Decision support system (DSS) in an outcome of management information system, providing support for management at operational control, management control, and strategic planning.
Management activity of each of these classes includes planning, control, and decision making.
A feature of the DSS that is currently receiving much publicity is computer graphics Graphs are good only in certain situations. However, in those situations some graphs are more effective than others.
The most recent embellishment of the DSS concept is the group decision support system (GDSS). The GDSS endeavours to improve communication among group members by providing simulating environment.
The term decision support system refers to a class of system which support the process of making decisions. The emphasis is on ‘support’ rather than on automation of decision.
DSS allows the decision maker to retrieve data and test alternative solution during the process of problem-solving.
Keen and Scott Morton (1978) defined DSS as:
The impact is on decisions in which there is sufficient structure for computer and analytic aids to be of value but where manager’s judgement is essential;
The payoff is in extending the range and capability of manager’s decision processes to help them improve their effectiveness; and
The relevance for managers is the creation of a supportive tool, under their own control, which does not attempt to automate the decision process, predefine or objectives, or impose solution. However, this definition has certain limitations. In 1984, Freyenfeld (1984) proposed the following empirical definition of DSS based on
discussions with some 30 supplier user and academic organisation:
“A Decision support system is an interactive data processing and display system which is used to assist in a concurrent decision making process, and which also confirm to following characteristics:
It is sufficiently user- friendly to used by decision makers(s) in person;
It display its information in a format and terminology which is familiar to the user(s);and
It is selective in its provision of information and avoids its user(s) in information overload.”
Another definition of a decision support system is: “A set of well-integrated, user-friendly, computer-based tools that combine data with various decision-making models—quantitative and qualitative—to solve semi –structured and unstructured problems.’’
EVOLUTION OF DSS:
The notion of decision support as a formal concept was coined by G. Anthony Gorry and Michael S. Scott Morton. They felt a need for a frame work to channel computer application towards management decision making and developed a grid, known as the Gorry and Scott Morton grid.
The grid each based on Simon’s concept of programmed and non-programmed decision and Robert N. Anthony’s management levels.
The decision types are described in terms of problems structure, ranging from structured to semi-structured to unstructured.
A fully structured problem is one in which the first three of Simon’s phases – intelligence, design and choice-are structured. The decisions are routine and straightforward. By following a setup pre-established step, a solution to the problem can be found. Such a problem does not require intuition or judgement. Therefore, the system returns the same solution every time.
An unstructured problem is one in which none of the three phases is structured. The decisions are unique and non–repetitive. Because they require intuition, experience judgement, there may be no one ‘best’ solution and solutions may differ from one decision maker to the other.
A semi-structured problem is one in which one or two of the phases are structured. The decision in this category fall somewhere between structured decisions, which are routine and repetitive, and unstructured decision, which are unique and non-repetitive.
Gorry and Scott Morton entered types of business problem into their grid. For example, accounts receivable is solved by managers on the operational-control level making structured decision. R&D planning is accomplished by strategic planning managers making unstructured decisions.
The horizontal dotted line through the middle of the grid is significant. Its separate the problem that had been successfully solved with computer assistance from those problems that had not been subjected to computer processing.
The upper area was named structured decision system and the lower area was named decision support systems.
DSS are especially useful for semi-structured problems where problem-solving is improved
by interaction between the managers and the computer system.
The emphasis is on small, simple models which can easily be understood and used by the
Examples of semi-structured decision are : planning a mix of investments for a portfolio, looking at the financial implication of various way of financing a short-term cash flow deficit, consideration of alternative production and pricing policies, assessing the impact of potential future changes in exogenous variables such as interest rates, analysis of the of the credit-worthiness of corporate clients, and assessing the likely impacts of departmental
OBJECTIVES OF DSS
Assist managers in making decisions to solve semi-structured problems.
Support the manager’s judgement rather try to replace it.
Improve the manager’s decision-making effectiveness rather than its efficiency.
These objectives correlate with three fundamental principles of the DSS concept-problem
structure, decision support, and decision effectiveness.
CLASSIFICATION OF DSS
File Drawer Systems: This is a system which provides the user with organized information regarding specific demands. This system provides on-line information. This is very useful system for decision making.
Data Analysis Systems: These decision systems are based on comparative analysis and makes use of a formula. The cash flow analysis, inventory analysis and personnel inventory systems are examples of the analysis systems. This use of simple data processing tools and business rules are required to develop that system.
Information Analysis System: In this system the data is analysed and the information reports are generated. The decision makers use these reports for assessment of the situation for decision-making. The sales analysis, accounts receivables system, market research analysis are examples of such systems
Accounting Systems: These systems are not necessarily required for decision making but they are desirable to keep track of the major aspects of the business. These systems account items such as cash, inventory, and personnel and so on.
Model Based Systems: These systems are simulation models or optimization models fordecision making. It provides guidelines for operation or management. The product decision mix decisions, material mix, job scheduling rules are the examples. It is the most important type of DSS.
Solver Oriented DSS: It is performing certain computations for solving a particular type of problem. The solver could be economic order quantity procedure for calculating an optimal ordering quantity.
Suggestion System: There are used for operational purposes. They give suggestion to the management for a particular problem. This model helps in making required collection of data before taking a suitable decision.