CHAPTER
10
Decision Support Systems
and Management
Information Systems
1
Decision Support Systems
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...2
Decision Support Systems (DSS)
• A DSS is an organized collection of
people, procedures, software, databases,
and devices used to support problemspecific 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?
AI/ES
DSS
MIS
TPS
3
TPS, MIS, DSS, and AI/ES
Information
AI/ES
DSS
Less
More
Decision
Routine support
Less
More
I/O
Complex
processing/
analysis
More
Less
MIS
TPS
Data
More
Less
4
TPS, MIS, DSS, and AI/ES
Information
AI/ES
DSS
Less
More
Decision
Routine support
Less
More
I/O
Complex
processing/
analysis
More
Less
MIS
TPS
Data
More
Less
5
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.
6
• If you repeat a lie often enough it becomes the truth.
Terms
Programmed Decisions
Decisions made using a rule,
procedure, or quantitative
method.
Sorry, but
we can’t take
checks.
Non-programmed Decisions
Decisions dealing with unusual or
exceptional situations.
Should we
start selling
on the internet.
7
Real Decision Support Systems
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
8
Real Decision Support Systems
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
9
Real Decision Support Systems
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 Andrew
South Florida
10
Real Decision Support Systems
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.
11
Real Decision Support Systems
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.
12
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.
13
Characteristics of a DSS
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.
Continue
14
Characteristics of a DSS
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.
15
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
• 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.
DSS “Decisions”
16
Decision Making Model
•By Herman Simon
•Three stages:
• Intelligence
• The problem/opportunities
are thoroughly investigated.
• Design
• Alternative solutions
Decision Making
Simon’s Decision Making Model
Intelligence
Design
Choice
are developed.
• Choice
• Select an alternative.
17
• Put solution into effect.
• Monitoring
•.Evaluate implemented
solution.
• Make changes if necessary.
Intelligence
Design
Choice
Implementation
Problem Solving Model
Problem Solving Model
• George Huber expanded
Simon’s Model
• Added Two Stages
• Implementation
Decision Making
Huber’s Expanded Model of Problem Solving
Monitoring
18
Group Decision Support Systems (GDSS)
GDSS
• Group decision room.
• Has the components of a DSS.
• GroupWare: software designed specifically
for decisions made by groups.
19
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.
Group Decision Room
• Two or more individuals can type
comments at the same time.
• Comments instantly seen by all.
• Automatic record keeping for:
• voting.
• detailed comments.
Continue
20
Group Decision Support Systems (GDSS)
Some GDSS Characteristics:
• Supports different decision making approaches:
Brainstorming
Delphi Approach
Continue
21
Group Decision Support Systems (GDSS)
Continue
22
Group Decision Support Systems (GDSS)
Some GDSS Characteristics (Continued):
• Supports different decision making approaches:
Group Consensus
Approach
(Forces Unanimous Decision)
Nominal Group
Technique
(Group Members Vote)
23
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.
24
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.
25
26