Unit 6

DECISION
SUPPORT SYSTEM
Decision Support System
 Decision Support System (DSS) refers to a class of systems that
supports the process of decision making. The emphasis is on
“support” rather than on automation of decisions.

 DSS are interactive information systems, that rely on an integrated

set of user-friendly hardware & software tools to produce & present
information to support management in decision making process.

 DSS assists management in decision making by combining data,

sophisticated analytical models and user-friendly software into a
single powerful system that supports semi-structured or
unstructured decision-making.

 While MIS is considered for structured decisions, DSS is considered

more useful for decisions at tactical/strategic levels, which involves
complex decisions
Decision Support System Components
The DSS has three basic components:

1) The Database

2) The Modelbase
- Behavioral Model
- Management Science Model
- Operations Research Model

3) The DSS Software System

Decision Support System Components
1. DATABASE: The DSS Database is a collection of current or historical
data from a number of applications or groups. It uses live organizational
data so that decisions could be taken based upon actual conditions. The
database has access to data from both internal & external sources.

2. MODELBASE: A Model is an abstract representation that shows the

components or relationships of a phenomenon. DSS uses 3 types of
models:

 Behavioral Model: Here the focus is on studying/understanding the

behavior/trends amongst variables.
E.g. Trend analysis, Forecasting, Co-relation, Regression

 Management Science Model: These models are build on Principles of

Management, management Accounting & Econometrics.
E.g. Budgetary systems, Cost Accounting, Inventory Management etc
Decision Support System Components
 Operations Research Model: These are basically mathematical
models. These models represents real life problems in terms of
variables and parameters expressed in algebraic equation forms.
E.g. Linear Programming, Material Requirement planning etc.

3. DSS SOFTWARE: It permits easy interactions between the users

of the system and the DSS database & modelbase. It manages
the creation, storage and retrieval of models in the modelbase
and integrates them with the data in the DSS database.
The DSS software also provides a graphic, easy to use, flexible
user interface that supports the interaction between the users
and the DSS.
Desirable Characteristics of Decision Support System

 DSS should aid the decision maker in decision making

 DSS should be able to address semi/un-structured decision making
situations
 DSS should support decision makers particularly at tactical/strategic
levels
 DSS should be able to create general purpose models, simulation
capabilities and other analytical tools available to a decision maker
 DSS should be readily adapted to meet information requirements
for any decision environment
 DSS should provide mechanism to enable rapid response to a
decision makers request for information
 DSS should be flexible to accommodate variety of management
styles
 DSS should facilitate communication between/among various levels
of decision making
 DSS should have in-built flexibility and ability to evolve as user
sophistication grows
The Decision Support System Approach and Core
Capabilities
MIS-Decision Support System - Comparison
Structure of Decision Support Systems
Fundamental DSS Programme Structure
1) Dialogue Management: Users interfaces with the Dialogue
Management components, which is a set of programmes that
manages the user interface and translates the user’s request into
commands for the other 2 components. It has 3 sub parts:
a) User Interface b) Dialogue Control c) Request Translator

2) Model Management: It maintains & executes models of

business activity. Examples of such models are spreadsheets,
financial models & simulation models. It is used to create, store
and modify models and to cause them to be involved.

3) Database Management: It performs 2 functions:

 It stores & manipulates the database as directed by either the
Model Management or the Dialogue Management component.
 It maintains an interface with data sources that are external to the
DSS i.e. Enterprise data, External data sources and other DSS
applications.
Group Decision Support Systems (GDSS)
DSS is designed for and used more by individual decision maker.

However, it was felt that in today’s complex business environment, decision

makers generally work in groups because it leads to a better group
understanding of the problems and leads to better solutions.

Hence the DSS application was expanded to facilitate Group Decision

Environment and the DSS for a group came to be known as Group
Decision Support System (GDSS).

Under the GDSS environment, the members of the group utilizes the DSS
as a group and the user-interface is expanded to include the computers
which are suitably connected/networked. In this way, under GDSS,
members of a group can communicate using their computers with DSS or
with other members of the group to facilitate optimal decision making.
What is GDSS ?

 According to De Sanctis and Gallupe, “GDSS

is an interactive computer-based system that
facilitates the solution of unstructured
problems by a set of decision-makers working
together as a group”.
GDSS Components
The GDSS components are similar to that of the
DSS components. The GDSS has three basic
components as follows:

1) HARDWARE

2) SOFTWARE

3) PEOPLE AND PROCEDURE

GDSS Components
1) HARDWARE
- Input/Output Devices
- Audio/Visual Instruments
- Electronic Display Board Screens
- Computer Equipments
- Conferencing Infrastructure
- Network Systems enabling the linking of different sites/locations
and participants to each other

2) SOFTWARE
- Database and DBMS
- Modeling Capabilities
- Dialogue Management with Multiple-user Access
- Specialized Application Programmes to facilitate group access

3) PEOPLE AND PROCEDURE

- Trained Facilitator/s
- Decision Making Participants
- Support Staff
- Laid Down Procedures and Modus Operandi
GDSS Configuration
The GDSS Features
a) Anonymous inputs without identifying the source
of inputs to enable group decision makers to
concentrate on the merits of the input without
considering who gave it.

b) Parallel communication/s to enable every group

member to address issues or make
comments/suggestions simultaneously.

c) Automated record keeping by anonymously

recording each comment that is entered into the
PC by the group member, for future review and
analysis.
Factors in GDSS Success

a) Improved pre-planning
b) Increased participation
c) Open, collaborative meeting(s) atmosphere
d) Criticism-free idea generation
e) Setting priorities and making decisions
accordingly
f) Documentation/Record keeping of meetings
g) Access to external information, if and when
required
Executive Information System/Executive Support
System (EIS/ESS)

 EIS/ESS is a specialized DSS that includes all hardware, software, data

procedures and people used to assist senior/top level executives within an
organization.

 EIS is a computer based system that serves the information needs of Top
Executives by providing capabilities like:
1) Exception Reporting 2) Critical Success Factors identification
3) ‘ Drill Down ‘ capabilities

 EIS/ESS has emerged in response to the emerging dynamic situation

where the Top Executives are bombarded with huge amount of data,
effectively leading to “Information Overload” with the resultant
understandable confusions and dilemma.

 EIS/ESS is developed to support decision making at senior level including

members of the Board of Directors, Chief Executive Officer (CEO), Chief
Operating Officer (COO), Chief Finance Officer (CFO) etc.
Why EIS/ESS ?
According to Watson and others, EIS/ESS has become imperative due to certain
internal and external factors as enumerated below:

A) INTERNAL FACTORS
- Need for timely information
- Need for improved communication
- Need for access to operational data
- Need for rapid status updates on various business activities
- Need for access to corporate database
- Need for more accurate information
- Need for ability to identify historical trends

B) EXTERNAL FACTORS
- Increased and intensifying global competition
- Rapidly changing business environment
- Need to be more pro-active
- Need to access external database
- Increasing Government regulations
EIS/ESS Characteristics
The characteristics can be divided into three categories:

1. Informational Characteristics
2. User-Interface/Orientation Characteristics
3. Managerial/Executive Characteristics

1. Informational Characteristics:

- Flexibility and ease of use

- Provides timely information with short response time and quick
retrieval
- Provides correct information
- Provides relevant information
- Provides validated information
EIS/ESS Characteristics
2. User-Interface/Orientation Characteristics:

- Contains sophisticated ‘self-help’, user friendly interfaces including

Graphic User Interface (GUI)
- Facilitates access from many places
- Provides secure, reliable and confidential access and access
procedure
- Is customized to suit the management style of individual executives

3. Managerial/Executive Characteristics

- Provides support for defining overall Vision, Mission and Strategy

as it has strategic/futuristic orientation
- Provides support for Strategic Management Strategic Planning /
Organizing / Control / Staffing etc)
- Can help with situations that have a high degree of risk/uncertainty
EIS/ESS Capabilities
a) It provides access to aggregated / macro / global information
b) It enables to use external data extensively
c) It enables to address ad hoc queries/analysis
d) It incorporates graphics and text in the same display to provide
better view
e) It shows trends, ratios and deviations
f) It provides access to historical and also the latest data
g) It highlights problem indicators and supports open-ended problem
explanation with written interpretations
h) It is organized around critical success factors and provides
“Management by Exception” reports
i) The information can be presented in a hierarchical structure,
thereby facilitating detailed information at various levels, along with
“Drill Down capabilities”.
j) It filters, compresses and tracks critical data and also provide
forecasting capabilities
EIS/ESS Benefits
1. Facilitates the attainment of organizational objectives
2. Facilitates access to information by integrating many sources of
data and provide broad, highly aggregated information.
3. Improves the user ‘productivity’ by enabling more effective
decision making
4. Allows the anticipation of problems/opportunities and facilitates
pro-active rather than a re-active response.
5. Increases communication capability and quality
6. Facilitates better Strategic Planning and Control
7. Facilitates finding the cause of a problem in a “Root-Cause
Analysis” mode rather than “Fix-It” mode
8. Meets the needs of the executives in time-effective and time-
efficient manner
9. The EIS/ESS provides competitive advantage
Expert Systems - Definition
 An Expert System is a computer Programme that represents and copies
knowledge of some specialist in a specific area that has successfully been
solved by human experts with a view to solving problems or giving advice.

 ES is a highly specialized computer systems capable of using that element of

a human specialist’s knowledge and reasoning that can be formulated into a
set of facts and “Heuristic Rules”.

 ES copies human expertise in a “Narrow Domain” to solve “Specific

Problems” in a “Well Defined Area”.

 An ES is a computer Programme that:

a) Reasons with domain-specific knowledge that is logical as well as numerical
b) User domain-specific methods that are heuristic as well as following
procedures that are algorithmic (certain)
c) Performs well in the problem area
d) Explains or make understandable both what it knows and the reasons for its
answers
e) Retains ‘flexibility’
Expert Systems Components
Expert Systems - Capabilities
a) Capturing of Expertise

b) Codifying the Expertise

c) Duplicating and Transferring the Expertise

d) Saving the Human Expert’s Time

e) Saving on Maintenance and Updating of the

Knowledge Base
Expert Systems - Characteristics
a) Ability to explain their reasoning or suggested
decisions
b) Ability to display ‘Intelligence behavior’
c) Ability to draw conclusions from complex
relationships
d) Ability to provide ‘Portable Knowledge’
e) Ability to deal with certainty
f) Not widely used or tested, due to difficulty of
use
g) Limited to relatively narrow problems
h) Inability to deal with ‘Mixed Knowledge’
i) Difficulty to maintain
Expert Systems - Applications
 Aerospace Technology (NASA)
 Airline/Civil Aviation (Scheduling/Routing)
 Banking and Finance (Credit Card Limits)
 Criminology
 Education
 Food Industry
 Health Care Management (Diagnosing Blood Infections)
 Geological Data Analysis and interpretation for oil exploration
drilling sites
 Personnel Management
 Security Analysis/Portfolio Management
 Tax Planning
 Foreign Exchange Management
 Trouble Shooting Telephone Network
 Configuring Computer Systems
 Quality Control and Monitoring
Expert Systems - Limitations
 An ES is based on a narrow range of codified domain, they may
not be able to tackle multi-dimensional problems.
 Due to narrow range of knowledge incorporated in the ES, they
typically do not respond well to situations outside their range of
expertise.
 Typically ES may not be able to make available common sense
knowledge and broad-ranging contextual information/s.
 ES typically lack human self-awareness and self-analysis tool.
Introspection is not available as ES also happen to be “non-self-
referral” systems.
 If a problem is not specific and has not been solved previously by
an expert, then the problem is not considered suitable for the
Expert Systems implementations.

- ES are capable of performing only within a specific, logic oriented

realm of expertise, as computers basically only have MEMORY
and not, necessarily, INTELLIGENCE !
Artificial Intelligence (AI) - Introduction
 AI is a branch of computer science concerned with the study and
creation of computer systems that exhibit some form of human
intelligence:
1. Systems that learn new concepts and tasks
2. Systems that can reason & draw useful conclusions about the
world around us
3. Systems that can understand natural languages
4. Systems that perform other types of activities that require human
types of intelligence.

 AI is a branch of computer science that is concerned with the

automation of intelligent behavior.

 AI is a series of related technologies that attempt to reproduce

human behavior including thinking, speaking, feeling & reasoning.
Natural V/s Artificial Intelligence
Attributes Natural Artificial
Intelligence Intelligence
Ability to use sensors (eyes, ears, touch, smell) High Low
Ability to be creative and imaginative High Low
Ability to learn from past experiences High Low
Ability to be adaptive High Low
Ability to afford the cost of acquiring intelligence High Low
Ability to use a variety of information sources High High
Ability to acquire a large amount of external High High
information
Ability to make complex calculations Low High
Ability to transfer information Low High
Ability to make a series of calculations, rapidly and Low High
accurately
Pre-requisites of AI

 Understand what is ‘Common Sense’

 Understand ‘Facts’ and relationships among ‘Facts’
 Be able to manipulate ‘Qualitative’ data
 Be able to deal with exceptions and discontinuity
 Be able to interface with humans in a “Free-Format”
fashion
 Be able to deal with new situations based on previous
learning
AI ONION MODEL

Natural Language Processing

Heuristic Modeling &

Computer Vision
Problem Solving &

Representation
Search
of knowledge
Planning

AI Common
Languages Sense
& Tools Reasoning
& Logic

Expert Systems
AI - Applications
 Manufacturing/Production Planning and Scheduling
 Project Management
 Factory Management
 Sales, Distribution and Field Services
 Diagnosis and Trouble Shooting
 Financial Management
 Currency/Interest Rate SWAPs
 Portfolio Management
 Asset Liability Management
 Reading/Interpreting Financials
 Criminology
 Geology (Potential Drilling/Oil Exploration Sites)