Decision Support Systems and Executive Support Systems (1)

8/13/2019 Decision Support Systems and Executive Support Systems (1)

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Decision Support Systems and

Executive Support Systems


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Three types of decision

Structured

Semi-structured

Unstructured


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Structured

Structured decisions are those which are

made according to specified procedures of

rules or structured decisions are those that

are easily made from a given set of inputs.

Deciding to send a reminder notice to a

customer for an overdue balance is

considered to be structured decision


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Semi-structured

Semi-structured decisions are those for which

information obtained from a computer system

or information system is only a portion of the

total knowledge needed to make decision.

Advertise a new product or how much to

spend on MIS.


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Unstructured

Unstructured decisions are novel, and insignificant.

There is no cut and dried method for handling theproblem because it hasn't arisen before or because it'sprecise nature and structure are mysterious orcomplex, or because it so important' that it deserves acustom tailored treatment.

These, types of decisions often , involve a high degreeof freedom.

They may require a lot of creativity and intuitions fromthe decision maker to tell what factors will come intoplay in an unstructured play.


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Definition of decision support system

Decision Support

Systems (DSS) are a

specific class of

computerizedinformation system that

supports business and

organizational decision-

making activities.


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Objective of DSS

The objective of Decision Support System (DSS)isto support managers in their work, especiallydecision making.

Decision support system (DSS) tends to be used inplanning, modelling, analysing alternatives, anddecision making.

The emphasis is on small, simple models whichcan easily be understood and used by the

manager rather than complex integrated systemswhich need information specialist to operatethem.


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Examples

Typical information that a decision support applicationmight gather and present would be:

Accessing all of your current information assets,including legacy and relational data sources, cubes,data warehouses, and data marts

Comparative sales figures between one week and thenext

Projected revenue figures based on new product salesassumptions

The consequences of different decision alternatives,given past experience in a context that is described


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Differences to MIS

What distinguished MIS from a decision supportsystem (DSS) is flexibility.

The format and types of information on MIS arepredefined, but the format and types ofinformation in decision support system (DSS) arenot

In decision support system (DSS), users areprovided with the capabilities to generate their

own information usually in their own way.


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Making decision

Four stages

1. Intelligence

2. Design3. Choice

4. Implementation


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Intelligence (find what to fix)

Find or recognize a problem, need, or opportunity (alsocalled the diagnostic phase of decision making). Theintelligence phase involves detecting and interpretingsigns that indicate a situation which needs your attention.

These "signs" can come in many forms: Consistent customer requests for new-product features

The threat of new competition

Declining sales

Skyrocketing costs An offer from a company to handle your distribution

needs, and so on


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Design (find fixes)

Consider possible ways of solving the

problem, filling the need, or taking advantage

of the opportunity. In this phase, you develop

all the possible solutions you can.


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Choice (pick a fix)

Examine and weigh the merits of each solution, estimatethe consequences of each, and choose the best one. The"best" solution may depend on such factors as:

Cost

Ease of implementation .

Staffing requirements

Timeliness of the solution

This is the prescriptive phase of decision making; it's thestage at which a course of action is prescribed.


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Implementation (apply the fix)

Carry out the chosen solution, monitor the

results, and make adjustments as necessary.

Simply implementing a solution is seldom

enough. Your chosen solution will always needfine-tuning, especially for complex problems

or changing environments.


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Applications of DSS

DSS are men/machine systems and are

suitable for semi-structured problems.

The problems must be important to the

manager and the decision required must be a

key one.


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Other criteria

Large database

Large amount of computation or data

manipulation required

Complex inter-relationships

Analysis by stages

Communication


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Components of DSS

Interaction of man and machine

Hardware

Software Decision maker (user/manager)


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Functions of DSS

Information retrieval

Data reconfiguration

Calculator activities


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Information retrieval

Information retrieval in DSS environment refers

to the act of extracting information from a

database for the purpose of making decisions.

Usually, the sequence of retrievals made by theuser is unanticipated.

For example, the manager may see a few startling

pieces of information on the display and, as a result of

these, suddenly produce a report that provides more

detail about the situation: Drill down


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Data reconfiguration

Often managers using a DSS want information ina form other that that in which the data arelogically represented within the computer

system. The ability to reconfigure data makes it possible

for managers and other decision makers to lookat existing data from alternative perspectives:

sorting, exchanging fields, joining, andpresentation graphics using online analyticalprocessing and data warehouse


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Calculator activities

Functions

Functions are pre-stored formulas that enable a user toperform a calculator type task as soon as the function isinvoked

Analysis Analysisrefer to using a decision support system (DSS) to

review a set of facts and to assist in drawing conclusionsbased on there facts.

Statistical Tools: regression and correlation analysis Optimizing tools

What if analysis (sensitivity analysis)


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Optimizing tools

Optimizing toolsare useful for deriving thebest solution in certain structured decisionsusually at tactical and operational levels.

Optimizing tools are used where it is requiredto optimize the value of a single objective (e.g.production capacity) where the factorsinvoked (e.g. labour hours, machine capacityetc.) are subject to some constraints orlimitation.


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What if analysis (sensitivity analysis)

Assessing risk with the help of DSS tools is knownas sensitivity analysis.

At its simplest this means, holding all the

variables, bar one, constant and altering that onevariable step and noting the effect on the result.

For example, a simulation of an investment programmight include factors such as; cost per unit, price per

unit, volume sold, amount of investment and as on.What if sales growth per month is nil, 1/2%, 1 & 1/2%,2% or minus 1% etc.


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DSS for the supply chain

Comprehensive examination of supplymanagement chain

Searches for most efficient and cost-effectivecombination

Reduces overall costs

Increases speed and accuracy of filling customerorders


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DSS for Customer Relationship

Management

Uses data mining to guide decisions

Consolidates customer information intomassive data warehouses

Uses various analytical tools to sliceinformation into small segments


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DSS for customer analysis and

segmentation


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Executive support systems (ESS)

Senior managers use a category

of information systems called executive support

systems (ESS)to make decisions.

ESS serves the strategic level of the organization.

They address unstructured decisions and create a

generalized computing and communications

environment rather than providing any fixedapplication or specific capability


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Executive Support Systems (ESS) in Perspective

Tailored to individual executives

Not to managers in other levels

Easy to use Drill down capabilities

Support need for external data

Can help when uncertainty is high

Future-oriented

Linked to value-added processes


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ESS is designed to incorporate data about externalevents such as new tax laws or competitors, but theyalso draw summarized information from internal MISand DSS.

They filter, compress, and track critical data,emphasizing the reduction of time and effort requiredto obtain information useful to executives.

ESS employs the most advanced graphics software and

can deliver graphs and data from many sourcesimmediately to a senior executive's.


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Unlike the other types of information systems,ESS is not designed primarily to solve specificproblems.

Instead, ESS provides a generalized computingand telecommunications capacity that can beapplied to a changing array of problems.

While many DSS are designed to be highlyanalytical, ESS tends to make less use ofanalytical models.


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Sample questions answered by ESS

What business should we be in?

What are the competitors doing?

What new acquisitions' would protect us fromcyclical business swings?

Which units should we sell to raise cash for

acquisitions?


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Features/Properties of an ESS

Ease of use The system must be fast and extremely simple to use as it will

be used by busy executives. The use of touch screens, mouseand icons, popup menus, etc. is normal.

Access to data There must be unhindered rapid access to data permitting

vertical and horizontal exploration.

Data Analysis EIS should provide facilities for such things as ratios, trend

calculations, and data integration forecasts.

Quality Presentation The system should provide interesting and understandable

formats using colours, graphics, and diagrams.


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Question

A decision support system (DSS) uses its

analytical capabilities to solved semi-

structured and unstructured problems.

Describe what is the difference between such

problems

(5 marks)

Explain how the functions of a DSS can be used tosolve such problems.

(25 marks)

Decision Support Systems and Executive Support Systems (1)

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