module 3 dss

7/30/2019 Module 3 DSS

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C H A P T E R 4

Managerial Overview of DSSTeena Y. Sharma

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Managerial Overview of

Decision Support Systems


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Introduction


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To succeed in business today, including e-businessinitiatives, companies need information systems thatcan support diverse information and decision

making needs of their managers and businessprofessionals.

As companies move towards development, theyinvest in new data driven decision-support

application framework, that help them respondrapidly to changing market conditions and customerneeds.


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Information, Decision and Management


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StrategicManagement

Executives andDirectors

TacticalManagement

Business UnitManagers ND Self-

Directing Teams

Operational Management

Operating Managers and SelfDirecting Teams

Decision Structure Information Characteristics

Structured

Semi-Structured

UnstructuredAd-hoc, Unscheduled,Summarized, Infrequent,Forward Looking, External,Wide Scope

Pre-specified, Scheduled,

Detailed, Frequent,Historical, Internal,Narrow Focus


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It is shown in the figure on slide-3, that type ofinformation required by decision makers, is relatedto the level of management decision making and theamount of structure in the decision situations theyface.

The various levels of managerial decision makingare:

Strategic Management Tactical Management

Operational Management


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Strategic Management: It consists of board of directors, an executive committee of CEO, and

some other top executives.

They develop overall organizational goals, strategies and policies, theyalso monitor the performance of the organization in its environment.

Tactical Management: It consists of some self motivated people, business unit managers.

They develop short-medium range plans, schedules, budgets, policies,procedures for the sub-units of the company.

Operational Management: These are a group of some self directed people and operating managers.

They develop short range plans such as weekly production schedules.


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Types of Decision Structures


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Structured: Here it is known in advance, what steps have to followed, when a

decision situation arises, which means, how to take the decision isknown in advance.

E.g.: Inventory Control, Rewards to a team member etc.

Unstructured: When it is not possible to specify in advance, how a decision has to be

taken E.g.: New business initiatives for the business unit etc.

Semi-Structured: Here some decision procedures can be pre-specified, but they are not

strong enough, that they can lead to a definite recommended/expectedresult.

E.g.: Capital Budgeting


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Time Dimension Timeliness

Currency Frequency Time-period

Content Dimension

Accuracy Relevance Completeness Conciseness performance

Form Dimension

Clarity Detail

Order

Presentation

Media

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Quality of Information


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Decision Support Systems


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DSS are computer based IS, that provide interactiveinformation support to managers and businessprofessionals, during the decision making process.

They help managers in taking decisions.

The decisions so made are more effective.

DSS use: Analytical Models

Specialized Databases Decision Makers own Insights and Judgments

An Interactive Computer-based Modeling Process

In order to take decisions.


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DSS, Organizations, Management and BusinessChallenges


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Management

Organization

Technology

InformationSystems

BusinessSolutions

BusinessChallenges


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The Decision-Making Process


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Intelligence Design Choice Implementation


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The Decision Making Process


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Intelligence: It consists of Discovering, identifying and understanding the

problems occurring in the organization Why there is a problem?Where and What effects it will have on the firm ?

Design Involves identifying and exploring various solutions to the problem

Choice: Choosing best solution among the alternatives

Implementation: Implementing the chosen alternative, and continuing to monitor how

well the solution is working.


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Systems for Decision Support


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Management Information Systems (MIS)

Decision-Support Systems (DSS)

Data Visualization and Geographic Information

Systems (GIS) Web-Based Customer Decision Support Systems

(CDSS)

Executive Support Systems (ESS)


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Managers and Decision Making


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Role Description Support Systems

Interpersonal Roles

Figurehead Symbolic head: perform some duties which arelegal or social in nature

None

Leader Motivate followers None

Liaison Maintaining self-developed network of outsidepeople who give information

Electronic CommunicationSystems

Informational Roles

Monitor Evaluating information MIS, ESS

Disseminator Transmit the information received from outsidersto insiders of organization

Mail, Office System

Spokesperson Transmit information to companys outsiders Sales systems. MIS, ESS

Decisional RolesEntrepreneur Improvement, bringing changes in organization Various Online Systems, MIS,

ESS, at times DSS

Disturbance Handler Giving solutions to unexpected actions MIS, DSS

Resource Allocator Responsible for allocating organizationalresources

DSS

Negotiator Representing the organization at major

negotiations,

MI?S


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Management Information Systems


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MIS help managers to monitor and control thebusiness activities, usually by providing informationon business activities.

Their main objective is to do the PerformanceAnalysis of the organization, b generating variouskind of reports.

It mainly addresses structured problems

They typically produce fixed and scheduled reportsbased on data extracted from firms TPS.

At times they may generate exception reports also.


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Decision-Support Systems


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They addressSemi-structuredand Unstructuredproblems as well.

They do the Analysis and Comparison of reports

taken from other systems like TPS, MIS etc. Their main objective is Problem Solving.


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Comparing DSS and MIS


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MIS DSS

Main Objective Performance Evaluation of theOrganization

Problem Solving

What do they generate ? Provide information about the

performance of theorganization

Provide information and decision

support techniques to analyzespecific problems or opportunities

Frequency ofInformation

Periodic, Exceptional, Demandand Push responses

Interactive inquiries and responses

Information Format Pre-specified, Fixed Format Ad-hoc, Flexible and AdaptableFormat

Information ProcessingMethodology

Information is produced byextraction and manipulation ofbusiness data

Information is produced byanalytical modeling of businessdata


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Components of a DSS


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Analytical Models

DSS Database

Decision Makers own Insights and Judgments

User Interface DSS Software System


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DSS Components


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OperationsData

MarketData

Sales DataCustomerAccount

Data

Data Management Functions(Data Extraction, Validation, Correction, Integration and Replication)

Model Management function s(Analytical Modeling, Statistical Analysis)

User Interface Functions(Hyperlinked Media, 3-D Visualization)

Legacy

Software

Web

Browser

Other

Software


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Business Value of DSS


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DSS for Pricing Decisions

DSS for Profitability Analysis

DSS for Customer Relationship Management

DSS for Companys SWOT Analysis DSS for sudden business problems


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Using Decision Support Systems


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Using a DSS involves an interactive AnalyticalModeling Process.

Using a DSS involves four basic type of Analytical

Modeling Activities: What-If Analysis

Sensitivity Analysis

Goal-Seeking Analysis

Optimization Analysis


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What-If Analysis

In What-If analysis, the end user makes changes to variables,relationships between variables, and observing changes in theother variables.

E.g.: If advertising cost is cut down by 10%, what will be thenet affect on sales


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Sensitivity Analysis

It is a special case What-If Analysis.

Typically value of only one particular variable is changedrepeatedly, and the resulting change on all variables is

observed.


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Goal-Seeking Analysis Goal Seeking Analysis reverses the direction of analysis done

in What-If and Sensitivity analysis.

Instead of observing, how changes in one variable affects the

other variables, Goal-Seeking Analysis sets a target value forthe variable, and then repeatedly change the variable until thetarget value is not received.

E.g.: Increasing the advertising promotions, until sales

received from them is not $ 1 Million.


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Optimization Analysis Optimization Analysis is a more complex form of Goal-

Seeking analysis.

Instead of setting a target value for one particular variable, an

optimum value is given to one or more variable, under certainconstraints.

Then one / more of these variables are changed repeatedly, asper the set constraints, until the best value for the target

variables is not obtained. E.g.: What is the best amount of advertising, with a given

amount of budget, the various media involved, to get a sales ofa fixed amount.

module 3 dss

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