Decision Support

Systems
DSS Defined

Defined in 3 themes:
1. Problem Structure: Degree to which decision
displays certain structural characteristics
2. Decision Outcome: Degree to which decision
succeeds in reaching its objectives
3. Managerial Control: Outcomes associated with
decisions lies with the manager. Select one of
multiple alternative and control of the final
selection lies with decision makers
2 IS for Management
What is DSS?

 Decision Support System is a system under the

control of one or more decision makers that assists
in the activity of decision making by providing an
organized set of tools intended to improve
structure on portions of decision making situation
and to improve the outline effectiveness of the
decision outcome

3 IS for Management
 Decision Support System

• A computer-based information system that supports business

or organizational decision-making activities.
• OR
• Interactive computer-based systems, which help decision
makers utilize data and models to solve unstructured
problems. [Gorry and Scott-Morton (1971)]
• OR
• Decision support systems couple the intellectual resources of
individuals with the capabilities of the computer to improve
the quality of decisions. It is a computer-based support
system for management decision makers who deal with semi-
structured problems. [Keen 4and Scott-Morton (1978)]
 DSS Benefits

 Improves personal efficiency

 Speed up the process of decision making
 Increases organizational control
 Encourages exploration and discovery on the part of the decision maker
 Speeds up problem solving in an organization
 Facilitates interpersonal communication
 Promotes learning or training
 Generates new evidence in support of a decision
 Creates a competitive advantage over competition
 Reveals new approaches to thinking about the problem space
 Helps automate managerial processes
 Create Innovative ideas to speed up the performance
Limitations

 DSSs cann’t replace human decision making talents such

as creativity, imagination or intuition
 DSSs are generally designed to be narrow in scope
of application. This prevents their generalized use to
multiple decision making contexts
 Languages and command interfaces are not sophisticated
of user directives and in queries
 The power of DSS is limited by the computer system upon
which it is running, its design and the knowledge
possessed by it at the time of its use
6 IS for Management
Evolution

7 IS for Management
8 IS for Management
 Gorry and Scott Morton’s framework
for Decision Support (1971)
Control Operational Managerial Strategic Planning Technology
Control Control Support Needed
Decision

Structured e.g. accounts e.g. short-term e.g. financial MIS, mathematical

receivable, forecasting management models, transaction
order entry processing

Semi-structured e.g. production e.g. credit e.g. mergers and DSS

scheduling evaluation acquisitions

Unstructured e.g. approving e.g. recruiting e.g. new DSS, ES, Neural
loans an executive technology Networks
development

Technology MIS, Management EIS, ES, neural

Support Needed Management Science, DSS, networks
IMS3001 – BUSINESS INTELLIGENCE
Science ES, EIS SYSTEMS – SEM 1 , 2004 9
Based on
 Simon’s (1960) decision can be categorized to
 Programmed: repetitive, routine and commonplace
 Non Programmed: novel, unique and consequential

10 IS for Management
 I. ON THE BASIS OF PURPOSE OF
DECISION MAKING
ROBERT B. ANTHONY(1965) has
differentiated organizational decisions into three categories,
they are:

1. STRATEGIC PLANNING DECISIONS:

are those decisions in which the decision maker develops
objectives and allocates resources to achieve these objectives.
 Decisions in this category are of long period and usually
involve a large investment and effort.
 Such decisions are taken by strategic planning level or top level
managers.
 Eg;- introduction of a new product, acquisition of another firm
etc…………….
2. MANAGEMENT CONTROL DECISIONS: are taken
by middle level managers and deal with the use of resources in
the organization.
 Analysis of variance, product mix, planning decisions, fall in
this category.
3. OPERATIONAL CONTROL DECISIONS : deal with
the day to day problems that affect the operation of the
organization.
 This type of decisions are normally taken by the managers at
the operational or bottom level of the management hierarchy in
the organization.
 For example, production scheduling decisions like the product
to be produced for the day or items and quantities to be
ordered are operational control decisions.
II. ON THE BASIS OF LEVEL OF PROGRAMMABILITY

Simon (1965) proposed two types of decisions programmed and non-

programmed decisions, also known as structured and unstructured decisions (Gorry
and Scott morton,1971)

1.PROGRAMMED/ STRUCTURED DECISIONS

Well defined and some specified procedure or some decision rule may be applied
to reach a decision.

These decisions are routine and repetitive and require little time for developing
alternatives in the design phase.

Decisions of this kind can be delegated to lower levels in an organization

These decisions are traditionally been made through habit, by operating

procedures or with other accepted tools.

Modern techniques for making such decisions involve operations research,

mathematical analysis, modeling and simulation etc….
2. NON-PROGRAMMED / UNSTRUCTURED
DECISIONS

These decisions are not well defined and have no pre-specified

procedure or decision rule.

These decisions are novel ones, which may range from one timed
decisions relating to a crisis to decisions relating to recurring
problems where conditions change so frequently and to such an
extend that decision rules cannot be specified.

Sufficient time has to be spend in the design phase of these

decisions.

Decisions of these kind are usually handled by strategic planning

level managers.

Unstructured decisions tend to be solved through the judgment,

intuition and the rule of the thumb.
Types of Decisions/Problems

 Structured or Programmed
 Rules known
 Steps known
 No judgment or creativity
 Unstructured or Nonprogrammed
 Rules unknown
 Steps unknown
 Requires judgment &/or creativity
 Semistructured or Semiprogrammed: Fall
between structured & unstructured

 DSS support semistructured & unstructured

problem solving 15 IS for Management
Types of Solutions

 Optimization
 Finding the best solution
 Satisfying
 Finding a good -- but not necessarily the best --
solution to a problem
 Most common in personal & professional lives
 Heuristics
 Commonly accepted guidelines or procedures
 Usually find a good solution.

16 IS for Management
Capabilities of DSSs
 Support all stages of decision making model
 Support different decision frequencies: One of a
kind or Repetitive
 Support all different problem structures
 Support all decision making levels

17 IS for Management
Components of a DSS

18 IS for Management
Components of a DSS

19 IS for Management
Components of a DSS

• Data Management System

• Model Management System
• Knowledge engine
• User interface
• User(s)
Knowledge Engine

• Performs activities related to problem recognition and

generation of interim or final solutions, as well as
other functions related to the management of the
problem-solving process
• Supplies the “brains” of the system
DSS User

• Central to the entire life cycle

• Is a person who is responsible to provide solution at hand
or making a decision solution
• User roles into one of four basic patterns of use
 Subscription mode: filter or interpret of the output
 Intermediary mode: assist to interpret
 Clerk mode: operator responsible for daily operation
 Terminal mode: provides data to the DSS online
Dialogue management

• Almost all the decision makers today often race

against time and often say: “I am too busy today to
learn”. This statement comes even after they have
been provided with the latest sophisticated equipment
and office automation systems.
• One of the main reason that can be thought of is the
absence of a good dialogue management subsystem. A
dialogue management subsystem acts as a window to
the DSS and provides a good user interface.
Dialogue management

• Consists of the three sub systems; namely the user

interface, the dialogue control, the request translator.
• The user interface sub system controls the physical
user interface.
• It also manages the appearance of the screen and also
accepts the input from the user and then displays the
results.
Dialogue management

• The user interface sub system is also responsible for

checking the user commands for the correct syntax.
• The dialogue control sub system is responsible for the
maintenance of the processing context with the user.
• The request translator helps in the translation of the
user command into the actions for the model
management or the data management components
into such a pattern that can be easily understood by
the user.
 1. DATA BASE MANAGEMENT SYSTEMS

• Data management component of a DSS

retrieves, stores, and organizes the relevant
data for the particular decision context
• DBMS provides for the various security
functions, data integrity procedures and
general DBA duties associated with DSS
 1. DATA BASE MANAGEMENT SYSTEMS

The data in the decision support system database are managed by

the DBMS, which covers

 Data Definition
 Data Manipulation
 Data Integrity
 Access Control
 Concurrency Control
 Transaction Recovery
Data Definition:

• That allows users to describe the data entities

and their associated attributes and
relationships
• Allows for the interrelation of data from
multiple users
Data Manipulation:

• Provides the user with a query language to

interact with the database
• Allows for capture and extraction of data
• Provides rapid retrieval of data for ad hoc
queries and reports
Data Integrity:

• Allows the user to describe rules (integrity

constraints) to maintain the integrity of the
database
• Assists in the control of erroneous data entry
based on the defined integrity constraints
Access Control:

• Allows identification of authorized users

• Controls access to various data elements and
data manipulation activities within the
database
• Tracks usage and access to data by
authorized users
Concurrency Control:

• Provides procedures for controlling simultaneous

access to the same data by more than one user

Transaction Recovery:
• Provides a mechanism for restart and reconciliation
of the database in the event of the hardware failure
• Records information on all transactions at certain
points to enable satisfactory database restart
 2. MODEL MANAGEMENT SYSTEMS

Model management systems stores and access models that managers use to make
decisions.

Such models are used for designing a manufacturing facility, analyzing financial health
of an organization, forecasting demand for a product or a service and determining the
quality of a particular batch of products.

Although most models are quantitative, decision makers use qualitative models also to
make decisions.

The model builder, a component of many model bases, provides a structured

framework for developing models by helping decision makers, identify the variables and
the interrelationships among the variables in the model.

A model builder creates, identifies, process, stores, updates and maintains different
decision making models and ensures that these models are consistently applied when
decisions are made.

The model builder also contains a model dictionary for consistency in the definitions
and uses of models.
Some of the models are:

•Statistical Models
•Production Models
•Marketing Models
•Financial and Accounting Models
•Strategic Models.

These models are extensively used in different

functional areas of a business.
 What if analysis
 Graphical analysis
 Goal-seeking analysis
 Simulation

35 IS for Management
2. WHAT – IF ANALYSIS

The process of assessing the impact of changes to

model variables, the values of the variables, or the
This interrelationships
helps managers toamong variables.
be proactive , rather than
reactive, in their decision making
This analysis is critical for semi-structured and
unstructured problems because the data
necessary to make such decisions are often either
Hence
not,available
managersornormally use their intuition and
incomplete.
judgement in predicting the long term implications of
their decisions.
Spreadsheet packages such as Excel and Lotus
1-2-3, have WHAT-IF applications.
3. GOAL SEEKING

The process of determining the input values required to

achieve a certain goal.

For example, house buyers determine the monthly payment they can
afford (say rs. 7000) and calculate the number of such payments required
to pay the desired house.

4. RISK ANALYSIS

Allows managers to assess the risks associated with various

alternatives. Decisions can be classified as low risk, medium risk,
and high risk.
A Decision Support System is particularly
useful in medium risk and high risk environments.
5. GRAPHICAL ANALYSIS

Helps managers to quickly digest large

volumes of data and visualize the impacts of
various courses of action
First, lotus system enabled users to easily
display and print information in a graphic
form.
Spreadsheets have sophisticated graphical
analysis capabilities. Eg:- Microsoft excel
gives the user a wide choice of graphs and
charts in many colours and patterns.
 DSS Categories

 Support based DSS (Alter 1980)

 Data-based DSS
 Model-based DSS

Structured Model-based
DSS
Semi-structure
Data-based
DSS
Unstructured
Advantages & Disadvantages of
Modeling
 Advantages
 Less expensive than custom approaches or real systems.
 Faster to construct than real systems
 Less risky than real systems
 Provide learning experience through trial and error
 Future projections are possible
 Can test assumptions
 Disadvantages
 Assumptions about reality may be incorrect
 Accuracy of predications often unreliable
 Requires abstract thinking
40 IS for Management
 Applications

 Airline Reservation system

 No more seats available
 Provide alternative flights you can use
 Use the info to make flight plans
Canadian National Railway
A Loan Manager can decide whether to grant loan to an applicant
Decision Making Software
 E.g. Logical Decisions (30 days trial)
 Expert Choice
 DecideIT
 1000Minds
 Applications Cont.

• Clinical decision support system for medical diagnosis.

• a bank loan officer verifying the credit of a loan applicant
• an engineering firm that has bids on several projects and
wants to know if they can be competitive with their costs.
• DSS is extensively used in business and management.
Executive dashboards and other business performance
software allow faster decision making, identification of
negative trends, and better allocation of business resources.
• A growing area of DSS application, concepts, principles,
and techniques is in agricultural production, marketing for
sustainable development.
• A specific example concerns the Canadian National
Railway system, which tests its equipment on a regular
basis using a decision support system.
• A DSS can be designed to help make decisions on the stock
market, or deciding which area or segment to market a
product toward.
 DSS Development Process

 The development of a DSS is determined by the

types of information and the facilities needed for
taking the decision.

 Support systems are developed using

programming languages or produced by packages
specially for incorporating decision support
development tools.
Types of DSS

1. Communication Driven DSS

2. Data Driven DSS
3. Document Driven DSS
4. Knowledge Driven DSS
5. Model Driven DSS

44 IS for Management
 Communication Driven DSS: Supports more
than one person working on a same task uses
communication networks and technology
 Eg: MS – Netmeeting
 Data Driven DSS: Emphasizes access to an
manipulation of time series of internal company
data, sometimes external data
 Eg: Business intelligence
 Document Driven DSS: It manages, retrieves and
manipulates unstructured information in a variety
of electronic formats

45 IS for Management
 Knowledge Driven DSS: It provides slight
problem solving expert stored as facts, rules,
procedures
 Model Driven DSS: Emphasise access and
manipulation of a statistical, financial optimization
or simulation model. It uses data & parameter
provided by user to assist decision maker in
analysing a situation
 What-if analysis
 Simulation
 Goal seek analysis

46 IS for Management
 Recognize the problem and
Decision the need for a decision
Making
Process
Identify the objective of
the decision

Gather and evaluate data

and diagnose the situation

List and evaluate

alternatives
© 2011 Cengage Learning. All rights reserved.
 Select the best
Decision course of action
Making
Process
Implement
the decision

Gather feedback

Follow up

© 2011 Cengage Learning. All rights reserved.

Collaborative Vs Non Collaborative
Structure
 Collaborative Structure
 Group: Multiple decision makers with complete
interaction
 Non Collaborative Structure
 Team: Single decision maker with no participant
interaction
 Committee: Single decision maker with complete
participant interaction

49 IS for Management
Multiparticipant Decision Maker
(MDM)
 It is an activity conducted by a collective entity
composed of two or more individuals and
characterized in terms of both the properties of the
collective entity and of its individual members
 Eg: Groupware
 Establish certain norms, or standards of behavior,
that guide the decision-making process

50 IS for Management
Basic Levels of MDM

Organizational
DSS
Group
Support
Systems

Group DSS

DSS

51 IS for Management
Decision Support System

 A system under the control of one or more

decision makers that assists in the activity of
decision making by providing an organized set of
tools intended to impart structure to portions of the
decision making situation and to improve the
ultimate effectiveness of the decision outcome

52 IS for Management
Organizational Decision Support
System (ODSS)
 A complex system of computer based technologies
include those that facilities communication that
provides support for decision makers spanning the
range of organizational roles and functional levels
and accommodates decision contexts that cut
across organizational units

53 IS for Management
Group Support System and
Groupware (GSS)
 A collective of computer based technologies used
to aid multiparticipant efforts in identifying and
addressing problems, opportunities and issues.
Group Decision Support system
(GDSS): A collective of computer based
technologies specifically designed to support the
activities and processes related to multiparticipant
decision making

54 IS for Management
Definition - GDSS
 A group decision support system (GDSS) is an
interactive computer based system that facilitates a
number of decision-makers (working together in a
group) in finding solutions to problems that are
unstructured in nature. They are designed in such
a way that they take input from multiple users
interacting simultaneously with the systems to
arrive at a decision as a group
 GDSS is an information system used to support
the process by which a group of people meet and
interact for learning and or deciding type tasks.
55 IS for Management
Group Decision Support Systems:
GDSS
Contain most of the elements of DSS & additional software to provide
effective support in group decision-making settings
Characteristics of Most GDSSs
Special design
Ease of use
Flexibility
Decision-making support
Delphi approach, Brainstorming, Nominal Group Technique (NGT)
Anonymous input
Reduction of negative group behavior
Parallel communication
Automated record keeping
Cost, control, complexity factors

56 IS for Management
 WHY USE GDSS?

 High level managers can spend 80% of their time

making decisions in groups. Applied correctly,
GDSS can reduce this time, arriving at a better
decision faster
 GDSS provides the hardware, software, databases
and procedures for effective decision making

57
 GDSS TIME/PLACE ENVIRONMENT

Same-Time Same-Time
Same-Place Different-Place
(Most widely used GDSS- (team room, tools, audio
computers with projectors, conferencing, screen sharing,
voting tools) chat)
Different-Time Different-Time
Same-Place Different-Place
(audio/video conferencing, document (voice mail, email, bulletin boards)
sharing)

58
COMPONENTS OF GDSS
There are four fundamental types of components that compose GDSS:
 Software
The software part may consist of the following components:
databases and database management capabilities, user/ system
interface with multi- user access, specific applications to facilitate group
decision-makers activities, and modeling capabilities.

 Hardware
The hardware part may consist of the following components: I/ O
devices, PCs or workstations, individual monitors for each participant or
a public screen for group, and a network to l ink participants to each
other.

 People
The people may include decision-making participants and / or
facilitator. A facilitator is a person who directs the group through the
planning process.

 Procedures
This refers to the methods that 59
have been used in holding meetings.
Components of a GDSS

 Same as DSS +
 Communication/networking capability
 Special software (called groupware)

60 IS for Management
GDSS MODEL
61
 Software Tools

 Electronic Questionnaire
 Brainstorming Tools
 Idea Organizer
 Tools for setting priority
 Policy formation tools

Chapter 10 62 IS for Management

 Software Tools

 Electronic Questionnaire: helps the organizers of

the meeting to identify the issues that need
immediate attention, thereby enabling the
organizers to create a meeting plan in advance
 Electronic Brainstorming Tools: allows the
participants to simultaneously contribute their
ideas on the subject matter of the meeting. As
identity of each participant remains secret

Chapter 10 63 IS for Management

 Software Tools
 Idea Organizer: helps in bringing together,
evaluating and categorizing the ideas that are
produced during the brainstorming activity
 Tools for Setting Priority: It includes a
collection of techniques, such as simple voting,
ranking in order and some weighted techniques
that are used for voting and setting priorities in a
group meeting
 Policy Formation Tool: It provides necessary
support for converting the wordings of policy
statements into an agreement
Chapter 10 64 IS for Management
 ADVANTAGES OF GDSS

 A n o n y m i t y – drive out fear leading to better decisions

from a diverse hierarchy of decision makers
 P a r a l l e l C o m m u n i c a t i o n – eliminate monopolizing
providing increased participation, better decisions
 A u t o m a t e d r e c o r d k e e p i n g – no need to take
notes, they’re automatically recorded
 A b i l i t y f o r v i r t u a l m e e t i n g s – only need hardware,
software and people connected
 P o r t a b i l i t y - Can be set up to be portable… laptop
 G l o b a l P o t e n t i a l - People can be connected across the
world
 Supports positive group behavior – In a group meeting, as
participants can share their ideas and they display more positive
group behavior towards the subject matter of the meeting
65
 DISADVANTAGES OF GDSS

 C o s t –infrastructure costs to provide the hardware and

software/room/network connectivity can be very expensive
 S e c u r i t y – especially true when companies rent the
facilities for GDSS; also, the facilitator may be a lower-level
employee who may leak information to peers
 Te c h n i c a l F a i l u r e – power loss, loss of connectivity,
relies heavily on bandwidth and LAN/WAN infrastructure –
properly setup system should minimize this risk
 K e y b o a r d i n g S k i l l s – reduced participation may result
due to frustration
 Tr a i n i n g – learning curve is present for users, varies by
situation
 P e r c e p t i o n o f m e s s a g e s – lack of verbal
communication could lead to misinterpretation
10
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