By: Mr Hashem Alaidaros MIS 211 Lecture 2 Title: General System Model of a Firm Case Study: Supermarket By: Mr Hashem Alaidaros MIS 211

Main points Physical and Virtual System General System Model (GSM) Case Study: GSM of Supermarket Physical Resources Management Information Processor Standards MIS

Physical and Virtual System Physical System of the firm consists of tangible resources. Examples: materials, personnel, machines and money Virtual system consists of the information resources that are used to represent the physical system Example: Computer-based file An inventory storeroom containing inventory items is a physical system, and the computer-based inventory master file is a virtual system that represent the physical system

The firm and its environment The physical system of a firm is an open system in that it interfaces with its environment Firms take resources from their environments, transforms these resources into products and services, and return the transformed resources to the environment Figure 2.1 shows this flow of resources from the environment, through the firm, and back to the environment The flow of physical resources is at the bottom and the flow of conceptual (virtual) resources is at the top

General System Model Figure 2.1 shows the following two flows: The Physical Resource Flow: includes personnel, material, machines, and money The Virtual Resource Flow: The arrows in the upper part of the figure show data, information, and decision-related information. At right, a 2-way flow of data and information that connects the firm to its environment

GSM The Firm's Control Mechanism: The elements that enable the firm to operate as a closed-loop system are shown in the upper portion of the diagram The Feedback (close) Loop: Data are gathered from the firm and from the environment and entered into the information processor, which transform it into information. The information is made available to managers to make decisions to affect necessary changes in the physical system

GSM Standard: Managers is guided in its decision making by the firm’s performance standard. These performance standards can also be used by the information processor to determine when the firm is not performing as planned.

GSM Environmental elements are organizations or individuals that exist outside the firm and have a direct or indirect influence on it.

Case Study of GSM: Supermarket

GSM of a supermarket Explain the General System Model of a Supermarket including: Physical resources Management Information Processor Standard MIS

Physical resources All of the physical resources flow through the physical system of a supermarket. Physical resources: Material, personnel, machines, money 1. Material: The primary flow is materials -- groceries and other items that are sold. 2. Personnel: The personnel flow consists of the store managers, the checkout clerks, stock clerks, and so on who are hired, work for a period of time, and eventually leave.

Cont. 3. Machines: A few machines are used in a supermarket. The bar code readers at the checkout counters are the most obvious, but there are others behind the scenes, such as computers, desk calculators, and telephones. Additionally, other resources in the machines category include the refrigerated coolers, display cases, and shelves that are used to store the merchandise awaiting sale. 4. Money: The flow of money into the supermarket is provided by customers, and the flow out is primarily in the form of payments to suppliers, employees, and owners.

Cont. The transformation process, It includes: arranging the items on the shelves. preparing fresh vegetables and fruits for display, cutting meat, and perhaps baking pastries and preparing deli items. All activity that makes the products conveniently and attractively available for sale can be considered transformation.

Management The management element in the conceptual system consists of the store manager and assistant managers.

Information processor The information processor is the store computer, which controls the bar code readers and provides the prices of the various items. The computer also transmits data to the headquarters that specifies items to be ordered, provides sales statistics, and so on.

Standard The standards of performance for the supermarket are jointly established by headquarters and the store management. Standards in the form of sales quotas and operating budgets give managers guidelines concerning the level of performance that is to be achieved. Managers use observation and the information processor to monitor actual performance and compare it to the standards.

MIS Managers receive reports (information) from information processor that show: which items are selling well and which are not the times during the day and the days during the week when sales are very high and very low. The managers respond to these reports by taking such decisions as adjusting order quantities, reallocating shelf space, putting items on sale, and adding promotional signs and displays.

Standard and Objectives Standards Measure of acceptable performance Usually stated in specific terms Used to control physical system Consists of: Management Information processor Objectives Overall goal that a system is to obtain Systems have one or more objectives

A Comparison of Objectives and Standards Objectives Standards of Performance Satisfy Customer Needs Achieve an annual sales volume of at least $25 million Maintain a 20% share of the market Maintain an annual growth rate of 15% Realize an after-tax profit of 15% of sales Maintain a record of accident-free days Operate efficiently Invest in the future Invest in a minimum of 15% of sales revenue in research and development Develop sources of supply Achieve stockout on no more than 2% of the items in inventory during the year Have no legal actions filed against the firm by customers, suppliers, and the government Operate ethically 6-21