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  1. Chapter 1 Introduction to Decision Support Systems Mallach, 2000

  2. Discussions • Definition • Evolution of DSS • DSS position in IS • How all IS can be used for decision support • Benefits of DSS

  3. 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!

  4. Cont’d… • Management Information System (MIS), storing and process all firm’s data: customers, orders, inventory, production, employees, suppliers, etc for non-technical managers.

  5. 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

  6. Flow of transaction data to DSS Transaction User Transaction Processing Systems CorporateDatabase Decision Support Systems Decision Maker

  7. Comparison of TPS and DSS

  8. 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

  9. 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!

  10. 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

  11. 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

  12. DSS are used by knowledge workers • Knowledge workers include non-management staff such as stock brokers, financial analyst, production coordinators, city planners, etc.

  13. 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?

  14. Needs human! • DSS is not a decision-making system!

  15. 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!

  16. 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

  17. 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…

  18. Who are the users? TopExecutives Middle Managers Clerical workers ExecutiveInf. Sys. DSS TPS

  19. Benefits of DSS • Improving personal efficiency • Improving problem solving • Facilitating communication • Promoting learning or training • Increasing organizational control

  20. Improving personal efficiency • Budgeting are still the same as 200 years ago • Who wants to revert to manual calculation when we have spreadsheets?

  21. 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

  22. Facilitate communication • As tool for persuasion: • Offensive use, to persuade certain actions • Defensive use, to justify actions that were already taken • New form: groupware

  23. Promote learning • Over time lets the DSS user see the result of their previous decisions in certain environment

  24. 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…