INTRODUCTION TO

DECISION SUPPORT
SYSTEM
By
Dr. Mohd Najib Mohd Salleh
Assoc Prof
Faculty of Computer Science and Information Technology
Chapter Outline

• Introduction
• Definition of Decision Support System
• General Characteristics of Decision Support System
• Advantages and Constraints of Decision Support
System
• History of Decision Support System
• Components of Decision Support System
Introduction to Business Environment

• “The sum total of all individuals, institutions and other

forces that are outside the control of a business enterprise

…….. but the business still depends upon them as they

affect the overall performance and sustainability of the
business.”
Business Environment
• The challenges and issues

• Companies work in an unstable or rapidly changing

economy.
• There are difficulties in tracking the numerous business
operations.
• Competition has increased especially global market.
• Electronic commerce is changing the ways business is
done.
• Existing information systems do not fully support decision
making.
Business Pressure
• information overload,

• ability for workers to work from home,

• global economy and strong competition facilitated by web-
based platform,
• Changing nature of the workforce which is becoming more
diversified,
• Powerful customers whose expectations increase as become
more knowledgeable about products and services,
• Technology innovations, societal issues or government
regulations.
 Why DSS ???
• Decision makers are faced
with increasingly stressful
environments –
• highly competitive, fast-paced,
near real-time, overloaded with
information,
• data distributed throughout the
enterprise, and multinational in
scope.
Why DSS ???

• The combination of the

Internet enabling speed
and access,
• The maturation of
artificial intelligence
techniques,

 has led to sophisticated aids to support decision making under these risky and
uncertain conditions.
Motivation

to improve decision making by

suggesting solutions that are
better than those made by
the human alone.

Increasingly available in diverse

fields from business,
transportation, medical
diagnosis and traffic control
to engineering applications.
Level of Management in
Decision Making

Types of control in all

managerial activities
• Strategic planning
• Management control
• Operational control
Types of Decision

 In general, structured decisions judgment, evaluation,

are more prevalent at lower and insights

organizational levels, and

unstructured decision making is
more common at higher levels.

repetitive and routine

 Structured decision

A structured decision is one in which the phases of the

decision-making process (intelligence, design, and
choice) have standardized procedures, clear objectives,
and clearly specified input and output. There exists a
procedure for arriving at the best solution
Structured decisions

• Computer support for structured decisions

• Management science (MS) or operations research
(OR)

The application of a scientific approach and

mathematical models to the analysis and solution
of managerial decision situations (e.g., problems,
opportunities)
Structured Decision

• Computer support for structured decisions

• Automated decision systems (ADS)
A business rules-based system that uses
intelligence to recommend solutions to
repetitive decisions (such as pricing)
Types of Decision

An unstructured decision is one where not all of

the decision-making phases are structured and human
intuition plays an important role.

A semi structured decision has some, but not

all, structured phases where standardized procedures may
be used in combination with individual judgment.
Unstructured Decision

• Computer support for unstructured decisions

• Customized solutions
• intuition and judgment
• Computerized communication and collaboration
technologies
• Knowledge management
Semi Structured Decision

• Computer support for semi-structured problems

• A combination of both standard solution procedures and
human judgment
• Management Science can provide models for the
structured portion
• For the unstructured portion, a DSS can improve the
quality of the information on which the decision is based
by providing a range of alternative solutions along with
their potential impacts
 Type of Decision

Conclusion……….

• The types of decision support matrix

• For semi-structured decisions and
unstructured decisions, conventional MIS
and MS tools are insufficient
• Decision support systems (DSS) are used.
 The Benefits of DSS

• The benefits of computerized decision support

• The Information systems department is too busy to

address all of management’s inquiries.
• Special analysis of profitability and efficiency is
needed.
• Accurate information is needed.
• Computerized support is viewed as an organizational
winner.
• New information is needed.
 The Benefits of DSS

• The benefits of computerized decision

support

• Management mandates computerized decision support.

• Higher decision quality is needed.
• Improved communication.
• Improved customer and employee satisfaction.
• Timely information is provided.
• Cost reduction is achieved.
• Employees’ productivity has been improved.
Elements in An Early Framework for
Computerized Decision Support
 Definition1

Decision Support System is a

general term for any
computer application that
enhances a person or group’s
ability to make decisions.
 Definition2

Decision Support System is an information system

that utilizes analytical modeling and helps executives
make strategic decisions.
 Definition3

• An interactive computer-based system to help decision

makers use information and communications technologies
(ICTs) to identify and solve problems, and make complete
decision process tasks.
 Definition4

• A conceptual framework for

• a process of supporting managerial decision
making,
• usually by modeling problems and
• employing quantitative models for solution
analysis.
History and Evolution
Decision Support System
Types of Information Systems
 Transaction
Processing Systems
(TPS)

• Developed in the early1960s

• Serve the operational management level
• Performing and recording daily routine and repetitive
transactions
• Primary focus: structured decision-making
• Provide summarized and organized data in the
accounting and finance areas.
• Account receivable and payable
• Sales transactions and Payroll
 Information Systems

• These process data resulting

from business transaction,
update operational databases
and produce business reports.
• Example: sales and inventory
processing, accounting system.
 Management Information Systems (MIS)

• Developed in the 1960s

• Intended to serve the operational or middle
management level
• Summary and exception reports
• monthly production reports
• Quarterly travel expense reports
• Difference between expected sales and actual sales of a
particular product
• Primary focus: fairly structured decision-makings
 Decision Support System (DSS)

• An interactive computer-based system that helps decision

makers in the solution of semi-structured and
unstructured problems.

• Developed in the early 1970s

• Originally, designed to serve the middle management
• Primary focus: semi-structured and unstructured
decision-makings
Expert system (ES),
Knowledge management
system (KMS), Enterprise
Resource Planning (ERP)
 Executive Information Systems OR
Executive Support Systems

• Developed in the late 1980s

• Serve the senior management level
• Designed mainly to monitor organization’s
performance and address decision makings quickly
and accurately
• Very user-friendly, supported by graphics
• Drill-down capability
• EIS drill-down interface design
Executive Information System (EIS)-

facilitates and supports

senior executive
information and decision-
making needs. It provides easy
access to internal and
external information relevant
to organizational goals.

Analyze business
performance, actions of all
competitors and strategic
planning.
 Executive Information System (EIS)-

provides critical information from

all IS sources, tailored to the
information needs of executives.

Moreover, breakthroughs
occurred in the development and
application of artificial
intelligence (AI) techniques to
business information systems.
 Information Flow
Executives

Enterprise Collaboration System

Executive Information System
System
Information
Flow Managers DSS

MIS
Information
Exchange/ TPS
Communication
EDP

Operational Systems and Staff

 The Need of EIS

• Need for more timely and accurate information for

better decision makings
• Need to access internal/external databases to detect
environmental changes
• Need to be more proactive due to intensive
competition
• Gain computer literacy
 What is
common criteria
of DSS??
DSS Characteristics and
Capabilities
 The Architecture
of Decision Support Systems
The Concept of Decision Support
Systems (DSS)
• DSS as an Umbrella term: Describes any
computerized system that supports decision making
in an organization
• DSS as a specific application
• The architecture of DSS
• Data
• Models manipulate data as related to a specific situation
• Knowledge component
• Users
• User interface
The Concept of Decision Support
Systems (DSS)
• Types of DSS
• model-oriented DSS: quantitative models used to generate a
recommended solution to a problem
• data-oriented DSS: support ad-hoc reporting and queries
Conceptual Architecture DSS
Web-based DSS
 Learning outcomes……..

What can you learn from this class ????

• Understand the definition,

• The evolution of IS to DSS,
• Business Environment and Motivation.

# Discuss with your group members some DSS example that

you can find from the WWW.
Decision Making Process

• Degree of structuredness
• Four-phase decision making process
• Intelligence
• Design
• Choice
• Implementation
Decision Making process
Managerial Decision Making

• The process of decision making

1. Defining the problem (a decision situation that may
deal with some difficulty or with an opportunity)
2. Constructing a model that describes the real-world
problem
3. Identifying possible solutions to the modeled problem
and evaluating the solutions
4. Comparing, choosing, and recommending a potential
solution to the problem
 Thank you
for your Attention