Mark Dean Notes
- 1. Decision Support Systems Session 1 Mark Dean
- 2. Course Objectives At the end of the course, students will be able to describe the current development and technologies in decision support be exposed to the tools used in decision support systems
- 3. Assessment Coursework Project 40% Final Examination 60% Total 100% Minimum Mark Required to Pass: 40%
- 4. Project Coursework will be given as a single project The project will be an individual project using MS EXCEL
- 5. Final Examination The Final Examination questions will be based on all the topics covered in Lectures
- 7. LEARNING OBJECTIVES Describe the need for computerised support of managerial decision making Examine the conceptual foundations of the decision support systems (DSS) methodology Provide expertise in developing, managing and using Decision Support Systems. Be competent in using MS Excel to build financial models such as what-if analysis, goal seeking, scenario manager.
- 8. TURBULENT BUSINESS ENVIRONMENT Factor Description Markets Strong competition Expanding global markets Blooming e-markets on Internet Innovative marketing methods Need for real-time transactions Consumer demands Desire for customization Desire for quality, diversity & delivery Customers getting powerful & less loyal Technology More innovations, new products & services Increasing obsolescence rate Information overload Societal Government regulation, deregulation Work force diversified, older, more women Increasing social responsibility Terrorism
- 9. Decision Support Systems Decision Support Systems are used by people who are skilled in their jobs and who need to be supported rather than replaced by a computer system. Using computer based systems help decision makers utilise data models and/or communications to solve problems and make decisions.
- 10. Why use computerised decision support systems Speedy computations Improved communication and collaboration Increased productivity of group members Improved data management Decision Support Systems
- 11. Business value of improved decision making Improving hundreds of thousands of “small” decisions adds up to large annual value for the business Types of decisions: Unstructured: Decision maker must provide judgment, evaluation, and insight to solve problem Structured: Repetitive and routine; involve definite procedure for handling so they do not have to be treated each time as new Semistructured: Only part of problem has clear-cut answer provided by accepted procedure Decision Support Systems
- 12. Classification of decisions by decision type and their relation to different types of system Decision Support Systems
- 13. Senior managers: Make many unstructured decisions E.g. Should we enter a new market? Middle managers: Make more structured decisions but these may include unstructured components E.g. Why is order fulfillment report showing decline in Minneapolis? Operational managers, rank and file employees Make more structured decisions E.g. Does customer meet criteria for credit? Decision Support Systems
- 14. Information Requirements of Key Decision-Making Groups in a Firm Senior managers, middle managers, operational managers, and employees have different types of decisions and information requirements. Decision Making and Information Systems Decision Support Systems
- 15. F our stages of decision making Intelligence Discovering, identifying, and understanding the problems occurring in the organization Design Identifying and exploring solutions to the problem Choice Choosing among solution alternatives Implementation Making chosen alternative work and continuing to monitor how well solution is working Decision Support Systems
- 16. Stages in Decision Making The decision-making process can be broken down into four stages. Decision Support Systems
- 17. Defining a Decision Support System A decision support system (DSS) is a model-based or knowledge-based system intended to support managerial decision making in semi-structured or unstructured situations Brings together human judgment and computerized information Uses data Provides a clear user interface (GUI) Incorporates the decision maker’s own insights Not meant to replace a decision maker Rather, it extends his/her decision making capabilities Improves the effectiveness of decision making rather than its efficiency
- 18. DSS Components A DSS is an intelligent information system , an extension of the common management information systems (MIS) A more sophisticated MIS that allows the use of models and knowledge bases to process the data and perform analysis Schematic View of a Decision Support System
- 19. Decision-support systems (DSS) Support unstructured and semistructured decisions Model-driven DSS Earliest DSS were heavily model-driven E.g. voyage-estimating DSS (Chapter 2) Data-driven DSS Some contemporary DSS are data-driven Use OLAP and data mining to analyze large pools of data E.g. business intelligence applications (Chapter 6) Decision Support Systems
- 20. Components of DSS Database or Excel List used for query and analysis Current or historical data from number of applications or groups May be small database or large data warehouse User interface Often has Web interface Software system with models, data mining, and other analytical tools Decision Support Systems
- 21. Overview of a Decision-Support System The main components of the DSS are the DSS database, the user interface, and the DSS software system. The DSS database may be a small database residing on a PC or a large data warehouse. Decision Support Systems
- 22. Model: Abstract representation that illustrates components or relationships of phenomenon; may be physical, mathematical, or verbal model Statistical models Optimization models Forecasting models Sensitivity analysis models Decision Support Systems
- 23. Sensitivity Analysis This table displays the results of a sensitivity analysis of the effect of changing the sales price of a necktie and the cost per unit on the product’s break-even point. It answers the question, “What happens to the break-even point if the sales price and the cost to make each unit increase or decrease?” Decision Support Systems
- 24. Using spreadsheet pivot tables to support decision making Online Management Training Inc. (OMT Inc.), sells online management training books and streaming online videos to corporations and individuals Records of online transactions can be analyzed using Excel to help business decisions, e.g.: Where do most customers come from? Where are average purchases higher? What time of day do people buy? What kinds of ads work best? Decision Support Systems
- 25. Sample List of Transactions for Online Management Training Inc. This list shows a portion of the order transactions for Online Management Training Inc. (OMT Inc.) on October 28, 2006. Decision Support Systems
- 26. Microsoft Excel spreadsheet software Pivot table : Categorizes and summarizes data very quickly Displays two or more dimensions of data in a convenient format PivotTable Wizard has three elements Empty PivotTable: With labels for rows, columns, and data areas PivotTable Field List Lists fields in list or database PivotTable Toolbar Decision Support Systems
- 27. The Excel PivotTable Wizard The PivotTable Wizard in Excel makes it easy to analyze lists and databases by simply dragging and dropping elements from the Field List Decision Support Systems
- 28. A Pivot Table that Determines Regional Distribution of Customers By dragging and dropping fields to row and data areas of the pivot table form, you can quickly produce a table showing the relationship between region and number of customers. You will need to use the Field Settings button on the Toolbar to produce this table in order to redefine the Cust ID field as a count rather than a sum so Excel reports the number of customers, not the sum of their customer IDs, which would be meaningless. Systems for Decision Support Decision Support Systems
- 29. A Pivot Table that Examines Two Dimensions In this pivot table, we can examine where our customers come from in terms of two dimensions: region and advertising source. It appears nearly 40 percent of the customers respond to e-mail campaigns, and there are some regional variations in this theme. Systems for Decision Support Decision Support Systems
- 30. Business value of DSS Burlington Coat Factory: DSS for pricing DSS manages pricing and inventory nationwide, considering complex interdependencies between initial prices, promotions, markdowns, cross-item pricing effects and item seasonality Syngenta: DSS for profitability analysis DSS determines if freight charges, employee sales commissions, currency shifts, and other costs in proposed sale make that sale or product unprofitable Compass Bank: DSS for customer relationship management DSS analyzes relationship between checking and savings account activity and default risk to help it minimize default risk in credit card business Decision Support Systems
- 31. Cognos Powerplay showing example data for outdoor products . Decision Support Systems
- 32. Cognos Powerplay showing example data for outdoor products Decision Support Systems
- 33. Data visualization tools: H elp users see patterns and relationships in large amounts of data that would be difficult to discern if data were presented as traditional lists of text Geographic information systems (GIS): Category of DSS that use data visualization technology to analyze and display data in form of digitized maps Used for decisions that require knowledge about geographic distribution of people or other resources, e.g.: Helping local governments calculate emergency response times to natural disasters Help retail chains identify profitable new store locations Decision Support Systems
- 34. California’s South Coast Air Quality Management District (AQMD) is responsible for monitoring and controlling emissions in all of Orange County and the urban portions of Los Angeles, Riverside, and San Bernardino counties. Displayed is a map produced with ESRI GIS software tracking particulate matter emissions from building construction activity in a two-by-two kilometer area. Systems for Decision Support Decision Support Systems
- 35. Read the Interactive Session: Technology, and then discuss the following questions: How did this DSS improve decision making at Renault? Describe some of the decisions that were improved by using this system. How much of an impact did this DSS have on business performance? Explain your answer. What management, organization, and technology factors had to be addressed in order to make this system successful? Renault Speeds Up Delivery with a New DSS Case Study