TOPIC:- DECISION SUPPORT SYTEM

SUBMITTED TO:Mr. HITESH

SUBMITTED BY:VINAY SHARMA M.B.A 3rd SEM 105272250756

INDEX
PAGE NO.
1. INTRODUCTION TO MIS 2. INFORMATION CONCEPTS 3. INTRODUCTION TO DSS
4.

(2-4) (5-15) (16-19) (20-23)

HISTORY OF DSS i. CLASSIFYING DSS ii. BENEFITS OF DSS

i. ii. ii.

CHARACTERISTICS OF DSS EXAMPLES OF DSS AIRLINE DSS REAL ESTATE DSS GEOGRAPHIC DSS
5. 6.

(24-27)

COMPONENTS OF DSS
i. ii. iii. iv. v. HARDWARE AND NETWORK RESOURCES SOFTWARE RESOURCES DATA RESOURCES MODEL RESOURCES PEOPLE RESOURCES

(28-30)

7.

CLASSES OF DSS
i. ii. iii. iv. v. vi. vii. FILE DRAWER SYSTEMS DATA ANALYSIS SYSTEMS ANALYSIS INFO. SYSTEMS ACCOUNTING MODELS REPRESENTATIONAL MODELS OPTIMIZATION MODELS SUGGESTION MODELS

(31-33)

MANAGEMENT INFORMATION SYSTEM

MANAGEMENT INFORMATION SYSTEM

A management information system (MIS) is a system that provides information needed to manage organizations effectively. Management information systems are regarded to be a subset of the overall internal controls procedures in a business, which cover the application of people, documents, technologies, and procedures used by management

accountants to solve business problems such as costing a product,service or a business-wide strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support Systems, Expert systems, and Executive information systems. Overview Initially in businesses and other organizations, internal reporting was made manually and only periodically, as a by-product of the accounting system and with some additional statistic(s), and gave limited and delayed information on management performance. Previously, data had to be separated individually by the people as per the requirement and
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necessity of the organization. Later, data was distinguished from information, and so instead of the collection of mass of data, important and to the point data that is needed by the organization was stored. Earlier, business computers were mostly used for relatively simple operations such as tracking sales or payroll data, often without much detail. Over the time, these applications became more complex and began to store increasing amount of information while also interlinking with previously separate information systems. As more and more data was stored and linked man began to analyze this information into further detail, creating entire management reports from the raw, stored data. The term "MIS" arose to describe these kinds of applications, which were developed to provide 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 (but is not limited to): decision support systems, resource and people management applications, Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management (CRM), project management and database retrieval applications.

INFORMATION CONCEPTS

INFORMATION CONCEPTS
DEFINITION:The processed form of data is called an information.information in its unprocessed form is called data,which is generated as a byproduct of transactions taking place in the organization.information,on the other hand,is procedded data and has an element of surprise .information reduces uncertainty and triggers action.davis and olson have defined information as data that has been processed into a form that is meaningful to the recipient and is of real or perceived value in current or prospective actions or decisions.

TYPES OF INFORMATION Broadly speaking,information could be classified on the basis of the purpose for which it is utilized,into three main categories ;namely: strategic information tactical information operational information STATERGIC INFORMATION:Statergic information is required by the managers at the statergic level of management for the formulation of organizational statergies.this relates to long term planning polocies of the organization as a whole.for example,information pertaining to new technologies,new products,competition etc.

TACTICAL INFORMATION:Information in this category is used in short term planning and is of use at management control level.for example,for sales analyse and forecasts,production resources requirements, annual financial statements,etc.this type of information is generally based on data arising from current activities of the organization .however,some of the tactical information ,such as competitor information, may arise from sources external to the organization. OPERATIONAL INFORMATION:Operational information applies to short periods which may vary from an hour to a few days.it is generally used by decision makers at the operational level. it is often required for taking immediate action. Examples of operational information may include current stock-inhand,work-in-progress levels, outstanding orders from customers etc.the sources of such n information is usually is usually current activity data. INFORMATION QUALITY Quality of information refers to its fitness for use ,or its reliability.some of its attributes of information,which influence the quality of information are discussed as follows.

TIMELINESS:- timeliness means that information must reach the recipients within the prescribed timeframe.for effective decision making,information must reach the decision maker at the right time,i.e.recipients must get information when they need it.delays ,of whatever nature,destroys the values of information.timely information can correct executive action at an early stage.the expected losses could be eliminated and gains maximisied by proper management of operations.the report which is required by an executive on the sixth of every month.
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ACCURACY:-Accuracy is another key attribute of management information.as per john g.burch and gary grudittski,accuracy means more than just one plus one equals two.it means that information is free from mistakes and errors,is clear and accurately reflects the meaning of data on which it is based.it conveys an accurate picture to the recipient ,who may require a presentation in graphical rather than tabular form.accuracy also means that the information is free from bias RELEVANCE:- Relevace is another key attribute of management information.information is said to be relevant if its answers specially for the reciepient what,why,where,when,who and why?in other words,the mis should serve reports to managers which are useful and the information helps them makes decisions,however what is relevant information for one recipient is not necessarily relevant for another.the relevance of information from a specific customers order,for example,will vary among the employess of the company.the indiviuals most directly responsible for processing customers orders will regards the details contents of a specific order as necessary information to performtheir respective jobs. ADEQUANCY:-adequancy means information must be sufficient in quality,i.e.mis provide reports containing information which is required in the deciding processes of decision making.the report should not give inadequate or for that matter ,more than adequate information,which may create adifficult situation for the decision maker,where as inadequancy of information leads to a crisis ,information overload resulta in chaos.therefore adequancy is a vital attribute of information which underscores that a report should
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cover all related aspects abouts a particular event or situation which the report is reporting. COMPLETENESS:-The information which is provided to a manager must be complete and should meet all his needs .incomplete information may results in wrong decisions and thus may prove costly to the organization.in extraordinary situations,where providing complete information is not feasible for one reason or the other the manager must be informed of this fact,so that due care in this regard may be taken.

EXPLICITNESS:-A report is said to be of good qualityif it does not require further analysis by the recipient for the decision making.on the other hand,a poor quality report requires further analysis or processing of its contents,therefore,explicitness is a prominent attribute of management information procured through the mis of an organization;thus ,the reports should be such that a manager does not waste anytime on the processing of the reports,rather he should be able to extract the required information directly.

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DIMENSIONS OF INFORMATION
Information may be understood to have various dimensions.however,for ever purpose,the following three dimensions of information will be of interest. Economic dimension Business dimension Technical dimension These three dimensions are detailed described are as follows:ECONOMIC DIMENSION:This dimension of information refers to the cost of information and its benefits.generation of information costs money.to decide about the money to be spent on information generation in an organization ,a costbenefit analysis should be under taken .measuring costs and benefits of information is difficult because of intangible characteristics of information .however ,the following aspects of information may be useful. Cost of information:It may include Cost of acquiring data, Cost of maintaining data, Cost of generating information Cost of communicating information. The cost is related to the response time required to generate information and communicate it.thus,for systems with low response time,the cost is high.similarly ,cost also depend on the required accuracy,speed of generation,etc..for more reliable and accurate systems,costs are higher as compared to the systems with relatively low accuracy.

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Value of information:As mentioned earlier information has a cost for its acquisition and maintenance.thus,before a particular piece of information is the value of the change in decisions behavior because of the information.the changein the behavior due to new information is measured to determine the benefits from its use.to arrive at the value of new information ,the cost incurred to get this information is deducted from the benefits. BUSINESS DIMENSION:Information can also be understood from its business

dimension.different types of information are required by managers at different levels of the management hierarchy.the the information needs of managers at statergic planning level are altogether different than those of operational control managers.it is because of the fact that managers at different levels are required to perform different functions in an organization. TECHNICAL DIMENSION:This dimension of information refers to the technical aspects aspects of the database.various aspects of the database,which are considered under this dimension,include the capacity of database,response time,security,validity,data interrelationship,etc.technical dimension is covered underdesign of information systems and under the topic of database management system.

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SYSTEM CONCEPTS
DEFINITION:a system may be defined as a set of elements which are joined together to achieve a common objectivethe word system is used quite often in our everyday life.we talk about an educational system,political system,economic system,circulatory system,solar system,computer system,and so on. KINDS OF SYSTEMS:Different kinds of systems may be understood as: Abstract and physical system Deterministic and problistic systems Open and closed systems User machine systems Abstract and physical system:System can be categorized as abstract systems and physical systems.there can be misunderstandings if one person talks about an information system as a set of concepts,ideas,or characteristics and his listeners perceives it as operational systems of people,equipment and reports.an abstract or conceptual system is an orderly arrangement of interdendent ideas or constructs,which may or may not have any counterpart in the real world. Physical system are generally concrete operational systems made up of people,materials,energy and physical things.physical systems are more than conceptual constructs;they display some activity or behavior.

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DETERMINISTIC AND PROBABILISTIC SYSTEM:A deterministic system is one in which the occurrence of all events is known with certainty.in such a system,given a description of the system state at a particular point of time of its operation,the next state can be perfectly predicted .an example of such a system is a correct computer program which performs exactly according to a set of instructions. Probabilistic system is one in which the occurrence of events cannot be perfectly predicted.though the behavior of such a system can be described in terms of probability ,a certain degree of errors is always attached to the prediction of the behavior of the system. OPEN AND CLOSED SYSTEM:An open system is one that interacts with its enviorment and thus exchanges informations,material,or energy with the enviorment,including random and undefined inputs.open systems are adaptive in nature with the environment in such a way,so as to favour their continued existence.such systems areself-organising,in the sense that they change their organization in response to changing conditions. A closed system is one which doesnot interact with its environment.such system in business world,are rare,but relatively closed systems are common.thus ,the system that are relatively isolated from the environment but not completely closed systems.

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USER-MACHINE SYSTEMS:Most of the physical systems are user-machine systems.it is difficult to think of a system composed only of people who do not utilize equipment of some kind to achieve their goals.in user-machine systems,both,i.e human as well as machine perform some activities in the accomplishment of a goal .the machine elements are relatively closed and deterministic,whereas the human elements of the system are open and probabilistic. SYSTEM RELATED CONCEPTS: There are three concepts of a system and these are described are as follows. Boundary Interface Blackbox BOUNDARY:- In order to focus on a particular system ,users need to define or describe the system under the study.this is done with the help of boundary.the boundary of a system may exist either physically or conceptually .in other words,the boundary is a feature of the system

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which defines and de hile its environment is outside the boundary.

INTERFACE:Each system can have sub systems which,in turn ,are made up of units.the interconnections and interactions among the subsystems are called interfaces.

BLACK-BOX:The transformation process in certain sub-systems,especially at the lowest level may not be defined.however,the inputs and outputs are known.such a sub-system whose processes are not defined ,is called a black box system.the concepts of black box are diagrammed as follows:

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INTRODUCTION TO DECISION SUPPORT SYSTEM

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INTRODUCTION TO DSS
A decision support system is an interactive system that helps people make decision, use judgment and work in areas where no one knows exactly how the task should be done in all classes. Decision support systems support decision making in semi structured and unstructured situations and they provide information, models, or tools for manipulating data. Decision support systems solve part of the problem and help isolate places where judgment and experience are required. Decision support system may support repetitive or non repetitive decision making. They support repetitive decision making by defining procedures and formats but still permits the users to decide how and when to use the systems capabilities. They
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support non repetitive decision making by providing data, models and interface methods that can be used however the user wants. The spectrum of different systems called decision support system is wide, ranging from general tools such as spreadsheets, graphics packages, and DBMSs to highly customized situation or optimization models focusing on a specific business situation. Basic decision support system concept, such as interactive problem solving, availability of online tools and direct use of models, grew out of dissatisfaction with the limitation of Transaction Processing Systems(TPS), and Management Information Systems(MIS). Transaction processing systems focused on record keeping and control of repetitive clerical process. MISs provided reports for management but were often inflexible and unable to produce the information managers needed in a form in which it could be used. The common thread through the wide range of DSS applications is that the situation emphasizes analytical work rather than general office work, transaction processing, or general management work. Decision support system supports this work by providing flexible, user controllable methods for displaying and analyzing data and formulating and evaluating alternative decisions. Decision support system originally relied on
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improved user interface, graphical and statistical methods, and simulation and optimization models to support better decisionmaking. Decision support systems are a major category of management support systems. They are computer based information systems that provide interactive information support to managers during the decision making process. Decision support systems use--1. Analytical model 2. Specialized databases 3. A decision makers own insight and judgments. 4. An interactive, computer based modeling process to support the making of semi structured and unstructured decisions by individual managers. They are designed to be adhoc, quick-response systems that are initiated and controlled by managerial end users. Decision support systems are thus able to directly support the specific types of decisions and the personal decision-making styles and needs of individual managers.

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HISTORY OF DECISION SUPPORT SYSTEM

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History
According to Keen (1978), the concept of decision support has evolved from two main areas of research: The theoretical studies of organizational decision making done at the Carnegie Institute of Technology during the late 1950s and early 1960s, and the technical work on interactive computer systems, mainly carried out at the Massachusetts Institute of Technology in the 1960s. It is considered that the concept of DSS became an area of research of its own in the middle of the 1970s, before gaining in intensity during the 1980s. In the middle and late 1980s, executive information systems (EIS), group decision support systems (GDSS), and organizational decision support systems (ODSS) evolved from the single user and model-oriented DSS. According to Sol (1987) the definition and scope of DSS has been migrating over the years. In the 1970s DSS was described as "a computer based system to aid decision making". Late 1970s the the DSS movement started focussing on "interactive
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computer-based systems which help decision-makers utilize data bases and models to solve ill-structured problems". In the 1980s DSS should provide systems "using suitable and available technology to improve effectiveness of managerial and professional activities", and end 1980s DSS faced a new challenge towards the design of intelligent workstations In 1987 Texas Instruments completed development of the Gate Assignment Display System (GADS) for United Airlines. This decision support system is credited with significantly reducing travel delays by aiding the management of ground operations at various airports, beginning with O'Hare International Airport in Chicago and Stapleton Airport in Denver Colorado. Beginning in about 1990, data warehousing and on-line analytical processing (OLAP) began broadening the realm of DSS. As the turn of the millennium approached, new Webbased analytical applications were introduced. It is clear that DSS belong to an environment with multidisciplinary foundations, including (but not exclusively) database research, artificial intelligence, human-computer interaction, simulation methods, software engineering, and telecommunications. The advent of better and better reporting technologies has seen DSS start to emerge as a critical component of management design. Examples of this can be seen in the intense amount of discussion of DSS in the education environment. DSS also have a weak connection to the user interface paradigm of hypertext. Both the University of Vermont PROMIS system (for medical decision making) and the Carnegie Mellon ZOG/KMS system (for military and business decision making) were decision support systems which also were major breakthroughs in user interface research. Furthermore, although hypertext researchers have generally been concerned with information overload, certain researchers, notably Douglas Engelbart, have been focused on decision makers in particular
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Classifying DSS There are several ways to classify DSS applications. Not every DSS fits neatly into one category, but a mix of two or more architecture in one. Holsapple and Whinston classify DSS into the following six frameworks: Text-oriented DSS, Database-oriented DSS, Spreadsheet-oriented DSS, Solver-oriented DSS, Rule-oriented DSS, and Compound DSS. A compound DSS is the most popular classification for a DSS. It is a hybrid system that includes two or more of the five basic structures described by Holsapple and Whinston. The support given by DSS can be separated into three distinct, interrelated categories: Personal Support, Group Support, and Organizational Support. DSS components may be classified as:
1. 2. 3. 4.

Inputs: Factors, numbers, and characteristics to analyze User Knowledge and Expertise: Inputs requiring manual analysis by the user Outputs: Transformed data from which DSS "decisions" are generated Decisions: Results generated by the DSS based on user criteria

DSSs which perform selected cognitive decision-making functions and are based on artificial intelligence or intelligent agents technologies are called Intelligent Decision Support Systems (IDSS). The nascent field of Decision engineering treats the decision itself as an engineered object, and applies engineering principles such as Design and Quality assurance to an explicit representation of the elements that make up a decision Benefits of DSS
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1. Improves personal efficiency 2. Expedites problem solving (speed up the progress of problems solving in an organization) 3. Facilitates interpersonal communication 4. Promotes learning or training 5. Increases organizational control 6. Generates new evidence in support of a decision 7. Creates a competitive advantage over competition 8. Encourages exploration and discovery on the part of the decision maker 9. Reveals new approaches to thinking about the problem space 10. Helps automate the managerial processes

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CHARACTERISTICS OF DECISION SUPPORT YSTEM

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CHARACTERISTICS
The concept of decision support is based on several assumptions about the role of the computer in effective decision-making: 1. The computer must support the manager but not replace his or her judgment. It should, therefore, neither try to provide the answers nor impose a predefined sequence of analysis. 2. The main payoff of computer support is for semi-structured problems, where parts of the analysis can be systematized for the computer, but where the decision makers insight and judgment are needed to control the process. 3. Effective problem solving is interactive and is enhanced by a dialogue between the user and the system. The user explores the problem situation using the analytical and information providing capabilities of the system as well as human experience and insights.

EXAMPLES OF DSS APPLICATIONS

Decision support systems are used for a variety of applications in both business and government. When a DSS is developed to solve large or complex problems that continually face an organization. It

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is called an institutional DSS, Decision Support Systems used for strategic corporate planning are an example of this type of DSS. Other DSS applications are developed quickly to solve smaller or less-complex problems that may be one time situations facing a manager. These are called adhoc dss. Many decision support systems are developed to support the types of decisions faced by a specific industry or by a specific functional area. The three examples to demonstrate the variety of DSS applications are as follows:-1.

AIRLINE DSS: The American Analytical Information

Management System (AAIMS) is a decision support system used in airline industry. It was developed for American airlines but is used by other airlines, aircraft manufacturers, airline financial analysts, consultants and association. AAIMS supports a variety of airline decisions by analyzing data collected on airline aircraft utilization, seating airline market share, revenue and profitability. Thus AAIMS helps airline management make decisions on aircraft assignments, route requests, ticket classifications, pricing and so on. REAL ESTATE DSS: Real\plan is a DSS used in the real estate industry to do complex analysis of investments in

2.

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commercial estate. For example, investing in commercial real estate properties typically involves highly detailed income, expense and cash flow projections. Real plan easily performs such analysis, even the properties with multiple units, lease terms, rent and cost-of-living adjustments.
3.

GEOGRAPHIC DSS: geographic information system

are a special category of DSS that integrate computer graphics and geographic databases and other DSS features. A geographic information system is a DSS thet constructs and displace maps and other graphics displace that support decision affecting the geographic distribution of people and other resources. Many companies are using GIS technology to choose new retail store locations, optimize distribution, routes, or analyze the demographic of their target audience.

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COMPONENTS OF DECISION SUPPORT SYSTEM

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COMPONENTS
Components of a DSS present in any decision support system. Lets first outline the functions of these components.
1.

HARDWARE AND NETWORK RESOURCES:

personal computer workstations provide the primary hardware resources for a DSS. They can be used on a standalone basis, but are typically connected by wide area or local area networks to serves and other computer systems for access to other DSS software, model &data resources.

MANAE R OR STAFF SPECIA LISTS

INTERACTI VE DECISION SUPPORT

DSS SOFTWARE MODEL BASE MANAGEMENT DIALOGUE GENERATION AND MANAEGEMENT DATABASE MANAGEMENT

MODE L BASE

DATA

NETWORKED MANAGEMENT WORKSTATION

BASE

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2.

SOFTWARE RESOURCES: DSS software packages

contain software modules to manage DSS databases, decision models and end user/system dialogue.

3.

DATA RESOURCES: A DSS database contains data

and information data extracted from the databases of the organization, external databases and a managers personal databases. It includes summarized data and information most needed by managers for specific type of decisions.

4.

MODEL RESOURCES: the model base includes a

library of mathematical models and analytical techniques stored as programs, subordinates, spreadsheets and command files.

5.

PEOPLE RESOURCES: Managers or their staff

specialists can use DSS to explore decision alternatives. Such end users can also develop their own simple decision support systems. However, they typically leave the development of large or complex decision support systems and DSS software packages to information systems specialists.

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CLASSES OF DECISION SUPPORT SYSTEM

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CLASSES
FILE DRAWER SYSTEM: These allow immediate
access to data items. They are basically online mechanized versions of manual filling systems
2.

1.

DATA ANALYSIS SYSTEMS: These allow the

manipulation of data by means of either analysis operations tailored to the task and setting or general analysis operations. They are typically used by non-managerial personnel to analyze files containing current or historical data.

3.

ANALYSIS INFORMATION SYSTEM: These

provide access to a series of data bases and small models.

4.

ACCOUNTIN MODELS: these calculate the

consequences of planned actions on the basis of accounting definitions. They typically generate estimates of income, balance sheets, etc., based on variations in input values to the definitional formulas.

5.

REPRESENTATIONAL MODELS: These estimate

the consequences of actions on the basis of models that represent some non-definitional characteristics of the system such as probabilities of occurrence. They include all

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simulation models that contain elements beyond accounting definitions.

6.

OPTIMIZATION MODELS: These provide guidelines

for action by generating the optimal solution consistent with a series of constraints. They are used for repetitive decisions that can be described mathematically and where a specific objective, such as minimizing cost, is the goal.

7.

SUGESTION MODEL: These compute a specific

suggested decision for fairly structured and repetitive decisions. Their purpose is to bypass other procedures for generating the suggestions.

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