Chapter 9 : Enabling the Organization – Decision Making

 

Decision Support Systems

Models information to support managers and business professionals

during the decision making process

1.Sensitivity analysis – the study of the impact that changes 

in one (or more) parts of the model have on other parts of the 

model. Eg: What will happen to the supply chain if a tsunami 

in Sabah reduces holding inventory from 30% to 10%?

2.What-if analysis – checks the impact of a change 

in an assumption on the proposed solution. Eg: 

Repeatedly changing revenue in small increments to 

determine it effects on other variables.

3.Goal-seeking analysis – finds the inputs necessary to achieve

a goal such as a desired level of output. Eg: Determine how

many customers must purchase a new product to increase gross

profits to $5 million.

Executive Information Systems

A specialized DSS that supports senior level executives within the

organization

Most EISs offering the following capabilities :

Consolidation – involves the aggregation of information and

features simple roll-ups to complex groupings of interrelated

information. Eg: Data for different sales representatives can

be rolled up to an office level. Then state level, then a

regional sales level.

Drill-down – enables users to get details, and details of details,

of information. Eg: From regional sales data then drill down to 

each sales representatives at each office.

Slice-and-dice – looks at information from different

perspectives Eg: One slice of information could display all product

sales during a given promotion, another slice could display a 

single product’s sales for all promotions.

Artificial Intelligence (AI)

Intelligent system – various commercial applications of artificial

intelligence

Artificial intelligence (AI) – simulates human intelligence such as

the ability to reason and learn

Advantages: can check info on competitor

Eg: Business executives use genetic algorithm to help them decide

which combination of projects a firm should invest.

CRM systems depend on cluster analysis to segment customer

information and identify behavioral traits.

Eg: Consumer goods by content, brand loyalty or similarity 

Eg: Maytag uses association detection to ensure that each

generation of appliances is better than the previous

generation.

Eg: Kraft uses statistical analysis to assure consistent

flavor, color, aroma, texture, and appearance for all of it

lines of foods.