DECISION SUPPORT SYSTEMS (CHAPTER 1)
VALENTINUS ROBY HANANTO
INSTITUT BISNIS DAN INFORMATIKA STIKOM SURABAYA
LEARNING OUTCOME
 Mahasiswa mampu memahami dan menjelaskan tentang: pengambilan keputusan, keputusan
manajerial dan sistem informasi, pentingnya dukungan komputer, keputusan terkomputerisasi dan
kerangka kerja pendukung keputusan
LEVELS OF ORGANIZATION
OPERATIONAL LEVEL
MANAGERIAL LEVEL
EXECUTIVE LEVEL
ORGANIZATIONAL BOUNDARIES
MANAGEMENT SUPPORT SYSTEMS
AN OVERVIEW
Emerging and Advanced Computer Technologies for Supporting Managerial Problem Solution

Changing Organizational Structure

Enabling Business Transformation

Changing Management Methods
BUSINESS PRESSURES – RESPONSES – SUPPORT MODEL
DSS DEFINITION
 Decision support system (DSS) are used to make business decision often
based on data collected by On-Line-Analytical-Processing system (OLAP)
 Example of data used for making decision :
 Retail sales transaction detail
 DSS as an Umbrella term: Describes any computerized system that supports
decision making in an organization
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WHY USE OF DSS
 Why use decision support systems?
 Speedy computations
 Improved communication and collaboration
 Increased productivity of group members
 Improved data management
 Managing giant data warehouses
 Quality support
 Overcoming cognitive limits in processing and storing information
 Anywhere, anytime support
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DECISION MAKING AND MANAGEMENT
 Management is a process by which organizational goals are achieved through the use of
resources (people, money, energy, materials, space, time).
 These resources are considered to be inputs, and the attainment of the goals is viewed as the
output of the process.
Measuring success:
Productivity= output/input
 Management is decision making
 The manager is decsion maker
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DECISION MAKING AND MANAGEMENT (CONT.)
 The nature of managers’ work
 Interpersonal : figurehead, leader, liaison.
 Informational: monitor, disseminator, spokesperson.
 Decisional: entrepreneur, disturbance handler,
resource allocator, negotiator.
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Decision Support and Business Intelligence Systems,
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DECISION MAKING AND MANAGEMENT (CONT.)
 Why Managers Need IT Support
 processing information manually is growing increasingly difficult
 computerized modeling
 examining numerous alternatives very quickly
 providing a systematic risk analysis
 being integrated with communication systems and databases
 being used to support group work
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PHASES OF THE DECISION MAKING
REALITY

Examination
Intelligence Phase
Verification of the
Model
Design Phase

Verification, Testing of
Proposed Solution
Choice Phases
SUCCESS
Implementation
of Solution

FAILURE
Decision Support and Business Intelligence Systems,
Eighth Edition
PHASES OF THE DECISION MAKING (CONT.)
 Intelligence phase

Organizational objectives

Search and scanning procedures

Data collection

Problem identification

Problem classification

Problem statement
Result:
Reality is examined
The problem is identified and defined
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PHASES OF THE DECISION MAKING(CONT.)
 Design phase

Formulate a model (Assumption)

Set criteria for choice

Search for alternative

Predict and measure outcomes
Result:
Representative model is constructed
The model is validated and evaluation criteria are set
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PHASES OF THE DECISION MAKING(CONT.)
 Choice phase

solution to the model

Sensitivity analysis

Selection of Best (Good) alternative

Plan for implementation

Design of control system
Result:
Proposed solution is included to the model
If reasonable, move to implementation phase.
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Decision Support and Business Intelligence Systems,
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PHASES OF THE DECISION MAKING(CONT.)
 Implementation phase

Put solution into action
Result:
Solution to the original problem
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DECISION MAKING PROCESSES

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The process of decision making
1.
Defining the problem (i.e., a decision situation that may deal with some
difficulty or with an opportunity)
2.
Constructing a model that describes the real-world problem
3.
Identifying possible solutions to the modeled problem and evaluating the
solutions
4.
Comparing, choosing, and recommending a potential solution to the
problem
Decision Support and Business Intelligence Systems,
Eighth Edition
DECISION MAKERS: WHO ARE THEY?
 Decision maker classification
 Individual decision makers can be single person or a computer system
 Multiple decision makers can be:
 Team where members support a single decision maker
 Groups where all members have a say in the decision
 Organization where global agreement is needed.
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FRAMEWORK FOR COMPUTERIZED
DECISION SUPPORT
Type of Control
Type of
Decision
Structured
Semi-structured
Unstructured
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Support
Needed
Operational Control
Managerial Control
Strategic
Planning
Accounts
1
Receivable Order
entry
Budget analysis,
2
short-term forecasting,
personnel reports, make-ofbuy analysis
Financial
3
management ,
warehouse location, distribution
systems
Production
4
scheduling
inventory control
Credit evaluation, Budget 5
Preparation, plan layout,
project scheduling, rewarded
systems design
Building new plant, mergers and6
acquisitions, new product
planning, compensation
planning, quality assurance
planning
Selecting a cover 7
for a magazine,
buying software
approving loans
Negotiating,
recruiting and executive,
buying hardware,
lobbying
R & D planning, new
9
technology development social
responsibility planning
MIS,
MS
MS, DSS, EIS, ES
8
Support
Needed
MIS
MS models
F & S models
DSS
DSS
ES
Neural
Networks
EIS, ES,
Neural Networks Decision Support and Business Intelligence Systems,
Eighth Edition
FRAMEWORK FOR COMPUTERIZED
DECISION SUPPORT (CONT.)
 Three type of decision :
1- Structured problems: are routine problems for which standard solution method exist.
 Procedure for obtaining the best solution are known
 Objective are clearly defined
2- Unstructured problems: are fuzzy, complex problem for which there are no cut-and direct solution
methods.
 Have no structure phase
 Often solved with human intuition
3- Semi-structured problem: is a decision problem in which some but not all phases are structured.
 In between solve with standard solution procedure and human judgment
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FRAMEWORK FOR COMPUTERIZED DECISION SUPPORT
(CONT.)
 The decision support matrix
 For semistructured decisions and unstructured decisions, conventional MIS and MS tools
are insufficient ; BUT Decision support systems (DSS) are used.
 Computer support for structured decisions
 Management science (MS) or operations research (OR) are used .
 Automated decision systems (ADS) is used.
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FRAMEWORK FOR COMPUTERIZED DECISION
SUPPORT (CONT.)
 Management science (MS) or operations research (OR) The application of a scientific
approach and mathematical models to the analysis and solution of managerial decision
situations (e.g., problems, opportunities)
 It adds new step 2 to the process of decision making, that is classify the problem into standard
category.
 Automated decision systems (ADS) A business rules-based system that uses intelligence
to recommend solutions to repetitive decisions (such as pricing)
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ARCHITECTURE OF A DECISION SYSTEM
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ARCHITECTURE OF A DECISION SYSTEM(CONT.)
 The architecture of DSS
 Data
 Models manipulate data as related to a specific situation
 Knowledge component
 User interface
* The user themselves are also important components of the architecture
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DECISION ANALYSIS
 Decision analysis allow us to select a decision from set of possible decision alternatives
when uncertainties regarding the future exist.
 The goal is to optimize the resulting return (payoff) in term of decision criteria.
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DSS AND DATA WAREHOUSE
 Data warehouse is a decision support database.
 The data warehouse is an integrated, subject-oriented, time-variant, non-
volatile database that provide support for decision making.
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DSS AND DATA WAREHOUSE
 Integrated: the data warehouse is centralized, consolidated database that integrates data
retrieved from the entire organization.
 Subject- oriented: data of data warehouse is arranged and optimized to provide answer to
questions coming from diverse functional area within a company.
 Time-variant: the data warehouse represent the flow of data through time
 Non-volatile: once data enter the data warehouse, they are never removed.
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ON-LINE ANALYTICAL PROCESSING (OLAP)
 It is an element of DSS.
 It is support ad-hoc querying for business analyst.
 Multidimensional view of data is foundation of OLAP
Multidimensional data
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DSS AREA
 DSS
 EIP
 Management Science
 ERM
 Business Analytics
 ERP
 Data Mining
 CRM
 Data Warehouse
 SCM
 Business Intelligence
 KMS
 OLAP
 KMP
 CASE tools
 ES
 GIS
 ANN
 EIS
 Intelligent Agents
TASK # 1
 Each group have to present one case study; under these conditions:

define organization
 Define business problem
 Provide possible solutions
 The result.
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Decision Support and Business Intelligence Systems,
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