DECISION-MAKING
SYSTEMS
Decision Support Software
Reasons for the growth of decisionmaking information systems
• People need to analyze large amounts of
information
• People must make decisions quickly
• People must apply sophisticated analysis
techniques, such as modeling and forecasting, to
make good decisions
• People must protect the corporate asset of
organizational information
Transaction Processing Systems
• Capture data regarding business
transactions/activities.
– That data is stored in a database and then mined/analyzed
using one or more decision making techniques
• Transactional Data being captured
–
–
–
–
Debits and credits
Inventory going into and out of the system
Items being bought and sold.
Payments being made and received
• Uses source data automation: captures data at the
point of origin
The Organizational Pyramid and
Information Needs
• As you move from lower to upper levels in an organization,
information needs move from transactional in nature to
analytical. Analytical information supports strategic decision
making. Info also becomes less detailed and more concise.
Different Decision Types
• Programmed Decisions (structured decision)
– Structured situations with well defined relationships
– Quantifiable. There is an understood and accepted
method for making the decision.
– Very easy to automate (program) these types of
decisions.
• Nonprogrammed Decisions (nonstructured decision)
– Ill-structured situations with vague or changing
relationships between variables
– Not easily quantifiable in advance. No agreed-on
decision making method.
– There may be several “right” answers (although some
answers could be better than other answers).
Different Decision Types
Structured decisions
• Routine and repetitive problems with
standard procedures and solutions
Unstructured decisions
• Fuzzy, complex problems with no cutand-dried procedures and solutions
• Most decisions that you make fall somewhere in between
structured and nonstructured (containing elements of both).
• Various forms of decision support tend to be used when
dealing with nonstructured aspects of a decision. (DSS
helps you analyze information)
• With artificial
intelligence, the
decision making
expertise is built into
the system so that
the AI system makes
the decision for you
Problem Solving Approaches Used by
Computer-Aided Decision Making
Systems
• Optimization: find the
very best solution
given the constraints
provided
(aka the optimal answer)
• Satisficing: find a
good solution, one
that satisfies all of
your decision criteria,
without necessarily
being the best solution.
DECISION SUPPORT SYSTEM
(DSS)
Highly flexible and interactive IT
system that is designed to support
decision making when the problem is
not structured ( i.e. Nonprogrammed
decision).
Spreadsheets are a common form of
decision support system (DSS)
Alliance between You and a DSS
• Decision support systems help you analyze, but
you must know how to solve the problem, and how
to use the results of the analysis
– A DSS assists you in making a decision, as opposed to
making the decision for you.
– Power of a
DSS is its
ability to
analyze
information
and its ease
of use.
QUANTITATIVE MODELS
OFTEN USED BY A DSS
• Three quantitative (mathematical) models often used by
DSSs include:
1. Sensitivity analysis – the study of the impact that
changes in one (or more) parts of the model have on
other parts of the model
2. What-if analysis – checks the impact of a change in
an assumption on the proposed solution
3. Goal-seeking analysis – finds the inputs necessary
to achieve a goal such as a desired level of output
DSS Quantitative Model: What-if analysis:
change one assumption and see what impact it has on the model
DSSQuantitative Model:Goal-seeking analysis
what inputs must occur in order to achieve the desired result?
A DSS Can Help With Analysis
Tasks Like
•
•
•
•
•
•
Deciding where to spend advertising dollars
Analyzing sales trend information
Analyzing drug interactions
Developing airline schedules
Pricing products
Allocating limited investment dollars among
several potential projects.
• Budget setting.
Inventory control.
• Cash flow forecasting.
Processing rules are imprecise. Human judgment required.
Applied Uses of a DSS
YIELD MANAGEMENT SYSTEMS are a form of DSS used
by airlines to alter the price of seats on available flights on a
minute by minute basis, comparing the number of seats sold
to an estimate of what was expected. If fewer seats have
sold, more low-cost seats are made available. If more seats
have sold, less low-cost seats are made available.
Objective: have the plane take off full at the highest
possible average cost per seat
• Airlines are using optimization software to save
money on the costs associated with each flight by
reducing the number of miles traveled, fuel used
and/or overflight
fees paid, with the
system also taking
weather and wind
speed & direction
into account.
GEOSPATIAL INFORMATION SYSTEMS
(GIS) Geographic Information Systems
• A Geographic Information System (GIS) is a
specialized decision support system designed
specifically to analyze spatial information.
– Spatial information is any information that can be shown
in map form, such as roads, population distribution
characteristics, sewer systems and other utilities, income
levels, health conditions, areas of high or low crime, etc.
– The strength of a GIS is the ability to layer information
with a mouse click.
• ArcExplorer 2:
showing features in
San Diego (can find out
more info about an
attraction by placing your
mouse over it)
• Haag text examples
– GIS used in the space
shuttle Challenger
investigation
– GIS used in tree
maintenance in
Chattanooga
– GIS used in the 2001
Virginia highway
sniper investigation.
– Analyzing hurricane
destruction in Florida.
• Businesses
use GIS
software to
analyze
information,
generate
business
intelligence,
and make
decisions.
• Can layer in
info with a
mouse click
• Marketing
applications
• Westar Outage
Map
• Airline Flights
• US Army
Command Post
of the Future
(CPOF)
EXECUTIVE INFORMATION SYSTEMS
•
Executive information system (EIS) – specialized DSSs
designed for use by senior-level executives in order to
make upper level decisions.
•
Most EISs offering the following capabilities:
–
Consolidation – involves the aggregation of information and
features simple roll-ups to complex groupings of interrelated
information
– Drill-down – enables users to get details, and details of details,
of information
–
Slice-and-dice – looks at information from different
perspectives
Table 5.1
The Capabilities of Dashboards
Figure 5.3
Sample Performance Dashboard
© NAN104/iStockphoto
Figure 5.5 A Human Resource
Dashboard/Scorecard
Courtesy of iDashboards
Figure 5.6 Management Cockpit
The Management Cockpit is a registered trademark of SAP, created by Professor M. Georges.
Data Visualization Technologies
• Data visualization
• The process of presenting data to users in visual formats, thereby
making IT applications more attractive and understandable to
users
• The Value of Visualization
• Geographic Information Systems (GIS)
• A computer-based system for capturing, integrating,
manipulating, and displaying data using digitized maps
• Geocoding
• the process of assigning geographical location to every object
• Enables users to generate information for planning, problem solving, and
decision making
• Examples: ESRI, Intergraph, Pitney Bowes Mapinfo
• Reality mining
• Using GISs and Global Positioning Systems (GPSs) together
• Allowing analysts to extract information from the usage patterns
of mobile phones and other wireless devices
Digital Dashboards
• Digital dashboard – integrates information from
multiple components and presents it in a unified
display
The End
Click Here for Artificial Intelligence
• As you move from lower to upper levels in an
organization, information needs move from ___________
in nature to __________.
– Transactional in nature to analytical
Decision support systems
Transactional decisions
Ad-hoc decisions
Nonprogrammed decisions
Programmed decisions
Analytical decisions
(these are the answers)
• ____________ have well-defined relationships and are
easily quantifiable while _________________ may have
several answers that will work, and they are not easily
quantifiable.
• If you are trying to find the very best solution
given the constraints provided, you are using a
technique called ___________
– optimization
• If you want to find a good solution, one that
satisfies all your decision criteria, without
necessarily being the best solution., you are using
a technique called _____________.
– satisficing
Components of a DSS
• Model management component – consists of both
the DSS models and the model management system
• Data management
component – stores
and maintains the
information that you
want your DSS to use
• User interface
management
component – allows you
to communicate with the
DSS