DECISION SUPPORT SYSTEMS (DSS)

DECISION MAKING CONCEPTS The word decision is derived from the Latin root decido, meaning to cut off. The concept of decision, therefore, is settlement, a fixed intention bringing to a conclusive result, a judgment, and a resolution. A decision is the choice out of several options made by the decision maker to achieve some objective in a given situation. Business decisions are those, which are made in the process of conducting business to achieve its objectives in a given environment. In concept, whether we are talking about business decisions or any other decision, we assume that the decision maker is a rational person who would decide, with due regard to the rationality in decision making. The major characteristics of the business decision making are: (a) Sequential in nature. (b) Exceedingly complex due to risks and trade offs. (c) Influenced by personal vales (d) Made in institutional settings and business environment. The business decision making is sequential in nature. In business, the decisions are not isolated events. Each of them has a relation to some other decision or situation. The decision may appear as a snap decision but it is made only after a long chain of developments and a series of related earlier decision. The decision making process is a complex process in the higher hierarchy of management. The complexity is the result of many factors, such as the inter-relationship among the experts or decision makers, a job responsibility, a question of feasibility, the codes of morals and ethics, and a probable impact on business. The personal values of the decision maker play a major role in decision making. A decision otherwise being very sound on the business principle and economic rationality may be rejected on the basis of the personal values, which are defeated if such a decision is implemented. The culture, the discipline and the individuals commitment to the goals will decide the process and success of the decision. Whatever may be the situation, if one analyses the factors underlying the decision making process, it would be observed that there are common characteristics in each of them. There is a definite method of arriving at a decision: and it can be put in the form of decision process model. The decision making process requires creativity, imagination and a deep understanding of human behaviour. The process covers a number of tangible and intangible factors affecting the decision process. It also requires a foresight to predict the post-decision implications and a illingness to face those implications. All decisions solve a problem but over a period of time hey give rise to a number of other problems. DECISION-MAKING Decision making is a process of choosing among alternative courses of action for the purpose of attaining a goal or goals. According to Herbert A. Simon (1977), managerial decision making is synonymous with the whole process of management. Consider the important managerial function of planning. Planning involves a series of decisions: What should be done? When? How? Where? By Whom? Hence, planning implies decision making. Other functions in the management process; such as organizing and controlling, also involve making decisions.

Decision Making and Problem Solving A problem occurs when a system does not meet its established goals, does not yield the predicted results, or does not work as planned. Problem solving may also deal with identifying new opportunities. Differentiating between the terms decision making and problem solving can be confusing. One way to distinguish between the two is to examine the phases of the decision process. These phases are (1) intelligence, (2) design, (3) choice, and (4) implementation. Some consider the entire process (phases -4) as problem solving, with the choice phase as the real decision making. Others view phases 1-3 as formal decision making ending with a recommendation, whereas problem solving additionally includes the actual

implementation of the recommendation (phase-4), he terms decision making and problem solving are used interchangeably, PHASES IN THE DECISION MAKING PROCESS The well known model proposed by Herbert A. Simon is used as the basis for describing the decision making process. The model consists of three major phases: intelligence, design and choice. A fourth phase, implementation, was added later. Monitoring can be considered a fifth phase, however, we view monitoring as the intelligence phase applied to the implementation phase. Simon's model is the most concise, and yet complete characterization of rational decision making. A conceptual picture of the decision making process is shown in Figure below:

There is a continuous flow of activity from intelligence to design to choice (bold lines), but at any phase, there may be a return to the previous phase (feedback). Modeling is an essential part of this process. The

seemingly chaotic nature of following a haphazard path from problem discovery to solution by decision making can be explained by these feedback loops. The decision making process starts with the intelligence phase, where reality is examined and the problem is identified and defined. Problem ownership is established as well. In the design phase, a model that represents the system is constructed. This is done by making assumptions that simplify reality and by writing down the relationships among all variables. The model is then validated, and criteria are set for evaluation of the alternative courses of action that are identified. Often the process of model construction identifies potential alternative solutions, and vice versa. The choice phase includes selection of a proposed solution to the model (not to the problem it represents). This solution is tested to determine its viability. Once the proposed solution seems to be reasonable, we are ready for the last phase: implementation. Successful implementation results in solving the real problem. Failure leads to a return to an earlier phase of the process. In fact, we can return to an earlier phase during the execution of any of the latter three phases. Intelligence Phase The intelligence phase of the decision making process consists of problem finding activities related to searching the environment for conditions calling for decisions. Analysis and choice cannot proceed until the problem has been identified and formulated. The intelligence phase, therefore, consists of searching or scanning the internal and external environment for conditions which suggest an opportunity or a problem. The existence of an opportunity or a problem initiates the design and choice phases of decision making. The concept of decision support systems does not imply that all the data is in computerized databases. It does imply, however, that the data is systematically collected and stored and is accessible to the user of the system. In some cases, the database can store a pointer to the data such as a reference to a government statistical report. The primary requirement of decision support for intelligence is the ability to search the database for opportunities and problems. The search process has different characteristics depending on whether it can be structured and whether it is continuous or ad hoc. Decision support systems generally focus on systems other than the regular reporting system. However, regular reports can be designed to assist in the problem finding activity of comparing expectations with current and projected performance. Design Phase Following the intelligence phase which results in problem or opportunity recognition, the design phase involves inventing, developing, and analyzing possible courses of action. Support for the design phase should provide for iterative procedures in considering alternatives. The following iterative steps are typical 1. Understanding the problem. A correct model of the situation needs to be applied to be created, and the assumptions of the model tested. 2. Generating solutions. The generation of possible courses of action is aided by: The model itself. The manipulation of the model frequently provides insight leading to generation of solution ideas. The database retrieval system. ,he retrieval capabilities yield data useful in generating solution ideas. In many cases, the decision model will provide a suggested solution. For example, an inventory reorder model may suggest a solution to the problem of how much to order. This quantity is a suggestion that can be modified, but it represents a feasible solution (and perhaps an optimal solution based on the factors in the model). Often the decision support system will lead the user in a rational search strategy for solutions. For example, the solution search procedure might begin with a set of questions relating to common solutions. These questions might be followed by a series of questions which assist the decision maker to consider all alternatives. The advantage of structured approaches is that they assist in systematically exploring the normal decision space; the disadvantage is the tendency to suppress search outside the normal decision space. 3. Testing feasibility of solutions. A solution is tested for feasibility by analyzing it in terms of the environments it affects problem area, entire organization, competitors, and society. The analysis may be

performed judgmentally against broad measures of these environments. Another approach is to analyze the proposed solutions using models of the different environments. These models will generally involve computer programs and a database. The model base in a comprehensive MIS will have a number of such models that can be used in testing solutions. As an example of the use of these models, one solution to a problem of increasing scrap might be acquisition of a new machine. This would be tested against the budget model or cash flow model to determine if the acquisition is feasible from a cash resources standpoint. This solution might also be evaluated against organizational factors relating to pollution standards.

Choice Phase The choice phase requires the application of a choice procedure and the implementation of the chosen alternative. A decision support system, by definition, does not make a choice. However, optimization models and suggestion models can be used to rank the alternatives and otherwise apply decision choice procedures to support the choice of the decision maker. For example, a decision to acquire a machine from among several alternatives may be structured by one or more criteria such as the following: Rate of return Years to payback Maximum cash outlay Executive preference Employee preference Minimum risk These criteria can be applied by use of decision software. The choice is then made by a decision maker and communicated to persons who can implement the result. An important consideration in evaluating alternatives is the sensitivity of the solutions to changes in the assumptions on which the decision is to be made or in the conditions which are expected to occur. Sensitivity analysis is performed most easily when a quantitative model is available for manipulation. An example of the Simon Model would illustrate further its use in the MIS. For example, a manager finds on collection and through the analysis of the data that the manufacturing plant is under-utilized and the products which are being sold are not contributing to the profits as desired. The problem identified, therefore, is to find a product mix for the plant, whereby the plant is fully utilized within the raw material and the market constraints, and the profit is maximized. The manager having identified this as the problem of optimization, now examines the use of Linear Programming (LP) Model. The model used to evolves various decision alternatives. However, selection is made first on the basis of feasibility, and then on the basis of maximum profit. The product mix so given is examined by the management committee. It is observed that the market constraints were not realistic in some cases, and the present plant capacity can be enhanced to improve the profit. The same model is used again to test the revised position. Therefore, additional data is collected and an analysis is made to find out whether the average 20 per cent utilization of the capacity can be increased. A market research for some products is made and it is found that some constraints need to be removed and some reduced. Based on the revised data, LP Model is used, and the optimum solution obtained.

THE STRUCTURE OF DECISIONS In order to discuss the support of decisions and what DSS tools can or should do, it is necessary to have a perspective on the nature of the decision process and the various requirements of supporting it. One way of looking at a decision is in terms of its key components. The first component is the data collected by a decision maker to be used in making the decision. The second component is the process selected by the decision maker to combine this data. Finally, there is an evaluation or learning component that compares decisions and examines them to see if there is a need to change either the data being used or the process

that combines the data. These components of a decision interact with the characteristics of the decision that is being made. STRUCTURED DECISIONS: Many analysts categorize decisions according to the degree of structure involved in the decision-making activity. Business analysts describe a structured decision as one in which all three components of a decisionthe data, process, and evaluationare determined. Since structured decisions are made on a regular basis in business environments, it makes sense to place a comparatively rigid framework around the decision and the people making it. Structured decision support systems may simply use a checklist or form to ensure that all necessary data is collected and that the decision making process is not skewed by the absence of necessary data. If the choice is also to support the procedural or process component of the decision, then it is quite possible to develop a program either as part of the checklist or form. In fact, it is also possible and desirable to develop computer programs that collect and combine the data, thus giving the process a high degree of consistency or structure. UNSTRUCTURED DECISIONS: At the other end of the continuum are unstructured decisions. While these decisions have the same components as structured onesdata, process, and evaluationthere is little agreement on their nature. With unstructured decisions, for example, each decision maker may use different data and processes to reach a conclusion. In addition, because of the nature of the decision there may only a limited number of people within the organization that are even qualified to evaluate the decision. Generally, unstructured decisions are made in instances in which all elements of the business environmentcustomer expectations, competitor response, cost of securing raw materials, etc.are not completely understood (new product and marketing strategy decisions commonly fit into this category). Unstructured decision systems typically focus on the individual or team that will make the decision. These decision makers are usually entrusted with decisions that are unstructured because of their experience or expertise, and therefore it is their individual ability that is of value. One approach to support systems in this area is to construct a program that simulates the process used by a particular individual. Some of the current DSS applications have included long-range and strategic planning policy setting, new product planning, market planning, cash flow management, operational planning and budgeting, and portfolio management." Another approach is to monitor and document the process that was used so that the decision maker(s) can readily review what has already been examined and concluded. An even more novel approach used to support these decisions is to provide environments that are specially designed to give these decision makers an atmosphere that is conducive to their particular tastes. The key to support of unstructured decisions is to understand the role that individuals experience or expertise plays in the decision and to allow for individual approaches. SEMI-STRUCTURED DECISIONS: In the middle of the continuum are semi-structured decisions, and this is where most of what are considered to be true decision support systems are focused. Decisions of this type are characterized as having some agreement on the data, process, and/or evaluation to be used, but are also typified by efforts to retain some level of human judgment in the decision making process. An initial step in analyzing which support system is required is to understand where the limitations of the decision maker may be manifested (i.e., the data acquisition portion, the process component, or the evaluation of outcomes). Grappling with the latter two types of decisionsunstructured and semi-structuredcan be particularly problematic for small businesses, which often have limited technological or work force resources. Many decision situations faced by executives in small business are one-of-a-kind, one-shot occurrences requiring specifically tailored solution approaches without the benefit of any previously available rules or procedures.

This unstructured or semi-structured nature of these decisions situations aggravates the problem of limited resources and staff expertise available to a small business executive to analyze important decisions appropriately. Faced with this difficulty, an executive in a small business must seek tools and techniques that do not demand too much of his time and resources and are useful to make his life easier. Subsequently, small businesses have increasingly turned to DSS to provide them with assistance in business guidance and management. Broadly speaking, decision support systems are a set of manual or computer-based tools that assist in some decision-making activity. In today's business environment, however, decision support systems (DSS) are commonly understood to be computerized management information systems designed to help business owners, executives, and managers resolve complicated business problems and/or questions. Good decision support systems can help business people perform a wide variety of functions, including cash flow analysis, concept ranking, multistage fore-casting, product performance improvement, and resource allocation analysis. Previously regarded as primarily a tool for big companies, DSS has in recent years come to be recognized as a potentially valuable tool for small business enterprises as well. MIS AND DECISION MAKING CONCEPTS It is necessary to understand the concepts of decision making as they are relevant to the design of the MIS. The Simon Model provides a conceptual design of the MIS and decision making, wherein the designer has to design the system in such a way that the problem is identified in precise terms. That means the data gathered for data analysis should be such that it provides diagnostics and also provides a path to bring the problem to surface. In the design phase of the model, the designer is to ensure that the system provides models for decision making. These models should provide for the generation of decision alternatives, test them and pave way for the selection of one of them. In a choice phase, the designer must help to select the criteria to select one alternative amongst the many. The concept of programmed decision making is the finest tool available to the MIS designer, whereby he can transfer decision making from a decision maker to the MIS and still retain the responsibility and accountability with the decision maker or the manager. In case of non-programmed decisions, the MIS should provide the decision support systems to handle the variability in the decision making conditions. The decision support systems provide a generalized model of decision making. The concept of decision making systems, such as the closed and the open systems helps the designer in providing design flexibility. The closed systems are deterministic and rule based; therefore, the design needs to have limited flexibility, while in an open system, the design should be flexible to cope up with the changes required from time to time. The methods of decision making can be used directly in the MIS provided the method to be applied has been decided. A number of decision making problems call for optimization, and OR models are available which can be made a part of the system. The optimization models are static and dynamic, and both can be used in the MIS. Some of the problems call for a competitive analysis, such as a payoff analysis. In these problems, the MIS can provide the analysis based on the gains, the regrets and the utility. The concepts of the organizational and behavioural aspects of decision making provide an insight to the designer to handle the organizational culture and the constraints in the MIS. The concepts of the rationality of a business decision, the risk averseness of the managers and the tendency to avoid an uncertainty, makes the designer conscious about the human limitations, and prompts him to provide a support in the MIS to handle these limitations. The reliance on organizational learning makes the designer aware of the strength of the MIS and makes him provide the channels in the MIS to make the learning process more efficient. The relevance of the decision making concepts is significant in the MIS design. The significance arises out of the complexity of decision making, the human factors in the decision making, the organizational and behaviour aspects, and the uncertain nvironments. The MIS design addressing these significant factors turns out to be the best design. DECISION SUPPORT SYSTEMS (DSS) What is a Decision Support System?

The term decision support system (DSS) refers to a class of systems which support the process of making decisions. The emphasis is on "support" rather than on automation of decisions. Decision support systems allow the decision maker to retrieve data and test alternative solutions during the process of problem solving. According to a definition, DSS is "Development of approaches for applying information systems technology to increase the effectiveness of decision makers in situations where the computer can support and enhance human judgment in the performance of tasks that have elements which cannot be specified in advance." Definition: A Decision Support System (DSS) is an umbrella term used to describe any computer application that enhances the users ability to make decisions. More specifically, the term is usually used to describe a computer-based system designed to help decision-makers use data, knowledge and communications technology to identify problems and make decisions to solve those problems. Computer system designed to provide assistance in determining and evaluating alternative courses of action. A DSS (1) acquires data from the mass of routine transactions of a firm, (2) analyzes it with advanced statistical techniques to extract meaningful information, and (3) narrows down the range of choices by applying rules based on decision theory. Its objective is facilitation of 'what if' analysis and not replacement of a manager's judgment. A decision support system (DSS) is a computer program application that analyzes business data and presents it so that users can make business decisions more easily. It is an "informational application" (to distinguish it from an "operational application" that collects the data in the course of normal business operation). Decision Support Systems (DSS) are a specific class of computerized information system that supports business and organizational decision-making activities. A properly designed DSS is an interactive softwarebased system intended to help decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions. Typical information that a decision support application might 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 the next Projected revenue figures based on new product sales assumptions The consequences of different decision alternatives, given past experience in a context that is described

A decision support system is a way to model data and make quality decisions based upon it. Making the right decision in business is usually based on the quality of your data and your ability to sift through and analyze the data to find trends in which you can create solutions and strategies for. DSS or decision support systems are usually computer applications along with a human component that can filter through large amounts of data and pick between the many choices. The early definitions of a DSS identified it as a system intended to support managerial decision makers in semi structured decision situations. DSS were meant to be an adjunct to decision makers to extend their capabilities but not to replace their judgment. They were aimed at decisions where judgment was required or at decisions that could not be completely supported by algorithms. Not specifically stated, but implied in the early definitions, was the notion that the system would be computer based, would operate interactively online, and preferably would have graphical output capabilities. While many people think of decision support systems as a specialized part of a business, most companies have actually integrated this system into their day to day operating activities. For instance, many companies constantly download and analyze sales data, budget sheets and forecasts and they update their

strategy once they analyze and evaluate the current results. Decision support systems have a definite structure in businesses, but in reality, the data and decisions that are based on it are fluid and constantly changing. The key to decision support systems is to collect data, analyze and shape the data that is collected and then try to make sound decisions or construct strategies from analysis. Whether computers, databases or people are involved usually doesn't matter, however it is this process of taking raw or unstructured data, containing and collecting it and then using it to help aid decision making. Decision support systems that just collect data and organize it effectively are usually called passive models, they do not suggest a specific decision, and they only reveal the data. An active decision support system actually processes data and explicitly shows solutions based upon that data. While there are many systems that are able to be active, many organizations would be hard pressed to put all their faith into a computer model without any human intervention. A cooperative decision support system is when data is collected, analyzed and then is provided to a human component which then can help the system revise or refine it. It means that both a human component and computer component work together to come up with the best solution. While the above DSS model takes the relationship of the user in mind, another popular DSS model takes into consideration the mode of assistance as the underlying basis of the DSS model. This includes the Model Driven DSS, Communications Driven DSS, Data Driven DSS, Document Driven DSS, and Knowledge Driven DSS. Model Driven DSS is when decision makers use statistical, simulations or financial models to come up with a solution or strategy. Keep in mind that these decisions are based on models; however they do not have to be overwhelming data intensive. A Communications Driven DSS models is when many collaborators work together to come up with a series of decisions to set in motion a solution or strategy. This communications driven DSS model can be in an office environment or on the web. It is a type of DSS that enhances decision-making by enabling communication and sharing of information between groups of people. At its most basic level it could be a simple threaded e-mail. At its most complex it could be a web-conferencing application or interactive video. Communication-Driven DSS will exhibit at least one of the following characteristics: Supports coordination and collaboration between two or more people; Facilitates information sharing; Enables communication between groups of people; Supports group decisions. A Data Driven DSS model puts its emphasis on collected data that is then manipulated to fit the decision maker's needs. This data can be internal, external and in a variety of formats. It is important that usually data is collected and categorized as a time series which is a collection of data that forms a sequence, such as daily sales, operating budgets from one quarter to the next, inventory levels over the previous year, etc. Data-driven DSS are a form of support system that focuses on the provision of internal (and sometimes external) data to aid decision making. Most often this will come in the form of a data warehouse a database designed to store data in such a way as to allow for its querying and analysis by users. An example of a data-driven DSS would be a Geographic Information System (GIS), which can be used to visually represent geographically dependant data using maps. A Document Driven DSS model uses documents in a variety of data types such a text documents, spreadsheets and database records to come up with decisions a well as further manipulate the information to refine strategies. Document-driven DSS are support systems designed to convert documents into valuable business data. While data-driven DSS rely on data that is already in a standardized format that

lends it to database storage and analysis, document-driven DSS makes use of data that cannot easily be standardized and stored. The three primary forms of data used in document driven DSS are: Oral (i.e. transcribed conversations); Written (i.e. reports, memos, e-mail and other correspondence); Video (i.e. TV commercials and news reports).

A Knowledge Driven DSS model uses special rules stored in a computer or used by a human to determine whether a decision should be made. For instance, for many day traders a stop loss limit can be seen as a knowledge driven DSS model. These rules or facts are used in order to make a decision. Knowledge-driven DSS are systems designed to recommend actions to users. * Model-Driven DSS Model-driven support systems incorporate the ability to manipulate data to generate statistical and financial reports, as well as simulation models, to aid decision-makers. Model-based decision support systems can be extremely useful in forecasting the effects of changes in business processes, as they can use past data to answer complex what-if questions for decision makers. In addition to these basic types of DSS there are also two additional factors: whether the DSS is spreadsheet-based, web-based or something else entirely. * Spreadsheet-based DSS Model- and Data-driven DS systems can be built using spreadsheets. Spreadsheets offer decision-makers easy to understand representations of large amounts of data. Additionally, spreadsheet data is arranged in such a way as to make it easy to convert the data into visualizations to further aid decision-makers. * Web-based DSS Any type of DSS can be web-based. The term simply describes any decision support system that is operated through the interface of a web browser, even if the data used for decision support remains confined to a legacy system such as a data warehouse. Scope of DSS In addition to these basic types of Decision Support System there are also two separate categories used to define systems. * Enterprise-wide DSS Enterprise-wide DS systems are systems that are linked into large data warehouses, and offer decision support to managers at all levels of an enterprise. Enterprise-wide systems will typically be basic, general use systems that can perform a wide variety of functions. * Desktop DSS Desktop DS systems are much smaller applications designed to be run from a desktop PC. While these systems may well be linked into a data warehouse or other large volume of data, they will typically be more limited in scope.

An example of a desktop DSS is Microsoft Excel, the desktop spreadsheet application. History According to Keen (1978), the concept of decision support has evolved from two main areas of research: The theoretical studies of organizational decision making done at the Carnegie Institute of Technology during the late 1950s and early 1960s, and the technical work on interactive computer systems, mainly carried out at the Massachusetts Institute of Technology in the 1960s. It is considered that the concept of DSS became an area of research of its own in the middle of the 1970s, before gaining in intensity during the 1980s. In the middle and late 1980s, executive information systems (EIS), group decision support systems (GDSS), and organizational decision support systems (ODSS) evolved from the single user and modeloriented DSS. According to Sol (1987) the definition and scope of DSS has been migrating over the years. In the 1970s DSS was described as "a computer based system to aid decision making". Late 1970s the the DSS movement started focusing on "interactive computer-based systems which help decision-makers utilize data bases and models to solve ill-structured problems". In the 1980s DSS should provide systems "using suitable and available technology to improve effectiveness of managerial and professional activities", and end 1980s DSS faced a new challenge towards the design of intelligent workstations. In 1987 Texas Instruments completed development of the Gate Assignment Display System (GADS) for United Airlines. This decision support system is credited with significantly reducing travel delays by aiding the management of ground operations at various airports, beginning with O'Hare International Airport in Chicago and Stapleton Airport in Denver Colorado. Beginning in about 1990, data warehousing and on-line analytical processing (OLAP) began broadening the realm of DSS. As the turn of the millennium approached, new Web-based analytical applications were introduced. It is clear that DSS belong to an environment with multidisciplinary foundations, including (but not exclusively) database research, artificial intelligence, human-computer interaction, simulation methods, software engineering, and telecommunications. The advent of better and better reporting technologies has seen DSS start to emerge as a critical component of management design. Examples of this can be seen in the intense amount of discussion of DSS in the education environment. DSS also have a weak connection to the user interface paradigm of hypertext. Both the University of Vermont PROMIS system (for medical decision making) and the Carnegie Mellon ZOG/KMS system (for military and business decision making) were decision support systems which also were major breakthroughs in user interface research. Furthermore, although hypertext researchers have generally been concerned with information overload, certain researchers, notably Douglas Engelbart, have been focused on decision makers in particular COMPONENTS OF DSS A DSS application can be composed of the subsystems as shown in Figure 4. This figure provides a basic understanding of the general structure of a DSS.

Data Management Subsystem: The data management subsystem includes a database, which contains relevant data for the situation and is managed by software called the database management system (DBMS). The data management subsystem can be interconnected with the corporate data warehouse, a repository for corporate relevant decision making data. Model Management Subsystem: This is a software package that includes financial, statistical, management science, or other quantitative models that provide the system's analytical capabilities and appropriate software management. Modeling languages for building custom models are also included. This software is often called a model base management system (MBMS). This component can be connected to corporate or external storage of models. Knowledge Based Management Subsystem: This subsystem can support any of the other subsystems or act as an independent component. It provides intelligence to augment the decision maker's own. It can be interconnected with the organization's knowledge depository, which is called the organizational knowledge base. User Interface Subsystem : The user communicates with and commands the DSS through this subsystem. The user is considered part of the system. Researchers assert that some of the unique contributions of DSS are derived from the intensive interaction between the computer and the decision maker. These components form the DSS application system, which can be connected to the corporate intranet, to an extranet, or to the Internet. CHARACTERISTICS AND CAPABILITIES OF DSS Because there is no consensus on exactly what a DSS is, there is obviously no agreement on standard characteristics and capabilities of DSS. The major capabilities of DSS as per the figure are the following: 1. DSS provide support for decision makers mainly in semi structured and unstructured situations by bringing together human judgment and computerized information. Such problems cannot be

2. 3.

4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

solved (or cannot be conveniently) by other computerized systems or by standard quantitative methods or tools. Support is provided for various managerial levels, ranging from top executives to line managers. Support is provided to individuals as well as to groups. Less structured problems often require the involvement of several individuals from different departments and organizational levels or even from different organizations, DSS provide support to several interdependent and/or sequential decisions. The decisions may be made once, several times, or repeatedly. DSS support all phases of the decision making process: intelligence, design, choice and implementation. DSS support a variety of decision making processes and styles, DSS are adaptive over time. The decision maker should be reactive, able to confront changing conditions quickly, and able to adapt the DSS to meet these changes. DSS are flexible, and so udders can add, delete, combine, change, or rearrange basic elements. Users must feel at home with DSS. User friendliness, strong graphical capabilities, and an English like interactive human machine interface can greatly influence the effectiveness of DSS. DSS attempt to improve the effectiveness of decision making (accuracy, timeliness. Quality) rather than its efficiency (the cost of making decisions). The decision maker has complete control over all steps of the decision making process in solving a problem. A DSS specifically aims to support and not to replace the decision maker. End users should be able to construct and modify simple systems by themselves. Larger systems can be built with assistance from information system (IS) specialists. A DSS usually utilizes models for analyzing decision making situations. The modeling capability enables experimenting with different strategies under different configurations.

The DSS should provide access to a variety of data sources, formats, and types, ranging from geographic information systems (GIS) to object oriented ones. A DSS can be employed as a stand alone tool used by an individual decision maker in one location, or it can be distributed throughout an organization and in several organizations along the supply chain. It can be integrated with other DSS and/or applications, and it can be distributed internally and externally, using networking and Web technologies. These characteristics allow decision makers to make better, more consistent decisions in a timely manner, and they are provided by the DSS major components. WHEN SHOULD YOU USE THE DECISION SUPPORT APPROACH? The Problems that Decision Support Systems Help Solve Decision Support Systems (DSS) are interactive information systems that assist a decision maker in approaching ill structured problems by offering analytical models and access to databases. These systems are designed to support the decision making process, rather than to render a decision. The hallmark of these systems is (or should be) flexibility. Personal DSS should be easy to develop: End user oriented tools are available for the purpose. On the other hand, an organizational DSS, used throughout an enterprise, should be developed in a well planned, disciplined process. All DSS should be easy to use. We can think of DSS as a set of capabilities. Within its area of application, such a system should give its user a way to use models and databases in an interactive session that best supports his or her way of thinking about the problem at hand. Problems that people in organizations face differ in terms of how structured the problems are; that is, the extent to which a solution procedure can be stated for them. Table 1 shows the classification of problems in terms of the degree to which a solution procedure can be explicitly presented. Type of Problem Examples of Characteristics How Decisions Problem Areas are Made Order Validation InventoryAvailability of an algorithm Fully computerized Reorder (standard operating procedure) (transaction processing systems) Sales forecasting Programmable aspects Human decision Budgeting Risk analysis present maker supported by computer Promotion of personnel No standard procedures or Principally by a human, Introducing new aspects available with some computer technology support

Structured

Semi-structured

Unstructured

TABLE 1 CLASSIFICATION OF PROBLEMS The principal domain of DSS is support of decision making for semistructured problems, where parts of the decision process itself require very significant computer support. This is so because a model, in some cases containing hundreds of equations, has, to be applied against a database often comprising many millions of data items, with human judgment injected at critical junctures. DSS are also employed to assist a decision maker facing an unstructured problem, often injecting the necessary factual grounding through access to data. Decision making to solve unstructured problems is now supported by expert systems, but within narrow domains, such as, for example, a decision regarding loan approval. When tackling ill structured both structured and semi structured problems, the exploration of alternate solutions cannot be completed before a choice must be made. When we say that one of the manager's principal tasks is to deal with ambiguity, we mean that he or she will be called upon to solve many ill structured problems. Applications What is a DSS APPLICATION?

A DSS is usually built to support the solution of a certain problem or for evaluation of an opportunity. As such it is called a DSS application. A DSS is an approach (or methodology) for supporting decision making. It uses an interactive, flexible, adaptable CBIS especially developed for supporting the solution for a specific non structured management problem. It uses data, provides an easy user interface, and can incorporate the decision maker's own insights. In addition, a DSS usually uses models and is built (often by end users) by an interactive and iterative process. It supports all phases of decision making and may include a knowledge component. Finally, a DSS can be used by a single user on a PC, or it can be Web based for use by many people at several locations. DSS applications are systems and subsystems that help people make decisions based on data that is culled from a wide range of sources. One example is the Clinical decision support system for medical diagnosis. Other examples include a bank loan officer verifying the credit of a loan applicant or an engineering firm that has bids on several projects and wants to know if they can be competitive with their costs. A growing area of DSS application, concepts, principles, and techniques is in agricultural production, marketing for sustainable development. For example, the DSSAT4 package, developed through financial support of USAID during the 80's and 90's, has allowed rapid assessment of several agricultural production systems around the world to facilitate decision-making at the farm and policy levels. There are, however, many constraints to the successful adoption on DSS in agriculture. DSS are also prevalent in forest management where the long planning time frame demands specific requirements. All aspects of Forest management, from log transportation, harvest scheduling to sustainability and ecosystem protection have been addressed by modern DSSs. A specific example concerns the Canadian National Railway system, which tests its equipment on a regular basis using a decision support system. A problem faced by any railroad is worn-out or defective rails, which can result in hundreds of derailments per year. Under a DSS, CN managed to decrease the incidence of derailments at the same time other companies were experiencing an increase. DSS has many applications that have already been spoken about. However, it can be used in any field where organization is necessary. Additionally, a DSS can be designed to help make decisions on the stock market, or deciding which area or segment to market a product toward. KEY DSS FUNCTIONS Gupta and Harris observed that DSS is predicated on the effective performance of three functions: information management, data quantification, and model manipulation: "Information management refers to the storage, retrieval, and reporting of information in a structured format convenient to the user. Data quantification is the process by which large amounts of information are condensed and analytically manipulated into a few core indicators that extract the essence of data. Model manipulation refers to the construction and resolution of various scenarios to answer 'what if' questions. It includes the processes of model formulation, alternatives generation and solution of the proposed models, often through the use of several operations research/management science approaches." Entrepreneurs and owners of established enterprises are urged to make certain that their business needs a DSS before buying the various computer systems and software necessary to create one. Some small businesses, of course, have no need of a DSS. The owner of a car washing establishment, for instance, would be highly unlikely to make such an investment. But for those business owners who are guiding a complex operation, a decision support system can be a valuable tool. Another key consideration is whether

the business's key personnel will ensure that the necessary time and effort is spent to incorporate DSS into the establishment's operations. After all, even the best decision support system is of little use if the business does not possess the training and knowledge necessary to use it effectively. If, after careful study of questions of DSS utility, the small business owner decides that DSS can help his or her company, the necessary investment can be made, and the key managers of the business can begin the process of developing their own DSS applications using available spreadsheet software. Benefits of DSS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Improves personal efficiency Expedites problem solving (speed up the progress of problems solving in an organization) Facilitates interpersonal communication Promotes learning or training Increases organizational control Generates new evidence in support of a decision Creates a competitive advantage over competition Encourages exploration and discovery on the part of the decision maker Reveals new approaches to thinking about the problem space Helps automate the managerial processes.

DSS UNCERTAINTIES AND LIMITATIONS While decision support systems have been embraced by small business operators in a wide range of industries in recent years, entrepreneurs, programmers, and business consultants all agree that such systems are not perfect. LEVEL OF "USER-FRIENDLINESS" Some observers contend that although decision support systems have become much more user-friendly in recent years, it remains an issue, especially for small business operations that do not have significant resources in terms of technological knowledge. HARD-TO-QUANTIFY FACTORS Another limitation that decision makers confront has to do with combining or processing the information that they obtain. In many cases these limitations are due to the number of mathematical calculations required. For instance, a manufacturer pondering the introduction of a new product can not do so without first deciding on a price for the product. In order to make this decision, the effect of different variables (including price) on demand for the product and the subsequent profit must be evaluated. The manufacturer's perceptions of the demand for the product can be captured in a mathematical formula that portrays the relationship between profit, price, and other variables considered important. Once the relationships have been expressed, the decision maker may now want to change the values for different variables and see what the effect on profits would be. The ability to save mathematical relationships and then obtain results for different values is a feature of many decision support systems. This is called "what-if" analysis, and today's spreadsheet software packages are fully equipped to support this decision-making activity. Of course, additional factors must be taken into consideration as well when making business decisions. Hard-to-quantify factors such as future interest rates, new legislation, and hunches about product shelf life may all be considered. So even though the calculations may indicate that a certain demand for the product will be achieved at a certain price, the decision maker must use his or her judgment in making the final decision. If the decision maker simply follows the output of a process model, then the decision is being moved toward the structured end of the continuum. In certain corporate environments, it may be easier for the decision maker to follow the prescriptions of the DSS; users of support systems are usually aware of the risks associated with certain choices. If decision makers feel that there is more risk associated with exercising judgment and opposing the suggestion of the DSS than there is in simply supporting the process,

the DSS is moving the decision more toward the structured end of the spectrum. Therefore, the way in which a DSS will be used must be considered within the decision-making environment. PROCESSING MODEL LIMITATIONS Another problem with the use of support systems that perform calculations is that the user/decision maker may not be fully aware of the limitations or assumptions of the particular processing model. There may be instances in which the decision maker has an idea of the knowledge that is desired, but not necessarily the best way to get that knowledge. This problem may be seen in the use of statistical analysis to support a decision. Most statistical packages provide a variety of tests and will perform them on whatever data is presented, regardless of whether or not it is appropriate. This problem has been recognized by designers of support systems and has resulted in the development of DSS that support the choice of the type of analysis The Major Characteristics of MIS, MS/OR, and DSS Management Information Systems (MIS) The main impact has been on structured tasks, where standard operating procedures, decision rules, and information flows can be reliably predefined, The main payoff has been in improving efficiency by reducing costs, turnaround time, and so on, and by replacing clerical personnel or increasing their productivity. The relevance for managers' decision making has mainly been indirect (e.g., by providing reports and access to data). MIS application is routine and done periodically. Management Science/Operations Research The impact has mostly been on structured problems (rather than tasks), in which the objective, data, and constraints can be pre-specified. The payoff has been in generating better solutions for general categories of problems (e.g., inventory). The relevance for managers has been in the provision of detailed recommendations and new methods handling complex problems. Applications are non routine, as needed. Decision Support Systems The impact is on decisions in which there is significant structure for computer and analytic aids to be of value but where the manager's judgment is essential. The payoff is in extending the range and capability of managers' decision processes to help them improve their effectiveness. The relevance for managers is in the creation of a supportive tool, under their own control, that does not attempt to automate the Decision processes, predefine objectives, or impose solutions. DSS applications are non routine, as needed.