CONCEPT OF PHILOSOPHY OF DSS

Decision support systems are an application of Herbert Simon model .The model has three
phases, which are, intelligence, design and choice .The DSS basically helps the information
system in the intelligence phase where the objective is to identify the problem and then go
to the design phase for solution. The choice of selection criterion varies from problem to
problem. It is, therefore, required to go through three phases again and again till a
satisfactory solution is found. In the use of three phase cycle, we may use inquiry, analysis
and models or accounting systems to come to a rational solution.
The DSS helps in making a decision and also in its performance evaluation. These systems
can be used to validate the decision by performing sensitivity analysis on various
parameters of the problem.
In decision making, we know that there are two types of decisions- programmable and non-
programmable. The programmable decision, because of its rule base structure, can be
computerized, as inputs, processing methodology; analysis and choice of decision making
are predetermined. DSS can be built around the rule in case of programmable decision
solution, while in non-programmable decisions, the rules are not fixed or predetermined, and
requires every time the decision-making cycle as indicated in Herbert Simon model.
The DSS refers to a class of system which support in the process of decision-making and
does not always give a decision itself. The nature of the decision is such that the decision
maker needs variety of information, when same or similar types of decisions are to be made.
These needs are such that wider additional demands on information are continuously
satisfied. The reasons for changing the demands are also because the methods of decision-
making undergo a change from time to time. The quantum and the scope of information also
changes depending upon the risk on decision-making. The higher the risk, more information
may be sought.
A DSS is a specialized kind of information system, which is an interactive system that
supports in decision-making process of a manager in an organization, especially in semi
structural and unstructured situations. The system utilizes information, models, and data
manipulation tools to help make decision in semi structured to unstructured situation.
As the name suggests DSS represents systems that assists decision-making. DSS tends to be
used in planning, analyzing alternatives and trial and error search for solutions. Such
systems are generally operated through terminal based interactive dialogues with users.
They incorporate a variety of decision models and thus are capable performing what if
analysis for managers. DSS differs from most traditional information systems in that usually
each decision support system is distinct from other information system and is tailor-made for
every manager. DSS, although created and used by managers, are nevertheless a part of the
organizations MIS. As DSS is tailored to a specific managerial task or special problem, its
use is limited to that task or problem. DSS tend to serve management control level and
strategic planning level managers. The elements of DSS include a database, model base and
software providing interactive dialogue facility for the manager. The data in the database
typically is a combination of master files (internal corporate data) and data from external
sources.
The second component of the DSS is a library of models to manipulate and analyze the data
in the desired ways. The model base might include econometric models to forecast demand
by industry and simulation models of the corporation.
A user interface is the third component. Through this, the user can communicate with the
DSS. The physical interface generally consists of a terminal hooked up to the mainframe
computer, either directly or by telephone. Microcomputers with modems are being used ever
more frequently for this interface. These elements are illustrated in the figure below:
 DSS goes one step further to a management information system (MIS) as DSS support
decision making. DSS used MIS is de3scribe in the figure below:

DSS can be differentiated from MIS in terms of its processing capabilities. Whereas, MIS
processes data to convert it into information; DSS processes information to support the
decision making process of a manager. For example, a salary information system provides
information to every employee regarding his basic salary, allowance and deductions if any,
etc. however if an employee wants to make use of DSS. DSS helps the user decide in which
scheme and how much he should invest in order to get maximum benefits. Secondly, DSS
provides an interactive dialogue environment through which the user can interact with the
system to add/alter the data as per the requirements. The main application areas of DSS are
production, finance and marketing. For example, DSS supports decision-making in
procurement analysis, production planning and scheduling, inventory planning and control,
financial planning and analysis, tax planning, strategic financial planning, marketing mix etc.
DSS can nowadays, be developed with the help of special purpose software packages. These
language packages usually include several pre-written analysis routines such as interact
calculations formulae, discounted cash flow calculation routines. These routines can be
easily integrated into DSS requiring that particular calculating function.
THE IDEAL CHARACTERISTICS AND CAPABILITIES OF DSS
1. DSS provide support for decision makers mainly in semi structured and unstructured
situation by bringing together human judgments and computerized information. Such
problem cannot be solved (or cannot be solved easily) by other computerized system or by
standard quantitative or tools.
2. Support is provided for various managerial levels, ranging from top executives to line
managers.
3. Support is provided to individuals as well as to groups less-structured problems often
require the involvement of several individuals from different departments and organizational
levels or even from different organizations.
4. DSS provide support to several interdependent or sequential decisions. The decision may
be made once, several times, or repeatedly.
5. DSS support a variety of decision making processes and styles.
6. DSS are adaptive overtime. The decision maker should be reactive, able to comfort
changing condition quickly and be able to adapt the DSS to meet these changes these
changes. DSS are flexible and so user can add delete, combine, change, or rearrange basic
elements.
7. Users must feel at home with DSS. User-friendliness, strong graphical capabilities, and
English like interactive human machine interface can greatly increase the effectiveness of
DSS. DSS attempt to improve the effectiveness of decision-making (accuracy, timeliness,
quality) rather than its efficiency (the cost of making decisions).
8. The decision maker has complete control over all steps of the decision-making process in
solving a problem. A DSS specially aims to support and not to replace the decision maker.
9. The decision maker has complete control over all steps of the decision-making process in
solving a problem. A DSS specially aims to support and not to replace the decision maker.
10. End users should be able to construct and modify simple systems by themselves. Larger
systems can be built with assistance from information system specialists.
11. A DSS usually utilizes models for analyzing decision-making situations. The modeling
capability enables experimenting with different strategies under different configurations.
CAHARCTERISTICS AND CAPABILITIES OF DSS

TYPES OF DSS
1. Status inquiry system: the number of decisions in the operational management and
same at the middle management is such that they are based on one or two aspects of a
decision-making situation. It does not call for any elaborate computations, analysis, choice,
etc. for decision-making. If the status is known, the decision is automatic. i.e., the status and
solution is unique relation.
2. Data analysis system: these decision systems are based on cooperative analysis, and use
of a formulae or an algorithm. But, these processes are not structured and, therefore vary.
 The cash flow analysis, the inventory analysis and the personal inventory systems are
examples of the analysis systems. The use of simple data processing tools and business
rules are required to develop this system.
3. Information analysis system: in this system, the data is analyzed and information
reports are generated. The reports might be having exemptions as a feature. The decision
makers use these reports for assessment of the situation for decision-making. The sales
analysis, the account receivable system, the market research analysis, the MRP systems are
examples of this system.
4. Accounting systems: these systems are not necessarily for decision making but they are
desirable to keep track of the major aspects of the business as a function. The contents of
these systems are more data processing leading to formal reporting, with exemptions, if
necessary. These systems account items such as cash, inventory, and personnel and so on
and relate it to a norm or norms developed by the management, for control and decision.
5. Model based systems: these systems are simulation models or optimization models for
decision making. These decisions, generally, are onetime and infrequent and provide
general guidelines for operation or management. The product mix decision, the material
mix, the job scheduling rules, and the resource or asset or facilities planning system.
SOME IMPORTANT FACTS
The DSS are developed by the users and systems analysts jointly.
The DSS uses the principles of economics, science and engineering and also tools and
techniques of management
The data used in the DSS is drawn from the information systems developed in the company.
The decision support systems are developed in isolation and form an independent system
subset of the MIS.
The most common use of the DSS is to test the decision alternatives and also to test the
sensitivity of the result to the change in the system and assumptions.
The data and information for the DSS are used from the internal sources such as the database
and conventional files, and from the external sources.
MAJOR FUNCTIONS OF MIS
1. DSS can be used to identify relationships among the key elements of the problems.
2. Determining sensitivity of result to change in decision variables
3. DSS can be used to estimate the impact on sales, budget or introducing a product into new
market.
4. Developing models of business process
DSS: DETERMINISTIC SYSTEM
There are a number of situation, where the management has to make a decision based on
the analysis of business statistics. Since, the organization would have the database
information; these decision situations draw data from the database(s). Most of these
decision situations are fairly structured and, therefore, can be put in the form of the business
models. A far assumption is made that the model has business and decision-making validity.
If the management can design such models duly tested, they can be used by the need
arrives. All such tools and models act as the support system for decision-making. The tools
and the models are generally standard but have to have a custom need in the specific
situation. The DSS based on such tools or models have found extensive use, as a number of
computer based software tools and packages are hardware independent and have proven
the application areas. The ranges of packages are available from PC to mainframe computer
systems. The packages are also available for popular network system as well.
The origin of these tools and models lie in the business management, the management
science and the operations research. Some are universally known and proven tools and have
 application in the business management. While designing the models, a flexible approach is
taken to solve varied decision-making problems. They undergo a change over a period of
time. The most significant advantage of the DSS is its implications on the result or business
performance. The second advantage of DSS is that it provides higher management ability to
delegate decision-making to the lower level once the tools and the models are tested.
DSS MODELS
The DSS can be based on three different approaches. They are shown in the figure below:

Behavioral model: these models are useful in understanding the behavior amongst the
business variables. The decision maker can then make decisions giving due regard to such
behavioral relationships.
Management science models: these models are developed on the principles of business
management, accounting and economies. In many areas of management, the proven
methods of management control are available which can be used for the management
decisions. There are also several management systems, which can be converted into DSS
models.
Operation research models: the operation research models are mathematical models. These
models represent a real life problem situation in terms of the variables, constants and
parameters expressed in algorithm equation. Since, the models are mathematical; there are
solutions to these problems. In arriving the solution methodology calculus, matrix algebra,
probability and set theory are used. These models have clarity to the extent that each of
them has a set of assumptions which must be true in real life. Further, if the assumptions are
valid, the solutions offered are realistic and practical. The model represents the real life
problem solutions.
MIS AND THE BENEFITS OF DSS

The DSS is a special class of system which is used as a support in decision-making. Many of
the decision-making situations, at all levels of management, are such that its occurrence is
in frequent but the methodology of decision-making is known. Some of the methods are
proven and are widely used. Such applications are separated and are packed in the DSS.
These systems are data from the general MIS and they are used by a manager or a decision
maker for decision support. The basic characteristic of the DSS is that it is based on some
tool, techniques or model. These systems are used sometimes for testing new alternatives,
training and learning. They are also used for sensing the various parameters of the model.
The MIS designer has to look for all such situations and design the DSS for integration in the
system. The MIS would become more useful if the decision-making is made person-
independent and executed system covers the normal variety of decision situations. If
anything outside the considered variety crops up. DSS will bring to be notice of the decision
makers that actions are called for in the situation.
When the decision situation requires multidimensional analysis using the internal and
external data, then such DSS are kept out of the main MIS design scope. Most of these
situations call for the use of models and the nature of decision is strategic, calling for
planned activity.
 Decisions like a new product launch, price revision, appointing new dealers, change of
product design or change in the manufacturing process are strategic decisions which require
artificial analysis of data, careful evaluation of various alternatives and selecting one of
them for implementation on the given criteria.
The DSS plays a dominant role in the management information system, as a support to
decision makers.

THE BENEFITS OF DSS

One strong reason for using DSS is that existing information system and MIS are not
sufficient for meeting all the needs of information and decision-making. Decision maker still
has to look for additional information, analysis and a model for decision-making in certain off
a situation. Exception reporting and controlling by using standards and targets are useful to
some extends in decision-making. The single largest benefit of DSS is that it raises the
capability of decision maker to make right rational decisions. The capability is built due to
several abilities DSS provides to decision maker to deal with the program:

Ability to view data/information in different dimensions and sensing the problem, trend,
pattern through different views
Ability to understand and assess business performance and various results in terms of cause
and effect, and enabling to define the problem
Ability to understand the problem and its results, and ability to judge the impact on
business
Ability to assess the impact of any change in the business performance and enabling to
focus on the areas where the impact is negative
Ability to view a complex situation or problem and to design a model to analyze the
problem, develop alternatives to solve the problem, test the solution and to conduct
sensitivity analysis
Ability to make better decisions due to quick analysis, modeling, developing alternatives
and testing for selection
Ability to control the risk exposure in decisions

All these abilities together make a decision maker a capable person to handle any complex
business situation or problem. DSS enables managers to construct databases for ad-hoc
(informal) query, reporting analysis, viewing and modeling the data to describe and
understand the decision-making scenario. Manager through DSS builds capability to execute
the decision-making process intelligent-design-choice built by Herbert Simon.
MANAGEMENT
INFORMATION
SYSTEMS (BBA6001)
- CONCEPTS OF
DSS
 Submitted by:

Ayushi Gupta

BBA/4559/14

MANAGEMENT
INFORMATION
SYSTEMS (BBA6001)
 - CONCEPTS OF
DSS

Submitted by:

Aashima Jain

BBA/45/14