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DECISION SUPPORT

SYSTEM
Kritika Batra

Isha Sharma

Sahil Sharma

Shefali Hiran

DECISION means decision making

DESIGN

BACKTRACKING

INTELLIGENCE

CHOICE

Herbert Simon Model of Decision-Making

INTELLIGENCE : The intelligence phase of decision making

process involves monitoring the organisation, its environment for


problems and opportunities, identifying any problems or
opportunities, and gathering data that have some bearing on what
to do about the problems or opportunities.
DESIGN : This refers to formulating a problem or an

opportunity, developing solutions to solve the problems, exploit


the opportunity and testing solutions for feasibility.
CHOICE : The choice of an action depends on variety of factors

like external environment, internal organisation, time and the


decision maker.

DECISION + SYSTEM =
DECISION SUPPORT
SYSTEM

TYPES OF DECISION

STRUCTURED
DECISIONS

SEMISTRUCTURED
DECISIONS

UNSTRUCTURED
DECISIONS

DECISION + SYSTEM =
DECISION SUPPORT
SYSTEM

Open and Close System


Physical and Abstract System
Manual and Automated System
Deterministic and Probabilistic System
Natural and Manmade System
Formal and Informal System

INTRODUCTION
Decision Support System refer to a class of system

which support the process of decision making.


It is a set of well integrated, user friendly, computer

based tools that combine data with various decision


making models-qualitative and quantitative-to solve
semi structured and unstructured problems.
There are three phases i.e. Intelligence, design and

choice.

The DSS basically helps the information system in

the intelligence phase where the objective is to


identify the problem and then go to design phase for
solution. It is required to go through these phases
again and again till a satisfactory solution is found.
The rules in case of programmed decisions are fixed

or predetermined while in non-programmed decision


the rules are not fixed or predetermined and requires
the user to go through the decision making cycle.

CHARACTERSTICS
It is flexible enough to accommodate a variety of

management styles.
It facilitates communication between levels of
decision making.
It helps the decision maker in the decision making
process.
It is an interactive, user friendly system that can
be used by the decision maker with little or no
assistance from an MIS professional.

It has the capability to interface with the corporate

database.
It can be readily adapted to meet the information

requirements for any decision environment.


It is designed to solve semi structured and

unstructured problems.
It supports decision makers at all levels, but is most

effective at the tactical and strategic levels.

CLASSIFICATION
DSS
Classificatio
n
File Drawer
System

Type of Operation

Examples and Comments

Access of data item

Data oriented system. Basically on-line


computerised versions of manual filing
system, e.g., account balance, stock
position queries, monitoring loads and
capacities.

Data Analysis
System

Ad hoc analysis of
data files

Data oriented systems. Used to analyse


files containing current or historical data,
e.g., analysing files for overdue account,
bad prayers.

Analysis
Information
Systems

Ad hoc analysis using


database and small
models

Data oriented systems. Extension of data


analysis systems to include internal and
external databases with limited
modelling, e.g., a marketing DSS could
include internal sales data, customer data
and market research data.

DSS
Classification

Type of Operation

Examples and Comments

Accounting
Models

Estimating future
results using
accounting rules

Model oriented systems. These generate


results using probability based
stimulation models, e.g., risk analysis for
new project, traffic stimulation with
variable flows.

Optimisation
Models

Calculating optimal
results where
constraints exist

Model oriented systems. These are used


for structured decisions where constraints
exist and there is a clear objective, e.g.,
machine loading, material usage,
production planning.

Suggestion
Models

Production suggested
results where decision
rules are known

Model oriented systems. These compute


suggested decisions for semi-structured
problems. Expert system are one of the
tools, e.g., credit authorisations,
insurance rate calculations.

COMPONENTS OF DECISION
SUPPORT SYSTEM
DATABASE

MODEL BASE

Production Data
Marketing Data
Finance Data
Human Resource Data

Statistical Models
Forecasting Models
Planning Models
Operational Models

DSS SOFTWARE
Manage Database
Manage Model Base
Manage end-user Interface
User Interface
User

DATABASE
Database is a pre-requisite for developing any type of
information system.

Database is a collection of current and historical data from a


number of groups or applications, and these data are organized
for easy access by a range of applications.
Since a DSS may require data from various financial areas
of an organization- production, marketing, finance, and human
resource, database must contain data of all these functional
areas.
DSS protects the integrity of data.

MODEL BASE
A model base is a collection of mathematical and analytical models that can be made

accessible to the DSS users.


Models may be of different types

Physical model(model of a machine)


Mathematical model(equation, formula)
Verbal model(description of a procedure for doing work)

Each DSS is built for a specific set of purposes and make different collections of

models depending on those purposes.


Optimization models provide guidelines for action by generating optimal solution
consistent with a series of constraints.
Forecasting models are used to forecast an organizations business prospects,
particularly in terms of sales. Forecasting models use historical data and extrapolate
the likely behaviour of these data in future.
Sensitivity analysis models study the impact of discrete changes in parameters of
optional solution. A discrete change is one that happens on irregular basis.

DSS SOFTWARE
DSS software system permits easy interaction between the users and

database and model base.


DSS software system manages the creation, storage, and retrieval of

models from the model base and integrates them with data in database.
DSS software system also provides a graphic, easy to use flexible user

interface that supports interaction between the user and DSS.


The user-DSS interface must be easy so that relevant information is

extracted without much pain.


Since, each manager may have his own unique working style, the DSS

software system must offer this flexibility.

Model
Building

What If
Analysis

Graphical
Analysis

FUNCTIONS
OF DSS

Risk
Analysis

Goal
Seeking

FUNCTIONS OF DSS
MODEL BUILDING: This allows decision makers to identify the most

appropriate model for solving the problem on hand. It takes into account
input variables, interrelationships among the variables, problem assumptions
and constraints.
WHAT-IF ANALYSIS: This is the process of assessing the impact of

changes to model variables, the values of the variables, or the


interrelationships among variables. This helps managers to be proactive,
rather than reactive, in their decision making. This analysis is critical for
semi-structured and unstructured problems because the data necessary to
make such decisions are often either not available or incomplete. Hence,
managers normally use their intuition and judgment in predicting the longterm implications of their decisions.
GOAL SEEKING: It is the process of determining the input values required

to achieve a certain goal.


RISK ANALYSIS: It is a function of DSS that allows managers to assess

the risks associated with various alternatives. Decisions can be classified as


low risk, medium risk, and high risk. A DSS is particularly useful in medium
risk and high risk environments.

GRAPHICAL ANALYSIS: This helps managers to quickly digest large

volume of data and visualize the impacts of various courses of action. S L


Jarvenpaa and G W Dickson studied the relative advantages and
disadvantages of tabular and graphic output. They recommended the use of
graphs when:
Seeking a quick summary of data
Detecting trends over time
Comparing points and patterns at different variables
Forecasting activities
Seeking relatively simple impressions from a vast amount of
information.

MODELS OF DECISION SUPPORT


SYSTEM
Decision Support
Models

Behavioural
Model

Management
Science
Models

Operations
Research
Model

Behavioural Model
These models are useful in understanding the behaviour

amongst the business variables. The decision maker can


then make decisions giving due regard to such
behavioural relationships.
Trend analysis, forecasting and statistical analysis

model belong to this category.


These types of models are largely used in process

control, manufacturing, agricultural sciences, medicine


and marketing.

Management Science Models

These models are developed on the principles of


business management, accounting and econometrics.

The use of management science:

Material
Management

Production
Management

Human Resource
Management

Budgetary system
Cost accounting
systems
System of capital
budgeting
ABC analysis
Control of inventory

Production
Human resource
Planning and control planning and
forecasting
Scheduling and
loading systems

Operations Research Model


These models represent a real life problem situation in terms of

the variables, constants and parameters expressed in algebraic


equations.
Since the models are mathematical, there are solutions to these

problems. These models have clarity to the extent that each of


them has a set of assumptions, which must be true in real life.
Some problems do not fall in the category of the standard

operations research models. In such cases, the problems are


solved using a stimulation approach.

Development of Decision Support


System
Decision support systems are developed using programming

languages or produced by packages specially incorporating


decision support development tools.
Conventional high level languages, such as C++ can be used to

develop, which are extremely flexible. However, decision


support systems that use these languages involve an extended
analysis and design phase.
Fourth generation or very high level languages are more

appropriate. They are particularly useful as they are generally


database oriented.

METHODS FOR DEVELOPING DSS

DSS
Generator

DSS
Shells

Customer Made
Software

DSS Generator: It is comprised of programs such as data

management tools, electronic spreadsheets, report generators,


statistical packages, graphical packages, query languages, and
model building tools.
DSS Shell: It is a program used to build a customized DSS. Shells

eliminate the need for developing the DBMS, model management


system, and user interfaces, because skeletal versions of these
modules are already available in the shell. A user simply connect the
shell with the appropriate external and internal databases and input
the appropriate models in order to have a fully functional DSS.
Custom-made software : It is designed and developed by

organizations, who are committed to the DSS technology but cannot


find a suitable generator or shell

Applications of DSS
Independent Problems: The independent problems are the

standalone problems whose solutions are independent of


other problems. The goal is to find the best possible solution
to the given problem.
Interrelated problems: In interrelated problems, solutions

are interrelated, by each other, to find the most effective


solution to the group of interrelated problems.
Organizational problems: In organizational problems, all

departments within an organization are included. Such


problems require team effort. A DSS is ideal for interrelated
and inter organisation problems.

GROUP DECISION SUPPORT


SYSTEM
A GDSS is an interactive computer-

based system to facilitate the solution of


unstructured problems by a set of
decision makers working together as a
group.

FEATURES OF GDSS
Interaction among decision makers
Emphasis
Priorities
Access to information
Information is stored

COMPONENTS OF GDSS
Group of
Decision Makers

Individual
Decision Maker

Model Base
Report Writing
Software

Groupware

Database

Decision Maker
A GDSS has a number of decision makers who work

collectively on a specific problem with the objective that the


problem will be solved by the collective wisdom of all the
decision makers in a group than on the basis their
contributions taken individually.
Each of these decision makers has access to database to

extract relevant data and can use report writing software for
report preparation to understand the ideas of decision makers
on the problem concerned.

Database and Model Base


Like a DSS, a GDSS also uses database and model base to

extract relevant data and models for analyzing these data in


order to arrive at a decision.
While model base for both DSS and GDSS remains the

same in decision making, there may be a difference in the


organization of database in some cases.
It is preferable to have distributed database as decision

makers are placed in different locations, to facilitate easy


access.

Groupware
Software that is used in GDSS is called as groupware.
While DSS software has been developed on the basis of strong

theoretical framework, groupware has no such base as yet.


Rather, it has been evolved from a number of seemingly

disjointed sources which have been designed to meet a variety of


needs, such as electronic brainstorming, idea organizer, vote
programme software, and so on.
Groupware can be classified into four categories:

Brainstorming Software
Brainstorming Software solves a problem by identifying its

components.
Members of a decision making group generate, exchange

and evaluate their ideas with each other.


The output of this exercise is a structured report containing

the pros and cons of various ideas and how they are relevant
for problem solution.

Alternate Rating and Ranking


Software
Decision makers use a variety of alternatives and rate/rank

them on the basis of certain criteria.


This software undertakes the evaluation work and combines

various alternatives in the form of table or graph.


The software helps in decision making by identifying and

evaluating alternative solutions.

Consensus Building Software


Consensus building is necessary in group decision making

so that members arrive at an agreed decision.


This software inform the decision maker about the degree of

uniformity in their alternative solutions.


When there is no consensus, the decision maker can engage

in further discussion.
The software points out the issue on which decision makers

disagree and support them to have a common decision.

Group Authoring and outlining Software


This software enables various decision makers to create an

outline of a written report, and each decision maker can


contribute independently by writing sections or making
suggestions to sections written by others.
The written document, therefore, reflects consistency and

agreement as it progresses to its finished form.

DIFFERENCE BETWEEN INDIVIDUAL &


GROUP DECISION MAKING
BASIS

INDIVIDUAL DECISION
MAKING

GROUP DECISION
MAKING

Nature of
problem

It will result in greater creativity Where the problem requires a


& efficiency if policy
variety of expertise group
guidelines for the problem are
decision making it suitable.
provided in hand.

Time
availability

It is more time consuming.

It is less time consuming.

Quality of
decisions

It leads to lower quality


solution.

It leads to higher quality


solution.

Climate of
decision
making

Competitive climate stimulates


individual decision making.

Supportive climate encourages


group decision making.

POSITIVE ASPECTS OF GROUP DECISION MAKING


Pooling of knowledge and information
Satisfaction and commitment
Personnel development
More risk taking
NEGATIVE ASPECTS OF GROUP DECISION MAKING

Time-consuming and costly


Individual domination
Problem of responsibility
Groupthink

TECHNIQUES OF GROUP
DECISION MAKING
Brainstorming

Delphi
technique

Techniques

Consensus
mapping

Nominal group
technique

Brainstorming
Brainstorming is a technique to stimulate idea generation for

decision making. For brainstorming a group of 10 to 15


persons is constituted.
Process of brainstorming:
Problem is stated clearly
Initial emphasis of quantity of idea
No limitation on idea
Idea-evaluation

Nominal Group Technique


Nominal group technique (NGT) is a structured group meeting which

restricts verbal communication among members during the decision


making process. The process in NGT goes as follows:
1. The group leader outlines the problem requiring decision.
2. Each member writes down his ideas independently and presents
his best single idea on the problem.
3. After writing their respective ideas, it is presented for discussion
and evaluation before the group members.
4. The members are asked to rank the various ideas for decision
making and the decision is arrived at on the basis of this ranking.
The NGT is widely used in health service, industry, education, and

government organizations.

Delphi Technique
In Delphi technique of decision making, members do not have face-toface interaction for group decision.
The decision is arrived at through written communication in the form
of filling up questionnaires often through mails.

Consensus Mapping
Consensus mapping technique of group decision making tries to pool
the ideas generated by the subgroups to arrive at a decision.
The technique begins after a task group has been developed, clarified
and evaluated from a list of ideas.
This search for structure includes the listing and discussion of
alternative clusters and categories by the entire group or subgroups, and
then production of a single classification scheme by group members.

Then the facilitators consolidate the different schemes

developed by subgroups into a representative scheme that


acts as a strawman map for the entire group.
Group members then work to revise the strawman map into

a more mutually acceptable solution.


This exercise is repeated until the group as a whole arrives

at a single consolidated map and a final decision based on


that.

Improving Group Decision


Making With GDSS
. Idea Generation: The basic logic behind decision making is that

through this process, much more ideas can be generated to solve a


problem as compared to individual decision making. GDSS provide
tailor-made information for this purpose by enabling a decision
maker to access relevant information by using groupware.
. Enhanced Participation: For effective group decision making, it is

essential that group members have adequate participation in


decision-making process without sacrificing their valuable time.
GDSS provide a number of ways through which group members
freely exchange their views, opinions, and ideas among themselves.

Improved Idea Evaluation: Many ideas may be generated

through group processes but there is a need for evaluating these


ideas carefully. A basic problem in idea evaluation is the
tendency of evaluating an idea on the basis of its source rather
than on the basis of its quality.
Preservation of Organizational Memory: GDSS tools enable

the organization to preserve data that are generated through


group processes. Easy documentation of such information is
possible. Documentation of such info is relevant than merely
writing minutes of a meeting which are in the form of describing
what decisions have been arrived at rather than showing how
decisions have been made.

Difference Between DSS and MIS


Basis
DSS
MIS
Philosophy

Providing integrated tools,


Providing structured
data, models, and languages to information to end users
end users

Orientation

External orientation

Internal orientation

Flexibility

Highly flexible

Relatively inflexible

Analytical
capability

More analytical capability

Little analytical capability

System analysis Emphasis on tools to be used


in decision process

Emphasis on information
requirement analysis

System design

System development based on


static information
requirements

Iterative process

THANK YOU