Fundamentals of DSS
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Transcript of Fundamentals of DSS
Decision Support SystemRev: 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
Contents※ Discussion Questions
1 Decision Making
2 Introduction to Decision Support System (DSS)
3 Development of DSS
4 Use of DSS
5 Business Intelligence
6 Group Decision Support System(GDSS) and Web DSS
7 Limitation of DSS
8 Case Study
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
■ Definition– Selecting the best solution from two or more alternatives
■ Levels of Managerial Decision Making
Operational Management
Operating Managersand Self-Directed Teams
Tactical Management
Business Unit Man-agers
and Self-Directed Teams
Strategic Management
Executives and Directors
Dec
i-si
ons
Informa-
tion
Decision Struc-ture
Information Character-istics
Unstructured
Semistruc-tured
Structured
Ad HocUnscheduledSummarizedInfrequentForward Look-ingExternalWide Scope
PrespecifiedScheduledDetailedFrequentHistoricalInternalNarrow Focus
1. Decision Making
5
Types of Problems and Decision Style
■ Combinations of the type of problems and the levels of the management activities[Huff, 1985]
Levels of Management Activities
Operational Control Management Control Strategic Planning
Types of
Problems
Structured Inventory reordering quantity Setting production level Plant’s location
Semi-structured Share trading Setting budget Capital acquisition
Unstructured Package design Selecting a new man-ager
Information systems portfolio
1. Decision Making
6
Decision-making Process (Simon, 1977)
Organization objectives Search and scanning proce-
dures Data collection Problem identification Problem ownership Problem classification Problem statement
Intelligence Phase
Formulate a model Set criteria for choice Search for alternatives Predict and measure out-
comes
Design Phase
Solution to the model Sensitivity analysis Selection of the best(good) al-
ternative(s) Plan for implementation
Choice Phase
Implementationof solution
Satisfaction?END
Feedback
NoYes
1. Decision Making
7
Difficulties in 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
1. Decision Making
8
Definition of Decision Support System (DSS)
■ DSS as an Umbrella Term– Any computer-based information system that provide interactive information to sup-
port decision-making in an organization• e.g. an organization wide knowledge management system, a decision support system specific to an or-
ganizational function (marketing, finance, accounting, manufacturing, planning, SCM, etc.)
■ DSS as a Specific Application– An interactive, flexible, and adaptable computer-based application using informa-
tion and model specially developed for supporting the solution of a semi-structured management problem for improved decision making
2. Introduction to DSS
9
Differences between DSS and MIS
DSS MIS
Decision support provided
Provide information and decision support techniques to analyze specific problems or opportunities
Provide information about the per-formance of the organization
Information form and frequency Interactive inquiries and responses Periodic, exception, demand, and
push reports and responses
Information format Flexible, adaptable format Fixed format
Information pro-cessing
methodology
Information produced by analytical modeling of business data
Information produced by extrac-tion and manipulation of business data
2. Introduction to DSS
10
Structure of DSS
■ 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
User
DBMS MBMS
DGMS
2. Introduction to DSS
11
Composition of DSS 2. Introduction to DSS
12
DSS Model
Individualproblemsolver
Othergroup
members
Reportwriting
software
Mathematicalmodels
Database
Groupware
Decisionsupportsystem
InformationData Communication
Environment
Environment
3. Development of DSS
13
Four-stage Process for developing DSS
Decision support analysis
DSS software
evaluation and
selection
• Identification of candidate vendors
• Feature analysis• Benchmarks• External site sur-
veys
• Structured inter-views
• Decision analysis• Data analysis• Technical analysis• Conceptual DSS
orientation• Plans and prioritiza-
tion
• Scoping of proto-type
• Project evaluation criteria
• Detailed design• System construc-
tion• Testing• Demonstration• Evaluation
• Functional orienta-tion
• Operational training• Deployment• Maintenance
Prototype developmen
t
Operational deployment and support
3. Development of DSS
14
Types of Analytical Modeling
Type of Analytical Modeling Activities and Examples
What-if Analysis
Observing how changes to selected variables affect other variables
• What will happen to the total inventory cost if the cost of car-rying inventories increases by 10 percent?
Sensitivity analysis
Observing how repeated changes to a single variable af-fect other variables
• The impact of changes in external variables and parameters on the outcome variables
Goal-seeking analysis
Making repeated changes to selected variables until a chosen variable reaches a target value
• What annual R&D budget is needed for an annual growth rate of 15 percent by 2013?
Optimization analysis Finding an optimum value for selected variables, given certain constrains
3. Development of DSS
15
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
4. Use of DSS
16
Web Technology
Evolution of DSS into Business Intelligence
■ Change in the Use of DSS– Specialist → Managers → Whomever, Whenever, Wherever
■ Emergence of “Business Intelligence”
OLAP
Data Ware-housing
Data Min-ing
Intelligent Systems
Business Intelligence
4. Use of DSS
17
Business Intelligence (BI)
■ Definition– An umbrella term that combines architectures, tools, databases, analytical tools, applica-
tions, and methodologies
■ Objective– To enable easy access to data (and models) to provide business managers with the ability
to conduct analysis
ACTION
Data
Information Knowledge Decisions
Business Intelligence
5. BI
18
DSS and BI
Criteria DSS BI
Architecture Similar since BI evolved from DSS
SupportDirect support for
specific decision makingAccurate and timely information,
and indirect support for decision making
Orientation Analyst-oriented Executive-and strategy-orientated
Foundation Built from scratchCommercially available tools
and components
Core ToolsData mining, Predictive analysis(Many tools are used for both)
5. BI
19
Introduction to Group Decision Support Systems (GDSS)
■ 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
6. GDSS and Web DSS
20
Classification of GDSS
Decision Room Local Decision Network
Teleconferencing Remote Decision Making
Public Screen
Terminal
Terminal
Terminal
Terminal
Terminal
Terminal
Terminal
Terminal
Terminal Terminal
TerminalTerminal
Terminal
Terminal
Video CameraNetworking
Smaller Larger
Face-to-face
Dispersed
Group sizeM
em
ber
pro
xim
ity
6. GDSS and Web DSS
21
Web DSS
■ 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 deci-
sion support system
■ Development cause of Web DSS
Distribution of PositionVirtual enterpriseUnified ProtocolInternet
The problem that solution is impossible to traditional DSS occurs.
The necessity that replaces the existent DSS in the Internet
Overcome the regional limitation
Department offering service without the substance
6. GDSS and Web DSS
22
DSS & GDSS & Web DSS
DSS GDSS Web DSS
Data base Data base (Distributed) Data base
Model base Model base (Distributed) Model base
User Interface User Interface Internet supportingUser Interface
Personal Decision-maker Many Decision-maker Personal or Many Decision-maker
Group Application Software Intelligence Agent, Internet
6. GDSS and Web DSS
23
Problems Facing DSSs
■ 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
7. Limitation of DSS
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 – Sixteenth Edition”, McGraw – Hill, Chapter 9
■ Efraim Turban, Ramesh Sharda, Dursun Delen, “Decision Support and Business Intelligence systems – Ninth Edition”, Pearson, Chapter 1, pp.1~35
■ Efraim Turban, Ramesh Sharda, Dursun Delen, “Decision Support and Business Intelligence systems – Ninth Edition”, Pearson, Chapter 2, pp.36~69
■ Efraim Turban, Ramesh Sharda, Dursun Delen, “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