Management Information System

1. 5 Management Information System Decision Support System Judi Prajetno Sugiono jpsugiono@gmail.com (2008)

2. Learning Objectives • Identify the changes taking place in the form and use of decision support in e-business enterprises. • Identify the role and reporting alternatives of management information systems.

3. Learning Objectives (continued) • Describe how online analytical processing can meet key information needs of managers. • Explain the decision support system concept and how it differs from traditional management information systems.

4. Learning Objectives (continued) • Explain how the following information systems can support the information needs of executives, managers, and business professionals: • Executive information systems • Enterprise information portals • Enterprise knowledge portals

5. Learning Objectives (continued) • Identify how neural networks, fuzzy logic, genetic algorithms, virtual reality, and intelligent agents can be used in business. • How can expert systems be used in business decision-making situations?

6. Section I • Decision Support in Business

7. Business and Decision Support • To succeed, companies need information systems that can support the diverse information and decision-making needs of their managers and business professionals.

8. Business and Decision Support (continued) • Information, Decisions, & Management • The type of information required by decision makers is directly related to the level of management and the amount of structure in the decision situations.

9. Business and Decision Support (continued)

10. Business and Decision Support (continued) • Information Quality • Timeliness • Provided WHEN it is needed • Up-to-date when it is provided • Provided as often as needed • Provided about past, present, and future time periods as necessary

11. Business and Decision Support (continued) • Information Quality (continued) • Content • Free from errors • Should be related to the information needs of a specific recipient for a specific situation • Provide all the information that is needed • Only the information that is needed should be provided • Can have a broad or narrow scope, or an internal or external focus • Can reveal performance

12. Business and Decision Support (continued) • Information Quality (continued) • Form • Provided in a form that is easy to understand • Can be provided in detail or summary form • Can be arranged in a predetermined sequence • Can be presented in narrative, numeric, graphic, or other forms • Can be provided in hard copy, video, or other media.

13. Business and Decision Support (continued)

14. Business and Decision Support (continued) • Decision Structure • Structured decisions • Involve situations where the procedures to be followed can be specified in advance • Unstructured decisions • Involve situations where it is not possible to specify most of the decision procedures in advance

15. Business and Decision Support (continued) • Decision structure (continued) • Semistructured decisions • Some decision procedures can be specified in advance, but not enough to lead to a definite recommended decision

16. Business and Decision Support (continued) • Amount of structure is typically tied to management level • Operational – more structured • Tactical – more semistructured • Strategic – more unstructured

17. Decision Support Trends • The growth of corporate intranets, extranets and the Web has accelerated the development and use of “executive class” information delivery & decision support software tools to virtually every level of the organization.

18. Management Information Systems • The original type of information system • Produces many of the products that support day-to-day decision-making • These information products typically take the following forms: • Periodic scheduled reports • Exception reports • Demand reports and responses • Push reports

19. Management Information Systems (continued) • Management reporting alternatives • Periodic scheduled reports • Prespecified format • Provided on a scheduled basis • Exception reports • Produced only when exceptional conditions occur • Reduces information overload

20. Management Information Systems (continued) • Management reporting alternatives (continued) • Demand reports and responses • Available when demanded. • Ad hoc • Push reports • Information is sent to a networked PC over the corporate intranet. • Not specifically requested by the recipient

21. Online Analytical Processing • Enables managers and analysts to interactively examine & manipulate large amounts of detailed and consolidated data from many perspectives • Analyze complex relationships to discover patterns, trends, and exception conditions • Real-time

22. Online Analytical Processing (continued) • Involves.. • Consolidation • The aggregation of data. • From simple roll-ups to complex groupings of interrelated data • Drill-Down • Display detail data that comprise consolidated data

23. Online Analytical Processing (continued) • Slicing and Dicing • The ability to look at the database from different viewpoints. • When performed along a time axis, helps analyze trends and find patterns

24. Decision Support Systems • Computer-based information systems that provide interactive information support during the decision-making process • DSS’s use • Analytical models • Specialized databases • The decision maker’s insights & judgments • An interactive, computer-based modeling process to support making semistructured and unstructured business decisions

25. Decision Support Systems (continued) • Designed to be ad hoc, quick-response systems that are initiated and controlled by the decision maker • DSS Models and Software • Rely on model bases as well as databases • Might include models and analytical techniques used to express complex relationships

26. Decision Support Systems (continued) • DSS models and software (continued) • Can combine model components to create integrated models in support of specific types of business decisions

27. Decision Support Systems (continued) • Geographic Information & Data Visualization Systems • Special categories of DSS that integrate computer graphics with other DSS features • GIS • A DSS that uses geographic databases to construct and display maps and other graphics displays

28. Decision Support Systems (continued) • Geographic information and data visualization systems (continued) • Data visualization systems • Represent complex data using interactive three-dimensional graphic forms • Helps discover patterns, links, and anomalies

29. Using Decision Support Systems • An interactive modeling process • Four types of analytical modeling • What-if analysis • Sensitivity analysis • Goal-seeking analysis • Optimization analysis

30. Using Decision Support Systems (continued) • What-If Analysis • End user makes changes to variables, or relationships among variables, and observes the resulting changes in the values of other variables

31. Using Decision Support Systems (continued) • Sensitivity Analysis • A special case of what-if analysis • The value of only one variable is changed repeatedly, and the resulting changes on other variables are observed • Typically used when there is uncertainty about the assumptions made in estimating the value of certain key variables

32. Using Decision Support Systems (continued) • Goal-Seeking Analysis • Instead of observing how changes in a variable affect other variables, goal-seeking sets a target value (a goal) for a variable, then repeatedly changes other variables until the target value is achieved

33. Using Decision Support Systems (continued) • Optimization Analysis • A more complex extension of goal-seeking • The goal is to find the optimum value for one or more target variables, given certain constraints

34. Contoh: PT. INDAH GELAS • PT Indah Gelas adalah suatu perusahaan yang memproduksi kaca berkualitas tinggi untuk digunakan sebagai jendela dan pintu kaca. Perusahaan ini memiliki tiga buah 'pabrik, yaitu pabrik 1 yang membuat bingkai aluminium, pabrik 2 yang membuat bingkai kayu, dan pabrik 3 yang digunakan untuk memproduksi kaca dan merakit produk keseluruhan. Saat ini perusahaan mendapat pesanan berupa dua macam produk baru yang potensial, yaitu pintu kaca setinggi 8 kaki dengan bingkai aluminium (produk 1), dan jendela berukuran 4 x 6 kaki dengan bingkai kayu (produk 2).

35. Goal: • Max. Profit: z=3x1+5x2 • Criterion: • x1<=4 • 2X2<=12 • 3x1+5x2<=18 • x1>=0 • X2>=0

36. Decision Making Under Risk

37. Decision Tree

38. Expected Value of Imperfect Information • Consider an imperfect source of information with a prediction record as shown in the table. • In the past 100 seasons of which 60 wet (W) and 40 dry (D), the source predicted a total of 46 wet seasons (w) of which 42 were wet (W) and 4 were dry (D). Of the 54 prediction of dry (d), 36 were dry (D) and 18 were wet (W).

40. Example: Investment • Additional Information • P(O|C)=0.8 P(O|L)=0.1 O=optimistic • P(P|C)=0.2 P(P|L)=0.9 P=pessimistic

42. Using Decision Support Systems (continued) • Data Mining for Decision Support • Software analyzes vast amounts of data • Attempts to discover patterns, trends, & correlations • May perform regression, decision tree, neural network, cluster detection, or market basket analysis

43. Executive Information Systems • EIS’s combine many of the features of MIS and DSS • Originally intended to provide top executives with immediate, easy access to information about the firm’s “critical success factors” • Alternative names • Enterprise information systems • Executive support systems

44. Executive Information Systems (continued) • Features of an EIS • Information presented in forms tailored to the preferences of the users • Most stress use of graphical user interface and graphics displays • May also include exception reporting and trend analysis

45. Enterprise Portals and Decision Support • A Web-based interface and integration of intranet and other technologies that gives all intranet users and selected extranet users access to a variety of internal & external business applications and services

46. Enterprise Portals and Decision Support (continued) • Business benefits • More specific and selective information • Easy access to key corporate intranet website resources • Industry and business news • Access to company data for stakeholders • Less time spent on unproductive surfing

47. Knowledge Management Systems • IT that helps gather, organize, and share business knowledge within an organization • Hypermedia databases that store and disseminate business knowledge. May also be called knowledge bases • Best practices, policies, business solutions • Entered through the enterprise knowledge portal

48. Section II • Artificial Intelligence Technologies in Business

49. Business and AI • “Designed to leverage the capabilities of humans rather than replace them,…AI technology enables an extraordinary array of applications that forge new connections among people, computers, knowledge, and the physical world.”

50. Artificial Intelligence • A field of science and technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics, & engineering • Goal is to develop computers that can think, see, hear, walk, talk, and feel • Major thrust – development of computer functions normally associated with human intelligence – reasoning, learning, problem solving