UNIT II : Decision Support

System
 Decision-making concepts
 Decision-making process
 Decision Analysis by analytical
modeling
 Behavioral concepts in decision-
making
 Organizational Decision-making
What is DSS?
 Decision support system are computer based
information system that provide interactive
information support to managers and
business professionals during the decision-
making processes.
 DSS use- Analytical models ,
Specialized databases , A decision makers
own insights & judgments & an interactive ,
computer based modeling process to support
the making of semistructured & unstructured
business decisions.
Decision-Making Concepts
 The concept of decision 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.
 The decision-making process requires
 creativity
 imagination
 and deep understanding of human
behavior
 Decision-Making Process
 It is a process which the decision maker
uses to arrive at a decision.
Intelligence

Design

Choice
 Intelligence:
Raw data collected, processed and examined.
Identifies a problem calling for a decision.
 Design:

Inventing, developing and analysing the

different decision alternatives and testing the
feasibility of implementation.
Assess the value of the decision outcome.
 Choice:
Select one alternative as a decision,
based on the selection criteria.
 MIS DSS
Decision Provide Provide information &
support information decision support
provided about the techniques to analyze
performance of specific problems or
the organization opportunities.
Information Prespecified & Ad hoc, flexible, &
format fixed format adaptable format
Information Information Information produced
processing produced by by analytical modeling
methodology extraction & of business data
manipulation of
business data
 Using Decision Support Systems
 An interactive
modeling process
 Four types of
analytical modeling
 What-if analysis
 Sensitivity analysis
 Goal-seeking
analysis
 Optimization
analysis
What- If Analysis
 In what-if analysis , an end user makes
changes to variables, or relationships among
variables, & observes the resulting changes in
the values of other variables.
 eg. If you were using a spreadsheet to calculate tax,
you might change a salary (a variable) or tax rate
formula (a relationship among variables) in a simple
financial spreadsheet model.
 spreadsheet program can recalculate all affected
variables in that spreadsheet
Sensitivity analysis
 The value of only one variable is changed
repeatedly, and the resulting change on other
variables are observed.
 It is used when decision makers are uncertain
about the assumptions made in estimating
the value of certain key variables.
 Eg. Let’s cut advertising by $100 repeatedly
so we can see its relationship to sales.
Goal-seeking analysis
 It is reverses of the analysis done in what-if
and sensitivity analysis.
 Instead of observing how changes in a
variable affects other variables, goal-seeking
analysis sets a target value for a variable and
then repeatedly changes other variable until
the target value is achieved.
 eg. let’s try increases in advertising until sales
reach $1 million.
Optimization analysis
 It is more complex extension of goal-seeking
analysis. Instead of setting a specific target
value for a variable, the goal is to find the
optimum value for one or more target
variables, given certain constraints. Then one
or more other variables are changed
repeatedly until the best values for the target
variables are discovered.
Advantages :-
 It reduces the time & efforts in collecting and
analysis of data from different sources.
 It facilitates the quicker analysis of data for
unstructured decision making which improves
the speed.
 DSS allows the decision-maker to interact in a
natural manner due to the careful design of
the interface.
 DSS enables the user to anticipate outcomes
with the help of query facility.
 Focused on specific decision or classes
of decision.
 Presentation in form of graphics.
 End user control of data , tools, &
sessions.
Limitations of DSS
 DSS can not replace human decision-making
talents such as creativity imagination.
 Language & command interface are not
sophisticated enough to allow for natural
language.
 DSS are generally designed to be narrow in
scope of application. this prevents their
generalize use to multiple decision-making
context.
Data Warehousing
 It is a relational database that is designed for query
& analysis rather than for transaction processing.
 It usually contains data derived from transaction
data, but it can include data from other sources
also.
 In addition to a relational database, a data
warehouse environment includes an extraction,
transformation, analytical processing , client
analysis tools & other applications that manage the
process of gathering data and delivering it to
business users.
 A data warehouse is defined as –
’’ A collection of non-volatile data of
different business subjects and objects,
which is time variant and integrated
drawn from various sources &
applications and stored in a manner to
make a quick analysis of business
situation.’’
Characteristics -
 The scope of data warehouse is whole
organization.
 It contains the record of business
created from existing application.
 It enables you to take business view,
application view, and physical view at a
point in time on any aspects of business
situation.