phases)

Herbert A. Simon model “The New Science of

Management Decision”
Simon’s model of decision-making
Three inter-related phases.
The three phases are inter-related as there is a
flow of activities from the Intelligence phase,
to the design phase to the choice phase.
Stages in Decision Making
Let's use the example of purchasing a new
television :
Intelligence : You identify the facts: You
don't have a television or the one that you do
have isn't any good. You intuitively
understand what the problem is and its effect
on you. You missed your favorite show last
night.
Design : You design possible solutions: You
could watch the television in your neighbor's
apartment or you could purchase a new one for
yourself. Your neighbor will get annoyed if
you keep coming over. On the other hand, you
won't be able to go on vacation if you use your
money to buy a new television.
Choice : You gather data that helps you make
a better decision: Your neighbor doesn't like
the same shows you like or she's getting rather
tired of you being there. You also determine
that televisions cost a lot of money so you
figure out how you can afford one. You
choose to purchase a new television instead of
watching your neighbor's.
Implementation : You implement the
decision: You stop at the appliance store on
your way home from work and carry out your
decision to purchase a new television.
Decision Support Systems

What If-Analysis

Sensitivity Analysis

Important
Goal-Seeking Analysis
Decision
Support
Systems
Analytical Models Optimization Analysis
Using Decision Support Systems

An interactive modeling process

Four types of analytical modeling
 What-if analysis
 Sensitivity analysis
 Goal-seeking analysis
 Optimization analysis
Using Decision Support Systems (continued)

What-If Analysis
 End user makes changes to variables, or
relationships among variables, and observes the
resulting changes in the values of other variables
What-If Analysis
Using Decision Support Systems (continued)

Sensitivity Analysis
A special case of what-if analysis
 The value of only one variable is changed
repeatedly, and the resulting changes on other
variables are observed
 Typically used when there is uncertainty about the
assumptions made in estimating the value of
certain key variables
Sensitivity Analysis

Figure 13-5
Using Decision Support Systems (continued)

Goal-Seeking Analysis
 Instead of observing how changes in a variable
affect other variables, goal-seeking sets a target
value (a goal) for a variable, then repeatedly
changes other variables until the target value is
achieved
Goal Seeking Analysis
Using Decision Support Systems (continued)

Optimization Analysis
A more complex extension of goal-seeking
 The goal is to find the optimum value for one or
more target variables, given certain constraints