CHAPTER 7 DECISION SUPPORT SYSTEM 1 2 Objectives

CHAPTER 7: DECISION SUPPORT SYSTEM 1

2 Objectives q Identify the changes taking place in the form and use of decision support in business. q Identify the role and reporting alternatives of management information systems. q Describe how online analytical processing can meet key information needs of managers. q Explain the decision support system concept and how it differs from traditional management information systems.

3 Information required at different management levels

4 Levels of Management Decision Making q Strategic management q Executives develop organizational goals, strategies, policies, and objectives q As part of a strategic planning process q Tactical management q Managers and business professionals in self-directed teams q Develop short- and medium-range plans, schedules and budgets q Specify the policies, procedures and business objectives for their sub-units

5 Levels of Management Decision Making q Operational management q Managers or members of self-directed teams q Develop short-range plans such as weekly production schedules

6 Information Quality q Information products whose characteristics, attributes, or qualities make the information more value q Information has 3 dimensions: q Time q Content q Form

7 Attributes of Information Quality

8 Decision Structure q Structured – situations where the procedures to follow when a decision is needed can be specified in advance q Unstructured – decision situations where it is not possible to specify in advance most of the decision procedures to follow q Semistructured - decision procedures that can be prespecified, but not enough to lead to a definite recommended decision

9 Information Systems to support decisions Management Information Systems Decision Support Systems Decision support provided Provide information about the performance of the organization Provide information and techniques to analyze specific problems Information form and frequency Periodic, exception, demand, and push reports and responses Interactive inquiries and responses Information format Pre-specified, fixed format Ad hoc, flexible, and adaptable format Information processing methodology Information produced by extraction and manipulation of analytical modeling of business data

10 Decision Support Trends q Personalized proactive decision analytics q Web-Based applications q Decisions at lower levels of management and by teams and individuals q Business intelligence applications

11 Business Intelligence Applications

12 Decision Support Systems q Provide interactive information support to managers and business professionals during the decisionmaking process q Use: q Analytical models q Specialized databases q A decision maker’s own insights and judgments q Interactive computer-based modeling q To support semi-structured business decisions

13 DSS Components

14 DSS Model Base q Model base q A software component that consists of models used in computational and analytical routines that mathematically express relations among variables q Examples: q Linear programming models, q Multiple regression forecasting models q Capital budgeting present value models

15 Management Information Systems q Produces information products that support many of the day-to-day decision-making needs of managers and business professionals q Prespecified reports, displays and responses q Support more structured decisions

16 MIS Reporting Alternatives q Periodic Scheduled Reports Ø Prespecified format on a regular basis q Exception Reports Ø Reports about exceptional conditions Ø May be produced regularly or when exception occurs q Demand Reports and Responses Ø Information available when demanded q Push Reporting Ø Information pushed to manager

17 Online Analytical Processing q Enables mangers and analysts to examine and manipulate large amounts of detailed and consolidated data from many perspectives q Done interactively in real time with rapid response

18 OLAP Analytical Operations q Consolidation Ø Aggregation of data q Drill-down Ø Display detail data that comprise consolidated data q Slicing and Dicing Ø Ability to look at the database from different viewpoints

19 OLAP Technology

20 Geographic Information Systems q DSS that uses geographic databases to construct and display maps and other graphics displays q That support decisions affecting the geographic distribution of people and other resources q Often used with Global Position Systems (GPS) devices

21 Data Visualization Systems q DSS that represents complex data using interactive three-dimensional graphical forms such as charts, graphs, and maps q DVS tools help users to interactively sort, subdivide, combine, and organize data while it is in its graphical form.

22 Using DSS q What-if Analysis Ø End user makes changes to variables, or relationships among variables, and observes the resulting changes in the values of other variables q Sensitivity Analysis Ø Value of only one variable is changed repeatedly and the resulting changes in other variables are observed

23 Using DSS q Goal-Seeking Ø Set a target value for a variable and then repeatedly change other variables until the target value is achieved Ø How can analysis q Optimization Ø Goal is to find the optimum value for one or more target variables given certain constraints Ø One or more other variables are changed repeatedly until the best values for the target variables are discovered

24 Data Mining q Main purpose is to provide decision support to managers and business professionals through knowledge discovery q Analyzes vast store of historical business data q Tries to discover patterns, trends, and correlations hidden in the data that can help a company improve its business performance q Use regression, decision tree, neural network, cluster analysis, or market basket analysis

25 Market Basket Analysis q One of most common data mining for marketing q The purpose is to determine what products customers purchase together with other products

26 Executive Information Systems (EIS) q Combine many features of MIS and DSS q Provide top executives with immediate and easy access to information q About the factors that are critical to accomplishing an organization’s strategic objectives (Critical success factors) q So popular, expanded to managers, analysts and other knowledge workers

27 Features of an EIS q Information presented in forms tailored to the preferences of the executives using the system Ø Customizable graphical user interfaces Ø Exception reporting Ø Trend analysis Ø Drill down capability

28 Enterprise Interface Portals q EIP Ø Web-based interface Ø Integration of MIS, DSS, EIS, and other technologies Ø Gives all intranet users and selected extranet users access Ø To a variety of internal and external business applications and services q Typically tailored to the user giving them a personalized digital dashboard

29 Enterprise Information Portal Components

30 Knowledge Management Systems q The use of information technology to help gather, organize, and share business knowledge within an organization q Enterprise Knowledge Portals Ø EIPs that are the entry to corporate intranets that serve as knowledge management systems

31 Enterprise Knowledge Portals

32 Artificial Intelligence (AI) q A field of science and technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics, and engineering q Goal is to develop computers that can simulate the ability to think, as well as see, hear, walk, talk, and feel

33 Attributes of Intelligent Behavior q q q q Think and reason Use reason to solve problems Learn or understand from experience Acquire and apply knowledge Exhibit creativity and imagination Deal with complex or perplexing situations Respond quickly and successfully to new situations Recognize the relative importance of elements in a situation q Handle ambiguous, incomplete, or erroneous information

34 Domains of Artificial Intelligence

35 Cognitive Science q Based in biology, neurology, psychology, etc. q Focuses on researching how the human brain works and how humans think and learn

36 Robotics q Based in AI, engineering and physiology. q Robot machines with computer intelligence and computer controlled, humanlike physical capabilities.

37 Natural Interfaces q Based in linguistics, psychology, computer science, etc. q Includes natural language and speech recognition q Development of multisensory devices that use a variety of body movements to operate computers q Virtual reality Ø Using multisensory human-computer interfaces that enable human users to experience computer-simulated objects, spaces and “worlds” as if they actually exist

38 Expert Systems q ES q A knowledge-based information system (KBIS) that uses its knowledge about a specific, complex application to act as an expert consultant to end users q KBIS is a system that adds a knowledge base to the other components on an IS

39 Expert System Components q Knowledge Base Ø Facts about specific subject area Ø Heuristics that express the reasoning procedures of an expert (rules of thumb) q Software Resources Ø Inference engine processes the knowledge and makes inferences to make recommend course of action Ø User interface programs to communicate with end user Ø Explanation programs to explain the reasoning process to end user

40 Expert System Components

41 Expert System Benefits q Faster and more consistent than an expert q Can have the knowledge of several experts q Does not get tired or distracted by overwork or stress q Helps preserve and reproduce the knowledge of experts

42 Expert System Limitations q Limited focus q Inability to learn q Maintenance problems q Developmental costs q Can only solve specific types of problems in a limited domain of knowledge