The main objective of managing a Decision Support System (DSS) in a firm or business is to fasten a decision-making process. This decision-making process sometimes can face challenges such as inadequate information and resistance among others. However, with the DSS system, the entire decision-making process runs smoothly. It takes consideration options, time constraints, and known risks. In addition, the process makes use of critical tools such as business intelligence, business rules, artificial intelligence, continuous improvement, and predictive analytics. This paper will explain the DSS and how it is useful in today’s business activities. In addition, it will also describe characteristics, structures, and its components. There are several types of the decision support system that will be explained in details in the research. Its kinds will be provided based on a user relationship and on a mode of assistance. The benefits and applications of the system will also be discussed in details in this chapter.
Management is the coordination and organization of all activities in a business in order to fulfill its objectives. Management can take several forms that depend on the type and objectives of firms. Business management often includes several factors of production such as materials, money, and machines. For the management to be successful, there are several systems that are put in place. Among them, there is a decision support system that treats the solution made in a business as a reusable asset. Moreover, it introduces technology to automate the decision-making process. The approach of automating decision-making is mostly applicable to larger organizations especially the ones that deal with banking, insurance, and financial services. The concept is critical in businesses that deal with high-volume decision making. The reason is that it makes the process to be efficient, consistent, and easy. Therefore, this computer program makes the decision process easier.
The decision support system is typically intended to analyze data and present them to knowledge workers. Therefore, they can easily make decisions in environments that are constantly changing and unpredictable. Decision support systems can be either fully controlled by humans or completely computerized. In some cases, they are a combination of both human beings and computers. The well designed DSS is one that can assist decision makers gather information from the compilation of raw data, personal experiences, documents or businesses models and use that information to solve problems and make decisions. The paper will explain the decision support system, its characteristics, structure, and component. In addition, the application, types, and benefits of this system will be also explained.
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There were many sources that were explored when writing this paper. In the research, an overview of all sources used during the research of the Decision Support System has been provided. The paper is started by introducing what the DSS is. According to Hübner (2011), the DSS is a system that helps business to make effective decisions easily. Before it has been discovered, decision-making was a long process that faces many challenges. Some of major challenges that managers faced when making decisions are opposite to other employees, inadequate information, and limited time. There are several reasons that made employees resist new changes in their organization. They include job security where they fear losing their jobs. Other business may face challenges due to the lack of consultation when decisions are made. Another reason that results in the opposition is a lack of expertise when making a decision.
There are also several sources applied to explore the characteristics of the DSS system. According to Hübner (2011), it is important to understand the characteristics of the DSS. The reason is that it has become easier to differentiate it with other systems being used in the market. The main feature of the DSS includes facilitation that helps the system to get the accurate data for decision-making. Other features of the system are the interaction, ancillary, task-orientation among others. All the characteristics of this system perform different tasks that are important to human resources management department.
According to Turban, the DSS has four components and the structure including data management, model management, knowledge management, and interface management. The data that might be gathered and presented by the DSS are evaluating the company’s assets and comparing information from different figures. The information also involves giving the past experience of a certain context and coming up with different viable decisions. The various categories of DSS suit different companies. There are several factors that affect the choice of the DSS in a business. Among them, there is the size of business. A smaller business cannot use similar DSS with a larger organization. Another great factor that influences the choice of the DSS is the targeted people. There is the DSS type that suits internal teams while others are the best for external teams.
According to Power (2012), there are many sectors that use the DSS to make a critical decision within their organization. These sectors initially have faced challenges when making decisions. Among them, there is a health sector. The latter one uses the system to make a medical diagnosis. The system is also used to determine the best method of supplying medical equipment to their stations without a delay. Another sector that is embracing this technology is the real estate. The system can be used in running daily activities of this area. Financial institutions such as banks, insurance, and micro-finance are also embracing the technology. The system plays a major role when making any decision about credibility of loans applicants. Another important sector of economy that is using the DSS is the forest. Here, activities such as tree cutting and transportation are closely monitored. Therefore, it has greatly reduced illegal logging (Turban, 2010).
Since the DSS has been introduced in the market, companies have noted several benefits of the system (Burstein & Holsapple, 2008). Among the major notable advantages there is a decision-making process that has been improved. Companies can make the decision easily unlike how it was in the past. Faster decision-making means that all departments in the organization will run smoothly. Therefore, it has a great impact on the amount of profits made. Another benefit is enhancing communication among the staff.
The DSS is a computer program that analyzes business information and presents it to a user in a way making the decision-making process easy (Hübner, 2011). The data are collected during a normal business operation. Typically, the kind of information that is gathered and presented would be as follows. Total sales made during a week and the comparison with other weeks, projected revenues made on selling new products, total company assets including the fixed and current assets, and the consequences of different decision alternatives considering their experience.
The DSS sometimes may present the data graphically and exclude artificial intelligence or an expert system. The program may aim at the company’s executives and other groups such as the subordinates.
The question is how a person can know the DSS. This query is critical because knowledge transfer is important when we categorize and classify. Therefore, it is possible to distinguish the DSS from other systems.
Here, there are the distinguished features of the DSS:
The above feature ensures that the DSS system provide the accurate information and data for the decision to be made in future. The decision-making process is supposed to coincide when using the support system (Hübner, 2011). It defines the person’s activities that the person must use before making a decision for using this system. The DSS facilitates data gathering from different individuals to ensure the following fact. The decision maker does not spend a lot of time gathering data. Many people can use the system to pass out information through a pipeline to reduce the time spent in the decision-making process.
Interaction is also an important feature of DSS. Many businesses that are using it use extensive technology, decision-making software, and personal computers. When various people in the company access the software and put information about the decision to be made, the interaction occurs among them. Sometimes, the person being responsible for decision making in the business is not allowed to visit various branches that the business has. Therefore, an only way that he or she can interact with his or her colleagues in the other businesses is through DSS.
It is another common element of the DSS. Task-oriented means that the system can handle more than one activity per time. Most firms provide inputs for more than one outcome being related to various decisions (Turban, 2010). Hence, the multiple features in the system enable users to handle this kind of information.
Ancillary is another characteristic of DSS. The features enable the DSS to support the decision-making process in the organization. However, the system is not intended to replace decision makers. It only makes the decision-making process easy.
The DSS is an independent system that replicates or collects data from other information systems. The system is intended for a regular use. Management can use the system to make several decisions in the company. The major reason the DSS is used is to improve the accuracy, quality, timeliness, and overall effectiveness of specific decisions.
The DSSs vary greatly in their complexity and application. Nevertheless, these systems share the same components being critical for people to know and understand. They have four features: model management, data management, user interface management, and knowledge management (Turban, 2010).
The major functions of the above component are to store and maintain the data being required by the DSS to use. Hence, the data management component consists of both DSS database management systems and DSS information. The information that is used in the DSS comes from sources such as follows.
Organization data is the type of data being available within the organization. The DSS can be programmed in a way that it can retrieve the useful information from the database or data warehouse. Later, it can be used for making decision. Sometimes, users can copy data directly to the DSS database in order to save searching time.
The data can come from as follows:
This component consists of the DSS models and the DSS model management system. A model can be defined as a representation of some events, facts or situations. Templates are mostly used by people for experimentation. They can take various forms depending on the needs of people (Turban, 2010).
In any business, models can be used to represent the relationships of variables. For example, businessmen can use statistical models for the analysis of variance to determine whether the TV, newspapers, billboards, and posters are equally effective modes of advertising for an increase of sales.
DSS is helpful in various decision-making processes for using models that analyze data in different ways. The template used in DSS depends on the type of decision to be made and the kind of analysis being required. For example, it can be used to determine an effect of changing one variable to the other one or finding a profitable solution given the limited resources and operating restrictions. The DSS can also use a spreadsheet such as Excel for analysis.
The components allow a person to communicate with the DSS. It consists of user interface management system. It is being a component that allows a person to combine his or her knowledge of processing and storing capabilities of his or her computer. This element is the one that the individual predicts when he or she enters commands, information, and models. It is the only component of the system that the person can have a direct contact with. For it to be effective, the DSS should have a well-designed user interface. Therefore, the best one should be the one that uses your methods and terminology. It is consistent, simple, flexible, and also adaptable.
In the organization, the DSS performs three major tasks that are as follows:
The above characteristic is like of that of the expert system providing the information about the related complex data. It gives some rules that prevent a possible solution as well as an alternative method to be used to solve the issue (Hübner, 2011). A good example is when the effects of the price reduction are analyzed. The DSS should predict if the volume of activity is more than what the current staff can serve.
Decision support systems are classified into different categories although there is no specific universally accepted classification. They can be categorized into two major categories being based on a relationship with users (active/ passive/ cooperative) and based on the mode of assistance (data-driven, communication-driven, mode-driven, and document-driven).
The majority of time, this type of DSS aims at internal teams and partners. It is used to help to conduct meetings. The client and web server are the types of technology used to run this type of DSS. For example, instant and chats’ messaging software, net-meeting, and online collaboration systems are commonly used.
The above type of DSS is more common for larger groups. They are usually used to search for web pages. The client and web system are the common technology in this DSS.
Often, this type of DSS aims at managers, products, and also subordinates. It is used to get specific answers to issues searched in the database.
This type of DSS is the most complex one. It is used to analyze decisions before they are made. They are used by the employees, managers or other people who interact with the business for different purposes depending on how the model is set-up.
The knowledge-driven DSSs catch broad ranges covering the use of users within the organization setups and also others that interact with the firm such as consumers and suppliers among others. It is used to provide advice to the management or choose services or products. The type of technology that is used to deploy this system is web, server systems, and software running.
According to the user relationship classification, there are three different classes of the decision support system. These three classes include; passive, active and cooperative ones. It is important to note that they apply to the concept of decision support systems in relation to: a specific decision context, a specifically targeted preference, a knowledge base, and an engine for analyzing and displaying decision options.
A passive DSS only provides assistance in the process of decision-making. However, it does not give any explicit recommendations or alternative solutions to the problem in question. The passive DSS only maintains the firm at its current position. The reason is that it does not suggest ways in which the firm can improve its activities or operations.
The active DSS offers both the recommendations and alternative solutions in a decision-making process. It identifies gaps in the firm’s operations and comes up with suggestions on how to strengthen the company’s position. Managers come up with some ways of alleviating problems in the organization keeping in mind its objectives. They identify patterns and alternatives and incorporate them into the active DSS. The latter one, in turn, determines whether such problems and gaps exist in relation to the current position of the company.
The functions of the Cooperative DSS are similar to those ones of the active DSS. However, the only difference is that it allows decision makers to refine and revise their suggestions (Hübner, 2011). The cooperative system improves and completes the suggestions of an advisor. It sends them back to the latter one for validation. If no decision is met, the process starts all again until it is made.
Decision support systems can be used in any knowledge domain to make the decision-making process easy. Many sectors of economy are embracing this technology in order to improve their overall performance. The following ones are some of the ways that the DSS has been applied in various fields.
The DSS is applied in medicine to make a medical diagnosis. Such decision support systems are called clinical decision support systems (CDSS). If used properly, CDSS has the potential to change a perspective in medical training and practice (Power, 2012). Evolution of CDSS usually takes place in four stages. The primitive step is standalone and does not support integration. The second one allows for integration with other medical systems. The third step is standard-based; and the final and fourth stages are model based.
Business managers can take building the DSS according to their needs and objectives in order to achieve optimal decision-making. It can be applied in different areas of operations of business to improve decision-making. For example:
Inventory management: the DSS can be quite useful in evaluating and handling stock stored in the company or any other firm assets that can be optimized or moved around. In simple terms, the DSS can help business managers in making decisions on the optimal supply chain to use.
Sales optimization and projection: the DSS can be used as a tool to analyze sales data for making predictions and also monitoring the sales pattern. With this information, managers make decisions about the best resource allocation, which will bring in positive results for the organization.
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The DSS can be used by realtors to monitor and manage a daily running of their businesses. The information from each property can be processed and used to make decisions not only on the routing basis of the company but also for a future planning for the organization (Turban, 2010).
With the help of DSS, a financial institution can verify the credit worthiness of a person before he or she applies for a loan. Officers can also use the DSS to verify whether a certain firm bidding for different projects is competitive in terms of its costs
Forests are endangered across the world. Illegal human activities such as logging and charcoal burning are reducing forest at a high rate. Therefore, there is a need to conserve them using proper technology. The DSS has come in handy in forest conservation and management. It monitors important activities in the forest such as logging, protection, and also log transportation. Hence, it has helped a lot in conserving the forest across the world. The reason is that the forest departments can access information being initially difficult to get when making decisions. As a result, they have improved their services.
Transport companies use the DSS to assess and test the transport equipment on a regular basis. It helps organizations avoid any delays and inconveniences that may be caused by undetected worn out transport equipment. For example, the Canadian National Railway relies on the DSS to test the equipment and reduce incidences of derailments that may be brought about by defective railroads.
The DSS can predict the demand for water in a particular region. It is possible through the use of geographical and historical information about the water consumption of the area to forecast and plan for future consumption of water.
In the situations where reaching a decision is difficult, the system assists by giving other alternatives. They will best suit the firm’s operations (Burstein & Holsapple, 2008). It improves the level of decision-making and is also faster compared to human performance.
Such benefit can be seen in cases where the active and collaborative DSS is used. It reduces the pressure on the decision maker to reach a decision.(c) It reduces the time of training because the programs are equipped with experiences from experts.(d) It enhances organizational control because the system helps managers arrive at an optimal solution. This benefit helps managers to have a better control of the company.(e) Companies that use DSS have a competitive advantage over their competitors. The reason is that with the help of the system they can make projections and decisions that will produce results.
The concept of decision support systems (DSS) is indeed very special with each theory having various definitions. These ones are based on the theory point of view. The system has many sectors in making accurate decisions easily. Therefore, these ones have a positive impact on these areas. The reason is that they do not face opposition when making the decision thus improving the production. Some of the sectors that have embraced this technology are: health, forest, financial, real estate, and many others. However, the decision on Support Systems does not only make any decision-making process easy for advisors and managers, but also provide the company with different perspectives of solutions to the particular problem. In this day and era, the world is growing and changing fast.
Therefore, incorporating and building the DSS for companies is probably one of the best ways to enhance the performance of the organization. Employees working within firms that have a well-designed DSS also experience a better and more satisfied decision making. The reason is that they do not have to do all thinking and coming up with ideas to improve the organization. There are many benefits of using the DSS system. Bigger organizations are using it because it makes the decision-making process faster and easier.