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Decision Support System

Decision Support System. Rev: Feb, 2012 Euiho (David) Suh , Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management Engineering POSTECH. Contents. Discussion Questions.

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Decision Support System

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  1. Decision Support System Rev: Feb, 2012 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management EngineeringPOSTECH

  2. Contents

  3. Discussion Questions Explain the decision-making process of Simon Why does a company need computerized support of managerial decision making? What are two definitions of decision support system? With DSS, what advantages could the company obtain? What are the differences between MIS and DSS? Explain them using your own words. What are the four types of analytical modeling? Choose one and explain it with an example Explain the background of BI’s emergence and compare BI with DSS What is GDSS? How is it different from DSS? In the case study, how did Interpark use DSS in the management?

  4. Decision Making 1. Decision Making Decision Structure Information Characteristics Unstructured Ad Hoc Unscheduled Summarized Infrequent Forward Looking External Wide Scope Operational Management Operating Managersand Self-Directed Teams Tactical Management Business Unit Managersand Self-Directed Teams Strategic Management Executives and Directors Decisions Information Semistructured Prespecified Scheduled Detailed Frequent Historical Internal Narrow Focus Structured • Definition • Selecting the best solution from two or more alternatives • Levels of Managerial Decision Making

  5. Types of Problems and Decision Style 1. Decision Making Combinations of the type of problems and the levels of the management activities[Huff, 1985]

  6. Decision-making Process (Simon, 1977) 1. Decision Making Feedback Intelligence Phase Design Phase Choice Phase • Organization objectives • Search and scanning procedures • Data collection • Problem identification • Problem ownership • Problem classification • Problem statement • Formulate a model • Set criteria for choice • Search for alternatives • Predict and measure outcomes • Solution to the model • Sensitivity analysis • Selection of the best(good) alternative(s) • Plan for implementation Implementationof solution END Satisfaction? Yes No

  7. Difficulties in Decision-making 1. Decision Making • Rapidly increasing alternatives • Technology • Information system • Advanced search engines • Globalization • Uncertainty of the future • Government regulations • Need for compliance • Political instability • Terrorism, competition, changing consumer demands • Need to make rapid decisions • Increasing potential costs of trial-and-error learning

  8. Definition of Decision Support System (DSS) 2. Introduction to DSS • DSS as an Umbrella Term • Any computer-based information system that provide interactive information to support decision-making in an organization • e.g. an organization wide knowledge management system, a decision support system specific to an organizational function (marketing, finance, accounting, manufacturing, planning, SCM, etc.) • DSS as a Specific Application • An interactive, flexible, and adaptable computer-based applicationusing information and model specially developed for supporting the solution of a semi-structured management problem for improved decision making

  9. Differences between DSS and MIS 2. Introduction to DSS

  10. Structure of DSS 2. Introduction to DSS DBMS MBMS DGMS User • Dialog-Data-Models DSS Frameworks • Dialog based management system (DGMS) • All the capabilities of the DSS must be articulated and implemented through dialog subsystem • Data based management system (DBMS) • Performing all data-related tasks(maintains, stores and retrieves data from the database, extracts data from various sources, …) • Models based management system (MBMS) • Containing the library of models and routines to maintain and manage them

  11. Composition of DSS 2. Introduction to DSS

  12. DSS Model 3. Development of DSS Environment Individual problem solver Other group members Mathematical models Report writing software Groupware Database Decision support system Environment Data Communication Information

  13. Four-stage Process for developing DSS 3. Development of DSS • Decision support analysis DSS software evaluation and selection Prototype development Operational deployment and support • Functional orientation • Operational training • Deployment • Maintenance • Structured interviews • Decision analysis • Data analysis • Technical analysis • Conceptual DSS orientation • Plans and prioritization • Identification of candidate vendors • Feature analysis • Benchmarks • External site surveys • Scoping of prototype • Project evaluation criteria • Detailed design • System construction • Testing • Demonstration • Evaluation

  14. Types of Analytical Modeling 3. Development of DSS

  15. Use of DSS 4. Use of DSS • DSS Applications • Corporate financial planning • Marketing analysis • Real estate investments • Mineralogical exploration • Transportation routing • Portfolio analysis • Reasons to use DSS • Speedy computations • Improved communication and collaboration • Increased productivity of group members • Improved data management • Overcoming cognitive limits • Quality support; agility support • Using Web; anywhere, anytime support

  16. Evolution of DSS into Business Intelligence 4. Use of DSS Web Technology OLAP Data Warehousing Business Intelligence Data Mining Intelligent Systems • Change in the Use of DSS • Specialist → Managers → Whomever, Whenever, Wherever • Emergence of “Business Intelligence”

  17. Business Intelligence (BI) 5. BI Data Business Intelligence ACTION Information Knowledge Decisions • Definition • An umbrella term that combines architectures, tools, databases, analytical tools, applications, and methodologies • Objective • To enable easy access to data (and models) to provide business managers with the ability to conduct analysis

  18. DSS and BI 5. BI

  19. Introduction to Group Decision Support Systems (GDSS) 6. GDSS and Web DSS • Definition of GDSS • An interactive computer-based system that facilitates the solution of semi-structured and unstructured problems by a group of decision makers • Characteristics of GDSS • A Specially designed information system, not a configuration of already-existing system components • Supporting the process of group decision makers by providing automation of subprocesses, using information technology tools • Addressing one type of problem or a variety of group level organizational decisions • Encouraging generation of ideas, resolution of conflicts, and freedom of expression • Containing built-in mechanisms that discourage development of negative group behaviors, such as destructive conflict, miscommunication, and groupthink • c.f. Definition of Group Support System (GSS) • Any combination of hardware and software that supports the collaborative work of groups

  20. Classification of GDSS 6. GDSS and Web DSS Group size Smaller Larger Face-to-face Public Screen Terminal Terminal Terminal Terminal Member proximity Terminal Terminal Terminal Terminal Terminal Terminal Terminal Terminal Terminal Terminal Video Camera Networking Dispersed

  21. Web DSS 6. GDSS and Web DSS Internet Unified Protocol Virtual enterprise Distribution of Position The problem that solution is impossible to traditional DSS occurs. Department offering service without the substance Overcome the regional limitation The necessity that replaces the existent DSS in the Internet • Definition • Advanced DSS that supports CSCW (Computer Supported Cooperative Work) of individual or group decision-maker in web • DSS which have components of the Intelligence Agent and Internet, unlike an existent decision support system • Development cause of Web DSS

  22. DSS & GDSS & Web DSS 6. GDSS and Web DSS

  23. Problems Facing DSSs 7. Limitation of DSS • Data capture and collection • How to capture and collect data • Non-compatibility of purchased DSSs with existing databases and computer networks • Data integrity and security • Unstructured problems • How to solve unstructured problems which are commonly faced by top executives • Management of DSSs • Cost-effectiveness • Standardization • Data are not independent of spreadsheets • Industrial standard for all spreadsheets

  24. Case Study 8. Case Study

  25. Reference Euiho Suh, “DSS/EIS/DW/OLAP (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory) O’Brien & Marakas, “Introduction to Information Systems – Fifteenth Edition”, McGraw – Hill, Chapter 9, pp. 349~403 Efraim Turban, RameshSharda, DursunDelen, “Decision Support and Business Intelligence systems – Ninth Edition”, Pearson, Chapter 1, pp.1~35 Efraim Turban, RameshSharda, DursunDelen, “Decision Support and Business Intelligence systems – Ninth Edition”, Pearson, Chapter 2, pp.36~69 Efraim Turban, RameshSharda, DursunDelen, “Decision Support and Business Intelligence systems – Ninth Edition”, Pearson, Chapter 10, pp.419~470 Yunmi Lee, “DSS & ES (PPT Slide)”, POSMIT Lab.(POSTECH Strategic Management of Information and Technology Laboratory) M.C. ER, “Decision Support Systems: A Summary, Problems, and Future Trends”,Decision Support Systems 4 (1988) 355-363

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