2. What is a Decision Support System (DSS)?
A decision support system (DSS) is an information system
that aids a business in decision-making activities that
require judgment, determination, and a sequence of
actions. The information system assists the mid- and high-
level management of an organization by analyzing huge
volumes of unstructured data and accumulating
information that can help to solve problems and help in
decision-making. A DSS is either human-powered,
automated, or a combination of both
3. Purpose of a Decision Support System
• A decision support system produces detailed information reports
by gathering and analyzing data. Hence, a DSS is different from a
normal operations application, whose goal is to collect data and not
analyze it.
• In an organization, a DSS is used by the planning departments –
such as the operations department – which collects data and
creates a report that can be used by managers for decision-making.
Mainly, a DSS is used in sales projection, for inventory and
operations-related data, and to present information to customers
in an easy-to-understand manner.
• Theoretically, a DSS can be employed in various knowledge
domains from an organization to forest management and the
medical field. One of the main applications of a DSS in an
organization is real-time reporting. It can be very helpful for
organizations that take part in just-in-time (JIT) inventory
management.
• In a JIT inventory system, the organization requires real-time data
of their inventory levels to place orders “just in time” to prevent
delays in production and cause a negative domino effect.
Therefore, a DSS is more tailored to the individual or organization
that is making the decision rather than a traditional system.
5. Components of a Decision Support
System
• 1. Model Management System
• The model management system S=stores models that managers can use in their
decision-making. The models are used in decision-making regarding the
financial health of the organization and forecasting demand for a good or
service.
•
• 2. User Interface
• The user interface includes tools that help the end-user of a DSS to navigate
through the system.
•
• 3. Knowledge Base
• The knowledge base includes information from internal sources (information
collected in a transaction process system) and external sources (newspapers and
online databases).
•
6. Types of Decision Support Systems
• Communication-driven: Allows companies to support tasks that
require more than one person to work on the task. It includes
integrated tools such as Microsoft SharePoint Workspace and
Google Docs.
• Model-driven: Allows access to and the management of financial,
organizational, and statistical models. Data is collected, and
parameters are determined using the information provided by
users. The information is created into a decision-making model to
analyze situations. An example of a model-driven DSS is Dicodess –
an open-source model-driven DSS.
• Knowledge-driven: Provides factual and specialized solutions to
situations by using stored facts, procedures, rules, or interactive
decision-making structures like flowcharts.
• Document-driven: Manages unstructured information in different
electronic formats.
• Data-driven: Helps companies to store and analyze internal and
external data.
7. Advantages of a Decision Support System
• A decision support system increases the speed and
efficiency of decision-making activities. It is possible, as a
DSS can collect and analyze real-time data.
• It promotes training within the organization, as specific
skills must be developed to implement and run a DSS
within an organization.
• It automates monotonous managerial processes, which
means more of the manager’s time can be spent on
decision-making
• It improves interpersonal communication within the
organization.
8. Disadvantages of a Decision Support
System
• The cost to develop and implement a DSS is a huge capital
investment, which makes it less accessible to smaller
organizations.
• A company can develop a dependence on a DSS, as it is
integrated into daily decision-making processes to improve
efficiency and speed. However, managers tend to rely on the
system too much, which takes away the subjectivity aspect of
decision-making.
• A DSS may lead to information overload because an
information system tends to consider all aspects of a problem.
It creates a dilemma for end-users, as they are left with
multiple choices.
• Implementation of a DSS can cause fear and backlash from
lower-level employees. It is because many of them are not
comfortable with new technology and are afraid of losing their
jobs to technology.
•
9. What Does Executive Support System (ESS)
Mean?
• An Executive Support System (ESS) is software that
allows users to transform enterprise data into quickly
accessible and executive-level reports, such as those
used by billing, accounting and staffing departments.
An ESS enhances decision making for executives.
• ESS is also known as Executive Information System
(EIS).
10. Models of Decision Making
All decisions can be categorised into the following three basic models:-
1. The Classical Model
2. The Administrative Model
3. The Herbert Simon’s Model
11. The Classical Model
• The rational/ Classical model is the first attempt to know the
decision-making-process. It is considered by some as the
classical approach to understand the decision-making process.
The classical model gave various steps in decision-making
process:-
12. Features of Classical Model:
Features of Classical Model:
1. Problems are clear.
2. Objectives are clear.
3. People agree on criteria and weights.
4. All alternatives are known.
5. All consequences can be anticipated.
6. Decision makers are rational.
i. They are not biased in recognizing problems.
ii. They are capable of processing ail relevant information
iii. They anticipate present and future consequences of decisions.
iv. They search for all alternatives that maximizes the desired results.
13. Bounded Rationality Model or
Administrative Man Model:
• Decision-making involve the achievement of a goal. Rationality
demands that the decision-maker should properly understand
the alternative courses of action for reaching the goals.
• He should also have full information and the ability to analyse
properly various alternative courses of action in the light of
goals sought. There should also be a desire to select the best
solutions by selecting the alternative which will satisfy the goal
achievement
14. Herbert A. Simon Model
• Herbert A. Simon defines rationality in terms of objective and
intelligent action. It is characterised by behavioural nexus between
ends and means. If appropriate means are chosen to reach desired
ends the decision is rational.
• Bounded Rationality model is based on the concept developed by
Herbert Simon. This model does not assume individual rationality in
the decision process.
• Instead, it assumes that people, while they may seek the best
solution, normally settle for much less, because the decisions they
confront typically demand greater information, time, processing
capabilities than they possess. They settle for “bounded rationality or
limited rationality in decisions. This model is based on certain basic
concepts.
