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Chapter 12

Chapter 12. Decision Support and Geographic Information Systems. Learning Objectives. When you finish this chapter, you will: Understand the steps followed in decision making. Recognize the difference between structured and unstructured decision making.

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Chapter 12

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  1. Chapter 12 Decision Support and Geographic Information Systems

  2. Learning Objectives • When you finish this chapter, you will: • Understand the steps followed in decision making. • Recognize the difference between structured and unstructured decision making. • Know the typical software components that decision support systems comprise. • Be able to distinguish between the main types of decision support systems.

  3. Decision Making in Business • Organization’s success depends largely on quality of managers’ decisions • When decisions involve large amounts of information and processing, computer-based systems can make the process effective and efficient

  4. The Decision-Making Process • Decisions are more difficult when more than one alternative seems reasonable • One researcher described decision making as a three-phase process • Intelligence • Design • Choice

  5. Figure 12.1 The three phases of decision making The Decision-Making Process

  6. Structured andUnstructured Problems • Structured Problems • Proven set of steps for solution • Algorithm • Unstructured Problems • Multiple potential solution • Semistructured Problems • Neither fully structured nor totally unstructured

  7. Figure 12.2 Business problems vary from structured to unstructured. Many fall between the two extremes and are considered semistructured. Structured and Unstructured Problems

  8. Structured andUnstructured Problems • Managers and Semistructured Problems • Most common type of problem for managers

  9. Structured andUnstructured Problems

  10. Decision-Support System Components • Decision Support Systems (DSS) • Computer-based information systems that help managers select one of many solutions • Automates some of decision-making process • Sophisticated and fast analysis • Used at all management levels

  11. Decision-Support System Components • Three Major Components • Data management module • Model management module • Dialog management module • Together, DSS modules: • Help enter request conveniently • Search vast amounts of data • Use data in desired models • Present results in readable manner

  12. Decision-Support System Components

  13. Decision-Support System Components • The Data Management Module • Gives user access to databases • Usually linked to external databases

  14. Decision-Support System Components • The Model Management Module • Collection of models the DSS draws on to assist in decision making • Linear regression model

  15. Figure 12.5 A linear regression model for predicting sales volume as a function of dollars spent on advertising Decision-Support System Components

  16. Decision-Support System Components • The Dialog Module • Interface between user and other modules • Prompts user to select a model • Allows database access and data selection • Lets user enter/change parameters • Displays analysis results • Textual, tabular, and graphical displays

  17. Decision-Support System Components

  18. Types of Decision-Support Systems • Personal Decision-Support Systems • Serve individual users in daily decision making • Run on personal computers • Single model for data processing

  19. Types of Decision-SupportSystems

  20. Types of Decision-Support Systems

  21. Types of Decision-Support Systems • Group-Decision Support Systems • Promote brainstorming and group decision making • Located in conference room or on networked computers • Weigh votes to overcome impasses

  22. Figure 12.8 A GDSS Room Types of Decision-Support Systems

  23. Sensitivity Analysis • Tests degree to which result is affected by change in parameters • What-if analysis • Can change multiple parameters at once

  24. Executive Information Systems (EIS) • Alleviate information overload for executives • Select most relevant data for analysis • Drilling down • Consolidate and summarize data • Display data graphically

  25. Executive Information Systems • An effective EIS has the following features: • An easy-to-use and easy-to-learn graphical user interface • On-request “drill-down” capability • On-demand financial and other ratios, and other indicators • Easy-to-use but sophisticated tools to allow navigation in databases and data warehouses

  26. Executive Information Systems • An effective EIS…(continued) • Statistical analysis tools • The ability to respond to ad hoc queries and sensitivity analyses • Access to external data pools • The ability to solve diverse business problems

  27. Developing Decision-Support Systems • When Should a DSS Be Built? • What is the type problem and how structured is it? • Are the required data available in databases and data warehouses? • How often do managers encounter the problem? • Who will use the system? • Can the prospective users spare adequate time for the development process?

  28. The Electronic Spreadsheet: A DSS Tool • Provide two facilities for building DSS • Preprogrammed functions • Ability to use IF-THEN statements • Most widely used tool • Inexperienced users can use to develop DSSs

  29. GeographicInformation Systems (GIS) • Decision aid for map-related decisions • Typical GIS contains • Database of quantitative and qualitative data • Database of maps • Program to display information on maps

  30. Ethical and Societal IssuesDecisions by Machines • Automated decisions can affect individuals. • Mortgage companies, credit card companies, employers, banks, etc. • European Protection • “Automated Individual Decisions” Directive

  31. Ethical and Societal IssuesDecisions by Machines • Who Needs Protection • Determining creditworthiness • Efficient • Effective • Hidden Injustice • Mistakes on records • Decisions final

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