Chapter 12 Decision Support Executive and Geographic Information

Chapter 12 Decision Support, Executive, and Geographic Information Systems

Learning Objectives ü When you finish this chapter, you will w Understand the steps followed in decision making. w Recognize the difference between structured and unstructured decision making. w Know the typical software components that decision support systems comprise. w Be able to distinguish between the main types of decision support systems. 2

Decision Making in Business ü Organization’s success depends on quality of managers’ decisions ü When decisions involve large amounts of information and processing, computer-based systems can make the process effective and efficient. 3

The Decision-Making Process ü Three decision-making phases w Intelligence w Design w Choice 4

The Decision-Making Process Figure 12. 1 The three phases of decision making 5

Structured and Unstructured Problems Figure 12. 2 Business problems vary from structured to unstructured. Many fall between the two extremes and are considered semistructured. 6

Structured and Unstructured Problems ü Structured Problems w Proven set of steps for solution Algorithm ü Unstructured Problems w Multiple potential solution ü Semistructured Problems w Neither fully structured nor totally unstructured 7

Structured and Unstructured Problems ü Programmable Problems w Specific programs can be written to solve Structured problems are programmable Unstructured problems are unprogrammable ü Managers and Semistructured Problems w Most common type of problem for managers 8

Structured and Unstructured Problems Figure 12. 3 Examples of structured and semistructured problems 9

DSS Components ü Decision Support Systems (DSS) w Computer-based information systems that help managers select one of many solutions Automates some of decision-making process Sophisticated and fast analysis Used at all management levels 10

DSS Components w Three Major Components Data management module Model management module Dialog management module w Together, DSS modules: Help enter request conveniently Search vast amounts of data Use data in desired models Present results in readable manner 11

DSS Components Figure 12. 4 Components of a DSS and their interaction 12

DSS Components ü The Data Management Module w Gives user access to databases w Usually linked to external databases 13

DSS Components ü The Model Management Module w Selects appropriate model to analyze data Linear regression model 14

DSS Components Figure 12. 5 A linear regression model for predicting sales volume as a function of dollars spent on advertising 15

DSS Components ü The Dialog Module w Interface between user and other modules Prompts user to select a model Allows database access and data selection Lets user enter/change parameters w Displays analysis results Textual, tabular, and graphical displays 16

DSS Components Figure 12. 6 A DSS helps marketers make decisions. 17

Types of Decision Support Systems ü Personal Decision Support Systems w Serve individual users in daily decision making w Run on personal computers w Single model for data processing 18

Types of Decision Support Systems Figure 12. 7 An investment DSS shows an analysis of individual stocks (top), and risk levels by economic sector and country (bottom). 19

Types of Decision Support Systems ü Group Decision Support Systems w Promote brainstorming and group decision making w Located in conference room or on networked computers w Weigh votes to overcome impasses 20

Types of Decision Support Systems Figure 12. 8 A GDSS Room 21

Sensitivity Analysis ü Sensitivity analysis w Tests degree to which result is affected by change in parameters w What-if analysis w Can change multiple parameters at once 22

Executive Information Systems ü Executive Information Systems (EIS) w Alleviate information overload for executives w Select most relevant data for analysis Drilling down w Consolidate and summarize data w Display data graphically 23

Executive Information Systems ü An effective EIS has the following features: w An easy-to-use and easy-to-learn graphical user interface w On-request “drill-down” capability w On-demand financial and other ratios, and other indicators w Easy-to-use but sophisticated tools to allow navigation in databases and data warehouses 24

Executive Information Systems w Statistical analysis tools w The ability to respond to ad hoc queries and sensitivity analyses w Access to external data pools w The ability to solve diverse business problems 25

Developing Decision Support Systems ü When Should a DSS Be Built? w What is the type problem and how structured is it? w Are the required data available in databases and data warehouses? w How often do managers encounter the problem? w Who will use the system? w Can the prospective users spare adequate time for the development process? 26

The Electronic Spreadsheet: A DSS Tool ü Provide two facilities for building DSS w Preprogrammed functions w Ability to use IF-THEN statements ü Most widely used tool w Inexperienced users can use to develop DSSs 27

Geographic Information Systems ü Geographic Information System (GIS) w Decision aid for map-related decisions ü Typical GIS contains w Database of quantitative and qualitative data w Database of maps w Program to display information on maps 28

Ethical and Societal Issues Decisions by Machines ü Automated decisions can affect individuals. w Mortgage companies, credit card companies, employers, banks, etc. ü European Protection w “Automated Individual Decisions” Directive 29

Ethical and Societal Issues Decisions by Machines ü Who Needs Protection w Determining creditworthiness Efficient Effective ü Hidden Injustice w Mistakes on records w Decisions final 30