Chapter 10 Decision

Support Systems
 Learning Objectives
 Use of decision support in business
 Identify the role and reporting alternatives of MIS
 Describe how online analytical processing (OLAP) can
meet key information needs of managers
 How DSS it differs from traditional MIS
 Executive information systems, Enterprise information
portals and Knowledge management systems
 Identify how neural networks, fuzzy logic can be used in
business
 Give examples of several ways expert systems can be
used in business decision-making situations

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 Decision Support in Business
 Companies are investing in data-driven decision
support application frameworks to help them
respond to
 Changing market conditions
 Customer needs
 This is accomplished by several types of
 Management information
 Decision support
 Other information systems

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 Levels of Managerial Decision
Making

Chapter 10 Decision Support Systems 4

 Information Quality
 Information products made more valuable by
their attributes, characteristics, or qualities
 Information that is outdated, inaccurate, or
hard to understand has much less value
 Information has three dimensions
 Time
 Content
 Form

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 Attributes of Information Quality

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 Decision Structure
 Structured (operational)
 The procedures to follow when decision
is needed can be specified in advance
 Unstructured (strategic)
 It is not possible to specify in advance
most of the decision procedures to follow
 Semi-structured (tactical)
 Decision procedures can be pre-specified,
but not enough to lead to the correct decision

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 Decision Support Systems
Management Information Decision Support
Systems Systems
Decision Provide information about the Provide information and
support performance of the organization techniques to analyze
provided specific problems
Information form Periodic, exception, demand, Interactive inquiries and
and frequency and push reports and responses
responses
Information Pre-specified, fixed format Ad hoc, flexible, and
format adaptable format

Information Information produced by Information produced by

processing extraction and manipulation of analytical modeling of
methodology business data business data

Chapter 10 Decision Support Systems 8

 Business Intelligence Applications

Chapter 10 Decision Support Systems 9

 DSS Components

Chapter 10 Decision Support Systems 10

Applications of Statistics and
Modeling
 Supply Chain: simulate and optimize supply
chain flows, reduce inventory, reduce stock-
outs
 Pricing: identify the price that maximizes
yield or profit
 Product and Service Quality: detect quality
problems early in order to minimize them
 Research and Development: improve
quality, efficacy, and safety of products and
services
Chapter 10 Decision Support Systems 11
 Management Information
Systems
 The original type of information system
that supported managerial decision making
 Produces information products that support
many day-to-day decision-making needs
 Produces reports, display, and responses
 Satisfies needs of operational and tactical
decision makers who face structured
decisions

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Management Information System Reports

Periodic
Periodic Scheduled
Scheduled
Reports
Reports

Exception
Exception Reports
Reports

Demand
Demand Reports
Reports
Major
and
and Responses
Responses
Management
Information
Systems Reports Push
Push Reports
Reports
Management Reporting Alternatives
 Periodic Scheduled Reports
 Pre-specified format on a regular basis
 Exception Reports
 Reports about exceptional conditions
 May be produced regularly or when an
exception occurs
 Demand Reports and Responses
 Information is available on demand
 Push Reporting
 Information is pushed to a networked computer

Chapter 10 Decision Support Systems 14

 Online Analytical Processing
 OLAP
 Enables managers and analysts to examine
and manipulate large amounts of detailed and
consolidated data from many perspectives
 Done interactively, in real time, with rapid
response to queries

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Online Analytical Processing
Data is retrieved from corporate databases
and staged in an OLAP multi-dimensional
database

Corporate
Databases
Client PC
OLAP
Server

Multi- •Operational DB
dimensional •Data Marts
Web-enabled OLAP database •Data Warehouse
Software
 Online Analytical Operations
 Consolidation
 Aggregation of data
 Example: data about sales offices rolled up
to the district level
 Drill-Down
 Display underlying detail data
 Example: sales figures by individual product
 Slicing and Dicing
 Viewing database from different viewpoints
 Often performed along a time axis

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Geographic Information Systems
 DSS uses geographic databases to construct
and display maps and other graphic displays
 Supports decisions affecting the geographic
distribution of people and other resources
 Often used with Global Positioning Systems
(GPS) devices

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 Data Visualization Systems
 Represents complex data using interactive,
three-dimensional graphical forms
(charts, graphs, maps)
 Helps users interactively sort, subdivide,
combine, and organize data while it is in its
graphical form

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 Using Decision Support Systems
 Using a decision support system involves an interactive analytical
modeling process
 Decision makers are not demanding pre-specified information
 They are exploring possible alternatives
 What-If Analysis
 Observing how changes to selected variables affect other
variables
 Sensitivity Analysis
 Observing how repeated changes to a single variable affect
other variables
 Goal-seeking Analysis
 Making repeated changes to selected variables until a chosen
variable reaches a target value
 Optimization Analysis
 Finding an optimum value for selected variables, given certain
constraints

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 Data Mining
 Provides decision support through knowledge
discovery
 Analyzes extensive historical business data
 Looks for patterns, trends, and correlations
 Goal is to improve business performance
 Types of analysis
 Regression
 Decision tree
 Neural network
 Cluster detection
 Market basket analysis

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 Market Basket Analysis
 One of the most common uses for data mining
 Determines what products customers
purchase together with other products
 Results affect how companies
 Market products
 Place merchandise in the store
 Lay out catalogs and order forms
 Determine what new products to offer
 Customize solicitation phone calls

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 Executive Information Systems
 Combines many features of MIS and DSS
 Provide top executives with immediate and
easy access to information
 Identify factors that are critical to accomplishing
strategic objectives (critical success factors)
 So popular that it has been expanded to
managers, analysis, and other knowledge
workers

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 Features of an EIS
 Information presented in forms tailored to the
preferences of the executives using the system
 Customizable graphical user interfaces
 Exception reports
 Trend analysis
 Drill down capability

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 Enterprise Information Portals
 An EIP is a Web-based interface and integration
of MIS, DSS, EIS, and other technologies
 Available to all intranet users and select
extranet users
 Provides access to a variety of internal and
external business applications and services
 Typically tailored or personalized to the user
or groups of users
 Often has a digital dashboard
 Also called enterprise knowledge portals

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 Dashboard Example

Chapter 10 Decision Support Systems 26

Enterprise
Information
Portal
Components

Chapter 10 Decision Support Systems 27

 Enterprise Knowledge Portal

Chapter 10 Decision Support Systems 28

 Artificial Intelligence (AI)
 AI is a field of science and technology based on
 Computer science
 Biology
 Psychology
 Linguistics
 Mathematics
 Engineering
 The goal is to develop computers that can
simulate the ability to think
 And see, hear, walk, talk, and feel as well

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 Attributes of Intelligent Behavior
 Some of the attributes of intelligent behavior
 Think and reason
 Use reason to solve problems
 Learn or understand from experience
 Acquire and apply knowledge
 Exhibit creativity and imagination
 Deal with complex or perplexing situations
 Respond quickly and successfully to new
situations
 Recognize the relative importance of elements in a
situation
 Handle ambiguous, incomplete, or erroneous
information
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 Domains of Artificial Intelligence

Chapter 10 Decision Support Systems 31

 Cognitive Science
 Applications in the cognitive science of AI
 Expert systems
 Knowledge-based systems
 Adaptive learning systems
 Fuzzy logic systems
 Neural networks
 Genetic algorithm software
 Intelligent agents
 Focuses on how the human brain works
and how humans think and learn

Chapter 10 Decision Support Systems 32

 Robotics
 AI, engineering, and physiology are the basic
disciplines of robotics
 Produces robot machines with computer
intelligence and humanlike physical
capabilities
 This area include applications designed to
give robots the powers of
 Sight or visual perception
 Touch
 Locomotion
 Navigation

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 Latest Commercial Applications
of AI
 Decision Support
 Helps capture the why as well as the what of
engineered design and decision making
 Information Retrieval
 Converts information into simple
presentations
 Database mining

Chapter 10 Decision Support Systems 34

 Expert Systems
 An Expert System (ES)
 A knowledge-based information system
 Contain knowledge about a specific, complex
application area
 Acts as an expert consultant to end users

Chapter 10 Decision Support Systems 35

Components of an Expert System
 Knowledge Base
 Facts about a specific subject area
 Heuristics that express the reasoning
procedures of an expert (rules of thumb)
 Software Resources
 An inference engine processes the knowledge
and recommends a course of action
 User interface programs communicate with
the end user
 Explanation programs explain the reasoning
process to the end user

Chapter 10 Decision Support Systems 36

Components of an Expert System

Chapter 10 Decision Support Systems 37

 Benefits of Expert Systems
 Captures the expertise of an expert or group of experts in a
computer-based information system
 Faster and more consistent than an expert
 Can contain knowledge of multiple experts
 Does not get tired or distracted
 Cannot be overworked or stressed
 Helps preserve and reproduce the knowledge
of human experts
An example of an expert system used by many people is
the Microsoft Windows operating system troubleshooting
software located in the "help" section in the taskbar menu.
Microsoft has designed their expert system to provide
solutions, advice, and suggestions to common errors
encountered throughout using the operating systems.

Chapter 10 Decision Support Systems 38

 Limitations of Expert Systems
 The major limitations of expert systems
 Limited focus
 Inability to learn
 Maintenance problems
 Development cost
 Can only solve specific types of problems
in a limited domain of knowledge

Chapter 10 Decision Support Systems 39

 Neural Networks
 Computing systems modeled after the brain’s
mesh-like network of interconnected processing
elements (neurons)
 Interconnected processors operate in parallel
and interact with each other
 Allows the network to learn from the data it
processes

Chapter 10 Decision Support Systems 40

 Fuzzy Logic
 Fuzzy logic
 Resembles human reasoning
 Allows for approximate values and
inferences and incomplete or ambiguous data
 Used more often in Japan than in the U.S.
 Used in fuzzy process controllers used in
subway trains, elevators, and cars
 Fuzzy set theory defines fuzzy operators on
fuzzy sets.
Rules are usually expressed in the form:
IF variable IS property THEN action
e.g IF temperature IS very cold THEN stop fan.
Chapter 10 Decision Support Systems 41
Thank You