DECISSION SUPPORT SYSTEM DECISION

o Making decisions concerning complex systems often strains our capabilities.

o Predicting how the system will react to an external manipulation such as a policy decision is often difficult.

Decision support systemo Decision Support Systems (DSS) are a specific class of

computerized information system that supports business and organizational decision-making activities .

o A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions .

WHY DSS o Because decision-making involves a complex sequence of

activities over time, it implies there are at least three functions that should be assigned to DSSs:

o 1) The capability of capturing and saving information from previous activities;

o 2) Data processing capability;o 3) Data retrieval capability.

COMPONENTS OF DSS o There are three fundamental components of DSS :o DATA BASE MANAGEMENT SYSTEM (DBMS)o MODEL BASED MANAGEMENT SYSTEM (MBMS)o DIALOG GENERATION &MANAGEMENT SYSTEM (DGMS)

Types of DSS o DS systems can be separated into seven broad categories, each

aiding decision making by different methods:o DATA DRIVEN DSS.o MODEL-DRIVEN DSS.o KNOWLEDGE DRIVEN DSS.o DOCUMENT DRIVEN DSS.o Communication Driven DSS.o INTER & INTRA-ORGANIZATIONAL DSS.o NEW BREED OF DSS

Displays the analysis of results

Interface between user and other modules Dialog management module May also include OLAP or data mining tools collection of mathematical models (statistical models, linear programming,

forecasting, sensitivity analysis models) available for the user Model management module Capabilities to manipulate the data

o consists of current or historical data and possibly some external data; data warehouse Data management module

Ability to solve diverse business problems Ability to perform ad hoc queries or what-if analysis Tools to navigate in a database or data warehouse Statistical analysis tools Access to external (outside the firm) databases On-demand financial analysis (ratios or indicators) Drill down capacity Easy to use graphical user interface (Windows like) Drill down, customized views, individualized reporting (Subtotal) Web-based DSS exist for both types (customer decision support systems;

Vanguard;, Rainbird irrigation systems), Home Depot (deck projects)

1

Data-driven DSS are systems that analyze large pools of data that are (usually) stored in a data warehouse; these systems permit managers to extract useful relationships that exist in the data (datamining).

Model-driven DSS are primarily standalone systems that use some type of quantitative model to perform “what if” or other types of analysis.

Types of DSS (one way of classifying) Customer DSS (CDSS) Types of DSS

o Tracking the spread of disease or crime o Repositioning promotions and advertising o Targeting pockets of potential customers o Identifying the best site to locate a branch office o Geographic Information Systems (GIS) o Applications of GIS

Program to display information on maps Database of maps Database of quantitative and qualitative data

Typical GIS contains A GIS is a DSS for decision aid for map-related decisions

Geographic Information Systems (GIS) Complexity of products and sophistication of the buyer often determine the

nature of a CDSS 20o Support exists for both the individual consumer (B2C) and businesses

(B2B)o A CDSS is a special type of DSS designed to support the buying

decisions of an existing or potential customer. Most current CDSS are Web based Customer DSS (CDSS)

Manager and Consumer Decision Making o Manager’s Decision Making Process Customer’s Purchasing Decision

Process Need recognition Intelligence Information search Design Choice Implementation Evaluation Purchase After purchase evaluation Description Customers must recognize they have a need

Customers must search for a product or service that satisfies this need Customers use decision heuristics to evaluate and compare goods and services The customer must place an order, pay for it, and arrange for collection delivery, or maybe installation Customers evaluate purchases with a view to future decision-making. Customer support and maintenance may be important

Charts, pivot tables, what-if tables, scenario management o Ability to use Visual Basic for Applications o Built in IF-THEN function o Preprogrammed functions enable the use of many mathematical models

Features of spreadsheets that support DSS construction o Most widely used tool for decision support because it is widely

accessible to both experienced and inexperienced users o The Electronic Spreadsheet: A DSS Tool

Pros for automated decisions – efficiency (cost, time, speed) Mathematical models employ equations and(or) inequalities Graphic models that use lines, symbols and shapes (ER diagram) Narrative models provide spoken or written descriptions Physical models like a scale model of a building Model types A model is an abstraction of an object or activity (entity)

o Model Types Linear versus nonlinear Stochastic (probabilistic) versus deterministic Dynamic versus static production schedule

o quality control product-mix inventory level (EOQ) o Production

2

Sales performance o pricing strategies product demand forecast

o Finance depreciation methods tax computations breakeven analysis after-tax yield return on investment cash flow

Accounting Sample Models by Functional Area

DSS o IN-HOUSE PROPRIETARY DATABASE o KNOWLEDGE DATABASE DATA PROCESSING MODELS FINANCIAL

ACOUNTING ECONOMICAL EXTERNAL AND INTERNAL ENVIRONMENT PROCESSING BY MANAGER,

o USING KNOWLEDGE, EXPERIENCE AND INTUITION QUALITY DECISION PROCESING MODEL FOR DSS

NEW BREEDS OF DSS o HYBRID SYSTEMo Eg.-WEB BASED DSSo On-line Analytical Processing (OLAP)

MANAGEMENT REQUIREMENT OF DSS o ALLOCATING RESOURCESo PREPARING BUDGETSo OBSERVATION OF RESULTSo EVALUATION OF RESULTo MODIFICATION OF ACTIVITES AND RESOURCES

Intangible payoffs DSS o Improved internal control.o Enhances long term profitability by improving quality of decision

making.o Faster response to changes in business environment .o Better management awareness of internal strength and

weaknesses and external threats and opportunities.o Allows managers’ to record experience and use it in future for

similar scenarios that may arise within the organization.

3

Organization’s success depends on quality of managers’ decisions When decision making involves many uncertainties and/or lots of altatives a DSS is needed

When decisions involve large amounts of data and complex processing, a DSS is a valuable tool

Decision Making in Business

3.  Implementation –

the individual puts the decision into effect and reports on the progress of the solution

Choice - the individual selects among the various solution alternatives

Design - the individual conceives of possible alternative solutions to the problem

Intelligence - the individual collects information to identify problems occurring Simon’s Stages of Decision Making

4. The Decision Making Process Is Not Linear Is there a problem? Intelligence

What are the alternatives? Design Which should you choose? Choice Is the choice working? 4 Implementation

5. Typical Activities in the Stages of Decision-Making 5 6. 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 7.  Semistructured decisions are ones where only part of the problem has a

clear-cut answer provided by an acceptable procedure 7 Unstructured decisions are nonroutine decisions in which the decision maker must provide judgment, evaluation, and insights; there is no agreed-upon procedure for making the decision Structured decisions are repetitive, routine, and involve a definite procedure for handling

Types of Decisions 8.  How are these problems different? 8 Semistructured problem: If I invest

$100,000 in stock XYZ and sell the stock in two years, how much money will I make? Structured problem: How much will I earn after two years if I invest $100,000 in municipal bonds that pay 4 percent per annum tax free? Example of a Structured and Semistructured Problem

9. Examples of Structured and Semistructured Problems 9 10. Other DSS are built for individual managers to assist in daily decision making

tasks (e.g., Mrs. Fields Cookies provides managers with a DSS that assists in decisions related to which cookies to make, how many to make based on prior sales)Some DSS are very sophisticated and built by experts to improve firm performance (e.g., in trucking, models are developed to minimize total mileage and maximize truck loads while maintaining satisfactory delivery times) Examples A DSS is a computer system that combines data, 10 sophisticated analytical models, and user-friendly software to support semi-structured and unstructured decision making. A Definition of a DSS

11.  DSS use sophisticated analysis and modeling tools 11 DSS provide support for decisions and problems whose solutions cannot be specified in advance DSS operate with little or no assistance from professional programmers (e.g., personal and CDSS) DSS allow users to initiate and control the input and output DSS offer users flexibility, adaptability, and a quick response (usually interactive) Characteristics of a DSS

12. sometimes rank the choices 12make faster decisions In the choice phase generate more accurate alternatives generate more alternatives In the design

4

phase make more data available increase the use of quantitative data produce more timely data In the intelligence phase How a DSS Can Improve Managerial Decision Making

MIS

INTRODUCTION Management Information System (MIS) provides information for the managerial activities in an organization. The main purpose of this research is, MIS provides accurate and timely information necessary to facilitate the decision-making process and enable the organizations planning, control, and operational functions to be carried out effectively. Management Information System (MIS) is basically concerned with processing data into information and is then communicated to the various Departments in an organization for appropriate decision-making.

4. WHAT IS MIS? 1) Right Information 2) To the right person 3) At the right place 4) At the right time 5) In the right form 6) At the right cost

5. Characteristics of a Management Information System 1) Provides reports with fixed and standard formats - Hard-copy and soft-copy reports 2) Uses internal data stored in the computer system 3) End users can develop custom reports 4) Requires formal requests from users

6. THE MIS DEFINITION 1) The MIS is define as the computer based information system. 2) The MIS is defined as a system based on the database of the organization evolved for the purpose of providing information to the people in the organization.

7. SCOPE OF STUDY The term "MIS" across to describe such applications providing managers with information about sales, inventories, and other data that would help in managing the enterprise. Today, the term is used broadly in a number of contexts and includes decision support systems, resource and people management..

8. NEED OF MIS Information that needs to be recorded and studied includes relevant information of the department for planning process as well as specific information to know whether one involved in SWM services is performing his duty well, adequate vehicles are given to the SWM Dept. by the workshop, the vehicles give their optimum output, the repairing and maintenance of vehicles and equipment at the workshop is properly done, the vehicles carrying the waste to the disposal site are optimally utilised, the processing plants are performing well, landfill sites are well managed etc.

9.  Decision support systems (DSS) are computer program applications used by middle management to compile information from a wide range of sources to support problem solving and decision making. Decision support systems (DSS) TYPES OF MIS

10. DSS • Decision making Process INTELLIGENCE DESIGN CHOICE Herbert Simon Model of Decision Making

11.  CHOICE: Select one alternative as a decision based on the selection criteria. DECISION: Inventing developing and analysis different decision alternative and testing the facibility of implementation. INTELLIGENCE: Row data collected process and examined identifies a problem calling for a decision.

12. CONCLUSION As organizations grow, MIS allows information to move between functional areas and departments instantly, reducing the need for face-to- face communications among employees, thus increasing the responsiveness of the organization.

5