Decision Support Systems and Executive Support Systems

Three types of decision

Structured Semi-structured Unstructured

Structured
Structured decisions are those which are made according to specified procedures of rules or structured decisions are those that are easily made from a given set of inputs. Deciding to send a reminder notice to a customer for an overdue balance is considered to be structured decision

Semi-structured
Semi-structured decisions are those for which information obtained from a computer system or information system is only a portion of the total knowledge needed to make decision. Advertise a new product or how much to spend on MIS.

Unstructured
Unstructured decisions are novel, and insignificant. There is no cut and dried method for handling the problem because it hasn't arisen before or because it's precise nature and structure are mysterious or complex, or because it so important' that it deserves a custom tailored treatment. These, types of decisions often , involve a high degree of freedom. They may require a lot of creativity and intuitions from the decision maker to tell what factors will come into play in an unstructured play.

Definition of decision support system

Decision Support Systems (DSS) are a specific class of computerized information system that supports business and organizational decisionmaking activities.

Objective of DSS
The objective of Decision Support System (DSS) is to support managers in their work, especially decision making. Decision support system (DSS) tends to be used in planning, modelling, analysing alternatives, and decision making. The emphasis is on small, simple models which can easily be understood and used by the manager rather than complex integrated systems which need information specialist to operate them.

Examples
Typical information that a decision support application might gather and present would be: Accessing all of your current information assets, including legacy and relational data sources, cubes, data warehouses, and data marts Comparative sales figures between one week and the next Projected revenue figures based on new product sales assumptions The consequences of different decision alternatives, given past experience in a context that is described

Differences to MIS
What distinguished MIS from a decision support system (DSS) is flexibility. The format and types of information on MIS are predefined, but the format and types of information in decision support system (DSS) are not In decision support system (DSS), users are provided with the capabilities to generate their own information usually in their own way.

Making decision
Four stages 1. Intelligence 2. Design 3. Choice 4. Implementation

Intelligence (find what to fix)

Find or recognize a problem, need, or opportunity (also called the diagnostic phase of decision making). The intelligence phase involves detecting and interpreting signs that indicate a situation which needs your attention. These "signs" can come in many forms: Consistent customer requests for new-product features The threat of new competition Declining sales Skyrocketing costs An offer from a company to handle your distribution needs, and so on

Design (find fixes)

Consider possible ways of solving the problem, filling the need, or taking advantage of the opportunity. In this phase, you develop all the possible solutions you can.

Choice (pick a fix)

Examine and weigh the merits of each solution, estimate the consequences of each, and choose the best one. The "best" solution may depend on such factors as: Cost Ease of implementation . Staffing requirements Timeliness of the solution This is the prescriptive phase of decision making; it's the stage at which a course of action is prescribed.

Implementation (apply the fix)

Carry out the chosen solution, monitor the results, and make adjustments as necessary. Simply implementing a solution is seldom enough. Your chosen solution will always need fine-tuning, especially for complex problems or changing environments.

Applications of DSS
DSS are men/machine systems and are suitable for semi-structured problems. The problems must be important to the manager and the decision required must be a key one.

Other criteria
Large database Large amount of computation or data manipulation required Complex inter-relationships Analysis by stages Communication

Components of DSS
Interaction of man and machine Hardware Software Decision maker (user/manager)

Functions of DSS
Information retrieval Data reconfiguration Calculator activities

Information retrieval
Information retrieval in DSS environment refers to the act of extracting information from a database for the purpose of making decisions. Usually, the sequence of retrievals made by the user is unanticipated.
For example, the manager may see a few startling pieces of information on the display and, as a result of these, suddenly produce a report that provides more detail about the situation: Drill down

Data reconfiguration
Often managers using a DSS want information in a form other that that in which the data are logically represented within the computer system. The ability to reconfigure data makes it possible for managers and other decision makers to look at existing data from alternative perspectives: sorting, exchanging fields, joining, and presentation graphics using online analytical processing and data warehouse

Calculator activities
Functions
Functions are pre-stored formulas that enable a user to perform a calculator type task as soon as the function is invoked

Analysis
Analysis refer to using a decision support system (DSS) to review a set of facts and to assist in drawing conclusions based on there facts.

Statistical Tools: regression and correlation analysis Optimizing tools What if analysis (sensitivity analysis)

Optimizing tools
Optimizing tools are useful for deriving the best solution in certain structured decisions usually at tactical and operational levels. Optimizing tools are used where it is required to optimize the value of a single objective (e.g. production capacity) where the factors invoked (e.g. labour hours, machine capacity etc.) are subject to some constraints or limitation.

What if analysis (sensitivity analysis)

Assessing risk with the help of DSS tools is known as sensitivity analysis. At its simplest this means, holding all the variables, bar one, constant and altering that one variable step and noting the effect on the result.
For example, a simulation of an investment program might include factors such as; cost per unit, price per unit, volume sold, amount of investment and as on. What if sales growth per month is nil, 1/2%, 1 & 1/2%, 2% or minus 1% etc.

DSS for the supply chain

Comprehensive examination of supply management chain Searches for most efficient and cost-effective combination Reduces overall costs

Increases speed and accuracy of filling customer orders

DSS for Customer Relationship Management

Uses data mining to guide decisions Consolidates customer information into massive data warehouses Uses various analytical tools to slice information into small segments

DSS for customer analysis and segmentation

Executive support systems (ESS)

Senior managers use a category of information systems called executive support systems (ESS) to make decisions. ESS serves the strategic level of the organization. They address unstructured decisions and create a generalized computing and communications environment rather than providing any fixed application or specific capability

Executive Support Systems (ESS) in Perspective

Tailored to individual executives
Not to managers in other levels

Easy to use Drill down capabilities Support need for external data Can help when uncertainty is high Future-oriented Linked to value-added processes

Executive support systems (ESS)

ESS is designed to incorporate data about external events such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS. They filter, compress, and track critical data, emphasizing the reduction of time and effort required to obtain information useful to executives. ESS employs the most advanced graphics software and can deliver graphs and data from many sources immediately to a senior executive's.

Executive support systems (ESS)

Unlike the other types of information systems, ESS is not designed primarily to solve specific problems. Instead, ESS provides a generalized computing and telecommunications capacity that can be applied to a changing array of problems. While many DSS are designed to be highly analytical, ESS tends to make less use of analytical models.

Sample questions answered by ESS

What business should we be in? What are the competitors doing? What new acquisitions' would protect us from cyclical business swings? Which units should we sell to raise cash for acquisitions?

Features/Properties of an ESS
Ease of use
The system must be fast and extremely simple to use as it will be used by busy executives. The use of touch screens, mouse and icons, popup menus, etc. is normal.

Access to data
There must be unhindered rapid access to data permitting vertical and horizontal exploration.

Data Analysis
EIS should provide facilities for such things as ratios, trend calculations, and data integration forecasts.

Quality Presentation
The system should provide interesting and understandable formats using colours, graphics, and diagrams.

Question
A decision support system (DSS) uses its analytical capabilities to solved semistructured and unstructured problems.
Describe what is the difference between such problems (5 marks) Explain how the functions of a DSS can be used to solve such problems. (25 marks)