1. Decision Making
&
Information Systems

2. 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

3. 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

4. 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

5. 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

6. 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

7. Figure 10.1: How Decision Making Relates to Problem Solving

8. 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

9. Programmed Versus Nonprogrammed Decisions
Decision made using a rule, procedure, or quantitative method
Easy to computerize using traditional information systems

10. Programmed Versus Nonprogrammed Decisions (continued)
Decision that deals with unusual or exceptional situations
Not easily quantifiable

11. 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

12. 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

13. Figure 10.3: Sources of Managerial Information

14. 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)

15. 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

16. 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

17. 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

18. Figure 10.5: MIS is an integrated collection of functional information systems

19. 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

20. Figure 10.6: Overview of a Financial MIS

21. 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

22. Figure 10.7: Overview of a Manufacturing MIS

23. 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

24. Figure 10.10: Overview of a Marketing MIS

25. 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

26. Human Resource Management Information Systems (continued)
Training and skills inventory
Scheduling and job placement
Wage and salary administration
Outplacement

27. Figure 10.13: Overview of a Human Resource MIS

28. 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

29. Figure 10.4
REPORTS
Most management information systems produce predetermined reports – that is, reports whose content has been designed and programmed in advance. These include scheduled reports, key indicator reports, demand reports, exception reports and drilldown reports.
Scheduled reports are produced at regular intervals, such as hourly, daily, weekly or monthly. For example, a sales manager might get a weekly report summarizing sales by region, store, or salesperson. This allows the manager to monitor sales and follow-up on locations or people that seem to be slipping.
Key indicator reports summarize the prior day’s critical activities to allow the user to take quick action to fix a potential problem. For instance, a report received each morning summarizing sales figures from each store would allow a sales manager to immediately follow up with stores that show slow sales.
Demand reports are reports produced to give information at a manager’s request, rather than on a particular schedule. For example, on a Wednesday, the sales manager may request weekly sales to date for each store. Although these reports can be produced on demand, the requested information must have been identified at an earlier time and processed and stored in the application database. For example, if a company has never identified a store’s rate of sales growth as necessary information before, a manager cannot suddenly request it and except to receive it from the management information system.
Exception reports are automatically produced to show a deviation from normal or from a plan. For example, each quarter the sales manager might receive an exception report listing those stores that failed to meet their sales target.

30. Figure 10.4 cont’d
REPORTS
Drill-down reports start with highly summarized data and allow a user to request increasing levels of detail. For example, the sales manager may initially see a table listing monthly sales by region. If he wants more detail, he can use the mouse to click on a particular region, say the southeast, and would see a table summarizing sales in the southeast region by store. If he sees that store A has lower sales than any other, he could click on it and see sales for that store by department. He could click on a particular department to see sales by employee or by item. This helps users trace problems or superior performance to the root.
Figure 10.4 shows a drilldown report starting with earning summarized by quarter, drilling down to sales by product category.

31. Functional Aspects of the MIS
Each management information system is an integrated collection of subsystems, often organized along functional lines of an organization.

32. Functional Areas
Finance
Manufacturing
Marketing
Human Resources

33. Financial statements
Uses and managements of funds
Financial stats for control
MIS is an integrated collection of functional systems, each supporting particular functional areas.
Figure 10.5
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
Functional areas typically include accounting, finance, marketing, personnel, operations, research and development, and legal. Management information systems organized by functional area produce specialized reports for each area.
Benefit reports
Salary surveys
Scheduling report
Job applicant profiles
Needs and planning report

34. An Overview Of Decision Support Systems
A DSS is an organized collection of people, procedures, software, databases, and devices used to support problem- specific decision making and problem solving
The focus of a DSS is on decision-making effectiveness when faced with unstructured or semistructured business problems

35. 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

36. 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

37. Capabilities of a Decision Support System
Support all problem-solving phases
Support different decision frequencies
Support different problem structures
Support various decision-making levels

38. DEGREE OF PROBLEM STRUCTURE
The DSS Focuses on Semistructured Problems
Manager + Computer
(DSS)
Solution
Computer
Solution
Manager
Solution
Structured Semistructured Unstructured
DEGREE OF PROBLEM STRUCTURE 9

39. 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 10

40. A DSS Model support system problem solvers group members Report
Environment
Individual
problem
solvers
Other
group members
Report
writing
software
Mathematical
Models
GDSS
software
GDSS
software
Database
Decision
support
system
Environment
Data
Communication
Information
Legend: 11

41. Figure 10.15: Decision-Making Level

42. Table 10.3: Comparison of DSSs and MISs

43. Table 10.3: Comparison of DSSs and MISs (continued)

44. 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

45. Figure 10.16: Conceptual Model of a DSS

46. 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

47. Characteristics of a GSS That Enhance Decision Making (continued)
Anonymous input
Reduction of negative group behavior
Parallel communication
Automated record keeping

48. 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

49. Executive Support Systems in Perspective
Tailored to individual executives
Easy to use
Drill-down capabilities
Support need for external data

50. Executive Support Systems in Perspective (continued)
Can help when uncertainty is high
Future-oriented
Linked to value-added processes

51. 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

52. 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

53. 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

54. 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

55. Review 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.

56. Summary (continued) We are indeed in the information age.
1-34
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:
Globalization
Competition
Information as a key resource
The virtual workplace and telecommuting
Electronic commerce
Knowledge worker computing.

57. 1-35
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)

58. 1-36
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