Chapter 12 Decision Support and Geographic Information Systems

Management Information Systems, 3rd Edition Effy Oz

Learning Objectives
When you finish this chapter, you will:
Understand the steps followed in decision making. Recognize the difference between structured and unstructured decision making. Know the typical software components that decision support systems comprise. Be able to distinguish between the main types of decision support systems.
Management Information Systems, 3rd Edition Effy Oz

Decision Making in Business

Organizations success depends on quality of managers decisions When decisions involve large amounts of information and processing, computerbased systems can make the process effective and efficient.

Management Information Systems, 3rd Edition Effy Oz

The Decision-Making Process

Three decision-making phases
Intelligence Design Choice

Management Information Systems, 3rd Edition Effy Oz

The Decision-Making Process

Figure 12.1 The three phases of decision making

Management Information Systems, 3rd Edition Effy Oz

Structured and Unstructured Problems

Figure 12.2 Business problems vary from structured to unstructured. Many fall between the two extremes and are considered semistructured.
Management Information Systems, 3rd Edition Effy Oz

Structured and Unstructured Problems

Structured Problems
Proven set of steps for solution
Algorithm

Unstructured Problems
Multiple potential solution

Semistructured Problems
Neither fully structured nor totally unstructured
Management Information Systems, 3rd Edition Effy Oz

Structured and Unstructured Problems

Programmable Problems
Specific programs can be written to solve
Structured problems are programmable Unstructured problems are unprogrammable

Managers and Semistructured Problems

Most common type of problem for managers

Management Information Systems, 3rd Edition Effy Oz

DSS Components
Decision Support Systems (DSS)
Computer-based information systems that help managers select one of many solutions
Automates some of decision-making process Sophisticated and fast analysis Used at all management levels

Management Information Systems, 3rd Edition Effy Oz

DSS Components
Three Major Components
Data management module Model management module Dialog management module

Together, DSS modules:

Help enter request conveniently Search vast amounts of data Use data in desired models Present results in readable manner
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Management Information Systems, 3rd Edition Effy Oz

DSS Components
The Data Management Module
Gives user access to databases Usually linked to external databases

Management Information Systems, 3rd Edition Effy Oz

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DSS Components
The Model Management Module
Selects appropriate model to analyze data
Linear regression model

Management Information Systems, 3rd Edition Effy Oz

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DSS Components

Figure 12.5 A linear regression model for predicting sales volume as a function of dollars spent on advertising

Management Information Systems, 3rd Edition Effy Oz

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DSS Components
The Dialog Module
Interface between user and other modules
Prompts user to select a model Allows database access and data selection Lets user enter/change parameters

Displays analysis results

Textual, tabular, and graphical displays

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Types of Decision Support Systems

Personal Decision Support Systems
Serve individual users in daily decision making Run on personal computers Single model for data processing

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Types of Decision Support Systems

Group Decision Support Systems
Promote brainstorming and group decision making Located in conference room or on networked computers Weigh votes to overcome impasses

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Types of Decision Support Systems

Figure 12.8 A GDSS Room

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Sensitivity Analysis
Sensitivity analysis
Tests degree to which result is affected by change in parameters What-if analysis Can change multiple parameters at once

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Executive Information Systems

Executive Information Systems (EIS)
Alleviate information overload for executives Select most relevant data for analysis
Drilling down

Consolidate and summarize data

Display data graphically
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Executive Information Systems

An effective EIS has the following features:
An easy-to-use and easy-to-learn graphical user interface On-request drill-down capability On-demand financial and other ratios, and other indicators Easy-to-use but sophisticated tools to allow navigation in databases and data warehouses

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Executive Information Systems

Statistical analysis tools The ability to respond to ad hoc queries and sensitivity analyses Access to external data pools The ability to solve diverse business problems

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Developing Decision Support Systems

When Should a DSS Be Built?
What is the type problem and how structured is it? Are the required data available in databases and data warehouses? How often do managers encounter the problem? Who will use the system? Can the prospective users spare adequate time for the development process?
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The Electronic Spreadsheet: A DSS Tool

Provide two facilities for building DSS
Preprogrammed functions

Ability to use IF-THEN statements

Most widely used tool

Inexperienced users can use to develop DSSs
Management Information Systems, 3rd Edition Effy Oz

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Geographic Information Systems

Geographic Information System (GIS)
Decision aid for map-related decisions

Typical GIS contains

Database of quantitative and qualitative data Database of maps Program to display information on maps
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Ethical and Societal Issues

Decisions by Machines Automated decisions can affect individuals.
Mortgage companies, credit card companies, employers, banks, etc.

European Protection
Automated Individual Decisions Directive

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Ethical and Societal Issues

Decisions by Machines Who Needs Protection
Determining creditworthiness
Efficient Effective

Hidden Injustice
Mistakes on records
Decisions final
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