Decision making concepts & Decision Support Systems

Faculty: Gayathri Ranjit

Assistant Professor TKM Institute of Management

Contents
1. Decision making concept 2. Systems for Decision Support 3. Decision making process/stages 4. Decision making in the real world 6. Framework for DSS 7. MIS Vs DSS 8. DSS - Characteristics and capabilities 9. DSS - Structure and Components 10. GDSS

5. Decision Support Trends

11. EDSS

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Decision makers

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Decision making - Types & Levels

Decisions

Structured
(repetitive, routine)

Unstructured
(judgement, evaluation, insights)

Semi-structured
(combination of both)

Types

Operational Management

Senior Management

Middle Management

Levels

TPS, MIS

ESS, DSS

DSS, GDSS

Systems

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Managers job and decision making

1. Interpersonal role 2. Informational role 3. Decisional role

Difficulties in decision making

Increasing number of alternatives Decisions made under pressure Uncertain decision environment Need to access remote information

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Stages in decision making

Problem discovery Intelligence

Solution discovery

Design

Choosing solutions

Choice

Solution testing

Implementation TKM Institute of Management 6

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Decision making Real world Constraints

Data Quality Management Filters

Constraints

Organizational Inertia

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Trends in Decision Support

Detailed enterprise wide data

Broadening decision rights and responsibilities

Intranets and portals Personalization and customization of information Team support tools

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Framework for developing DSS Decision Matrix

Operational control Structured
order entry

Management control 1
Make or buy analysis

Strategic Planning

Support needed 3

2
Financial Management

MIS
6

Semi structured
Inventory control

4
Project scheduling

5
Mergers & acquisitions

DSS

Unstructured
Selecting a cover for a magazine

7
Recruiting an executive

8
R&D planning

DSS, ES

Support needed

MIS

DSS, EIS

EIS, ES

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MIS Vs DSS
MIS
Provide information on firms performance to help managers monitor and control the business (summarises and reports) Produce answers to routine questions and fixed, regularly scheduled reports (whose formats are specified in advance) Sometimes MIS reports are only exception reports (highlighting only exceptional conditions) Oriented to internal (not external or environmental) events Flexible to a little extent to accommodate changing needs

DSS
DSS support semi-structured and unstructured problem analysis Helps make decisions that are unique, rapidly changing and not specified in advance

With a DSS, there is less effort to link users to structured information flow.

Bring information from external sources also DSS emphasizes change, flexibility and rapid response and works on interactive user-friendly mode

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MIS Vs DSS
MIS
Make use of simple methods such as summaries and comparisons

DSS
Make use of mathematical models/statistical techniques Has more analytical powers than any other system Caters more to strategic decision making Uses internal information from both MIS and TPS

Very little analytical capability

Provides input to operational, tactical and strategic levels Depend on TPS for their data

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DSS Characteristics & Capabilities

Characteristics
Manipulate data Enhance learning Contribute to all levels of decision making Employ mathematical models
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Capabilities
Sensitivity Analysis What-If Analysis Goal-seeking Analysis

DSS Structure & Components

Data management subsystem Model management subsystem

User interface
Users Knowledge based subsystems

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DSS - Components
TPS External Data

DSS Database

DSS Software system Models OLAP Tools Data Mining Tools

User Interface

User

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System (GDSS)
Group Decision Support

An interactive, computer-based system that facilitates a groups efforts to find solutions to semi-structured and unstructured problems. When a decision making group is supported electronically, that support is referred to as group decision support. Objective is to support the process of arriving at a decision

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GDSS - Components
People Software
GDSS software tools

Hardware

Electronic questionnaires Electronic brainstorming Idea organizers Questionnaire tools Tools for voting or setting priorities Stakeholder identification & analysis Policy formation tools Group dictionaries
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GDSS - Activities in an electronic meeting system

Group Interaction
Idea generation
Brainstorming Topic commenter Group outliner Idea organizer Issue analyzer Group writer Vote selection Alternative Evaluation Questionnaire

Session planning

Idea Organization

Prioritizing

Session Manager

Policy Development

Policy Formation

Organizational memory

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GDSS (Cntd..)
Groups

One-room
(members in one place)

Virtual
(members in different locations)

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GDSS Business Value

Using GDSS, productivity can increase with increase in number of attendees More collaborative atmosphere by guaranteeing contributors anonymity GDSS software tools follow structured methods for preserving results of meetings, enabling non-attendees to locate needed info after the meeting GDSS meetings can increase number of ideas generated and quality of decisions while producing the desired results in fewer meetings Leads to more participative and democratic decision making Most useful for tasks involving idea generation, complex problems and large groups

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Executive Decision Support Systems (EDSS)

Executive Support Systems (ESS)
Executive Information Systems (EIS)

EDSS

Executive Information (Support) Systems

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EDSS (Cntd..)

An Executive Decision Support System (also known as Executive Information System or Executive Support System) is a computer based technology designed specifically for the information needs of top executives. ESS helps senior executives monitor organizational performance, track activities of competitors, spot problems, identify opportunities, and forecast trends. Combining data from internal and external sources, ESS create a generalized computing and communications environment that can be focused and applied to a changing array of problems.

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EDSS - Capabilities
Drill-down

Critical Success Factors

Key Performance Indicators

Status Access
Trend Analysis Ad-hoc Analysis Exception reporting

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EDSS - Role
ESS brings together information from all parts of the firm Ability to drill down is useful to senior executives and employees at lower levels alike.

ESS provides managers with timely, comprehensive and accurate firm wide information.
Through ESS, managers have access to external data such as industry trends, stock markets, economic and competitor information. With minimum experience and training, managers can use these tools to create graphic comparisons of data. Ability to detect signals of problems that indicate possible threats.
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EDSS Business Value

Flexibility

Timeliness and availability of data

Analyze, compare & highlight trends

Sense & respond strategy

De-centralized decision making

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 The presentation concludes with a crossword puzzle to test your understanding of the subject

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