UNIT-3

Decision Support Systems

Topics to be covered
Definition of DSS Features of DSS Components of DSS Database

Data Warehouse
MBMS KBS

User Interface / DSS Software

GDSS

Definitions of DSS
Decision Support System is an interactive computer based systems, which helps decision makers utilize data and models to solve unstructured problems. DSS couples the intellectual resources of individuals with the capabilities of the computer to improve the quality of the decisions. It is a computer based support system for management decision makers who deal with the semi structured problem.

Definitions of DSS
DSS is an effective blend of human intelligence, information technology and software which interact closely to solve complex programs. It is an information system that utilizes decision models, a database, and a decision makers own insights in an ad hoc (unplanned) basis, interactive analytical modeling process to reach specific decision by a specific decision maker.

Definitions of DSS
A DSS is an interactive, flexible, and adaptable CBIS, specially developed for supporting the solution of a nonstructured management problem for improved decision making. It utilizes data, it provides easy user interface,

and it allows for the decision makers own insights

DSS may utilize models, is built by an interactive process (frequently by end-users), supports all the phases of the decision making, and may include a knowledge component

Structured versus Unstructured Decisions

Structured decision are decision made for programmed and pre-planned situation yet unstructured are decisions made for emergent they are not pre-planned. For example, if fire break there and then manager can make decision unplanned. Structured decisions are those types of decision which are taken following a pre-established model (abstract representation of reality). No brain storming is required in taking decision rather establishing the model. Generally, line

managers take these types of decisions according the models

prepared by the top level managers to perform there job.

Structured versus Unstructured Decisions

Structured decisions are programmed where the
organization has already faced such situations. And the employees are used to solving such problems. For instance the hiring of new IT specialists in a firm. These decisions are generally made for routine tasks. Unstructured decisions are made for a sudden one-shot kind of situations. The situations are uncertain and unclear. These decisions are the non-programmed decisions that are happening for the first time. For instance, dealing with a labour strike in a factory.

Features of DSS
The key characteristics and capabilities of DSS :

The philosophy of DSS is to give the users the tools

necessary to analyze different types of data by using easy sophisticated models. DSS is designed to deliver capabilities, not simply to respond to information needs. DSS are aimed at middle and top management with emphasis on change, flexibility, and quick response. There is less emphasis on dealing with structured

information which generally prevails in lower level

management.

Features of DSS
DSS designers must not only technically competent but also be able to observe and understand the different functional areas of business organization. The technology required by DSS is based on easy and flexible access. Thereby, reliable communication network, availability of computer terminals are more important than large scale data processing systems.

Features of DSS
Support for decision makers, mainly in semi-structured and unstructured situations, by bringing together human judgment and computerized information. Support for all managerial levels, ranging from top executives to line managers. Can be integrated with other DSS and/or applications, and it can be distributed internally and externally, using networking and Web technologies.

Features of DSS
DSS is flexible, so users can add, delete, combine, change, or rearrange basic elements; DSS can be readily modified to solve other, similar problems. Userfriendliness, strong graphical capabilities, and a natural language interactive humanmachine interface can greatly increase the effectiveness of DSS.

Features of DSS
The decision maker has complete control over all steps of the decision-making process in solving a problem. End users are able to develop and modify simple systems by themselves. Can be employed as a standalone tool used by an individual decision maker in one location or distributed throughout an organization and in several organizations along the supply chain.

Components of DSS
The five important components of a typical DSS cannot altogether be isolated from other information because all of them use common database. Thus, DSS has four major components :

Data Warehouse
Database Model Base

User interface
Knowledge Base

Components of DSS
D A T A W A R

External Data

Database

Model Component

Internal Data

Knowledge Base
User Interface Component

E
H O U E

Users

Data Warehouse
A data warehouse is a relational database that is designed for query and analysis rather than for transaction processing. It usually contains historical data derived from transaction data, but it can include data from other sources. It separates analysis workload from transaction workload and enables an organization to consolidate data from several sources.

Data Warehouse
A data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis. A data warehouse consists of a computer databases responsible for the collection and storage of information for a specific organization. This collection of information is then used to manage information efficiently and

analyze the collected data.

Data Warehouse
The data provided by the data warehouse for analysis provides information on a specific subject, rather than the functions of the company and is collected from varying sources into one unit having time-variant. Once entered into the warehouse, data should not change. This is logical because the purpose of a warehouse is to enable you to analyze what has

occurred.

Data Warehouse
Data warehouses have become more important in the Information Age, and they are a necessity for many large corporations, as well as some medium sized businesses. They are much more elaborate than a mere database, and they can find connections in data that cannot be readily found within most databases.

Database
Database is a pre requisite for developing any type of information system. Database in an information system is a collection of historical and current data and these data are organized for easy access by a range of applications. Since DSS

may require data from various functional areas of an organization

production, marketing, finance, human resource, database must contain data for all these functional areas. Although DSS has no responsibility to create or update data in the database, but it demands that data within the database must be updated so that decisions can be taken on the actual data.

Database
Some large organization do not provide direct access to the central database to DSS because of two reasons. First, organization want to protect data from accidental or a

inappropriate changes in the database. Secondly, it is a slow and a expensive process for the DSS to search through the large database. The process affects not only the performance of the DSS but also all other systems using the database.

Therefore, such organizations create separate DSS database for

extracting relevant data.

Database and Data Warehouse

The biggest difference between the two is that most databases place an emphasis on a single application, and this application will generally be one that is based on transactions. In data warehouse, the data is analyzed, it will be done within a single domain as well as multiple domains. Some of the separate units that may be comprised within a database include payroll or inventory. Each system will place an emphasis on one subject, and it will not deal with other areas. In contrast, data warehouses deal with multiple domains simultaneously.

Database and Data Warehouse

As it deals with multiple subject areas, the data warehouse finds connections between them. This allows the data warehouse to show how the company is performing as a whole, rather than in individual areas. Another powerful aspect of data warehouses is their ability to support the analysis of trends. They are not volatile, and the information stored in them doesn't change as much as it would in a common database.

Database and Data Warehouse

There are two types of data that we become familiar with. The first one is, operational data and the other is, decision support data. The purpose, format, and structure of these two data types are quite different. The operational data will be placed in a relational database. Database system is highly efficient to calibrate operational data whereas, Data Warehouse places decision support data is are often useful for making effective organizational decisions by managers.

Database and Data Warehouse

In the relational database, tables are frequently used, and they may be normalized. The operational data will be calibrated in a way that allows it to deal with transactions that are made on a daily basis. Every time an item is sold to a customer by the company, a record must be made of it. As can be expected, this data will be updated on a frequent basis. To ensure the efficiency of the system, the data must be placed in a certain number of tables, and the tables must have fields.

Database and Data Warehouse

The time span deals with transactions that are atomic and current. These transactions will deal with things such as the inventory movement, or the purchase of an order. Generally, operational data will deal with a short time frame. However, decision support data tends to deal with long time frames. Many company managers are interested in transactions that occurred over a certain time period. Instead of dealing with the purchase of one customer, managers are often more interested in the buying patterns of a group of customers. If a sale has just been made, it will not be found in a decision support data warehouse.

Database and Data Warehouse

Granularity is the third concept that separates operational data from decision support data. Operational data will deal with transactions that have occurred within a certain period of time. However, the decision support

data must be broken down into different parts of

aggregation. While it may be summarized, it may also be more current. The managers within an organization will

need information that is summarized at various degrees.

Model Base Management

A model base is a collection of mathematical and analytical models that can be made accessible to the DSS users. A model is an abstract representation that illustrate the various components or relationship of a phenomenon. Each DSS is based on a specific type of a model and makes different models depending on those purposes.

Model Base Management

Models are preprogrammed software elements that can be used to build computerized models. For example, a randomnumber generator can be employed in the construction of a simulation model. Models in DSS are ubiquitous and relates to mathematical modelling which simulates real world systems and cover a very broad range of applications. These applications arise in all branches of Economics, Finance, Chemistry, Materials

Science,

Astronomy,

Physics,

Structural

and

Molecular

Biology, Engineering, Computer Science, and Medicine.

Model Base Management

The general procedure that can be used to implement a model to solve a decision problem follows a process cycle: (1) describe the problem, (2) prescribe a solution,

(3) control the problem by assessing/updating the

optimal solution continuously, and (4) Feedback and Control.

Model Base Management

1. Describe the Problem As soon as a problem is detected, we think about and understand it in order to adequately describe the problem in writing. Develop a mathematical model or framework to represent reality in order to devise/use an optimization

solution
validated

algorithm.
before it

The
is

problem
offered

formulation
a solution.

must
A

be

good

mathematical formulation for optimization must be both inclusive (i.e., it includes what belongs to the problem) and exclusive (i.e., shaved-off what does not belong to the problem).

Model Base Management

2. Managerial Interpretations of the Optimal Solution

Once you recognize the algorithm and determine the appropriate module of software to apply, utilize software to obtain the optimal strategy. Next, the solution will be

presented to the decision-maker in the same style and

language used by the decision-maker. This means providing managerial interpretations of the strategic solution in layman's terms, not just handing the decision-maker a

computer printout.

Model Base Management

3. Control the problem by assessing/updating the optimal solution

These activities include updating the optimal solution in order to control the problem. In this ever-changing world, it is crucial to periodically update the optimal solution to any given optimization problem. A model that was valid may lose validity due to changing conditions, thus becoming an inaccurate representation of reality and adversely affecting

the ability of the decision-maker to make good decisions.

The optimization model you create should be able to cope with changes.

Model Base Management

4. The Importance of Feedback and Control It is necessary to place heavy emphasis on the importance of thinking about the feedback and control aspects of an MBMS. It would be a mistake to discuss the context of the optimizationmodelling process and ignore the fact that one can never expect to find a never-changing, immutable solution to a decision problem. The very nature of the optimal strategy's environment is changing, and therefore feedback and control

are an important part of the model base management system.

Model Base Management

Describe the problem, Prescribe the solution, Update the solution.

Decision Making and Problem Solving

Decision Making and Problem Solving

A problem occurs when a system does not meet its established goals or does not work as planned. Problem solving may also deal with identifying new opportunities. Problem solving is the most critical activity a business organization undertakes. Problem solving begins with decision making. The Decision making process starts with the intelligence phase, where, potential problems and /or opportunities are identified and defined. In the design stage, alternative solutions to the problem are developed. In the choice stage, a course of action is selected. In the implementation stage, action is taken to put the solution into effect. In the monitoring stage, the implementation of the solution is evaluated to determine if the anticipated results were achieved and modify the process.

Model Base Management

Types of Models
Most common models available in a model base are the library of statistical functions. Such a library contains a full range of expected statistical functions including mean, median, mode, deviation, scatter plot and so on. The DSS software has the ability to protect future outcomes by analyzing a series of data. Some of the models which are based on forecasting and

analyzing data are optimizing models, forecasting models

and sensitivity analysis models.

Optimization Models
Optimization, also called mathematical programming, helps find the answer that yields the best result-the one that attains the highest profit, output, or satisfaction, or the one that achieves the lowest cost, waste, or discomfort. Often these problems involve making the most efficient use of resourcesincluding money, time, machinery, staff, inventory, and more.

Optimization Models
Optimization models which are base on mathematical programming solve problems of determining the optimal allocations of limited resources required to meet a given objective. The objective must represent the goal of the decision-maker. For example, the resources may correspond to people, materials, money, or land. Out of all permissible allocations of the resources, it is desired to find the one or

ones that maximize or minimize some numerical quantity

such as profit or cost.

Optimization Models
It provides guidelines for action by generating optimal solution consistent with a series of constraints. An optimal solution is one that optimizes returns to the organization as a whole either in the form of maximization of revenues or minimization of costs or both. Optimization models, by using linear and non linear programming, determine optimal resource allocation to maximize or minimize specified

variables, such as cost or time.

Forecasting Models
Forecasting models are used to forecast an organization business prospects, particularly in terms of sales. Forecasting models use historical data and project the likely behaviour of these data in future based on the data. If the future conditions

are projected to show some changes like entry of a new

competitor, or an emergence of a substitute product, necessary adjustments are made in the projected data. Organization often use forecasting software (what if analysis tools) to predict the likely actions of competitors.

Sensitivity Analysis
Sensitivity analysis models study the impact of distinct changes. A discrete change is one that happens on irregular basis, for example, entry of a new powerful competitor, change in excise duty structure of the government, ban on import/export of the product, etc. Sensitivity analysis, works from known or assumed conditions and allows the users to vary certain values to test results in order to achieve better

predict outcomes. Sensitivity analysis generates outcomes

when probability of occurrences are known.

Knowledge Based System

Knowledge-based system focuses on systems that use knowledge-based techniques to support human decisionmaking, learning and action. It is a computer system that is programmed to imitate human problem-solving by means of

artificial

intelligence

and

reference

to

database

of

knowledge on a particular subject. Also it based on the methods and techniques of artificial intelligence and their core components are the knowledge base and the inference mechanisms.

Knowledge Based System

In knowledge-based system the computer program uses an encoding of human knowledge to help solve problems. KBS are computer systems, contain stored knowledge, solve problems like humans would. And also KBS are AI programs with program structure of new type knowledge-base (rules, facts, meta-knowledge), inference engine (reasoning and search strategy for solution, other services). While in Management Information System.

Knowledge Based System

It is a planned system of collecting, processing, storing and disseminating data in the form of information needed to carry out the functions of management or in other words the MIS collects or encode data, analyze and convert it in information to be used by the top management in decision making or information management methods tied to the automation or support of human decision making.

Knowledge Based System

Knowledge-based system enabled programs to tackle problems that were otherwise difficult to solve by the usual techniques of computer science. It imitate human problem solving by means of artificial intelligence and reference to a database of knowledge on a particular subject or it uses data, facts, and reasons about them in order to do something. Also Knowledgebased system improve the company's competitive advantage and organizational performance because it solve problems like humans would and it has inference engine or reasoning and search strategy for solution and it has intelligent information processing systems.

User Interface
User interface in DSS permits easy interaction between the users and the database and model base. DSS software system manages the creation, storage, and retrieval of functions from model base and integrates them with data in the database. DSS software

provides GUI, easy to use flexible user interface that supports the
interaction between the user and DSS. Since DSS are meant for relatively higher level managers who are not experts in computer handling, the DSS interface must be easy so that relevant information is extracted without much difficulty.

Group Decisions Support Systems

In the early phase of development of DSS, focus was primarily on supporting individual decision making. However, the DSS software developers realized that the most of the time, the important decisions are made by a group consisting many decision makers. Therefore, they focused their attention to develop systems that would help group decision making. Such systems were named group decisions support systems.

Concept of GDSS
A GDSS system can be defined as a CBIS that supports the group of decision makers engaged in a common task and that provides interface to a shared environment. It is a modern way of conducting group discussions by applying new techniques like electronic meetings, brain storming, criticism free idea generation etc.

What is Brain Storming?

Brainstorming is the name given to a situation when a group of people meet to generate new ideas around a specific area of interest. Using rules which remove inhibitions, people are able to think more freely and move into new areas of thought and so create numerous new ideas and solutions. All the ideas are noted down and are not criticized. Only when the brainstorming session is over are the ideas evaluated.

What is electronic meeting?

An electronic meeting process guides through the various meeting stages using meeting productivity software. This software is designed to assist with the preparation and follow-up stages of your meeting as well as the meeting itself.

Features of GDSS
There are number of features of a GDSS because of which it can be differentiated from DSS. These features are as follows: 1.There is high level of interaction among decision makers who work collectively on a problem. This interaction is generally through computer system. The interaction is open an takes place in collaborative meeting atmosphere in which attendees from various organizational levels feel freedom to contribute positively to solve the problem.

Features of GDSS
2. Emphasis is put on criticism free idea generation creating an atmosphere where an idea will be evaluated on its merits rather than on the basis of the source of idea. Idea organization and evaluation require keeping the focus on the meeting objectives, finding efficient ways to organize ideas that can be generated, and evaluating those ideas keeping in the mind the

appropriate time constraints.

Features of GDSS
3. Priorities are set and decisions are made which required finding ways to encompass the thinking of all the members in making these decisions. 4. Each member of the decision making group has access to relevant internal and external information which allows the members to emphasize there own views, appreciate the views of others, and settle their differences in order to arrive at an acceptable decision within a given time frame.

Features of GDSS
5. While writing an agenda and distributing it to the team, GDSS software take this process one step further and allow to store meeting goals, agenda items and relevant files in an electronic workspace. This workspace can then be sent to participants via e-mail to review prior to the meeting. During the meeting, one can access the meeting workspace to go through agenda items.

Components of GDSS
Like a DSS a GDSS has several components which can be seen from the model of group decision support systems The principal components of GDSS consists of the following column: Decision makers Database Model base Groupware

Decision Makers
A GDSS has a number of decision makers who work collectively on a specific problem with the objective that the problem will be solved by the collective wisdom of all the decision makers. In a group rather than on the basis of their contributions taken

individually, each of these decision makers has access to the

database including model base from which each of them extract relevant data. Each of them can use report writing software for report preparation on individual basis as well as can use groupware to understand the ideas of others on the problem concerned.

Database and Model Base

Like a DSS a GDSS also uses database and model base to extract relevant data and models for analysing these data in order to arrive at decision. While model base for both DSS and GDSS may remain the same as both use almost similar models in decision making, there may be difference in the organization of database in some cases. Where decision makers are placed at different locations, it is preferable to

have distributed databases to facilitate easy access.

Groupware
Software that is used in GDSS is generally called as a groupware. In 1988, Lotus Development Corporation developed a Groupware known as Notes, keeping in view the role of communication in GDSS. Notes included a number of features such as electronic mail, fax, voice messaging, internet access, bulletin board systems, personal calendaring, group calendaring, video conferencing, task management etc.

Groupware
It incorporates brain storming software which supports the definition phase of a problem by identifying its components. Members of the decision making group generate their own ideas, exchange their ideas with others, and evaluate those ideas. The output of these exercise is a structured report containing the pros and cons of various ideas and how they are relevant for problem solution.

Groupware
Decision makers use a variety of alternatives and rate them on the basis of certain criteria or rank them on the basis of these criteria. Alternative rating and ranking software undertakes the evaluation work and combines various alternatives in the form of a table or graph. The software supports design phase of decision making.

Groupware
Consensus building is necessary in group decision making so that deadlock is broken and members arrive at an agreed decision. Consensus building software informs the decision makers about the degree of uniformity in their alternative solutions. When there is no consensus the decision makers can engage in further discussion. The software points out the issues on which decision makers disagree and supports

them to have a common decision.