Modeling for DSS
A statistical model
(Regression
analysis)
Used for finding relationships among variables
This model is programmed in a DSS development software tool
A financial model Used for developing income statements & projecting financial
data for several years
This model is written with a special DSS financial planning
language called the interactive financial planning system (IFPS)
A linear
programming
Used to determine the best media selection.
It is solved using commercially available management science
software.
Some of the major issues involve din modeling are problem identification
and environmental analysis, variable identification, forecasting, the use of
multiple models, model categories, model management, and knowledgebased
modeling.
Identification of the problem and environment analysis
Identification of
the variables
It is the utmost importance.
Their relationships, influence diagrams, can be helpful in
this process.
Forecasting The results of a decision based on a model will usually
occur in the future.
Multiple Models DSS may include several models.
Categories of Models
DSS models are classified in seven groups.
Model
Management
Models like data must be managed.
Such management is done with the aid of model base
management software.
Knowledge base
modeling
DSS uses mostly quantitative models
Some knowledge is necessary to construct solvable models
Dynamic models
& static models
Dynamic models are used to evaluate scenarios that change
over time.
Example_ 5 year profit & loss projection.
Dynamic models are time dependent.
Example_ in determining how many checkout points should be
open in a supermarket.
They show trends & patterns over time.
They show average per period, moving averages, & comparative
analysis.
Example_ the transpiration model
Treating
certainty,
uncertainty, risk
When we build models, any of these conditions may occur.
Certainty models Everyone likes certainty models because they are easy to work
with and can yield optimal solutions.
Uncertainty
models
Managers attempt to avoid uncertainty as much as possible.
Risk Most major business decisions are made under assumed risk.
Several techniques can be used to deal with risk analysis.
Influence
Just as a flowchart can be use as a graphic representation of computer
program flow for design purposes, an influence diagram can be used to
map a model’s design.
The term influence refers to the dependency of a variable on the level of
another variable.
Rectangle A decision variable
Circle Uncontrollable or intermediate variable
Oval Result (Outcome) variable
Intermediate or final
The variables are connected with arrows, which indicate the direction of
the influence (relationship).
Arrows can be one way or two-way (Bi-directional), depending on the
direction of influence of a pair of variables.
Software
1 Analytica Analytica supports hierarchical diagrams, multidimensional
arrays, integrated documentation & parameter analysis
2 DPL This product provides a synthesis of influence diagrams and
decision trees
3 DS Lab
4 INDIA The solution process of this product transforms the original
problem into a new, reduced form in an attempt to determine
optimal policy
5 Precision
Tree
This creates influence diagrams & decision trees directly in
the Excel spreadsheet
Standard computer graphics software packages & computer aided
software engineering (CASE) packages can be used to create and
maintain influence diagram
A statistical model
(Regression
analysis)
Used for finding relationships among variables
This model is programmed in a DSS development software tool
A financial model Used for developing income statements & projecting financial
data for several years
This model is written with a special DSS financial planning
language called the interactive financial planning system (IFPS)
A linear
programming
Used to determine the best media selection.
It is solved using commercially available management science
software.
Some of the major issues involve din modeling are problem identification
and environmental analysis, variable identification, forecasting, the use of
multiple models, model categories, model management, and knowledgebased
modeling.
Identification of the problem and environment analysis
Identification of
the variables
It is the utmost importance.
Their relationships, influence diagrams, can be helpful in
this process.
Forecasting The results of a decision based on a model will usually
occur in the future.
Multiple Models DSS may include several models.
Categories of Models
DSS models are classified in seven groups.
Model
Management
Models like data must be managed.
Such management is done with the aid of model base
management software.
Knowledge base
modeling
DSS uses mostly quantitative models
Some knowledge is necessary to construct solvable models
Dynamic models
& static models
Dynamic models are used to evaluate scenarios that change
over time.
Example_ 5 year profit & loss projection.
Dynamic models are time dependent.
Example_ in determining how many checkout points should be
open in a supermarket.
They show trends & patterns over time.
They show average per period, moving averages, & comparative
analysis.
Example_ the transpiration model
Treating
certainty,
uncertainty, risk
When we build models, any of these conditions may occur.
Certainty models Everyone likes certainty models because they are easy to work
with and can yield optimal solutions.
Uncertainty
models
Managers attempt to avoid uncertainty as much as possible.
Risk Most major business decisions are made under assumed risk.
Several techniques can be used to deal with risk analysis.
Influence
Just as a flowchart can be use as a graphic representation of computer
program flow for design purposes, an influence diagram can be used to
map a model’s design.
The term influence refers to the dependency of a variable on the level of
another variable.
Rectangle A decision variable
Circle Uncontrollable or intermediate variable
Oval Result (Outcome) variable
Intermediate or final
The variables are connected with arrows, which indicate the direction of
the influence (relationship).
Arrows can be one way or two-way (Bi-directional), depending on the
direction of influence of a pair of variables.
Software
1 Analytica Analytica supports hierarchical diagrams, multidimensional
arrays, integrated documentation & parameter analysis
2 DPL This product provides a synthesis of influence diagrams and
decision trees
3 DS Lab
4 INDIA The solution process of this product transforms the original
problem into a new, reduced form in an attempt to determine
optimal policy
5 Precision
Tree
This creates influence diagrams & decision trees directly in
the Excel spreadsheet
Standard computer graphics software packages & computer aided
software engineering (CASE) packages can be used to create and
maintain influence diagram
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