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Chapter 1 Introduction to Decision Support Systems Mallach, 2000
Discussions • Definition • Evolution of DSS • DSS position in IS • How all IS can be used for decision support • Benefits of DSS
History of DSS • 1950: Electronic data processing (EDP) • Transaction processing: repetitive processing of common business events • Information reporting system: manager were given thick reports every week!
Cont’d… • Management Information System (MIS), storing and process all firm’s data: customers, orders, inventory, production, employees, suppliers, etc for non-technical managers.
Cont’d… • In 1970, manager saw that they do not need the whole MIS report… • Specific information systems were developed, called DSS • 1990 saw the birth of data warehouse
Flow of transaction data to DSS Transaction User Transaction Processing Systems CorporateDatabase Decision Support Systems Decision Maker
All IS are DSS…? • TPS: whether to reorder inventory today or not • Expert system: doctors in a hospital is given several disease possibilities given a set of symptoms • Personal information manager: a worker must prioritize what to do next using a To-Do-List software • Workgroup: a marketing team must decide when to arrange meeting or vote on a decision
What is a DSS? • Sprague’79, “IS featuring an integrated system composed of decision models, database and decision maker to support decision making” • Kroenke’92, “… a set of tools, data, models and other resource that managers and analyst use to understand, evaluate and solve problems… in unstructured problem domains.” • Many others!
Sprague’s DSS Characteristics • Tent to be aimed to less structured problems that typical managers face • Combines the use models with data retrievals • Easy to use and interactive • Emphasize in flexibility to accommodate changes in decision making approach of the user
Mallach’s DSS Characteristics • Common characteristics: • Are information systems • Used by knowledge workers • Used in making decisions • Support but do not replace people • Optional characteristics: • Used in semi-structured decisions • Incorporate models • Incorporate database
DSS are used by knowledge workers • Knowledge workers include non-management staff such as stock brokers, financial analyst, production coordinators, city planners, etc.
DSS is used for decision making • What products should we sell in the future? • How should we market and sell them? • What is the best way to provide customer satisfaction? • How should we invest? How do we get maximum return?
Needs human! • DSS is not a decision-making system!
Lack of structure… • Essentially we can not program a computer to make a decision to our total satisfaction in all cases. • It requires human judgment • If the computer can make the decision, we do not need DSS!
Models • A computer representation of a real life system that lets us investigate the impact of possible decision affecting that system • Forecast of the impact of several option of decision is very useful… • Example: • Linear programming • Statistics • Simulation • Probability • Queuing
Efficiency vs. Effectively • Generally IS are used to reduce cost • Example: accounting information systems, academic information systems • But DSS has high impact for organization’s life in the future! • It allows the organization to do strategic moves…
Who are the users? TopExecutives Middle Managers Clerical workers ExecutiveInf. Sys. DSS TPS
Benefits of DSS • Improving personal efficiency • Improving problem solving • Facilitating communication • Promoting learning or training • Increasing organizational control
Improving personal efficiency • Budgeting are still the same as 200 years ago • Who wants to revert to manual calculation when we have spreadsheets?
Improve problem solving • DSS can make people solve a problem better instead just faster • Marketing manager who can see more factors influencing sales & promotion, surely outperforms “non-DSS” managers
Facilitate communication • As tool for persuasion: • Offensive use, to persuade certain actions • Defensive use, to justify actions that were already taken • New form: groupware
Promote learning • Over time lets the DSS user see the result of their previous decisions in certain environment
Increase organization control • It also standardizes the way multiple managers calculate things! • Example: credit analysts in a bank, making decision for a loan application • Less corruption…