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Chapter 12

Decision Support and Geographic Information Systems

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Learning Objectives

When you finish this chapter, you will: Understand the steps followed in decision making. Recognize the difference between structured and

unstructured decision making. Know the typical software components that decision

support systems comprise. Be able to distinguish between the main types of

decision support systems.

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Decision Making in Business

Organization’s success depends largely on quality of managers’ decisions

When decisions involve large amounts of information and processing, computer-based systems can make the process effective and efficient

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The Decision-Making Process

Decisions are more difficult when more than one alternative seems reasonable

One researcher described decision making as a three-phase process IntelligenceDesignChoice

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Figure 12.1 The three phases of decision making

The Decision-Making Process

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Structured andUnstructured Problems Structured Problems

Proven set of steps for solution Algorithm

Unstructured ProblemsMultiple potential solution

Semistructured ProblemsNeither fully structured nor totally unstructured

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Structured and Unstructured Problems

Figure 12.2 Business problems vary from structured to unstructured. Many fall between the two extremes and are considered semistructured.

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Structured andUnstructured Problems Managers and Semistructured Problems

Most common type of problem for managers

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Structured andUnstructured Problems

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Decision-Support System Components Decision Support Systems (DSS)

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

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Decision-Support System Components

Three Major Components Data management module Model management module Dialog management module

Together, DSS modules: Help enter request conveniently Search vast amounts of data Use data in desired models Present results in readable manner

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Decision-Support System Components

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Decision-Support System Components The Data Management Module

Gives user access to databasesUsually linked to external databases

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Decision-Support System Components The Model Management Module

Collection of models the DSS draws on to assist in decision making

Linear regression model

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Decision-Support System Components

Figure 12.5 A linear regression model for predicting sales volume as a function of dollars spent on advertising

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Decision-Support System Components The Dialog Module

Interface between user and other modules Prompts user to select a model Allows database access and data selection Lets user enter/change parameters

Displays analysis results Textual, tabular, and graphical displays

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Decision-Support System Components

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Types of Decision-Support Systems Personal Decision-Support Systems

Serve individual users in daily decision making

Run on personal computersSingle model for data processing

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Types of Decision-SupportSystems

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Types of Decision-Support Systems

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Types of Decision-Support Systems Group-Decision Support Systems

Promote brainstorming and group decision making

Located in conference room or on networked computers

Weigh votes to overcome impasses

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Types of Decision-Support Systems

Figure 12.8 A GDSS Room

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Sensitivity Analysis

Tests degree to which result is affected by change in parameters

What-if analysis Can change multiple parameters at once

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Executive Information Systems (EIS) Alleviate information overload for

executives Select most relevant data for analysis

Drilling down Consolidate and summarize data Display data graphically

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Executive Information Systems

An effective EIS has the following features: An easy-to-use and easy-to-learn graphical user

interface On-request “drill-down” capability On-demand financial and other ratios, and other

indicators Easy-to-use but sophisticated tools to allow

navigation in databases and data warehouses

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Executive Information Systems

An effective EIS…(continued)Statistical analysis toolsThe ability to respond to ad hoc queries and

sensitivity analysesAccess to external data poolsThe ability to solve diverse business problems

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Developing Decision-Support Systems When Should a DSS Be Built?

What is the type problem and how structured is it? Are the required data available in databases and data

warehouses? How often do managers encounter the problem? Who will use the system? Can the prospective users spare adequate time for

the development process?

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The Electronic Spreadsheet: A DSS Tool Provide two facilities for building DSS

Preprogrammed functions

Ability to use IF-THEN statements Most widely used tool

Inexperienced users can use to develop DSSs

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GeographicInformation Systems (GIS) Decision aid for map-related decisions Typical GIS contains

Database of quantitative and qualitative dataDatabase of mapsProgram to display information on maps

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Ethical and Societal IssuesDecisions by Machines Automated decisions can affect

individuals.Mortgage companies, credit card companies,

employers, banks, etc. European Protection

“Automated Individual Decisions” Directive

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Ethical and Societal IssuesDecisions by Machines Who Needs Protection

Determining creditworthiness Efficient Effective

Hidden InjusticeMistakes on recordsDecisions final