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8/13/2019 Decision Support Systems and Executive Support Systems (1)
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Decision Support Systems and
Executive Support Systems
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Three types of decision
Structured
Semi-structured
Unstructured
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Structured
Structured decisions are those which are
made according to specified procedures of
rules or structured decisions are those that
are easily made from a given set of inputs.
Deciding to send a reminder notice to a
customer for an overdue balance is
considered to be structured decision
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Semi-structured
Semi-structured decisions are those for which
information obtained from a computer system
or information system is only a portion of the
total knowledge needed to make decision.
Advertise a new product or how much to
spend on MIS.
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Unstructured
Unstructured decisions are novel, and insignificant.
There is no cut and dried method for handling theproblem because it hasn't arisen before or because it'sprecise nature and structure are mysterious orcomplex, or because it so important' that it deserves acustom tailored treatment.
These, types of decisions often , involve a high degreeof freedom.
They may require a lot of creativity and intuitions fromthe decision maker to tell what factors will come intoplay in an unstructured play.
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Definition of decision support system
Decision Support
Systems (DSS) are a
specific class of
computerizedinformation system that
supports business and
organizational decision-
making activities.
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Objective of DSS
The objective of Decision Support System (DSS)isto support managers in their work, especiallydecision making.
Decision support system (DSS) tends to be used inplanning, modelling, analysing alternatives, anddecision making.
The emphasis is on small, simple models whichcan easily be understood and used by the
manager rather than complex integrated systemswhich need information specialist to operatethem.
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Examples
Typical information that a decision support applicationmight gather and present would be:
Accessing all of your current information assets,including legacy and relational data sources, cubes,data warehouses, and data marts
Comparative sales figures between one week and thenext
Projected revenue figures based on new product salesassumptions
The consequences of different decision alternatives,given past experience in a context that is described
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Differences to MIS
What distinguished MIS from a decision supportsystem (DSS) is flexibility.
The format and types of information on MIS arepredefined, but the format and types ofinformation in decision support system (DSS) arenot
In decision support system (DSS), users areprovided with the capabilities to generate their
own information usually in their own way.
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Making decision
Four stages
1. Intelligence
2. Design3. Choice
4. Implementation
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Intelligence (find what to fix)
Find or recognize a problem, need, or opportunity (alsocalled the diagnostic phase of decision making). Theintelligence phase involves detecting and interpretingsigns that indicate a situation which needs your attention.
These "signs" can come in many forms: Consistent customer requests for new-product features
The threat of new competition
Declining sales
Skyrocketing costs An offer from a company to handle your distribution
needs, and so on
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Design (find fixes)
Consider possible ways of solving the
problem, filling the need, or taking advantage
of the opportunity. In this phase, you develop
all the possible solutions you can.
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Choice (pick a fix)
Examine and weigh the merits of each solution, estimatethe consequences of each, and choose the best one. The"best" solution may depend on such factors as:
Cost
Ease of implementation .
Staffing requirements
Timeliness of the solution
This is the prescriptive phase of decision making; it's thestage at which a course of action is prescribed.
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Implementation (apply the fix)
Carry out the chosen solution, monitor the
results, and make adjustments as necessary.
Simply implementing a solution is seldom
enough. Your chosen solution will always needfine-tuning, especially for complex problems
or changing environments.
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Applications of DSS
DSS are men/machine systems and are
suitable for semi-structured problems.
The problems must be important to the
manager and the decision required must be a
key one.
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Other criteria
Large database
Large amount of computation or data
manipulation required
Complex inter-relationships
Analysis by stages
Communication
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Components of DSS
Interaction of man and machine
Hardware
Software Decision maker (user/manager)
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Functions of DSS
Information retrieval
Data reconfiguration
Calculator activities
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Information retrieval
Information retrieval in DSS environment refers
to the act of extracting information from a
database for the purpose of making decisions.
Usually, the sequence of retrievals made by theuser is unanticipated.
For example, the manager may see a few startling
pieces of information on the display and, as a result of
these, suddenly produce a report that provides more
detail about the situation: Drill down
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Data reconfiguration
Often managers using a DSS want information ina form other that that in which the data arelogically represented within the computer
system. The ability to reconfigure data makes it possible
for managers and other decision makers to lookat existing data from alternative perspectives:
sorting, exchanging fields, joining, andpresentation graphics using online analyticalprocessing and data warehouse
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Calculator activities
Functions
Functions are pre-stored formulas that enable a user toperform a calculator type task as soon as the function isinvoked
Analysis Analysisrefer to using a decision support system (DSS) to
review a set of facts and to assist in drawing conclusionsbased on there facts.
Statistical Tools: regression and correlation analysis Optimizing tools
What if analysis (sensitivity analysis)
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Optimizing tools
Optimizing toolsare useful for deriving thebest solution in certain structured decisionsusually at tactical and operational levels.
Optimizing tools are used where it is requiredto optimize the value of a single objective (e.g.production capacity) where the factorsinvoked (e.g. labour hours, machine capacityetc.) are subject to some constraints orlimitation.
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What if analysis (sensitivity analysis)
Assessing risk with the help of DSS tools is knownas sensitivity analysis.
At its simplest this means, holding all the
variables, bar one, constant and altering that onevariable step and noting the effect on the result.
For example, a simulation of an investment programmight include factors such as; cost per unit, price per
unit, volume sold, amount of investment and as on.What if sales growth per month is nil, 1/2%, 1 & 1/2%,2% or minus 1% etc.
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DSS for the supply chain
Comprehensive examination of supplymanagement chain
Searches for most efficient and cost-effectivecombination
Reduces overall costs
Increases speed and accuracy of filling customerorders
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DSS for Customer Relationship
Management
Uses data mining to guide decisions
Consolidates customer information intomassive data warehouses
Uses various analytical tools to sliceinformation into small segments
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DSS for customer analysis and
segmentation
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Executive support systems (ESS)
Senior managers use a category
of information systems called executive support
systems (ESS)to make decisions.
ESS serves the strategic level of the organization.
They address unstructured decisions and create a
generalized computing and communications
environment rather than providing any fixedapplication or specific capability
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Executive Support Systems (ESS) in Perspective
Tailored to individual executives
Not to managers in other levels
Easy to use Drill down capabilities
Support need for external data
Can help when uncertainty is high
Future-oriented
Linked to value-added processes
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Executive support systems (ESS)
ESS is designed to incorporate data about externalevents such as new tax laws or competitors, but theyalso draw summarized information from internal MISand DSS.
They filter, compress, and track critical data,emphasizing the reduction of time and effort requiredto obtain information useful to executives.
ESS employs the most advanced graphics software and
can deliver graphs and data from many sourcesimmediately to a senior executive's.
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Executive support systems (ESS)
Unlike the other types of information systems,ESS is not designed primarily to solve specificproblems.
Instead, ESS provides a generalized computingand telecommunications capacity that can beapplied to a changing array of problems.
While many DSS are designed to be highlyanalytical, ESS tends to make less use ofanalytical models.
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Sample questions answered by ESS
What business should we be in?
What are the competitors doing?
What new acquisitions' would protect us fromcyclical business swings?
Which units should we sell to raise cash for
acquisitions?
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Features/Properties of an ESS
Ease of use The system must be fast and extremely simple to use as it will
be used by busy executives. The use of touch screens, mouseand icons, popup menus, etc. is normal.
Access to data There must be unhindered rapid access to data permitting
vertical and horizontal exploration.
Data Analysis EIS should provide facilities for such things as ratios, trend
calculations, and data integration forecasts.
Quality Presentation The system should provide interesting and understandable
formats using colours, graphics, and diagrams.
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Question
A decision support system (DSS) uses its
analytical capabilities to solved semi-
structured and unstructured problems.
Describe what is the difference between such
problems
(5 marks)
Explain how the functions of a DSS can be used tosolve such problems.
(25 marks)