Week 2 Management Support Systems (MSS)

1. Week 2Management Support Systems (MSS) Management and Decision Making Decision support framework Decision support technologies

2. DECISION MAKING AND COMPUTERIZED SUPPORT • Management Support Systems (MSS) • Objectives • Support managerial work. • Support decision making.

3. Managerial decision making and information systems • Management is a process by which organizational goals are achieved through the use of resources. • Resources: Inputs • Goal Attainment: Output • Measuring Success: Productivity = Outputs / Inputs

4. Managerial decision making and information systems • There are 4 major functions of manager in management theory i.e. planning, organizing, directing and controlling. • Managerial decision is getting more complex for some reasons: • larger alternative space for decision options due to improved modern technology and communication systems. • cost of making errors can be very large because of the complexity and magnitude of operations, automation and chain reaction or even legal issues. • continuous in fluctuating environment and more uncertainty in several impacting elements.

5. System Effectiveness and Efficiency Two Major Classes of Performance Measurement • Effectiveness is the degree to which goals are achievedDoing the right thing! • Efficiency is a measure of the use of inputs (or resources) to achieve outputsDoing the thing right! • MSS emphasize effectiveness.

6. Computer Applications Evolvingfrom TPS and MISProactive Applications (DSS) New modern management tools in • Data access • Online analytical processing (OLAP) • Internet / Intranet / Web for decision support

7. Need for Computerized Decision Support and the Supporting Technologies • Speedy computations. A computer allows the decision maker to perfom large numbers of computations very quickly and at low cost. Timely decicions are critical for many situations, ranging from a physician’s decision in an emergency room to that of a stock trader. • Increrased productivity. Assembling a group of decision makers, especially experts, may be costly. Computerized support can reduce the size of the group and enable the group members to be at different locations (sasving travel cost). Also, the productivity of staff support (such as financial and legal analysts) may be incresed.

8. Need for Computerized Decision Support and the Supporting Technologies • Technical support. Many decisions involve complex computations. Data can be store in different database and at Web sites possibly outside the organization. The data may include sound and graphics, and there may be need transmit them quickly from distant locations. Computers can search, store, and transmit needed data quickly and economically. • Overcoming cognitive limits in processing and stroge. According to Simon (1997), the human mind is limited in its ability to process and information. Also, people may have difficulty in recalling information in an errorfree fashion when it is needed.

9. Decision-making Process

10. Three Phase Decision-making Process (Simon) • Intelligence--searching for conditions that call for decisions • Design--inventing, developing, and analyzing possible courses of action • Choice--selecting a course of action from those available

11. Decision Making Along a Continuum (Simon) Highly Unstructured (Nonprogrammed) Decisions Highly Structured (Programmed) Decisions Semistructured Decisions

12. Decision Making Problem (Simon) • Unstructured problem has no structured phases • problems often solved with human intuition • Semistructured problem has some (or some parts with) structured phases • solve with standard solution procedures and human judgment • Structuredproblem has all structured phases • procedures for obtaining the best solution are known • objectives are clearly defined • management support systems can be useful

13. Decision Support Technologies Management Support Systems (MSS) • Decision Support Systems (DSS) • Group Support Systems (GSS) • Enterprise (Executive) Information Systems (EIS) • Enterprise Resource Planning (ERP) and Supply-Chain Management (SCM) • Knowledge Management Systems • Expert Systems (ES) • Artificial Neural Networks (ANN) • Hybrid Support Systems • Intelligent DSS

14. Decision Support Framework Type of Control Operational Managerial Strategic Control Control Control Type of Decision Budget analysis, short-term forecasting, personnel reports, make or buy Accounts receivable, order entry Financial management (investment), warehouse location, distribution systems Structured Semistructured Unstructured Credit evaluation, budget preparation, plant layout, project scheduling, reward system design Building new plants, acquisition, new product planning, compensation planning, quality assurance planning Production scheduling, inventory control Selecting cover for magazines, buying software, approve loans Negotiating, recruiting an executive, buying hardware R&D planning, new technology development, social responsibility planning

15. Types of decision – The technology support Type of Control Operational Managerial Strategic Control Control Control Technology support needed Type of Decision Structured Semistructured Unstructured MIS, TPS DSS, KMS IDSS, ES, ANN, FL, CBR MIS, Management Science Management Science, DSS, ES, EIS EIS, ES, ANN, KMS Technology support needed

16. Typical Business Decision Aspects • Decision may be made by a group • Group member biases • Several, possibly contradictory objectives • Many alternatives • Results can occur in the future • Attitudes towards risk • Gathering information takes time and expense • Too much information • “What-if” scenarios • Trial-and-error experimentation with the real system may result in a loss • Changes in the environment can occur continuously