Transcript Slide 1

Decision Making
&
Information Systems
• Good decision-making and problem-solving skills are the
key to developing effective information and decision
support systems
• Define the stages of decision making
• Discuss the importance of implementation and monitoring
in problem solving
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• The management information system (MIS) must provide
the right information to the right person in the right
fashion at the right time
• Explain the uses of MISs and describe their inputs and
outputs
• Discuss information systems in the functional areas of
business organizations
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• Decision support systems (DSSs) are used when the
problems are unstructured
• List and discuss important characteristics of DSSs that give
them the potential to be effective management support tools
• Identify and describe the basic components of a DSS
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• Specialized support systems, such as group support
systems (GSSs) and executive support systems (ESSs),
use the overall approach of a DSS in situations such as
group and executive decision making
• State the goals of a GSS and identify the characteristics that
distinguish it from a DSS
• Identify the fundamental uses of an ESS and list the
characteristics of such a system
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Decision Making and Problem Solving:
Decision Making as a Component of
Problem Solving
• Decision-making phase: first part of problem-solving
process
• Intelligence stage: potential problems or opportunities are
identified and defined
• Design stage: alternative solutions to the problem are
developed
• Choice stage: requires selecting a course of action
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Figure 10.1: How Decision Making
Relates to Problem Solving
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Decision Making as a Component of
Problem Solving (continued)
• Problem solving: a process that goes beyond decision
making to include the implementation stage
• Implementation stage: a solution is put into effect
• Monitoring stage: decision makers evaluate the
implementation
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Programmed Versus Nonprogrammed
Decisions
• Programmed decisions
• Decision made using a rule, procedure, or quantitative
method
• Easy to computerize using traditional information systems
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Programmed Versus Nonprogrammed
Decisions (continued)
• Nonprogrammed decisions
• Decision that deals with unusual or exceptional situations
• Not easily quantifiable
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Optimization, Satisficing, and Heuristic
Approaches
• Optimization model: a process to find the best solution,
usually the one that will best help the organization meet
its goals
• Satisficing model: find a good—but not necessarily the
best—problem solution
• Heuristics: commonly accepted guidelines or procedures
that usually find a good solution
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An Overview of Management
Information Systems: Management
Information Systems in Perspective
• A management information system (MIS) provides
managers with information that supports effective
decision making and provides feedback on daily
operations
• The use of MISs spans all levels of management
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Figure 10.3: Sources of Managerial
Information
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Inputs to a Management Information
System
• Internal data sources (TPSs and ERP systems and related
databases; data warehouses and data marts; specific
functional areas throughout the firm)
• External data sources (Customers, suppliers, competitors,
and stockholders whose data is not already captured by
the TPS; the Internet; extranets)
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Outputs of a Management Information
System
• Scheduled report: produced periodically, or on a
schedule
• Key-indicator report: summary of the previous day’s
critical activities
• Demand report: developed to give certain information at
someone’s request
• Exception report: automatically produced when a
situation is unusual or requires management action
• Drill-down reports: provide increasingly detailed data
about a situation
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Characteristics of a Management
Information System
• Fixed format, standard reports
• Hard-copy and soft-copy reports
• Uses internal data
• User-developed reports
• Users must request formal reports from IS department
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Functional Aspects of the MIS
• Most organizations are structured along functional lines
or areas
• MIS can be divided along functional lines to produce
reports tailored to individual functions
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Figure 10.5: MIS is an integrated collection
of functional information systems
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Financial Management Information
Systems
• Financial MIS: provides financial information to all
financial managers within an organization
• Profit/loss and cost systems
• Auditing
• Uses and management of funds
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Figure 10.6: Overview of a Financial
MIS
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Manufacturing Management
Information Systems
• The manufacturing MIS subsystems and outputs monitor
and control the flow of materials, products, and services
through the organization
• Design and engineering
• Master production scheduling and inventory control
• Process control
• Quality control and testing
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Figure 10.7: Overview of a
Manufacturing MIS
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Marketing Management Information
Systems
• Marketing MIS: supports managerial activities in
product development, distribution, pricing decisions, and
promotional effectiveness
• Marketing research
• Product development
• Promotion and advertising
• Product pricing
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Figure 10.10: Overview of a Marketing
MIS
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Human Resource Management
Information Systems
• Human resource MIS: concerned with activities related
to employees and potential employees of an organization
• Human resource planning
• Personnel selection and recruiting
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Human Resource Management
Information Systems (continued)
• Training and skills inventory
• Scheduling and job placement
• Wage and salary administration
• Outplacement
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Figure 10.13: Overview of a Human
Resource MIS
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Other Management Information
Systems
• Accounting MIS: provides aggregate information on
accounts payable, accounts receivable, payroll, and many
other applications
• Geographic information system (GIS): capable of
assembling, storing, manipulating, and displaying
geographic information
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Figure 10.4
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Figure 10.4 cont’d
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Functional Aspects of the MIS
Functional Areas
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•
•
•
Finance
Manufacturing
Marketing
Human Resources
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MIS is an integrated collection
of functional systems, each
supporting particular
functional areas.
Figure 10.5
•Financial statements
•Uses and managements
of funds
•Financial stats for control
•Quality Control reports
•Process Control reports
•JIT reports
•Production Schedule
•CAD output
•Sales by customer
•Sales by salesperson
•Sales by product
•Pricing report
•Total service calls
•Customer satisfaction
•Benefit reports
•Salary surveys
•Scheduling report
•Job applicant profiles
•Needs and planning report
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An Overview Of Decision Support
Systems
• A DSS is an organized collection of people, procedures,
software, databases, and devices used to support problemspecific decision making and problem solving
• The focus of a DSS is on decision-making effectiveness
when faced with unstructured or semistructured business
problems
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Characteristics of Decision Support
Systems
• Handle large amounts of data from different sources
• Provide report and presentation flexibility
• Offer both textual and graphical orientation
• Support drill-down analysis
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Characteristics of Decision Support
Systems (continued)
• Perform complex, sophisticated analysis and comparisons
using advanced software packages
• Support optimization, satisficing, and heuristic
approaches
• Simulation
• What-if analysis
• Goal-seeking analysis
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Capabilities of a Decision Support
System
• Support all problem-solving phases
• Support different decision frequencies
• Support different problem structures
• Support various decision-making levels
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The DSS Focuses on Semistructured Problems
Computer
Solution
Structured
Manager + Computer
(DSS)
Solution
Semistructured
Manager
Solution
Unstructured
DEGREE OF PROBLEM STRUCTURE
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Peter Keen Believes That
a DSS Should:
1. Assist in solving semistructured
problems
2. Support, not replace, the manager
3. Contribute to decision effectiveness, rather than
efficiency
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A DSS Model
Environment
Individual
problem
solvers
Report
writing
software
Other
group
members
GDSS
GDSS
software
software
Mathematical
Models
Database
Decision
support
system
Environment
Legend:
Data
Communication
Information
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Figure 10.15: Decision-Making Level
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Table 10.3: Comparison of DSSs and
MISs
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Table 10.3: Comparison of DSSs and
MISs (continued)
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Components of a Decision Support
System
• Model base: provides decision makers access to a variety
of models and assists them in decision making
• Database
• External database access
• Access to the Internet and corporate intranet, networks,
and other computer systems
• Dialogue manager: allows decision makers to easily
access and manipulate the DSS and to use common
business terms and phrases
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Figure 10.16: Conceptual Model of a
DSS
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Group Support Systems
• Group support system (GSS)
• Consists of most elements in a DSS, plus software to
provide effective support in group decision making
• Also called group support system or computerized
collaborative work system
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Characteristics of a GSS That Enhance
Decision Making (continued)
• Anonymous input
• Reduction of negative group behavior
• Parallel communication
• Automated record keeping
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Executive Support Systems
• Executive support system (ESS): specialized DSS that
includes all hardware, software, data, procedures, and
people used to assist senior-level executives within the
organization
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Executive Support Systems in
Perspective
• Tailored to individual executives
• Easy to use
• Drill-down capabilities
• Support need for external data
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Executive Support Systems in
Perspective (continued)
• Can help when uncertainty is high
• Future-oriented
• Linked to value-added processes
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Capabilities of Executive Support
Systems
• Support for defining an overall vision
• Support for strategic planning
• Support for strategic organizing and staffing
• Support for strategic control
• Support for crisis management
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Summary
• The decision-making phase of the problem-solving
process includes three stages: intelligence, design, and
choice
• A management information system (MIS) provides
managers with information that supports effective
decision making and provides feedback on daily
operations
• A financial MIS provides financial information to all
financial managers within an organization
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Summary (continued)
• The manufacturing MIS subsystems and outputs monitor
and control the flow of materials, products, and services
through the organization
• A marketing MIS supports managerial activities in
product development, distribution, pricing decisions, and
promotional effectiveness
• A human resource MIS is concerned with activities
related to employees and potential employees of an
organization
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Summary (continued)
• A DSS is an organized collection of people, procedures,
software, databases, and devices used to support decision
making and problem solving
• A group support system (GSS) consists of most elements
in a DSS, plus software to provide effective support in
group decision making
• An executive support system (ESS) is a specialized DSS
that includes all hardware, software, data, procedures, and
people used to assist senior-level executives within the
organization
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Review
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The decision making process.
MIS provides feedback on daily operations.
5 types of MIS reports.
MIS is used in functional units of an organization.
DSS supports problem-specific non-programmed decision
making.
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Summary (continued)
• We are indeed in the information age.
• All businesses must coordinate their use of IT,
information, and people (The MIS Challenge).
• The many forces shaping business today include:
•
•
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•
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Globalization
Competition
Information as a key resource
The virtual workplace and telecommuting
Electronic commerce
Knowledge worker computing.
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Summary (continued)
• Businesses are using information technology (IT) in three
ways:
• to support information-processing tasks
• as an enabler of innovation
• as a collapser of time and space
• Information is also a key resource in business today. The
value of information can be defined according to its
dimensions:
• Time (when)
• Content (what)
• Form (how)
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Summary (continued)
Finally, people are the most important resource
in any organization. As an information-literate
knowledge worker, you have 5 charges:
1.Define what information you need
2.Know how and where to obtain information
3.Understand the meaning of information
4.Act appropriately based on information
5.Use information legally and ethically
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