Chapter 10: Supporting Decision

Making

Adapted from O’Brien, J. A. and Marakas, G. M.,

Management Information Systems, 7th Edition, 2006, The
McGraw-Hill Companies, Inc.
 Overview

 Understanding Decision Support Systems

 Business Intelligence

2
 Making a Decision . . .

 How do you choose a University?

– Available programs
– Duration of programs
– Cost of programs
– Location of University
– And . . .?
– What if you are an International student?
– http://www.studyusa.com/

3
 Making a Decision . . .

 Buying an MP3 player

– Type (hard-drive based, USB-based, portable)
– Brand
– Price
– What else?
– http://www.amazon.com

4
 Business Example

 Suppose you are a manager at TOYS-R-US

 You sell ‘Learning Tables’ for 2-year-olds
– One is made by LeapFrog
– The other by Fischer Price

5
 Business Example

 When do you decide to re-order this product?

– When you run out of stock? Every week? Month?
 How much should you re-order?
– 1000 more units? 10,000?
 What if at some stage your organization decides that
it cannot keep the products from two different brands
and must stick with one?
– Can you recommend a brand in tomorrow’s meeting?
– How can you support your recommendation?

6
 What do you need to make a decision?

 The key issue is that you need relevant, accurate

and timely information to make business decisions
 What decides relevance?
 How do you ensure accuracy and timeliness
 The amount of information is not static – it is
growing. How much information can you handle or
make sense out of?
 The type of information varies across the
organization. How do you manage this diversity?

7
 Information Requirements

 Depending on where you are in the hierarchy

of the organization, your information
requirements will vary
 Is the CEO interested in the same sort of
information that a project manager requires
on a routinely basis?

8
 Information, Decisions and
Management

9
 Levels of Management Decision
Making

 Strategic - group of executives develop overall

organizational goals, strategies, policies, and
objectives as part of a strategic planning process
 Tactical - managers and business professionals in
self-directed teams develop short- and medium-
range plans, schedules and budgets and specify the
policies, procedures and business objectives for their
subunits
 Operational - managers or members of self-directed
teams develop short-range plans such as weekly
production schedules

10
 Decision Structure

 Structured – situations where the procedures

to follow when a decision is needed can be
specified in advance
 Unstructured – decision situations where it is
not possible to specify in advance most of
the decision procedures to follow
 Semi-structured - decision procedures that
can be pre-specified, but not enough to lead
to a definite recommended decision
11
 Information Systems

12
 What are Decision Support Systems?

 Computer-based information systems that provide

interactive information support to managers and
business professionals during the decision-making
process using the following to make semi structured
business decisions
– Analytical models
– Specialized databases
– A decision maker’s own insights and judgments
– An interactive, computer-based modeling process
 GISs are a type of DSS (Data Visualization Systems)

13
 DSS Components

14
 What is a Management Information
System?

 An information system that produces

information products that support many of
the day-to-day decision-making needs of
managers and business professionals
 Reporting alternatives
– Periodic scheduled reports
– Exception reports
– Demand reports and responses
– Push reporting

15
 Push Reporting Example

16
 Comparison between MIS and DSS

17
 Using DSS

18
 Online Analytical Processing

 Enables managers and analysts to interactively

examine and manipulate large amounts of detailed
and consolidated data from many perspectives
– Done online in real time
– Large amounts of data
 Basic analytical processes include
– Consolidation
– Drill-down
– Slicing and Dicing (usually for identifying trends and
patterns)

19
 Executive Information Systems
 Information systems that provide top executives, managers,
analysts, and other knowledge workers with immediate and
easy access to information about a firm’s key factors that are
critical to accomplishing an organization’s strategic objectives
 Features include:
– Customizable graphics displays
– Exception reporting
– Trend analysis
– Drill down capability
 Any relationship with MIS & DSS?
 No longer remain an executive privilege

20
 Trends in DSS

 What are the recent trends with regard to the

use of Decision Support Systems?
 Consider the advancements in IT
– PC hardware and software suites
– Newer network architectures
– Improved communication networks (inter-,
intranets etc.)

21
 Business Intelligence

 What is your understanding of BI?

 How do you think these various systems
relate to BI?

22
 Business Intelligence

 Business intelligence (BI) is a broad category of

applications and technologies for gathering, storing,
analyzing, and providing access to data to help
enterprise users make better business decisions.
– high visibility of the data is made available to business units
to be used in decision making
– Data from BI centers supports sales forecasting, financial
projections, CRM solutions, new product development, etc.

23
 Business Intelligence

24
 Artificial Intelligence

 What is it?

25
 Attributes of Intelligent Behavior
 Think and reason
 Use reason to solve problems
 Learn or understand from experience
 Acquire and apply knowledge
 Exhibit creativity and imagination
 Deal with complex or perplexing situations
 Respond quickly and successfully to new situations
 Recognize the relative importance of elements in a situation
 Handle ambiguous, incomplete, or erroneous information

26
 Domains of Artificial Intelligence

27
 Domains of Artificial Intelligence

 Cognitive Science
– Focuses on researching how the human brain works and
how humans think and learn
 Robotics
– Robot machines with computer intelligence and computer
controlled, humanlike physical capabilities
 Natural Interfaces
– Includes natural language, speech recognition, and the
development of multisensory devices that use a variety of
body movements to operate computers

28
 Expert Systems

 A knowledge-based information system that uses its

knowledge about a specific, complex application to
act as an expert consultant to end users
– Knowledge Base – facts about specific subject area and
heuristics that express the reasoning procedures of an
expert
– Software Resources – inference engine and other programs
refining knowledge and communicating with users

29
 Expert Systems: Knowledge
Representation

 Type of Knowledge
– Explicit
– Tacit
 Methods of Representation
– Case-Based: examples of past performance, occurrences
and experiences
– Frame-Based: hierarchy or network of entities consisting of
a complex package of data values
– Object-Based: data and the methods or processes that act
on those data
– Rule-Based: rules and statements that typically take the
form of a premise and a conclusion

30
 Expert Systems: Benefits & Limitations

 Benefits
– Faster and more consistent than an expert
– Can have the knowledge of several experts
– Does not get tired or distracted by overwork or stress
– Helps preserve and reproduce the knowledge of experts
 Limitations
– Limited focus
– Inability to learn
– Maintenance problems
– Developmental costs

31
 Neural Networks

 Computing systems modeled after the brain’s

mesh-like network of interconnected
processing elements, called neurons

32
 Fuzzy Logic

 Method of reasoning that resembles human

reasoning since it allows for approximate
values and inferences and incomplete or
ambiguous data instead of relying only on
crisp data

33
 Genetic Algorithms

 Software that uses Darwinian, randomizing,

and other mathematical functions to simulate
an evolutionary process that can yield
increasingly better solutions to a problem

34
 Virtual Reality

 Computer-simulated reality that relies on

multi-sensory input/output devices such as a
tracking headset with video goggles and
stereo earphones, a data glove or jumpsuit
with fiber-optic sensors that track your body
movements, and a walker that monitors the
movement of your feet

35
 Intelligent Agents

 A software surrogate for an end user or a

process that fulfills a stated need or activity
by using built-in and learned knowledge base
to make decisions and accomplish tasks in a
way that fulfills the intentions of a user
 Common example: wizards found in
Microsoft Office

36