Topic 4 Decision

Support
Systems
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Explain the three objectives of Decision Support System (DSS);
2. Explain state the general and specific definition of DSS;
3. Apply the DSS concept in solving problems when constructing the
Group Decision Support System (GDSS); and
4. State the relationship and differences between DSS and other Typical
Information System (TPS)

INTRODUCTION
You have just learned several information system concepts such as the use of IT
in strategic planning and system concept. The system is developed according to
information obtained from the end user. However, do you know that the
information obtained is insufficient to make decisions in solving certain specific
problems, especially problems encountered by the strategic management? In this
topic, we are going to discuss about the decision making process and how the
Decision Support System (DSS) helps managers to make effective decisions.

Students will recognise DSS as a system that provides communication facilities

which includes information in helping consumers solve problems. We will also
learn about the format or structured information that results from DSS such as
special reports and periodic report formats. These reports are generated from
managerial science and mathematical models.
56 TOPIC 4 DECISION SUPPORT SYSTEMS

4.1 DECISION-MAKING

SELF-CHECK 4.1

Everyone will have to make decisions. Compare between making

decisions and solving problems. What makes them different?

Before discussing the decision support system, let us learn about the decision-
making process. Decisions are taken to solve problems. As a student, decision-
making is very vital. For example, what are the courses that you need to
complete an out of campus unit? From the moment you try to solve the problem,
you will encounter multiple decisions. What can be described as decisions?

DEFINITION:
According to Raymon McLeod (2001), decisions are forms of actions taken to
avoid or to reduce the negative effect, or to take advantage of the situation.

4.1.1 Types of Decision

According to a management scientist, Herbert A. Simon (1977) from the
University of Carnegie Mellon, the decision process comes from programmable
categories of decisions to unprogrammable decisions. The programmable process
here means that the problems encountered are a routine, repeatable structure and
that a standard procedure is developed to solve problems if they occur again.
The closest example is the problem of calculating the students' PNGK that can be
solved using available models.

On the other hand, an unprogrammable decision is more complex, is semi or

unstructured, vague and cannot be solved using available models or standard
procedures because of no or rarely occurring situations. Perhaps, the problems
need additional thinking processes that are unique and different in order to reach
a decision.
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 57

4.1.2 Decision-Making Phases

Every time you make decisions, you are unaware that you are actually following
the phases of decision making as described by Simon. Students have to
understand the phases of decision making to further understand how humans
make decisions. According to Simon, there are four phases of decision making.
These phases are:

Intelligence activity The ability of the human to search for a conducive

environment that is needed to be solved.

Design activity Invent, develop and analyse all types of actions

possible.

Selection activity Select one type of action from various alternatives

provided through design activity.

Evaluation activity Evaluate selection that has been made.

SimonÊs decision making phase is an interpretation from a systematic approach.

Managers and information system experts use this pattern to make decisions or
when developing a system.

4.2 DECISION SUPPORT SYSTEM CONCEPT

The DSS concept came about when G. Anthony Gorry and Michael S. Scott
Morton (1971) from the Massachusetts Institute of Technology (MIT) created a
working outline to classify computer applications to several categories. SimonÊs
decision concept and AnthonyÊs management level concept were used. It is
popularly known as the „Gorry and Scott Morton Grid‰ as shown in Figure 4.1.
58 TOPIC 4 DECISION SUPPORT SYSTEMS

Figure 4.1: Gorry and

Scott Morton grid

ACTIVITY 4.1

In your opinion, what is the function and importance of Decision

Support System in an organisation? Discuss with your friends.

4.2.1 Definition of DSS

Two definitions of Decision Support System (DSS) that need to be understood are
the general definition and specific definition.

DEFINITION:
General definition: DSS is a system that provides facilities to problem-solving
and communication in semi-structured problem solving.

Specific definition: DSS is a system that supports managers or a small group

of managers who relatively work as a problem-solving team that find the
solution to semi-structured problems and provide information or give
suggestions related to the specific decision.
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 59

Management in an organisation uses Management Support System (MSS) such as

Neural Network, Intelligence Agent, Expert System and others to improve the
effectiveness in decision-making, especially in complex tasks. The DSS that you
have learnt about is one of the components in the Management Support System.

DSS is a system based on computer interactivity. DSS helps decision makers use
data and models to solve structured, semi-structured and unstructured problems.
Why do we need to know DSS? We need to do so because in decision making,
the person responsible for making the decision needs correct, precise and the
most recent information in order to make a quality and effective decision.

Apart from that, DSS can be defined as a system that facilitates managers by
helping them solve semi-structured and unstructured problems.

DSS interactivity helps decision makers to use data and models to solve semi-
structured and unstructured problems.

DSS can help the management analyse information from the level of lower
management onwards, including outside the organisation. It is used to manage
unstructured decisions such as "What will happen ifÚ?". It can also use Database
Management System (DBMS), question language, monetary model, electronic
spreadsheet, statistical analysis, report generator or graphic software to provide
information.

SELF-CHECK 4.2
If for instance, you are given a choice of going to Phuket Island or
Tioman Island for a holiday, what are the criteria that would help you
make the decision? In your opinion, does DSS help you if all the data
needed is entered into the system?

SELF-CHECK 4.3
You are required to list down the differences between structured, semi-
structured and unstructured problems. Give examples for each.
60 TOPIC 4 DECISION SUPPORT SYSTEMS

4.2.2 DSS Characteristics

As there is no universal understanding about the DSS definition, there is no
understanding about the characteristics and abilities of DSS. However, Efraim
Turban and Aronson (2001) have listed 17 characteristics and abilities of DSS,
from the fundamentals to the ideal. Below are the characteristics of DSS:
1. DSS provides support to the decision maker in solving semi and
unstructured problems. Usually the problems cannot be solved using
computerised Information System and any other tools or quantitative
methodology.
2. All management level support, from operations to the executive level, is
provided.
3. Individual and group support are also available.
4. Support to interrelated decisions or a series of decisions. Decisions may be
made once, several times or just repeated.
5. All four phase of decision-making are supported by DSS: intelligence,
design, decision and justification.
6. All types of processes and styles of development of decisions are supported
by DSS.
7. DSS is very adaptive, so it will always be relevant to current demand.
8. DSS has an interesting graphical user interface.
9. The effectiveness of the user in decision making (quality, accuracy etc)
compared to efficiency (decision making cost).
10. The decision maker has full control over DSS. The DSS objective is to
support users, not to replace them.
11. The end user can modify DSS easily.
12. DSS will usually use models to analyse a problem. The modeling ability
helps the user to test a few different strategies in different situations.
13. DSS allows the user to obtain data from a database.
14. Web-based.

ACTIVITY 4.2
Observe point number seven of the DSS characteristics. Explain briefly
about this characteristic by providing suitable examples. Compare with
your friends.
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 61

Apart from the characteristics stated above, DSS needs to have the ability to
analyse. There are four basic analysis modeling activity:

What-If analysis: The decision maker can make changes to the variables, or
the relationship between the variables, to observe changes inside another
variable.

Awareness analysis: Usually a variable is changed several times and the

resulting variable changes are observed. It is usually used when the decision
maker is not sure of how to approximate the value of the key variables. For
example, a stock inventory must be reduced by 10% several times. Then, we
would be able to see the relation between sales and marketing department.

Objective searching analysis: Changing the analysis direction of What-if

analysis and Sensitivity analysis. Apart from observing how the changes in
the variable can affect other variables, it also sets one target value for the
variable. Then it will change the other variables repeatedly until the
targetted value is achieved. For instance, increasing the percentage of stock
inventory until sales and marketing reach profits of RM 1 million and net
profits of RM 850,000.00.

Optimisation analysis: A continuation that is very complex, from the

information analysis that not only sets one target but also finds the optimum
value for one or more targetted variables. Then, one or several variables are
changed based on constraints given until the best value of the targetted
variable is achieved. For example, what is the best exposure for an
advertisement, its budget and the type of media available?

4.2.3 Types of DSS

Based on Gorry and Scott MortonÊs (1971) work, Steven L Alter (1976) identified
six types of DSS. As seen in Figure 4.2, the six types of DSS have been classed
based on the degree of solution - problem support.

Based on Figure 4.2, the lowest support level in DSS type one is to enable
managers to obtain specific information elements. One example is to get the total
sales of one department from Perak only. If the system helps to analyse all the
files, thus, it is DSS type two. A manager who wants to create a special report
using data from the entire file inventory is one good example. The example only
involves one type of file, that is the inventory file.
62 TOPIC 4 DECISION SUPPORT SYSTEMS

Figure 4.2: Types of DSS

ACTIVITY 4.3

How can a manager prepare a report from all forms of reports, analyse
them and make a decision? Discuss.

Often, you have to obtain data and information from multiple resources, and all
kinds of files from multiple departments. The degree of complexity and support
in solution-problem is higher. Preparing reports from multiple types of files is
one example of DSS type three. At this level, students should already be clear
about the need for taxonomy in understanding the DSS concept.

The three types of DSS discussed earlier provide support to form special reports
resulting from the query or questioning done to a database. The other three DSS
types involve the use of a mathematical model or scientific management model
in supporting manager to make decisions.

An example given by Alter (1976) for DSS type four is the DSS model used to
estimate the effect of a solution. For example, a manager wants to know the
effect of increasing or decreasing the price of products on the monthly and yearly
profit of the company. The manager will input the DSS, for example, RM25 per
unit. The DSS will produce output to the manager if the price of RM25 per unit
will lead to a profit of RM5000 monthly.

However, you must understand that the model is not capable of explaining
whether the price of RM25 is the best solution for the manager to undertake. The
system can only explain what will happen to the profit if that decision is taken.
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 63

In order to provide additional support, you can add some DSS models that can
analyse risks, which can be used by the manager through estimation of analytical
probabilities.

The DSS type five suggests decisions. It gives more support to the decision maker
but the degree of complexity of the DSS increases, for example, DSS that uses the
linear algorithm model. A manager can input data about the structure of a
factory and its equipment. This DSS will then make use of the linear algorithm
model to produce the most effective decision.

The DSS type six, which can make decisions, is the DSS that offers the most
support to the user even though it is difficult and complex to develop. For
example, an insurance company depends on the DSS model to set the insurance
premium. Company managers are very confident with the model and let the DSS
make their decisions.

Alter experimentation is important for two reasons: first, it supports the concept
of developing a DSS system to solve a certain type of decision only; secondly, a
DSS should not limit itself to mathematical and scientific management only, but
should also produce a periodic report other than the special report.

SELF-CHECK 4.4

List down at least six (6) important DSS characteristics.

4.2.4 DSS Objective

SELF-CHECK 4.5

With regards to the important characteristics of DSS, try to think of the

objective of DSS and how far can DSS provide the best evaluation for a
certain decision?

You must understand that every system has its own aims and different
objectives. However, there are information systems that are interrelated, and
which support other systems or need support from other systems. For example,
Management Information System needs input from the Financial Information
64 TOPIC 4 DECISION SUPPORT SYSTEMS

System to prepare a companyÊs financial report. G. W. Keen and Scott Morton

(1978) at MIT provide three main objectives that need to be achieved by a DSS.
Below are the decision support system objectives:

1. Help and prepare support for the manager in the decision-making process
to solve semi and unstructured problems.

2. Support the manager in the decision-making process but not replace the
manager in making decisions.

3. Concentrate on improving the effective process of decision making by the

manager compared to efficiency.

The three objectives above are related to the three basic concepts of DSS that are
problem structure, support decision and the effectiveness of decision. Actually, it
is difficult to find completely structured or unstructured problems because most
of the problems are semi-structured.

The second objective of the DSS clearly shows that the computerised system still
cannot replace humans in decision-making. From this objective, we understand
that the DSS only helps decision makers to handle part of the structured
problems where part of the unstructured problems still need human intuition
and consideration.

The third objective states that efficiency and the speed of data and information
processing are not the main objectives of a DSS. The main advantage of using a
DSS is the ability to help users to make better, more qualitative and effective
decisions. According to McLeod (2001), managers must not find the best solution
using output from a DSS because finding the solution or the decision-making
process can be solved using mathematical models. On the other hand, managers
can depend on intuition and judgment in selecting the solution from several
alternatives.

4.2.5 DSS Model

Figure 4.3 is a DSS model that shows how components of DSS interact to support
decision makers. The DSS model has the same structure as the Management
Information System and Financial Information System models.
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 65

Figure 4.3: DSS model

Even though they have the same structure, the characteristics, concepts and
objectives of the three information systems are different. As displayed in Figure
4.3, data and information are input into the database from its surrounding. A
DSS database might also receive the same input data and information from the
Financial Information System and other systems and sub-systems. The content of
the database will be used by four (4) sub-systems software, that is the report
writing software, mathematical model, scientific management model and
groupware.

SELF-CHECK 4.6
What is the What-if analysis? What is the importance of this to analysis a
manager.

4.3 GROUP DECISION SUPPORT SYSTEM

The government and private organisations spend millions of ringgit to maintain
the traveling costs of their staff who attend meetings locally or internationally.
Now, every organisation can save if they use information and communication
66 TOPIC 4 DECISION SUPPORT SYSTEMS

technology (ICT) which enables them to conduct a virtual meeting with

colleagues or clients who are thousands of miles away. This can be done using
digital video technology, Internet Relay Chat (IRC) and other technologies in a
network such as the Internet and Intranet.

Innovation in ICT has given birth to a new DSS concept, that is the Group
Decision Support System (GDSS). A team that cooperates to achieve a common
objective can use GDSS to improve communication between group members.
GDSS provides a conducive environment and supports the decision-making
process using a type of software called groupware.

DEFINITION:
Group Decision Support System (GDSS) is a computer-based system that
supports a group of individuals that cooperate to achieve one aim by
providing an interface which use the surroundings that are shared together.

There are other definitions used to describe the application of information system
by a group, such as the Group Support System, Computerised Cooperative Work
and Electronic Meeting System. Every definition used applies to all kinds of
groups and environments.

You will agree with the opinion that information and communication technology
(ICT) has made the world smaller because it helps humans to communicate
better, even though your friends are thousands of miles away. For example,
specialist surgeons in Europe do not need to be in Malaysia to perform surgery as
it can be done remotely. Thus, the basic theory of the development of GDSS is to
communicate well to produce a better decision.

You have to understand that good communication in context of making decisions

does not necessarily mean good technology but refers to discussions that only
concentrate on problems without wasting time discussing irrelevant matters.
The additional time obtained can be used to search for other alternatives to the
solution chosen.

4.3.1 GDSS Environment

GDSS supports the problem-solving process by providing a conducive
environment to communicate in. Figure 4.4 shows four types of environments,
based on the group size and location of the group members.
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 67

For each type of GDSS environment, group members can meet at the same time
or at different times. If group members meet and discuss at the same time, as in a
meeting, this is called synchronous exchange. On the other hand, meeting at
different times, such as communicating using e-mail, is called asynchronous
exchange.

Figure 4.4: Group size and location that characterise the GDSS environment

By looking at Figure 4.4, you must be wondering what is meant by decision

room, decision network and so on.

Decision room is provided for a small group of humans that gather and meet to
discuss. However, the decision room has characteristics that are very different
from the meeting room that you know of, even though the purpose is the same,
which is to come to a decision. The decision room is different from a meeting
room because the decision room helps the members to communicate through the
aspects of architecture and tools with its furniture. Decision group is equipped
with a combination of workstation, microphone, video camera, big screen display
and such. At the center of the room is a computer for the facilitator.

The facilitator must make sure that the discussion is always on the right track.
Have you chatted on the Internet using IRC or ICQ? If yes, this communication
takes place in a decision room, which is almost the same except that the text that
is typed is displayed on the big screen. Other than that, any reference material
for discussion can be displayed using video, colour slides and transparencies.

There are two (2) unique characteristics of GDSS in the decision room which are
the parallel communication and anonymity.
68 TOPIC 4 DECISION SUPPORT SYSTEMS

Parallel communication occurs when all participants making statements use

the computer at the same time
Anonymity means that no participant knows who is giving certain
statements. Anonymity helps participants to spill out ideas and statements
without feeling afraid of being criticised by other participants. Thus, all ideas
and suggestions are evaluated based on meritocracy and not on who suggests
it.

DEFINITION:
Local Decision Network is a small group that uses the local area network
(LAN) to interact using an application such as IRC.

This method is used when it is impossible to gather all members in one room at
the same time.

Legislative Session is created when the decision room is too small to be occupied
by all members. This session is limited to communication through a few
methods. Among the methods are when only a few members are given the
opportunity to communicate, or limited time is allocated to every member to
communicate, or the facilitator selects materials and ideas that need to be
displayed on the screen for the group to see.

Computerised Conference is more commonly known as teleconferencing.

Teleconferencing is a computer application that helps a group of humans to
communicate even though they are geographically separated. Teleconferencing
involves computer conferencing, audio conferencing and video conferencing.

4.3.2 Group Software

ACTIVITY 4.4

Have you heard of group software or groupware? In your opinion, who

will need this kind of software and what would be the reason? Discuss.

The meaning of Group Software or groupware is software that provides support

to a cooperating group through collaboration. Group Software provides the
mechanism to all members of the group to share ideas, data, infomation,
knowledge and other resources; examples are Domino Server, Microsoft
 TOPIC 4 DECISION SUPPORT SYSTEMS ! 69

Netmeeting, Netscape, Collabra Server, Group System, Novell GroupWise and

many more.

ACTIVITY 4.5

This website: http://ksi.cpsc.ucalgary.ca/courses/547-95/kooy/gdss.html is a

good example of the development and use of GDSS at the University of Calgary
in solving their problems.

Figure 4.5: Communication of time/place and several computerised collaborative

technical support outline

However, you must realise that not all group software packages are suitable to be
used as a working group. Refer to the outline of time/place in Figure 4.5 and
you will see the see the technological differences in supporting a working group
according to time and place. Other than that, every group software package will
be of different technology, based on one package that supports the purpose of the
working group, such as the type of group assignments.

Working software must have at least one of the abilities or components listed:
electronic advisor, conference or an electronic meeting room, group timetable,
calendar, planning, conflict resolution, model development, video conference,
document sharing (such as screen, whiteboard and or live board), voting etc.
70 TOPIC 4 DECISION SUPPORT SYSTEMS

ACTIVITY 4.6

There are group software services offered on the Internet such as

WebEx and TCB works. You can obtain information on their
technology at http://www.webex.com.

Actually, there are thousands of group software packages that contain elements
of working software and you can look for information on the Web using a search
engine.

ACTIVITY 4.7

An interesting discussion on the decision support system can be found in

Topic 10, page 314 by Laudon K., and Loudon J. 2003. The Essentials of
Management Information Systems. New Jersey: Prentice Hall.

SELF-CHECK 4.7

1. Give the definition of Decision Support System.

2. Give four (4) phases in making decisions, as stated by Simon.

3. What is the objective of DSS?

4. Give four (4) analysis models needed by a DSS.

5. Give the definition of GDSS.

6. What is a legislative session?

 TOPIC 4 DECISION SUPPORT SYSTEMS ! 71

The impetus or main drive for a Decision Support System (DSS) is to support
the manager to make decisions effectively. DSS provides the facilities to
communicate which include information on helping the user to solve
problems.
DSS supports the manager, or a small group of managers who relatively
work as a problem solving team, in searching for a semi-structured and
unstructured problem solution by providing information or making
suggestions related to a specific decision.
In developing a DSS, the decision-making process needs to be researched
first. The decision-making process can be categorised as programmable
decisions and unprogrammable decisions.
The decision making process consists of four (4) activities: intelligence
activity, design activity, selection activity and evaluation activity.
There are 17 characteristics and abilities of an ideal DSS needed by a support
system.
Other than these characteristics there are four (4) type of basic analysis
modeling activities usually needed in a DSS. These activities are the what-if
analysis, awareness analysis, information searching analysis and optimisation
analysis.
There are three main objectives in developing a DSS. The first objective is to
help and provide support to the manager in the decision-making process to
solve semi-structure or unstructured problems. The second objective is to
support the manager in the process of making decisions and the last objective
is to improve the effectiveness of the decision making process.
Organisations can reduce the traveling costs of employees by using
information and communication technology (ICT) that enables virtual
meetings such as the Group Decision Support System (GDSS).
GDSS supports a group of individuals that work together to achieve one aim
by providing an interface to reach and use the shared environment.
The fundamental theory of GDSS development is to communicate better to
come to a better decision. GDSS helps a group of humans who conduct
meetings to find a solution by helping them concentrate on the problem
without wasting time discussing irrelevant matters.
Decision rooms provide characteristics that are very different from normal
meeting rooms because they help the members communicate through the
aspect of technology, and room design including its furniture. Decision
72 TOPIC 4 DECISION SUPPORT SYSTEMS

rooms provide anonymity; not participants do not know who is giving a

certain statement.
DSS and GDSS are part of the Management Support System technology that
helps the manager to make decisions qualitatively, and does not to replace
them in making decisions. This is because in the decision making phase,
humans still rely on intuition or experience.
However, DSS and GDSS are very useful and are helpful to companies in
making right decisions. Techno-savvy lifestyle such as using laptops or
handheld computers make DSS and GDSS important as computer mobility
enables humans to use computers anywhere to help them make decisions.