Decision Support System

Topics: Decision theory, Decision support system, Fuzzy logic Pages: 23 (3237 words) Published: April 14, 2014
Chapter 8
Decision Support Systems

Managers and Decision
Making
A decision refers to a choice made between alternatives.

 Why Managers Need the Support of Information
Technology. It is very difficult to make good
decisions without valid, timely and relevant
information.
 Number of alternatives to be considered is increasing
 Many decisions are made under time pressure.
 Due to uncertainty in the decision environment, it is
frequently necessary to conduct a sophisticated analysis.
 It is often necessary to rapidly access remote information. Can we make better decisions?

Decision Process
Decision makers go through a fairly systematic process.
Define
the
“Process or Problem”
Develop
Alternative
Courses of Action
Select
The “Best”
One
Review It

Act on it

The nature of decisions
 Information systems can support
decision-making levels. These include
the three levels of management
activity.
 Strategic management, tactical
management, and operational
management.

Strategic management
 A board of directors and an executive
committee of the CEO develop longrange planning.
 Decisions made at the strategic level
tend to be unstructured.

Tactical management
 Mid-level mangers deal with middle
level management activities such as
short-term planning, medium range
plans and control.
 Decisions made at the tactical
management level tend to be semistructured.

Operational management
 Operating managers deal with day-today operations of an organization, such as assigning employees to tasks,
or placing or purchase an order.
 Decisions made at the operational
management level tend to be more
structured.

Structured decisions
 Structured decisions are repetitive
and routine problems for which
standard solutions exist.
 Ex: finding an appropriate inventory
level, finding an optimal investment
strategy.
 MIS primarily analyzes structured
problems.

Semi-structured decisions
 Semi-structured problems fall between
structured and unstructured problems.
 Only some of the phases are structured in
semi-structured problems.
 It requires a combination of standard
procedures and individual judgment.
 Ex: annual evaluation of employees,
trading bonds, setting marketing budgets
for consumer products.

Unstructured decisions
 Unstructured problems are novel and nonroutine, complex.  For unstructured problems we cannot
specify some procedures to make a
decision.
 Ex: expanding the business, moving
operations to foreign countries.
 IS must provide a wide range of
information products to support these types
of decisions at all levels of the organization.

Decision Complexity
Decision making ranges from simple to very complex decisions that fall along a continuum that ranges from structured to unstructured. Structured processes refer to routine & repetitive problems with standard solutions. While Unstructured are "fuzzy," complex problems with no clear-cut solutions.

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Management Support Systems
 Management Information Systems
 Decision Support Systems
 Executive Information Systems

Management Information
Systems (MIS)
 MIS primarily provides information on
the firm’s performance to help
managers in monitoring and
controlling the business.

MIS
 Information provided by MIS is used by
decision makers at the operational and
tactical levels of organization.
 They face with more structured and semistructured types of decision situations.  A typical MIS report might show a
summary of monthly sales for each of the
major sales territories of a company.

MIS
 MIS typically produces fixed, regularly...
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