Decision Support Systems and
Executive Support Systems
Three types of decision/Problems
• Structured: given set of rules (objective)
• Semi-structured: objectivity and intuitive
• Unstructured: predominately intuitive
Structured
• Structured decisions are those which are
made according to specified procedures of
rules or structured decisions are those that
are easily made from a given set of inputs.
• Deciding to send a reminder notice to a
customer for an overdue balance is
considered to be structured decision
Semi-structured
• Semi-structured decisions are those for which
information obtained from a computer system
or information system is only a portion of the
total knowledge needed to make decision.
• Advertise a new product or how much to
spend on MIS.
Unstructured
• Unstructured decisions are novel, and significant.
• There is no cut and dried method for handling the
problem because it hasn't arisen before or because it's
precise nature and structure are mysterious or
complex, or because it so important' that it deserves a
custom tailored treatment.
• These, types of decisions often , involve a high degree
of freedom.
• They may require a lot of creativity and intuitions from
the decision maker to tell what factors will come into
play in an unstructured play.
Operational level systems
•
To answer routine questions and track the flow
of transactions through the organization.
Therefore, information generally must be easily
available, current, and accurate.
•
Supporting operational managers by keeping
track of the elementary activities and
transactions of the organization, such as sales,
receipts, cash deposits, payroll, credit decisions,
and the flow of materials in a factory
Management-level Systems
• To serve the monitoring, controlling,
decision-making, and administrative
activities of middle managers
• Typically providing periodic reports rather
than instant information on operations
– Including control systems for annual budgeting
and inventory, and management systems for
sales and human resources
Strategic-level systems
• To match changes in the external
environment with existing organizational
capability
• Helping senior management deal with and
address strategic issues and long-term
trends, both in the firm and in the external
environment
– Including a system to forecast sales trends over a
five-year period or systems for profit planning
and personnel planning
Major Types of systems
• Executive Support Systems (ESS)
• Decision Support Systems (DSS)
• Management Information Systems (MIS)
• Transaction Processing Systems (TPS)
Characteristics of a transaction
processing system
• Records internal and external transactions that take
place in a company
• Is used mostly by lower-level managers to make
operational decisions
• Stores data that are frequently accessed by other
systems
• Is ideal for routine, repetitive tasks
• Records transactions in batch mode or on-line
• Requires six steps to process a transaction—data
entry, validation, data processing, storage, output
generation, and query support
TPS payroll system
MIS systems obtain data from TPS
systems
MIS report
What I.S. technology could help to generate this
report?
Definition of decision support system
• Decision
Support
Systems (DSS) are a
specific
class
of
computerized
information system that
supports business and
organizational decisionmaking activities.
Objective of DSS
• The objective of Decision Support System (DSS) is
to support managers in their work, especially
decision making.
• Decision support system (DSS) tends to be used in
planning, modelling, analysing alternatives, and
decision making.
• The emphasis is on small, simple models which
can easily be understood and used by the
manager rather than complex integrated systems
which need information specialist to operate
them.
Examples
Typical information that a decision support application
might gather and present would be:
• Accessing all of your current information assets,
including legacy and relational data sources, cubes,
data warehouses, and data marts
• Comparative sales figures between one week and the
next
• Projected revenue figures based on new product sales
assumptions
• The consequences of different decision alternatives,
given past experience in a context that is described
Differences to MIS
• What distinguished MIS from a decision support
system (DSS) is flexibility.
• The format and types of information on MIS are
predefined, but the format and types of
information in decision support system (DSS) are
not
• In decision support system (DSS), users are
provided with the capabilities to generate their
own information usually in their own way.
•
Making decision
• Four stages
1. Intelligence
2. Design
3. Choice
4. Implementation
Intelligence (find what to fix)
Find or recognize a problem, need, or opportunity (also
called the diagnostic phase of decision making). The
intelligence phase involves detecting and interpreting
signs that indicate a situation which needs your attention.
These "signs" can come in many forms:
• Consistent customer requests for new-product features
• The threat of new competition
• Declining sales
• Skyrocketing costs
• An offer from a company to handle your distribution
needs, and so on
Design (find fixes)
• Consider possible ways of solving the
problem, filling the need, or taking advantage
of the opportunity. In this phase, you develop
all the possible solutions you can.
Choice (pick a fix)
Examine and weigh the merits of each solution, estimate
the consequences of each, and choose the best one. The
"best" solution may depend on such factors as:
• Cost
• Ease of implementation .
• Staffing requirements
• Timeliness of the solution
This is the prescriptive phase of decision making; it's the
stage at which a course of action is prescribed.
Implementation (apply the fix)
• Carry out the chosen solution, monitor the
results, and make adjustments as necessary.
Simply implementing a solution is seldom
enough. Your chosen solution will always need
fine-tuning, especially for complex problems
or changing environments.
Applications of DSS
• DSS are men/machine systems and are
suitable for semi-structured problems.
• The problems must be important to the
manager and the decision required must be a
key one.
Other criteria
• Large database
• Large amount of computation or data
manipulation required
• Complex inter-relationships
• Analysis by stages
• Communication
Components of DSS
Interaction of man and machine
• Hardware
• Software
• Decision maker (user/manager)
Functions of DSS
• Information retrieval
• Data reconfiguration
• Calculator activities
Information retrieval
• Information retrieval in DSS environment refers
to the act of extracting information from a
database for the purpose of making decisions.
Usually, the sequence of retrievals made by the
user is unanticipated.
– For example, the manager may see a few startling
pieces of information on the display and, as a result of
these, suddenly produce a report that provides more
detail about the situation: Drill down
Data reconfiguration
• Often managers using a DSS want information in
a form other that that in which the data are
logically represented within the computer
system.
• The ability to reconfigure data makes it possible
for managers and other decision makers to look
at existing data from alternative perspectives:
sorting, exchanging fields, joining, and
presentation graphics using online analytical
processing and data warehouse
Calculator activities
• Functions
– Functions are pre-stored formulas that enable a user to
perform a calculator type task as soon as the function is
invoked
• Analysis
– Analysis refer to using a decision support system (DSS) to
review a set of facts and to assist in drawing conclusions
based on there facts.
• Statistical Tools: regression and correlation analysis
• Optimizing tools
• What if analysis (sensitivity analysis)
Optimizing tools
• Optimizing tools are useful for deriving the
best solution in certain structured decisions
usually at tactical and operational levels.
• Optimizing tools are used where it is required
to optimize the value of a single objective (e.g.
production capacity) where the factors
invoked (e.g. labour hours, machine capacity
etc.) are subject to some constraints or
limitation.
What if analysis (sensitivity analysis)
• Assessing risk with the help of DSS tools is known
as sensitivity analysis.
• At its simplest this means, holding all the
variables, bar one, constant and altering that one
variable step and noting the effect on the result.
– For example, a simulation of an investment program
might include factors such as; cost per unit, price per
unit, volume sold, amount of investment and as on.
What if sales growth per month is nil, 1/2%, 1 & 1/2%,
2% or minus 1% etc.
DSS for the supply chain
• Comprehensive examination of supply
management chain
• Searches for most efficient and cost-effective
combination
• Reduces overall costs
• Increases speed and accuracy of filling customer
orders
DSS for Customer Relationship
Management
• Uses data mining to guide decisions
• Consolidates customer information into
massive data warehouses
• Uses various analytical tools to slice
information into small segments
DSS for customer analysis and
segmentation
Executive support systems (ESS)
• Senior managers use a category
of information systems called executive support
systems (ESS) to make decisions.
• ESS serves the strategic level of the organization.
• They address unstructured decisions and create a
generalized computing and communications
environment rather than providing any fixed
application or specific capability
Executive Support Systems (ESS) in Perspective
• Tailored to individual executives
– Not to managers in other levels
•
•
•
•
•
•
Easy to use
Drill down capabilities
Support need for external data
Can help when uncertainty is high
Future-oriented
Linked to value-added processes
Executive support systems (ESS)
• ESS is designed to incorporate data about external
events such as new tax laws or competitors, but they
also draw summarized information from internal MIS
and DSS.
• They filter, compress, and track critical data,
emphasizing the reduction of time and effort required
to obtain information useful to executives.
• ESS employs the most advanced graphics software and
can deliver graphs and data from many sources
immediately to a senior executive's.
Executive support systems (ESS)
• Unlike the other types of information systems,
ESS is not designed primarily to solve specific
problems.
• Instead, ESS provides a generalized computing
and telecommunications capacity that can be
applied to a changing array of problems.
• While many DSS are designed to be highly
analytical, ESS tends to make less use of
analytical models.
Sample questions answered by ESS
• What business should we be in?
• What are the competitors doing?
• What new acquisitions' would protect us from
cyclical business swings?
• Which units should we sell to raise cash for
acquisitions?
Features/Properties of an ESS
• Ease of use
– The system must be fast and extremely simple to use as it will
be used by busy executives. The use of touch screens, mouse
and icons, popup menus, etc. is normal.
• Access to data
– There must be unhindered rapid access to data permitting
vertical and horizontal exploration.
• Data Analysis
– EIS should provide facilities for such things as ratios, trend
calculations, and data integration forecasts.
• Quality Presentation
– The system should provide interesting and understandable
formats using colours, graphics, and diagrams.
Question
• LOOK at the solution to reword the question
• A decision support system (DSS) uses its
analytical capabilities to solved semi-structured
and unstructured problems.
– Describe what is the difference between such
problems
– (5 marks)
– Explain how the functions of a DSS can be used to
solve such problems.
– (25 marks)
Question
• A Transaction processing system and a
management information system are designed
to solve structured problems. Distinguish
between both systems.
(6 marks)
Question
• Distinguish between structured, semi-structured
and unstructured decisions. (6 marks)
• What are the essential features of a decision
support system. (12 marks)
• Explain, using suitable examples, How can these
features help solve semi-structured and
unstructured decisions. (12 marks)
• An Executive information systems is designed to
solve unstructured problems. Distinguish between
this system and the DSS. (6 marks)
Exam Question
• What are the four steps in a decision making
process.
(8 marks)
• What are the three features of a decision
support system.
(12 marks).
• Explain how these features can be used to
help implement strategies that require a
tighter integration with an organisations
suppliers and customers. (10 marks)