Decision support system

•Interactive computer-based systems that help people use

computer communications, data, documents, knowledge
and models to solve problems and make decisions. Need
good information and provide information that improves
decision-making.
•Companies use DSS to support the decision making of
customers and suppliers.
•Combine information portals, knowledge management,
business intelligence in an integrated web environment.
 Type of decisions
• Programmed decisions
– repetitive and routine
– have a definite procedure
• Nonprogrammed decisions
– Novel and unstructured
– No cut-and-dried method for handling problem
 Problem solving phases
• Intelligence
– Searching environment for conditions calling for a
solution
• Design
– Inventing, developing, and analyzing possible courses
of action
• Choice
– Selecting a course of action from those available
• Review
– Assessing past choices
 Characteristics of DSS
• Should support rather than automate decision
making
• Should respond quickly to changing moods of
decision makers
 Specific types of DSS
– business intelligence,
- data mining, data warehousing, knowledge
management and on-line analytical processing,
- e-business technologies, world-wide web and
information technologies
 Characteristics of DSS
• The computer must support the manager
and not replace his judgment.
• Semi-structured problem where parts if
analysis can be systematized by computer
• Effective problem solving is interactive by
a dialogue between user and system
 Characteristics of DSS

• Supports decision making at any level in

an organization (operations, financial
management and strategic decision-
making)
• DSS can support a manager using a
single PC or a large group of managers in
a networked client-server or web
environment
 Characteristics of DSS

• DSS include a wide variety of analytical

information systems,
• DSS provide managers more control of
their data, access to analytical tools
• capabilities for consulting and interacting
with a distributed group of staff.
• linked with a large data warehouse and
serves many managers within one
company
 DSS
Operational Control Management Strategic planning
Control
Degree of
Accounts Budget analysis-
Problem Structured Warehouse
Receivable engineered costs
Structure and factory
Order entry
location
Inventory Short-term
control forecasting
Semi-structured Mergers and
Production Variance analysis
acquistions
scheduling –overall budget

Cash Management Sales and New Product

Unstructured
production planning

R&D planning
 Components of DSS
• Database Management System. DBMS
manipulates, updates, maintains and
disseminates data.
-internal data generated by TPS
-external data from newspapers,census data, tax
codes, census figures, competitors
-online data services
-databases (finance, marketing, HR and others)
 Components of DSS
• Model Management systems – Stores and accesses
models that managers use to make decisions e.g.
manufacturing facility,analysing financial status,
forecasting demand for product or service, determining
quality of products.
• Expert knowledge –Expert systems (Artificial Neural
Network –knowledge based)
• Support tools -Online help, pull-down menus,user
interfaces, graphical analyses, error-correction
mechanisms – facilitates user’s interactions with the
system. Interfaces –important support tools
-
 DSS Types

Degree
of
problem
Retrieve Analyze Prepare Estimate Propose Make solving
information entire reports decision decisions decisions support
elements files from consequen-
multiple ces
files

Degree of
Little Much
complexity of the
problem-solving
system 13-11
 Three DSS Objectives
1. Assist in solving semistructured
problems
2. Support, not replace, the manager
3. Contribute to decision effectiveness,
rather than efficiency

13-12
 Functions of a DSS
• Model building –Decision makers identify input
variables, interrelationsips amongst variables,
problem assumptions and constraints
• E.g. sales forecasting- input variables such as
demand, cost and profit, assumptions (e.g.
prices of raw materials increase by 5% over
forecasting period), identify constraints e.g.
production capacity of plant. All information
integrated within system
 Functions of a DSS
• What-if-analysis –Assess Impact of changes
to model variables. Used for semi-structured
and unstructured problems. Develop(best-case
scenario, worst-case scenario and realistic
scenario)
-Spreadsheet packages such as Excel, Lotus 1-
2-3
 Functions of a DSS
• Goal seeking –determining input values
to achieve goals
• Risk analysis-Assess risks. Decisions
can be low-risk, medium-risk and high-
risk.
• Graphical analysis-Visualize impacts of
action, forecast activities, detect trends
- e.g. line or bar charts, grouped line or bar
charts
 Development of a DSS
• SQL –relational database systems such as ORACLE,
ACCESS
• 3 methods of developing a DSS
-DSS generator- data management tools, spreadsheets,
report generators,statistical packages, graphical
packages, model-building tools - Excel
-DSS shells – Program to build customized DSS e.g.
financial software to forecast incomes,project cash flow,
balance sheets, analyze financial data
-Custom made software- Use language such as C to
develop procedures. Expensive and time-consuming
 Organizational goals

Organizational Organizational
effectiveness efficiency

Decision-making Decision
effectiveness making
efficiency

Quality of use

Attittude of DSS

Intelligence Information Process

Quality Quality Quality
 Organizational Measures
• Organizational effectiveness – greater growth,
better innovation, increased profitability,
technical excellence, return on investment
• Organizational Efficiency- Cost savings,
increased productivity, greater team work, time
savings
• Decision making effectiveness – Ability to
carry out ad hoc analysis, examination of
alternatives, rationality of process
 Organizational Measures
• Decision making efficiency- reduction in time
taken for decision making, improvements in
predictive accuracy, greater focusing on key
issues
• Attitude to DSS- enhanced employee welfare,
satisfaction with procedures
• Quality use of DSS- Application in major
problem area, repeat use, widespread use,
utilization
• Information Quality- Accuracy, communication,
timeliness
 Organizational Measures
• Intelligence Quality- Better
understanding of organization, generation
of ideas
• Process Quality-Confidence in
decision,enhancement of processes such
as transparency, equal participation etc
• Validity-Content validity
A DSS Model
Environment
Individual Other
problem group
solvers members

Report GDSS
Mathematical GDSS
writing software
Models software
software

Database

Decision
support
system
Environment
Data Communication Information
Legend:
13-21
 Database Contents
• Used by Three Software Subsystems
– Report writers
• Special reports
• Periodic reports
• DBMS
– Mathematical models
• Simulations
• Special modeling languages
– Groupware or GDSS

13-22
Group Decision Support Systems
• Computer-based system that supports groups of people
engaged in a common task (or goal) and that provides
an interface to a shared environment.
• Used in problem solving
• Related areas
– Electronic meeting system (EMS) -idea generation
Idea categorization –Software –Problem statement
entered for comment. Anonymous consolidation of
comments, Idea ranking, Voting –voting software
– Computer-supported cooperative work (CSCW)
– Group support system (GSS)
– Groupware -network, teleconferencing, web meeting, video
conferencing

13-23
 How GDSS Contributes
to Problem Solving
• Improved communications
• Improved discussion focus
• Less wasted time
• Conducive to decision making
• Allows all group members to participate
• Greatly enhances efficiency of group
meetings
• Generates and processes ideas in parallel
13-24
 GDSS Environmental Settings
• Synchronous exchange
– Members meet at same time
– Committee meeting is an example
• Asynchronous exchange
– Members meet at different times
– E-mail is an example
• More balanced participation.

13-25
 GDSS Types
• Decision rooms
– Small groups face-to-face
– Parallel communication
– Anonymity
• Local area decision network
– Members interact using a LAN
• Legislative session
– Large group interaction
• Computer-mediated conference
– Permits large, geographically dispersed group interaction

13-26
Group Size and Location Determine
GDSS Environmental Settings
GROUP SIZE
Smaller Larger

Face-to- Decision Legislative

face
Room Session
MEMBER
PROXIMITY Local Area Computer-
Dispersed Decision Mediated
Network Conference

13-27
 Main Groupware Functions
IBM TeamWARE Lotus Novell
Function Workgroup Office Notes GroupWise
Electronic mail X X X X
FAX X X O X
Voice messaging O X
Internet access X X O X
Bulletin board system X 3 O
Personal calendaring X X 3 X
Group calendaring X X O X
Electronic conferencing O X 3 3
Task management X X 3 X
Desktop video conferencingO
Database access O X 3
Workflow routing O X 3 X
Reengineering O X 3
Electronic forms O 3 3 O
Group documents O X X O
X = standard feature O = optional feature 3 = third party offering
13-28
 E-commerce
• Buying and selling of products or
services over electronic systems such as
the Internet and other computer networks.
• Electronic funds transfer, supply chain
management, internet marketing, online
transaction processing, electronic data
interchange (EDI), inventory management
 E-commerce
• To sell a product - in stock
• Website connect to back-office
operation so that orders are
processed as they are placed
• e-catalog to be changed easily to add
new products or change prices
 E-commerce
Website

Website
Customer Electronic
and vendors catalog

Warehouses
Inventory

Financials
Order entry
 E-commerce
• Website guides customers around
site and can help in their making
purchases.
• Electronic catalog -Manages product
information so that it is presented to
customers in the most attractive and
organized way.
 E-commerce
Inventory
Is the inventory in stock or “virtual”
stock is being sold? E-Commerce
system should automatically update
inventory count each time an order is
received.
 E-commerce
• Order entry
• Once the order is taken, no need to
re-enter it in a different system to
process the order. System should
automatically and seamlessly pass it
through the operation.
 E-commerce
• Financials
-Now that the order has been placed
and the inventory has been
allocated, it should be able to create
a payable, an invoice, and it should
post to the General Ledger.
 E-commerce
• Warehousing
• Now ordering center must communicate
with shipping department.
• Customers and vendors
-Linked to outside world
E-business
automate sales and accounting, billing,
purchasing, inventory, warehousing, and
shipping.
 E-commerce
How fast is business on the Net growing?
How is the Net being used by business?
What strategic value is the Net to business?
The Business to Business Evolution
The Business to Consumer Revolution
What will change with E-commerce?
 E-business
Delivery of information, products, services and
payments electronically.
All types of business activity using computers and
networks including:
• Electronic banking
• Electronic purchasing & inventory management
• Electronic payment
Trade in digital goods & services
• Custom/customized product ordering
 E-business

• Advertising
• Internal employee communications
• Recruiting and employment
• Warranty registrationE-business will affect:
• Customers, competition, customer loyalty
• geographic boundaries - trading area
• The laws governing operations and products,
ability to deliver product
• strategies in providing service
• Critical suppliers
 E-business
• Enhanced products to include information
value
Better customer service (24 x 7)
• Access to greater market
• Faster product/service delivery
• Lower transaction costs
• Competitive advantage
• Business survival
 Evolution of e-business
• Shift in power from Seller to Buyer
• Value is being redefined by the Net
• Price Competition Becomes a Way of Life
• Physical value -> Information value
• Economies of scale  Economies of scope
• Mass production---- Mass customization
• Local market---- Global market
• Supplier service----- Self-service
• Compare prices online and click on bargain prices
 B2C versus B2B
• B2C • Business to Business
• Few Web-based • B2B
purchases • Many purchases over the
• Search and research Web
• Many different Vendors • Known product
• Registration process requirements and
marketplace
• Concentration on a
select/established vendors
• Pre-existing registration
 Business to Business

• New market spaces

• Supplier/buyer
• Expanded marketplace
• Global
• New distribution channels
• Alliances
• Techniques (auctioning, portals)
 Business to Business

• New sales channels

• Web page
• Push technology
• New market spaces
• Expanded marketplace
 Business to Business

• New distribution channels

e.g. A real estate agent uses alliances with
tax accountants and lawyers to sell real
estate tips on website
• New sales channels
- A website allows for the auctioning of
products and services (e-bay)
 Business to Business
• Faster reaction time
• Products –price controlled
• Additional products and services
• Supply chain integration
• Reduction of investment in inventory
• Direct shipping
• Ability for SME’s to compete
• Geographically - Globally
• Product lines - Virtual warehouses
• Size - Value adds over the Internet
 B2B
• Legal obligations
• Contracts
Governance
• Business obligations
• Privacy
• Disclosure
• Business imperatives
• Advertising
• Website
• Business plan
 B2C
• Reasons for Shopping On-line
• Convenience
• Not available locally
• Better selection
• Could download product
• Only available on website
• Not go through sales agent
• Lower price
• Faster delivery
 B2C
• E.g.Shoppers Buy Books On-line
• Books cost less on-line
• Couldn’t find book elsewhere
• Convenient - did not have to go to store
• Book shipped directly to buyer
• Book shipped directly as a gift
• Buy every other book by the author
• Web site recommended
 Role of internet in shopping
• Comparison shopping for products or services
which were subsequently purchased elsewhere
• Purchasing products or services
• Conducting on-line transactions with a financial
institution
 Conventional vs e-business
• Established controls • Public networks
• Private Networks • Unknown/non-trusted
• Known/trusted user users
• Safe environment • Hostile environment
• Commoncustomer profile
• Established standards
• Emerging trade laws
• Predictable population
• Emerging standards
size
• Global
• Specific customer
• Unpredictable population
information
• No controls
• Established trade laws
• Local
 Conventional vs e-business
• Bricks & mortars - • Web sites / Portals /
• physical presence • Industry networks
• Doors, security • Firewall, DMZ
guards,vaults
• High Availability (7X24)
• Proof of identity
Checkingcustomers’accou • Proof of origin
nt privileges limits • Non repudiation – proof
• Requesting customers’ of destination
signatures • Digital Authentication
• Use of stamps to show • Digital signature
confirmation
• Authorization
• Unique signatures
 Conventional vs e-business
• Personal relationship • Systems Logs
or recognition • Assurance Services
• Privacy • Web Trust Seal
• Integrity • Digital identity
• Confidentiality certificate
• Trust • Encryption
• Independent audit • Digital Watermarking-