Decision making concepts &

Decision Support Systems

Faculty:

Gayathri RanjitAssistant Professor

TKM Institute of Management

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Contents

1. Decision making – concept

2. Systems for Decision Support

3. Decision making – process/stages

4. Decision making in the real world

5. Decision Support – Trends

6. Framework for DSS

7. MIS Vs DSS

8. DSS - Characteristics and capabilities

9. DSS - Structure and Components

10. GDSS

11. EDSS

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IndividualEmployees

Operational Management

Middle Management

Senior Management

Decision makers

Decision makers

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Decision making - Types & Levels

Decisions

Structured(repetitive, routine)

Unstructured(judgement, evaluation,

insights)

Semi-structured(combination of both)

OperationalManagement

SeniorManagement

Middle Management

Types

Levels

SystemsTPS, MIS ESS, DSS DSS, GDSS

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Manager’s job and decision making

1. Interpersonal role

2. Informational role

3. Decisional role

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

Difficulties in decision making

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Stages in decision making

Intelligence

Design

Choice

Implement-ation

Problem discovery

Solution discovery

Choosing solutions

Solution testing

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Decision making – Real world Constraints

Management Filters

Data Quality

OrganizationalInertia

Constraints

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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

1 2 3

4 5 6

7 8 9

Operational control

Management

control

Strategic Planning

Structured

Semi structured

Unstructured

Support needed

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Framework for developing DSS – Decision Matrix

order entry Make or buy analysis

Financial Management

Inventory control

Project scheduling

Mergers & acquisitions

Selecting a cover for a magazine

Recruiting an executive

R&D planning

Support needed

MIS DSS, EIS

MIS

DSS

EIS, ES

DSS, ES

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MIS Vs DSSMIS

Provide information on firm’s 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

Very little analytical capability

Provides input to operational, tactical and strategic levels

Depend on TPS for their data

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

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DSS – Characteristics & Capabilities

• Characteristics

Manipulate data

Enhance learning

Contribute to all levels of decision making

Employ mathematical models

• Capabilities

Sensitivity Analysis

What-If Analysis

Goal-seeking Analysis

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DSS – Structure & Components

Data management subsystem

Model management subsystem

User interface

Users

Knowledge based subsystems

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DSS - Components

DSS Database

External DataTPS

DSS Software systemModels

OLAP ToolsData Mining Tools

User

User

Interface

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System (GDSS)

An interactive, computer-based system that facilitates a group’s 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

Group Decision Support

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GDSS - Components

GDSS software tools

People Hardware

Software

•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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Idea generation

Idea Organization

Prioritizing

Policy Development

Group Interaction

BrainstormingTopic commenter

Group outliner

Idea organizerIssue analyzerGroup writer

Vote selectionAlternative Evaluation

Questionnaire

Policy Formation

Organizational memory

Session planning

Session Manager

GDSS - Activities in an electronic meeting system

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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 (Support) Systems

Executive Information Systems(EIS)

EDSS

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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

‘Sense & respond’strategy

Analyze, compare & highlight trends

De-centralized decision making

Timeliness and availability of data

Flexibility

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