Chapter 10:

1. Chapter 10: Information and Decision Support Systems

2. Agenda • What is MIS? • Characteristics of MIS • Overview of Management Information Systems Applications • Outputs of MIS • Guidelines for Developing MIS reports • Decision Making and Problem Solving • Types of Decisions • Optimization, Satisficing, and Heuristic • Problem Solving Factors • What is a DSS? • Characteristics of a DSS • Capabilities of a DSS • Decision Support System Components • The Group Decision Support System • Capabilities of a GDSS • The Executive Support System • Capabilities of an ESS

3. What is MIS? • A Management Information System (MIS) is an organized method of providing past, present and projection information relating to internal operations and external intelligence. It supports the planning, control and operational functions of an organization by furnishing uniform information in the proper time-frame to assist the decision-maker. • A Management Information System provides managers with information and support for effective decision making and provides feedback on daily operations.

4. Characteristics of MIS • The most important source of internal data is the TPS • External data is not captured by the organization but are used by the MIS (i.e., customer, supplier and competitor information) • Produce scheduled, demand, and exception reports • Output reports with fixed and standard formats • Produce hard-copy and soft-copy reports • Use internal data stored in the computer system • Have reports developed and implemented by information systems personnel • Require formal requests from users

5. Overview of Management Information Systems Applications

6. Outputs of MIS • Scheduled reports are produced periodically or on a schedule, such as daily, weekly, or monthly (i.e., a monthly summary report that list total payroll costs). • A key indicator report is a special type of scheduled report that summarizes the previous day's critical activities (i.e., inventory levels or sales volume). • Demand reports are produced to give certain information at a manager's request (i.e., an inventory report for a particular item). • Exception reports are reports that are automatically produced when a situation is unusual or requires management action (i.e., a report for all customers that are late in their payments. • Drill Down Reports are reports that provide detailed data about a situation

7. Guidelines for Developing MIS reports • Tailor each report to user need: user involvement and input • Produce only needed reports • Pay attention to report content and layout: user friendly and right to the point • Use management by exception reporting: for problem solving or taking action • Set parameters carefully: proper number of reports • Produce all reports in a timely fashion: no outdated reports • Review reports

8. Functional Aspects of the MIS • Financial management information systems: profit/loss and cost systems, auditing, use and management of fund • Manufacturing management information systems: design and engineering, master production scheduling and inventory control (economic order quantity, reorder point, material requirements planning, manufacturing resource planning, just-in-time inventory), process control (computer-assisted manufacturing, computer-integrated manufacturing, a flexible manufacturing system), quality control and testing • Marketing management information systems: marketing research, product development, promotion and advertising, product pricing • Human resource management information systems: human resource planning, personnel selection and recruiting, training and skills inventory, scheduling and job placement, wage and salary administration • Other management information systems: accounting and geographic information system

9. Decision Making and Problem Solving • Problem solving is the most critical activity a business organization undertakes. Problem solving begins with decision making. • In the intelligence stage, potential problems and /or opportunities are identified and defined • In the designstage, alternative solutions to the problem are developed • In the choicestage, a course of action is selected • In the implementationstage, action is taken to put the solution into effect • In the monitoringstage, the implementation of the solution is evaluated to determine if the anticipated results were achieved and modify the process

10. Types of Decisions • Programmeddecisions are the ones that are made using a rule, procedure or quantitative method. For example, to say that inventory should be ordered when inventory levels drop to 100 units is to adhere to a rule. • Nonprogrammeddecisions deal with unusual or exceptional situations. In many cases these decisions are difficult to quantify. For example, determining the appropriate training program.

11. Optimization, Satisficing, and Heuristic • Optimizing is finding the best solution and is usually best fit for problems that can be modeled mathematically with a low degree of estimation risk. For example, find how many products an organization should produce to meet a profit goal. • Satisficing is finding a good, but not necessarily the best, solution. Satisficing does not look at all possible solutions, but at those that are likely to give good results. Satisficing is a good decision method because it it is sometimes too expensive to analyze every alternative to get the best solution. A satisficing example is when you have to select a location for a new plant. • Heuristics are guidelines or procedures that usually find a good solution by using “rules of thumb”.

12. Problem Solving Factors A number of factors are important in solving problems. An awareness of these factors will increase a manager's ability to properly analyze a problem and make good decisions. • Multiple Decision objectives. The goals of many organizations go beyond merely increased profits or reduced costs. • Increased alternatives. There are more alternatives to consider today, than few years ago. • Increased Competition. The number and type of competitors in the marketplace has made it difficult for many organizations to meet defined goals. • Social and political actions have a profound impact on problem solving. • Technology has provided managers with a variety of problem-solving tools and advances in its capabilities has increased decision alternatives. • International aspects like NAFTA and changes in Asia have increased the decision alternatives. • Time compression is a phenomenon whereby activities occur in a shorter time frame than was previously possible. • Creativity and imagination can differentiate one company from another.

13. What is a DSS? • A Decision Support System (DSS) is an interactive computer based information system with an organized collection of models, people, procedures, software, databases, telecommunication, and devices, which helps decision makers to solve unstructured or semi-structured business problems.

14. Characteristics of a DSS • Handle large amounts of data like database searches • Obtain and process data from different sources including internal and external data stored on mainframe systems and networks • Provide report and presentation flexibility to suit the decision maker's needs • Have both textual and graphical orientation like charts, trend lines, tables and more • Perform complex, sophisticated analysis and comparisons using advanced software packages • Support optimization, satisficing, and heuristic approaches giving the decision maker a great deal of flexibility in solving simple and complex problems • Perform "what-if" and goal-seeking analysis

15. Capabilities of a DSS • Support for problem-solving phases including the intelligence, design, choice, implementation and monitoring • Support for different decision frequencies that range from one-of-a-kind (i.e., merging with another company) to repetitive (i.e., how much inventory to purchase this week) • One-of-a-kind decisions are handled by an ad hoc DSS • Repetitive decisions are handled by institutional DSS • Support for different problem structures ranging from high structured and programmed to unstructured and non-programmed • Support for various decision-making levels including operational-level decisions, tactical-level decisions and strategic decisions

16. Decision Support System Components • The data subsystem includes the Database that allows the DSS to tap into information stored in the corporate database and the External Database Access that allows the use of external data sources. • The model base gives decision makers access to a variety of models and assist them in decision making. The model base can include the model management software (MMS) that coordinates the use of models in a DSS. • The user interface, also called the dialog management facility, it allows users to interact with the DSS to obtain information. The user interface requires two capabilities; the action language that tells the DSS what is required and pass the data to the DSS and the presentation language that transfers and presents the user results. • The DSS generator acts as a buffer between the user and the other DSS components, interacting with the database, the model base and the user interface.

17. The Group Decision Support System The Group Decision Support System (GDSS) is a CBIS that provides support in group decision-making settings. Characteristics of a GDSS: • Special design of software packages called groupware to allow two or more individuals in a group to effectively work together • Easy to use eliminating complexities that will make the system unusable • Flexible to allow two or more decision makers working on the same problem utilize their decision-making styles and preferences • Specific and general support capabilities • Anonymous input to foster objective and unbiased decision making • Reduction of negative group behavior that is counterproductive or harmful to effective decision making • Support of positive group behavior Software • Lotus Notes, Microsoft’s NetMeeting and Exchange

18. Capabilities of a GDSS • Decision-making aids include computer programs that assist in listing alternatives, analyzing potential solutions and ranking alternatives • Word processing and text manipulation allowing group members to access common files • Database and file manipulation allowing access to several types of databases and DBMSs • Spreadsheet capabilities to allow calculations and analysis in group meetings • Communications facilities that support teleconferencing and videoconferencing often called electronic meeting systems (EMS)

19. The Executive Support System The Executive Support System (ESS) is a CBIS used to assist senior-level executives within the organization Characteristics of a GDSS: • Easy to use eliminating complexities and saving time for decision makers who are often not technically oriented • Offer a wide range of computing resources including personal computers, mainframe systems and networks • Perform sophisticated data analysis including "what-if" and goal-seeking analysis as related to executive decisions • Offer a high degree of specialization allowing the decision maker to accurately see the "big picture" of the organization, the economy, and competitors • Provide flexibility because the decision making environments can change rapidly in the future • Provide comprehensive communications abilities with other managers around the world

20. Capabilities of an ESS • Support for defining the overall vision • Support for strategic planning • Support for strategic organizing and staffing • Support for strategic control • Support of crisis management

21. Points to Remember • What is MIS? • Characteristics of MIS • Overview of Management Information Systems Applications • Outputs of MIS • Guidelines for Developing MIS reports • Decision Making and Problem Solving • Types of Decisions • Optimization, Satisficing, and Heuristic • Problem Solving Factors • What is a DSS? • Characteristics of a DSS • Capabilities of a DSS • Decision Support System Components • The Group Decision Support System • Capabilities of a GDSS • The Executive Support System • Capabilities of an ESS

22. Group Assignment • Name five management information systems that can be used by the Home Depot. • Name one system (management information or decision support or group decision support or executive support) that can utilize the Internet technology for Home Depot. • Name the problems generated by standardizing the management information systems and decision support systems for every store of Home Depot located in the United States and other countries. • Name the differences between the decision support system and management information system for any organization. • Name the differences between the decision support system and group decision support system for any organization. • Name the differences between the decision support system and executive support system for any organization.