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C H A P T E R

Decision Support Systems Decision Support Systems and Management and Management

Information SystemsInformation Systems

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Decision Support Systems

• Are oriented toward assisting in solving both semi-structured and unstructured problems. Can be used for structured problems, too.

• Offer the potential for higher profits, lower costs, and better

products and services.

Structured Problem

When to reorder …

Unstructured Problem

Where to a relocate plant...

Decision Support Systems

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Decision Support Systems (DSS)• A DSS is an organized collection of people, procedures, software, databases,and devices used to support problem-specific decision making.

• Examples:• How will a labor strike affect our production schedule?• What are the potential affects of Cap-and-Trade on our profits?• Should we introduce a new line

of clothing?• Should be move into “green” tech?

TPS

MIS

DSS

AI/ES

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TPS, MIS, DSS, and AI/ES

TPS

MIS

DSS

AI/ESInformation

Data

Less

Routine

More

More

Decisionsupport

Less

Less

I/O

More

More

Complexprocessing/

analysis

Less

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TPS, MIS, DSS, and AI/ES

TPS

MIS

DSS

AI/ESInformation

Data

Less

Routine

More

More

Decisionsupport

Less

Less

I/O

More

More

Complexprocessing/

analysis

Less

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Terms

• Optimization Model• Finding the best solution to a problem or opportunity.

• Satisficing Model• Finding a good -- but not necessarily the best --

solution to a problem or opportunity..• Heuristics (rules of thumb)

• Commonly accepted guidelines or procedures that

usually find a good solution to a problem or opportunity. • Time is money.• It’s not how much you know, but who you know.• The most affective propaganda (PR) takes advantage of

peoples laziness.• Never show Microsoft your new product.• If you repeat a lie often enough it becomes the truth.

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Terms

Programmed Decisions Non-programmed Decisions

Decisions made using a rule, procedure, or quantitative method.

Decisions dealing with unusual or exceptional situations.

Sorry, but we can’t take

checks.

Should westart selling

on the internet.

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Office Depot• They used Essbase from Arbor Software Corporation and Compaq 7000 servers. Cost less than 5 million.

• Using this DSS they found they were carrying too much PC stock in the wrong stores.

• Using optimizing models, they reduced the number of PC models from 22 to 12.

• Eliminated unnecessary inventory.• Avoided costly markdowns on equipment that was not selling. Saved millions.

Office Depot’s DSS

Real Decision Support Systems

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Scotch Maid• They were told by Kmart to use EDI and to ship exactly the right amount of each clothing item to satisfy customer demand--no more and no less.• Using a DSS, Scotch Maid was about 99% effective in keeping 144 different items on the shelves with very little in backroom inventory.

Scotch Maid’s DSS K-Mart

Real Decision Support Systems

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Trane Air-conditioning Products• Used a DSS to assess the affects of quickly increasing production by 114 air-conditioning units.

• Determined how long it would take to produce the units.• Determined that it would NOT affect existing customers’ delivery schedules.

Hurricane AndrewSouth Florida

Real Decision Support Systems

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Pitney Bowes ($3.3 billion company) • Used a DSS to reduce its office equipment inventory reserve from 30 days to 15 days.

• Copiers, FAX’s, Mailer, Etc.• Used APS (Advanced Planning System) DSS.

• $150,100 to $1 million.

Real Decision Support Systems

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Sikorsky Aircraft • Used a DSS to reduce inventory by 50%, while doubling its business.• Used APS (Advanced Planning System) DSS.

• $150,100 to $1 million.

Real Decision Support Systems

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Real Decision Support Systems

United Airlines• Uses a DSS to schedule arrivals, departures, staffing needs, and gate assignment.• It has reduced gate conflicts, traffic congestion, and staffing problems.

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Characteristics of a DSS• Large amounts of data from many sources.

• DBMS and data warehouses.• Internets and intranets.

• Wide variety of report and presentation formats.• Computer screen or printer output.

• Textual or graphical orientations.• Text, tables, line drawings, pie/bar charts, trend lines, etc.

Characteristics of a DSS

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Characteristics of a DSS (continued)

• Drill-down analyses.• Complex statistical analyses.• Simulation analyses of the real world.

•Use models• Financial.• Statistical.• Graphical.• Project management.

• Optimization, satisficing, and heuristic approaches.• “What-if” analyses.• Goal-seeking analyses.

• If a company wishes to increase sales by 10%, what must it do.

Characteristics of a DSS

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DSS vs MIS

MIS• Structured problems.• Emphasizes information.

• Basic MIS reports: scheduled, demand, exception, etc.

Fixed format for output.• Regularly occurring reports.• Text oriented reports.•Low user control over MIS.

MIS “Information” DSS “Decisions”

DSS• Semi/unstructured problems.• Emphasizes decision making.

• “What-if” , simulation, goal -seeking .

• Flexible format for output.• Used when needed. • Graphical or text reports.• High user control over DSS.

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Simon’s Decision Making Model

Decision Making Model •By Herman Simon•Three stages:• Intelligence• The problem/opportunities are thoroughly investigated.

• Design• Alternative solutions are developed.

• Choice• Select an alternative.

Intelligence

Design

ChoiceDec

isio

n M

akin

g

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Huber’s Expanded Model of Problem Solving

Problem Solving Model • George Huber expanded Simon’s Model• Added Two Stages• Implementation• Put solution into effect.

• Monitoring•.Evaluate implemented solution.• Make changes if necessary.

Intelligence

Design

ChoiceDec

isio

n M

akin

g

Monitoring

Implementation

Pro

ble

m S

olvi

ng

Mod

el

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Group Decision Support Systems (GDSS)

GDSS• Group decision room.• Has the components of a DSS.• GroupWare: software designed specifically for decisions made by groups.

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Group Decision Support Systems (GDSS)

Some GDSS Characteristics:• Special Design to foster:

• Creative thinking.• Effective communication.• Good group decision making techniques.

•Reduction of negative group behavior.• Dominant individuals taking over the discussion.

• Ease of use and flexibility.• Anonymous input.• Parallel communication.

• Two or more individuals can type comments at the same time.• Comments instantly seen by all.

• Automatic record keeping for:• voting.• detailed comments.

Group Decision Room

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Some GDSS Characteristics:• Supports different decision making approaches: Brainstorming

Group Decision Support Systems (GDSS)

Delphi Approach

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Group Decision Support Systems (GDSS)

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Some GDSS Characteristics (Continued):• Supports different decision making approaches:

Group Decision Support Systems (GDSS)

Nominal Group Technique

(Group Members Vote)

Group Consensus Approach

(Forces Unanimous Decision)

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Executive Support Systems (ESS)

ESS• A specialized DSS for executives.• Individualized for each executive.• High ability to analyze, compare, and highlight trends.• Mostly used to track critical success factors and for strategic planning.

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Pratt & Whitney’s ESS

ESS• Tracked key-indicators of strategic plan success:

• Used to track engine quality and reliability by customer.• Used to track the quality of service given to individual customers.

• Commander EIS by Comshare.

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