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Decision support tools. Lecture 6: Model-based Decision Support Systems. Module structure. Management Decision-Making OLAP & Data Mining Group Support Systems Executive Support Systems Model-based Decision Support Systems Intelligent Systems Expert Systems

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decision support tools

Decision support tools

Lecture 6: Model-based Decision Support Systems

module structure
Module structure
  • Management Decision-Making
  • OLAP & Data Mining
  • Group Support Systems
  • Executive Support Systems
  • Model-based Decision Support Systems
  • Intelligent Systems
  • Expert Systems
  • Managing Decision Support Tools
management decision making
Management Decision Making

Transactions

Internal databases

Management Information Systems

External databases

MIS reports

Specialised decision support applications

the role of modelling
The role of modelling
  • Helps to understand complex situations
  • Types of model
    • Analog
    • Scale
    • Mathematical
    • Mathematical models
    • Controllable (decision) variables
    • Uncontrollable variable
    • Result variables
    • Mathematical relationships between them
more about mathematical models
More about mathematical models
  • Econometric modelsspecify the statistical relationship between various economic quantities
  • They are typically derived by using least-squares regression, maximum-likelihood estimation, or time series methods
  • Reliable models provide a valuable forecasting tool
advert for forecasting software
Advert for forecasting software

http://www.gmdhshell.com/business-forecasting-software

  • “How much should you spend on advertising? Should you pay more attention to managing expenses or focus on bringing in sales instead? Business forecasting is never a simple task.”
  • “By analyzing your past moves and historical data though, you can achieve a better vision of what you should do next.”
  • “Our application loads the historical values you provide and builds comprehensive mathematical models with the most accurate prediction strength.”
relevant problems in decision making
Relevant problems in decision-making
  • Intelligence
    • Access to information
    • Personal approaches & bias
  • Design
    • Complex calculations
    • Impact assessment
    • Learning from the past
  • Choice
    • Inconsistency
    • Justification
    • Changing environments
how a dss supports decision making
How a DSS supports decision-making
  • Combines models and data
  • Mathematical models
  • Internal / external data
  • Provides insight into the problem
  • Known relationships between variables
  • Accommodates both objective information and human judgement
  • Can perform sensitivity analysis
  • Sometimes a small change will have a big impact
interactions occurring within a dss
Interactions occurring within a DSS
  • A human user specifies one or more scenarios to be evaluated, and the outcome that is of interest
    • There must be a known relationship between the variables included in a scenario
  • The DSS retrieves data relating to the variables involved
  • The DSS applies models (formulas) that reflect the relationship between the different variables
  • The DSS estimates an outcome for each scenario based on historical data and the known relationships between variables
the components of a dss
The components of a DSS
  • Dialogue Manager (user interface)
  • Database Management System (DBMS) giving access to
    • Internal databases (e.g. TPS, MIS)
    • External databases (internet, libraries, government, etc)
  • Model Management Software (MMS) used to select appropriate models from the model base
    • A model base is a collection of mathematical and statistical functions that quantify the relationship between variables commonly used in business scenarios (e.g. financial, economic)
    • Specific model bases are available for different industries
slide13

Diagram of a DSS

Manager (user)

User interface

Internal data bases

Model management component

Data management component

External data sources

Model base

Other computer-based systems

(sometimes)

benefits of a dss
Benefits of a DSS
  • Easier experimentation
    • Lower cost
    • Compressed time frames
    • Assessment of risk
  • Sophisticated calculations
  • Comparison of alternatives
  • Improved understanding of problem context
  • Consistency, reliability, model refinement

Problems: cost, time, reliance, maintenance

other types of dss
Other types of DSS
  • Intelligent DSS
    • Includes knowledge base with rules
  • Organisational DSS
    • Supports a sequence of decisions
    • Crosses functional boundaries and hierarchies
    • Includes a communication component
slide17

Intelligent DSS

Manager (user)

User interface

Best practices

Knowledge management

Internal data bases

Model management component

Data management component

External data sources

Model base

Other computer-based systems

(sometimes)

tomorrow self study again
Tomorrow: self-study (again!)

Instead of coming to a lecture, read the “New Balance” Case Study on pages 457-458 of the module handout.

Write down your answers to the questions posted on RUconnected.

Bring your answers to the lecture on Thursday 27 March, where we’ll discuss everybody’s ideas.