Decision Support Systems

Topics: Decision making, Decision theory, Decision support system Pages: 91 (19136 words) Published: June 21, 2013

Decision support systems:
These systems give direct computer support to managers during the decision-making process. For example, advertising managers may use an electronic spreadsheet program to do what-if analysis as they test the impact of alternative advertising budgets on the forecasted sales of new products.

Decision support systems are computer-based information systems that provide interactive information support to managers and business professionals during the decision-making process. Decision support systems use (1) analytical models, (2) specialized databases, (3) a decision maker's own insights and judgments, and (4) an interactive, computer-based modeling process to support the making of semistructured and unstructured business decisions. Therefore, DSS are designed to be ad hoc, quick-response systems that are initiated and controlled by business decision makers. Decision support systems are thus able to directly support the specific types of decisions and the personal decision-making styles and needs of individual executives, managers, and business professionals. Unlike management information systems, decision support systems rely on model bases as well as databases as vital system resources. A DSS model base is a software component that consists of models used in computational and analytical routines that mathematically express relationships among variables. For example, a spreadsheet program might contain models that express simple accounting relationships among variables, such as Revenue — Expenses = Profit. Or a DSS model base could include models and analytical techniques used to express much more complex relationships. For example, it might contain linear programming models, multiple regression forecasting models, and capital budgeting present value models. Such models may be stored in the form of spreadsheet models or templates, or statistical and mathematical programs and program modules.

DSS software packages can combine model components to create integrated models that support specific types of decisions. DSS software typically contains built-in analytical modeling routines and also enables you to build your own models. Many DSS packages are now available in microcomputer and Web-enabled versions. Of course, electronic spreadsheet packages also provide some of the model building (spreadsheet models) and analytical modeling (what-if and goal-seeking analysis) offered by more powerful DSS software. Among the applications of DSS is what if analysis.

In what-if analysis, an end user makes changes to variables, or relationships among variables, and observes the resulting changes in the values of other variables. For example, if you were using a spreadsheet, you might change a revenue amount (a variable) or a tax rate formula (a relationship among variables) in a simple financial spreadsheet model. Then you could command the spreadsheet program to instantly recalculate all affected variables in the spreadsheet. A managerial user would be very interested in observing and evaluating any changes that occurred to the values in the spreadsheet, especially to a variable such as net profit after taxes. To many managers, net profit after taxes is an example of the bottom line, that is, a key factor in making many types of decisions. This type of analysis would be repeated until the manager was satisfied with what the results revealed about the effects of various possible decisions. COMPONENTS OF DSS - another perspective

The components of a DSS include a database of data used for query and analysis; a software system with models, datamining, and other analytical tools; and a user interface.

The DSS database is a collection of current or historical data from a number of applications or groups. It may be a small database residing on a PC that contains a subset of corporate data that has been downloaded and possibly combined with external...
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