MGN:343

Topics to be covered
Decision Making, Decision Support System Configurations, DSS
Characteristics and Capabilities
What is a Decision Support
System(DSS)?

• A decision support system (DSS) is an information system that aids a

business in decision-making activities that require judgment,
determination, and a sequence of actions.
• The information system assists the mid- and high-level management
of an organization by analyzing huge volumes of unstructured data
and accumulating information that can help to solve problems and
help in decision-making.
• A DSS is either human-powered, automated, or a combination of
both.
Purpose of a Decision Support
System

• A decision support system produces detailed information reports by

gathering and analyzing data. Goal is to collect data and analyze it.
• DSS is used by the planning departments – such as the operations
department – which collects data and creates a report that can be used by
managers for decision-making.
• DSS is used in sales projection, for inventory and operations-related data,
and to present information to customers in an easy-to-understand manner.
• One of the main applications of a DSS in an organization is real-time
reporting. It can be very helpful for organizations that take part in just-in-
time (JIT) inventory management.
• In a JIT inventory system, the organization requires real-time data of their
inventory levels to place orders “just in time” to prevent delays in
production and cause a negative domino effect. Therefore, a DSS is more
tailored to the individual or organization that is making the decision rather
than a traditional system.
Decision Making

• Definition: Decision making is the process of choosing among two or more

alternative courses of action for the purpose of attaining a goal or goals.
• Types of Decisions:
• Structured: these are usually taken by junior manager (operational level)
• Example: Field manager in a power plant taking decision about the
manpower planning
• Semi-structured: these are usually taken by the middle management
• Example: General Manager in a power plant taking decision about plant
operational efficiency and overhauling
• Unstructured: these are usually by the top management
• Example: Business Unit Head, Main Office in a power plant taking
decision about power purchase agreements and MoU with various
entities.
 Phases of the Decision Making
process
• Major phases:
• Intelligence
• Design
• Choice
• Implementation
• Monitoring
Decision-Making: Intelligence Phase
• Scan the environment, either intermittently or
continuously
• Identify problem situations or opportunities
• Monitor the results of the implementation
• Problem is the difference between what people
desire (or expect) and what is actually occurring
• Timely identification of opportunities is as
important as identification of problems
Decision-Making: Intelligence Phase

• Potential issues in data/information collection and estimation

• Lack of data
• Cost of data collection
• Inaccurate and/or imprecise data
• Data estimation is often subjective
• Data may be insecure
• Key data may be qualitative
• Data change over time (time-dependence)
Decision-Making: Intelligence Phase
• Problem Classification
• Classification of problems according to the degree of
structuredness
• Problem Decomposition
• Often solving the simpler sub-problems may help in
solving a complex problem
• Information/data can improve the structuredness of a
problem situation
• Outcome of intelligence phase:

A Formal Problem
Statement
Decision-Making: The Design Phase
• Finding/developing and analyzing possible courses
of actions

• Modeling: conceptualizing a problem and

abstracting it into a quantitative and/or qualitative
form (i.e., using symbols/variables)
Decision-Making: The Design Phase
• Developing (Generating) Alternatives

• Measuring/ranking the outcomes

• Using the principle of choice
Decision-Making: The Design Phase
• Risk
• Lack of precise knowledge (uncertainty)
• Risk can be measured with probability
• Scenario (what-if case)
• A statement of assumptions about the operating environment (variables) of a
particular system at a given time
• Possible scenarios: best, worst, most likely, average (and custom intervals)
Decision-Making: The Choice Phase
• The actual decision and the commitment to follow a
certain course of action are made here
• Includes the search, evaluation, and
recommendation of an appropriate solution to the
model
Decision-Making:
The Implementation Phase
“Nothing more difficult to carry out, nor more doubtful of success, nor
more dangerous to handle, than to initiate a new order of things.”
- The Prince, Machiavelli 1500s
• Solution to a problem = Change
• Change management?
• Implementation: putting a recommended solution to work
Simon 's Four Phases of Decision
Making
DSS Characteristics and Capabilities
DSS Characteristics and Capabilities

• Business analytics implies the use of

models and data to improve an
organization's performance and/or
competitive posture
• Web analytics implies using business
analytics on real-time Web information to
assist in decision making; often related to
e-Commerce
• Predictive analytics describes the business
analytics method of forecasting problems
and opportunities rather than simply
reporting them as they occur
Types of DSS

• Model-oriented DSS
• Data-oriented DSS
• Communication-driven DSS
• Document-driven DSS
• Knowledge-driven DSS
• Communication-driven: Allows companies to support tasks that
require more than one person to work on the task. It includes
integrated tools such as Microsoft SharePoint Workspace and Google
Docs.
• Model-driven: Allows access to and the management of financial,
organizational, and statistical models. Data is collected, and
parameters are determined using the information provided by users.
The information is created into a decision-making model to analyze
situations.
• Knowledge-driven: Provides factual and specialized solutions to
situations by using stored facts, procedures, rules, or interactive
decision-making structures like flowcharts
• Document-driven: Manages unstructured information in different
electronic formats.
• Data-driven: Helps companies to store and analyze internal and
external data.
Advantages of a Decision
Support System
• A decision support system increases the speed and efficiency of
decision-making activities. It is possible, as a DSS can collect and
analyze real-time data.
• It promotes training within the organization, as specific skills must be
developed to implement and run a DSS within an organization.
• It automates monotonous managerial processes, which means more
of the manager’s time can be spent on decision-making
• It improves interpersonal communication within the organization.
Disadvantages of a Decision
Support System
• The cost to develop and implement a DSS is a huge capital
investment, which makes it less accessible to smaller organizations.
• A DSS may lead to information overload because an information
system tends to consider all aspects of a problem. It creates a
dilemma for end-users, as they are left with multiple choices.
Decision support system examples

• GPS route planning. A DSS can be used to plan the fastest and best
routes between two points by analyzing the available options. These
systems often include the capability to monitor traffic in real-time to
route around congestion.
• Crop-planning. Farmers use DSS to help them determine the best time
to plant, fertilize, and reap their crops. Bayer Crop Science has applied
analytics and decision-support to every element of its business,
including the creation of “virtual factories” to perform “what-if”
analyses at its corn manufacturing sites.
• Clinical DSS. These systems help clinicians diagnose their patients. Penn
Medicine has created a clinical DSS that helps it get ICU patients off
ventilators faster
• ERP dashboards. These systems help managers monitor performance
indicators. Digital marketing and services firm Clearlink uses a DSS
system to help its managers pinpoint which agents need extra help.
Popular decision support system
software includes:
• https://www.ibi.com/analytics-platform/
• https://www.sap.com/products/bi-platform.html?btp=45705c4e-241
0-47cf-b212-5a788f0627a5
• https://www.salesforce.com/products/crm-analytics/overview/
• https://www.cio.com/article/3545813/decision-support-systems-sifti
ng-data-for-better-business-decisions.html