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BIA/U1 Topic 1 Decision Support Systems

A decision support system (DSS) is a computerized information system used to support decision-making in an organization or a business. A DSS lets users sift through and analyze massive reams of data and compile information that can be used to solve problems and make better decisions.

The benefits of decision support systems include more informed decision-making, timely problem solving and improved efficiency for dealing with problems with rapidly changing variables.

A DSS can be used by operations management and planning levels in an organization to compile information and data and synthesize it into actionable intelligence. This allows the end user to make more informed decisions at a quicker pace.

What Can a DSS Analyze?

The DSS is an information application that produces comprehensive information. This is different from an operations application, which would be used to collect the data in the first place. A DSS is primarily used by mid- to upper-level management, and it is key for understanding large amounts of data.

For example, a DSS could be used to project a company’s revenue over the upcoming six months based on new assumptions about product sales. Due to the large amount of variables that surround the projected revenue figures, this is not a straightforward calculation that can be done by hand. A DSS can integrate multiple variables and generate an outcome and alternate outcomes, all based on the company’s past product sales data and current variables.

How Can a DSS Present the Information?

The primary purpose of using a DSS is to present information to the customer in a way that is easy to understand. A DSS system is beneficial because it can be programed to generate many types of reports, all based on user specifications. A DSS can generate information and output it graphically, such as a bar chart that represents projected revenue, or as a written report.

Where Can a DSS Be Used?

As technology continues to advance, data analysis is no longer limited to large bulky mainframes. Since a DSS is essentially an application, it can be loaded on most computer systems, including laptops. Certain DSS applications are also available through mobile devices. The flexibility of the DSS is extremely beneficial for customers who travel frequently. This gives them the opportunity to be well-informed at all times, which in turn provides them with the ability to make the best decisions for their company and customers at any time.

Attributes of a DSS

  • Adaptability and flexibility
  • High level of Interactivity
  • Ease of use
  • Efficiency and effectiveness
  • Complete control by decision-makers
  • Ease of development
  • Extendibility
  • Support for modeling and analysis
  • Support for data access
  • Standalone, integrated, and Web-based

Characteristics of a DSS

  • Support for decision-makers in semi-structured and unstructured problems.
  • Support for managers at various managerial levels, ranging from top executive to line managers.
  • Support for individuals and groups. Less structured problems often requires the involvement of several individuals from different departments and organization level.
  • Support for interdependent or sequential decisions.
  • Support for intelligence, design, choice, and implementation.
  • Support for variety of decision processes and styles.
  • DSSs are adaptive over time.

Benefits of DSS

  • Improves efficiency and speed of decision-making activities.
  • Increases the control, competitiveness and capability of futuristic decision-making of the organization.
  • Facilitates interpersonal communication.
  • Encourages learning or training.
  • Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for an unusual decision.
  • Helps automate managerial processes.

Components of a DSS

  • Database Management System (DBMS): To solve a problem the necessary data may come from internal or external database. In an organization, internal data are generated by a system such as TPS and MIS. External data come from a variety of sources such as newspapers, online data services, databases (financial, marketing, human resources).
  • Model Management System: It stores and accesses models that managers use to make decisions. Such models are used for designing manufacturing facility, analyzing the financial health of an organization, forecasting demand of a product or service, etc.

Support Tools: Support tools like online help; pulls down menus, user interfaces, graphical analysis, error correction mechanism, facilitates the user interactions with the system.

Classification of DSS

There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows:

  • Text Oriented DSS:It contains textually represented information that could have a bearing on decision. It allows documents to be electronically created, revised and viewed as needed.
  • Database Oriented DSS: Database plays a major role here; it contains organized and highly structured data.
  • Spreadsheet Oriented DSS: It contains information in spread sheets that allows create, view, modify procedural knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel and Lotus 1-2-3.
  • Solver Oriented DSS: It is based on a solver, which is an algorithm or procedure written for performing certain calculations and particular program type.
  • Rules Oriented DSS: It follows certain procedures adopted as rules.
  • Rules Oriented DSS: Procedures are adopted in rules oriented DSS. Export system is the example.
  • Compound DSS: It is built by using two or more of the five structures explained above.

Types of DSS

  • Status Inquiry System: It helps in taking operational, management level, or middle level management decisions, for example daily schedules of jobs to machines or machines to operators.
  • Data Analysis System: It needs comparative analysis and makes use of formula or an algorithm, for example cash flow analysis, inventory analysis etc.
  • Information Analysis System: In this system data is analyzed and the information report is generated. For example, sales analysis, accounts receivable systems, market analysis etc.
  • Accounting System: It keeps track of accounting and finance related information, for example, final account, accounts receivables, accounts payables, etc. that keep track of the major aspects of the business.
  • Model Based System: Simulation models or optimization models used for decision-making are used infrequently and creates general guidelines for operation or management.
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