module 3 dss
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C H A P T E R 4
Managerial Overview of DSSTeena Y. Sharma
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Managerial Overview of
Decision Support Systems
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Introduction
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To succeed in business today, including e-businessinitiatives, companies need information systems thatcan support diverse information and decision
making needs of their managers and businessprofessionals.
As companies move towards development, theyinvest in new data driven decision-support
application framework, that help them respondrapidly to changing market conditions and customerneeds.
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Information, Decision and Management
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StrategicManagement
Executives andDirectors
TacticalManagement
Business UnitManagers ND Self-
Directing Teams
Operational Management
Operating Managers and SelfDirecting Teams
Decision Structure Information Characteristics
Structured
Semi-Structured
UnstructuredAd-hoc, Unscheduled,Summarized, Infrequent,Forward Looking, External,Wide Scope
Pre-specified, Scheduled,
Detailed, Frequent,Historical, Internal,Narrow Focus
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Information, Decision and Management
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It is shown in the figure on slide-3, that type ofinformation required by decision makers, is relatedto the level of management decision making and theamount of structure in the decision situations theyface.
The various levels of managerial decision makingare:
Strategic Management Tactical Management
Operational Management
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Information, Decision and Management
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Strategic Management: It consists of board of directors, an executive committee of CEO, and
some other top executives.
They develop overall organizational goals, strategies and policies, theyalso monitor the performance of the organization in its environment.
Tactical Management: It consists of some self motivated people, business unit managers.
They develop short-medium range plans, schedules, budgets, policies,procedures for the sub-units of the company.
Operational Management: These are a group of some self directed people and operating managers.
They develop short range plans such as weekly production schedules.
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Types of Decision Structures
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Structured: Here it is known in advance, what steps have to followed, when a
decision situation arises, which means, how to take the decision isknown in advance.
E.g.: Inventory Control, Rewards to a team member etc.
Unstructured: When it is not possible to specify in advance, how a decision has to be
taken E.g.: New business initiatives for the business unit etc.
Semi-Structured: Here some decision procedures can be pre-specified, but they are not
strong enough, that they can lead to a definite recommended/expectedresult.
E.g.: Capital Budgeting
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Managerial Overview of DSSTeena Y. Sharma
Time Dimension Timeliness
Currency Frequency Time-period
Content Dimension
Accuracy Relevance Completeness Conciseness performance
Form Dimension
Clarity Detail
Order
Presentation
Media
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Quality of Information
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Decision Support Systems
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DSS are computer based IS, that provide interactiveinformation support to managers and businessprofessionals, during the decision making process.
They help managers in taking decisions.
The decisions so made are more effective.
DSS use: Analytical Models
Specialized Databases Decision Makers own Insights and Judgments
An Interactive Computer-based Modeling Process
In order to take decisions.
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DSS, Organizations, Management and BusinessChallenges
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Management
Organization
Technology
InformationSystems
BusinessSolutions
BusinessChallenges
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The Decision-Making Process
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Intelligence Design Choice Implementation
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The Decision Making Process
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Intelligence: It consists of Discovering, identifying and understanding the
problems occurring in the organization Why there is a problem?Where and What effects it will have on the firm ?
Design Involves identifying and exploring various solutions to the problem
Choice: Choosing best solution among the alternatives
Implementation: Implementing the chosen alternative, and continuing to monitor how
well the solution is working.
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Systems for Decision Support
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Management Information Systems (MIS)
Decision-Support Systems (DSS)
Data Visualization and Geographic Information
Systems (GIS) Web-Based Customer Decision Support Systems
(CDSS)
Executive Support Systems (ESS)
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Managers and Decision Making
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Role Description Support Systems
Interpersonal Roles
Figurehead Symbolic head: perform some duties which arelegal or social in nature
None
Leader Motivate followers None
Liaison Maintaining self-developed network of outsidepeople who give information
Electronic CommunicationSystems
Informational Roles
Monitor Evaluating information MIS, ESS
Disseminator Transmit the information received from outsidersto insiders of organization
Mail, Office System
Spokesperson Transmit information to companys outsiders Sales systems. MIS, ESS
Decisional RolesEntrepreneur Improvement, bringing changes in organization Various Online Systems, MIS,
ESS, at times DSS
Disturbance Handler Giving solutions to unexpected actions MIS, DSS
Resource Allocator Responsible for allocating organizationalresources
DSS
Negotiator Representing the organization at major
negotiations,
MI?S
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Management Information Systems
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MIS help managers to monitor and control thebusiness activities, usually by providing informationon business activities.
Their main objective is to do the PerformanceAnalysis of the organization, b generating variouskind of reports.
It mainly addresses structured problems
They typically produce fixed and scheduled reportsbased on data extracted from firms TPS.
At times they may generate exception reports also.
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Decision-Support Systems
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They addressSemi-structuredand Unstructuredproblems as well.
They do the Analysis and Comparison of reports
taken from other systems like TPS, MIS etc. Their main objective is Problem Solving.
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Comparing DSS and MIS
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MIS DSS
Main Objective Performance Evaluation of theOrganization
Problem Solving
What do they generate ? Provide information about the
performance of theorganization
Provide information and decision
support techniques to analyzespecific problems or opportunities
Frequency ofInformation
Periodic, Exceptional, Demandand Push responses
Interactive inquiries and responses
Information Format Pre-specified, Fixed Format Ad-hoc, Flexible and AdaptableFormat
Information ProcessingMethodology
Information is produced byextraction and manipulation ofbusiness data
Information is produced byanalytical modeling of businessdata
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Components of a DSS
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Analytical Models
DSS Database
Decision Makers own Insights and Judgments
User Interface DSS Software System
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DSS Components
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OperationsData
MarketData
Sales DataCustomerAccount
Data
Data Management Functions(Data Extraction, Validation, Correction, Integration and Replication)
Model Management function s(Analytical Modeling, Statistical Analysis)
User Interface Functions(Hyperlinked Media, 3-D Visualization)
Legacy
Software
Web
Browser
Other
Software
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Business Value of DSS
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DSS for Pricing Decisions
DSS for Profitability Analysis
DSS for Customer Relationship Management
DSS for Companys SWOT Analysis DSS for sudden business problems
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Using Decision Support Systems
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Using a DSS involves an interactive AnalyticalModeling Process.
Using a DSS involves four basic type of Analytical
Modeling Activities: What-If Analysis
Sensitivity Analysis
Goal-Seeking Analysis
Optimization Analysis
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Using Decision Support Systems
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What-If Analysis
In What-If analysis, the end user makes changes to variables,relationships between variables, and observing changes in theother variables.
E.g.: If advertising cost is cut down by 10%, what will be thenet affect on sales
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Using Decision Support Systems
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Sensitivity Analysis
It is a special case What-If Analysis.
Typically value of only one particular variable is changedrepeatedly, and the resulting change on all variables is
observed.
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Using Decision Support Systems
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Goal-Seeking Analysis Goal Seeking Analysis reverses the direction of analysis done
in What-If and Sensitivity analysis.
Instead of observing, how changes in one variable affects the
other variables, Goal-Seeking Analysis sets a target value forthe variable, and then repeatedly change the variable until thetarget value is not received.
E.g.: Increasing the advertising promotions, until sales
received from them is not $ 1 Million.
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Using Decision Support Systems
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Optimization Analysis Optimization Analysis is a more complex form of Goal-
Seeking analysis.
Instead of setting a target value for one particular variable, an
optimum value is given to one or more variable, under certainconstraints.
Then one / more of these variables are changed repeatedly, asper the set constraints, until the best value for the target
variables is not obtained. E.g.: What is the best amount of advertising, with a given
amount of budget, the various media involved, to get a sales ofa fixed amount.
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