1 10 C H A P T E R Decision Support Systems and Management Information Systems

2 Decision Support Systems Are oriented toward assisting in solving both semi-structured and unstructured problems. Can be used for structured problems, too. Offer the potential for higher profits, lower costs, and better products and services. Structured Problem When to reorder … Unstructured Problem Where to a relocate plant... Decision Support Systems

3 Decision Support Systems (DSS) A DSS is an organized collection of people, procedures, software, databases, and devices used to support problem- specific decision making. Examples: How will a labor strike affect our production schedule? What are the potential affects of Cap-and-Trade on our profits? Should we introduce a new line of clothing? Should be move into “green” tech? TPS MIS DSS AI/ES

4 TPS, MIS, DSS, and AI/ES TPS MIS DSS AI/ES Information Data Less Routine More Decision support Less I/O More Complex processing/ analysis Less

5 TPS, MIS, DSS, and AI/ES TPS MIS DSS AI/ES Information Data Less Routine More Decision support Less I/O More Complex processing/ analysis Less

6 Terms Optimization Model Finding the best solution to a problem or opportunity. Satisficing Model Finding a good -- but not necessarily the best -- solution to a problem or opportunity.. Heuristics (rules of thumb) Commonly accepted guidelines or procedures that usually find a good solution to a problem or opportunity. Time is money. It’s not how much you know, but who you know. The most affective propaganda (PR) takes advantage of peoples laziness. Never show Microsoft your new product. If you repeat a lie often enough it becomes the truth.

7 Terms Programmed DecisionsNon-programmed Decisions Decisions made using a rule, procedure, or quantitative method. Decisions dealing with unusual or exceptional situations. Sorry, but we can’t take checks. Should we start selling on the internet.

8 Office Depot They used Essbase from Arbor Software Corporation and Compaq 7000 servers. Cost less than 5 million. Using this DSS they found they were carrying too much PC stock in the wrong stores. Using optimizing models, they reduced the number of PC models from 22 to 12. Eliminated unnecessary inventory. Avoided costly markdowns on equipment that was not selling. Saved millions. Office Depot’s DSS Real Decision Support Systems

9 Scotch Maid They were told by Kmart to use EDI and to ship exactly the right amount of each clothing item to satisfy customer demand--no more and no less. Using a DSS, Scotch Maid was about 99% effective in keeping 144 different items on the shelves with very little in backroom inventory. Scotch Maid’s DSS K-Mart Real Decision Support Systems

10 Trane Air-conditioning Products Used a DSS to assess the affects of quickly increasing production by 114 air-conditioning units. Determined how long it would take to produce the units. Determined that it would NOT affect existing customers’ delivery schedules. Hurricane Andrew South Florida Real Decision Support Systems

11 Pitney Bowes ($3.3 billion company) Used a DSS to reduce its office equipment inventory reserve from 30 days to 15 days. Copiers, FAX’s, Mailer, Etc. Used APS (Advanced Planning System) DSS. $150,100 to $1 million. Real Decision Support Systems

12 Sikorsky Aircraft Used a DSS to reduce inventory by 50%, while doubling its business. Used APS (Advanced Planning System) DSS. $150,100 to $1 million. Real Decision Support Systems

13 Real Decision Support Systems United Airlines Uses a DSS to schedule arrivals, departures, staffing needs, and gate assignment. It has reduced gate conflicts, traffic congestion, and staffing problems.

14 Characteristics of a DSS Large amounts of data from many sources. DBMS and data warehouses. Internets and intranets. Wide variety of report and presentation formats. Computer screen or printer output. Textual or graphical orientations. Text, tables, line drawings, pie/bar charts, trend lines, etc. Characteristics of a DSS Continue

15 Characteristics of a DSS (continued) Drill-down analyses. Complex statistical analyses. Simulation analyses of the real world. Use models Financial. Statistical. Graphical. Project management. Optimization, satisficing, and heuristic approaches. “What-if” analyses. Goal-seeking analyses. If a company wishes to increase sales by 10%, what must it do. Characteristics of a DSS

16 DSS vs MIS MIS Structured problems. Emphasizes information. Basic MIS reports: scheduled, demand, exception, etc. Fixed format for output. Regularly occurring reports. Text oriented reports. Low user control over MIS. MIS “Information” DSS “Decisions” DSS Semi/unstructured problems. Emphasizes decision making. “What-if”, simulation, goal -seeking. Flexible format for output. Used when needed. Graphical or text reports. High user control over DSS.

17 Simon’s Decision Making Model Decision Making Model By Herman Simon Three stages: Intelligence The problem/opportunities are thoroughly investigated. Design Alternative solutions are developed. Choice Select an alternative. Intelligence Design Choice Decision Making

18 Huber’s Expanded Model of Problem Solving Problem Solving Model George Huber expanded Simon’s Model Added Two Stages Implementation Put solution into effect. Monitoring.Evaluate implemented solution. Make changes if necessary. Intelligence Design Choice Decision Making Monitoring Implementation Problem Solving Model

19 Group Decision Support Systems (GDSS) GDSS Group decision room. Has the components of a DSS. GroupWare: software designed specifically for decisions made by groups.

20 Group Decision Support Systems (GDSS) Some GDSS Characteristics: Special Design to foster: Creative thinking. Effective communication. Good group decision making techniques. Reduction of negative group behavior. Dominant individuals taking over the discussion. Ease of use and flexibility. Anonymous input. Parallel communication. Two or more individuals can type comments at the same time. Comments instantly seen by all. Automatic record keeping for: voting. detailed comments. Group Decision Room Continue

21 Some GDSS Characteristics: Supports different decision making approaches: Brainstorming Group Decision Support Systems (GDSS) Delphi Approach Continue

22 Group Decision Support Systems (GDSS) Continue

23 Some GDSS Characteristics (Continued ): Supports different decision making approaches: Group Decision Support Systems (GDSS) Nominal Group Technique (Group Members Vote) Group Consensus Approach (Forces Unanimous Decision)

24 Executive Support Systems (ESS) ESS A specialized DSS for executives. Individualized for each executive. High ability to analyze, compare, and highlight trends. Mostly used to track critical success factors and for strategic planning.

25 Pratt & Whitney’s ESS ESS Tracked key-indicators of strategic plan success: Used to track engine quality and reliability by customer. Used to track the quality of service given to individual customers. Commander EIS by Comshare.

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