Decision support systems vary greatly in application and complexity, but they all share specific features. A typical Decision support systems has four components: data management, model management, knowledge management and user interface management.
4.1 Data Management Component
The data management component performs the function of storing and maintaining the information that you want your Decision Support System to use. The data management component, therefore, consists of both the Decision Support System information and the Decision Support System database management system. The information you use in your Decision Support System comes from one or more of three sources:
-Organizational information; you may want to use virtually any information available in the organization for your Decision Support System. What you use, of course, depends on what you need and whether it is available. You can design your Decision Support System to access this information directly from your company’s database and data warehouse. However, specific information is often copied to the Decision Support System database to save time in searching through the organization’s database and data warehouses.
-External information: some decisions require input from external sources of information. Various branches of federal government, Dow Jones, Compustat data, and the internet, to mention just a few, can provide additional information for the use with a Decision Support System.
-Personal information: you can incorporate your own insights and experience your personal information into your Decision Support System. You can design your Decision Support System so that you enter this personal information only as needed, or you can keep the information in a personal database that is accessible by the Decision Support System.
4.2 Model Management Component
The model management component consists of both the Decision Support System models and the Decision Support System model management system. A model is a representation of some event, fact, or situation. As it is not always practical, or wise, to experiment with reality, people build models and use them for experimentation. Models can take various forms.
Businesses use models to represent variables and their relationships. For example, you would use a statistical model called analysis of variance to determine whether newspaper, TV, and billboard advertizing are equally effective in increasing sales.
Decision Support Systems help in various decision-making situations by utilizing models that allow you to analyze information in many different ways. The models you use in a Decision Support System depend on the decision you are making and, consequently, the kind of analysis you require. For example, you would use what-if analysis to see what effect the change of one or more variables will have on other variables, or optimization to find the most profitable solution given operating restrictions and limited resources. Spreadsheet software such as excel can be used as a Decision Support System for what-if analysis.
The model management system stores and maintains the Decision Support System’s models. Its function of managing models is similar to that of a database management system. The model management component can not select the best model for you to use for a particular problem that requires your expertise but it can help you create and manipulate models quickly and easily.
4.3 User Interface Management Component
The user interface management component allows you to communicate with the Decision Support System. It consists of the user interface management system. This is the component that allows you to combine your know-how with the storage and processing capabilities of the computer.
The user interface is the part of the system you see through it when enter information, commands, and models. This is the only component of the system with which you have direct contract. If you have a Decision Support System with a poorly designed user interface, if it is too rigid or too cumbersome to use, you simply won’t use it no matter what its capabilities. The best user interface uses your terminology and methods and is flexible, consistent, simple, and adaptable.
For an example of the components of a Decision Support System, let’s consider the Decision Support System that Land’s End has tens of millions of names in its customer database. It sells a wide range of women’s, men’s, and children’s clothing, as well various household wares. To match the right customer with the catalog, land’s end has identified 20 different specialty target markets. Customers in these target markets receive catalogs of merchandise that they are likely to buy, saving Lands’ End the expense of sending catalogs of all products to all 20 million customers. To predict customer demand, lands’ end needs to continuously monitor buying trends. And to meet that demand, lands’ end must accurately forecast sales levels. To accomplish theses goals, it uses a Decision Support System which performs three tasks:
-Data management: The Decision Support System stores customer and product information. In addition to this organizational information, Lands’ End also needs external information, such as demographic information and industry and style trend information.
-Model management: The Decision Support System has to have models to analyze the information. The models create new information that decision makers need to plan product lines and inventory levels. For example, Lands’ End uses a statistical model called regression analysis to determine trends in customer buying patterns and forecasting models to predict sales levels.
-User interface management: A user interface enables Lands’ End decision makers to access information and to specify the models they want to use to create the information they need.
4.4 Knowledge Management Component
The knowledge management component, like that in an expert system, provides information about the relationship among data that is too complex for a database to represent. It consists of rules that can constrain possible solution as well as alternative solutions and methods for evaluating them.
For example, when analyzing the impact of a price reduction, a Decision Support System should signal if the forecasted volume of activity exceeds the volume that the projected staff can service. Such signaling requires the Decision Support System to incorporate some rules-of-thumb about an appropriate ratio of staff to sales volume. Such rules-of-thumb, also known as heuristics, make up the knowledge base.