1. Information and Decision Support Systems
Chapter 6
Information is an organization’s core asset. Transaction processing systems capture a large amount of data. Management information systems and decision support systems process and refine that data to provide vital information to decision makers and problem solvers. As organizations reengineer business processes, information systems designed for decision-making are no longer used solely by managers. To empower employees to make their own decisions and solve their own problems, organizations must provide employees at all levels of the enterprise with timely information provided by these systems.
Chapter 10 discusses information systems used for decision-making and problem solving in business, including management information systems and decision support systems. After studying this chapter, you should be able to address the objectives on the next 3 slides.
Fundamentals of Information Systems, Second Edition

2. Principles and Learning Objectives
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.
Management information systems are designed to provide correct & timely information about business operations to the right person. Management information systems are explicitly designed to provide information for decision-making and problem-solving, while transaction processing systems are not.
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3. Principles and Learning Objectives
The management information system (MIS) must provide the right information to the right person in the right fashion at the right time.
Define the term MIS and clearly distinguish the difference between a TPS and an MIS.
Discuss information systems in the functional areas of business organizations.
Like management information systems, decision support systems are designed to provide information to decision makers. However, decision support systems are designed to be used when problems are more unstructured.
Fundamentals of Information Systems, Second Edition

4. Principles and Learning Objectives
Decision support systems (DSSs) are used when the problems are more 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.
Group decision support systems and executive support systems extend the general approach of a DSS to specific situations, namely group and executive decision making and problem solving.
Fundamentals of Information Systems, Second Edition

5. Principles and Learning Objectives
Specialized support systems, such as group decision support systems (GDSSs) 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 GDSS 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.
Fundamentals of Information Systems, Second Edition

6. Decision Making and Problem Solving
Before looking at the information systems designed to help decision makers and problem solvers, we should understand the decision making and problem solving processes.
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7. How Decision Making Relates to Problem Solving
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8. Programmed versus Nonprogrammed Decisions
Easy to computerize
Nonprogrammed decisions
Rules and relationships not defined
Problem is not routine
Not easily quantifiable
When selecting an alternative in the choice stage, various factors affect the decision. We saw in the airport transportation example that resource constraints, such as time, money, or availability, are factors. Another factor is whether the decision can be programmed. Programmed decisions are made by following rules, procedures or quantitative methods that can be described in advance and regularly used, since the situations are recurring and well-structured. Management information systems are designed to provide information to address programmed decisions. Many simple programmed decisions can be completely automated – for example, inventory control systems can be programmed with reorder points and automatically trigger an order for more merchandise when the reorder point is reached.
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9. Problem Solving Approaches
Optimization: find the best solution
Satisficing: find a good solution
Heuristics: rules of thumb
Computerized decision support systems can usually be used for both optimization and satisficing modeling. An optimization model finds the best solution in relation to the constraints, assumptions, and goals it was given. For example, an optimization model can find the optimal labor cost to produce a particular product and meet a specific level of profit, subject to the cost of raw materials and machinery. Profit level is a goal and costs are a constraint in the model.
A satisficing model finds a good, but not necessarily the best, solution. Satisficing is used when optimization is too difficult, costly, or complex. Satisficing looks only at solutions that are likely to produce a good solution and can thus be done more easily and quickly than optimization, which involves an exhaustive search of all possible solutions.
Heuristics, or rules of thumb, are often used in decision making. Heuristics are generally accepted guidelines, or guidelines developed through experience, that usually find a good solution. For example, you might follow a heuristic of taking an umbrella if it is cloudy, windy, and humid when you leave the house. Your experience has shown you that generally this results in having an umbrella when it rains. However, this isn’t an optimal solution – since sometimes you carry an umbrella unnecessarily and sometimes it rains on days when you don’t have an umbrella. But the cost of finding an optimal solution is far too great in terms of time and money.
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10. Optimization, Satisficing, and Heuristic Approaches
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11. An Overview of Management Information Systems
Management information systems provides decision-makers information and feedback on daily operations. Additionally, management information systems can be used strategically, often incorporating Web technology.
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12. Sources of Managerial Information
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13. Reports Generated by an MIS
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14. Reports Generated by an MIS
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15. Guidelines for Developing MIS Reports
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16. Functional Aspects of the MIS
Each management information system is an integrated collection of subsystems, often organized along functional lines of an organization.
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17. Functional Aspects of MIS
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18. Overview of a Financial MIS
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19. Fundamentals of Information Systems, Second Edition
Manufacturing MIS
Material requirements planning (MRP)
Manufacturing resource planning (MRPII)
Just in time (JIT) inventory system
Inventory control programs are one component of a manufacturing MIS that relies on the production schedule. Inventory control programs can forecast future production, automatically reorder items when a certain threshold is met, determine manufacturing costs, and develop resource requirements plans from the production schedule.
Manufacturing Requirements Planning (MRP) programs help coordinate thousands of inventory items when demand for one item depends on demand for another. MRP systems determine when finished products are needed, then work backward to determine deadlines and resources needed to complete the final product on schedule.
When high inventory levels are kept, a company’s money is tied up in unused inventory. This means higher costs for the company. A Just-in-time (JIT) inventory approach ensures inventory and materials are delivered only when they are needed. This maintains inventories at their lowest possible level, but insures materials are on-hand in time for production. Although JIT is beneficial, it also makes a business vulnerable to supply chain disruptions – whether internal or external. For example, if a machine breaks down that makes a component another unit needs to assemble the product, assembly may need to stop due to lack on components.
Technologies have been developed to control and streamline the manufacturing process. Computers can directly control manufacturing equipment using computer-assisted manufacturing software. Computer-integrated manufacturing software connects all aspects of production together, including order processing, product design, manufacturing, quality control, and shipping. For example, after an engineer designs a product using CAD software, MRP systems can use information from the design as input to plan and order materials. Production scheduling systems can use the design specifications as an input into the scheduling process. And computer-added manufacturing systems can use the design specifications as input for setup. This greatly improves manufacturing efficiency.
A flexible manufacturing system allows a facility to quickly and efficiently change from making one product to making another, often using robotics and other automation. Generally the changeover is computer-controlled.
Finally, quality control has become paramount for manufacturing firms. Control charts or sample testing is used to monitor product quality.
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20. Overview of a Manufacturing MIS
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21. Overview of a Marketing MIS
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22. Fundamentals of Information Systems, Second Edition
Human Resource MIS
Concerned with activities related to employees and potential employees of the organization.
Subsystems include:
needs and planning assessments
recruiting
training and skills development
scheduling and assignment
employee benefits
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23. Overview of a Human Resource MIS
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24. Other Management Information Systems
Accounting MIS - provides aggregate information on accounts payable, accounts receivable, payroll, and many other applications.
Geographic Information Systems - computer system capable of assembling, storing, manipulating, and displaying geographic information.
Fundamentals of Information Systems, Second Edition

25. An Overview of Decision Support Systems
Decisions support systems are people, procedures, software, databases, and devices that are used in problem-specific decision-making and problem-solving. Decision support systems are particularly useful when dealing with semi-structured, poorly structured, or unstructured situations. Although decision support systems are used most often at higher levels of management, all employees may use them to assist in even programmable decisions.
Fundamentals of Information Systems, Second Edition

26. Capabilities of a Decision Support System
Support for problem-solving phases
Support for different decision frequencies
Support for different problem structures
Support for various decision-making levels
Although a specific DSS might only support one or a few phases, decision support systems can support decision makers in all the phases of the problem-solving process – that is, in the intelligence, design, choice, implementation, and monitoring stages.
As we’ve seen in this chapter, decisions can range from one-of-a kind to recurring. An ad hoc DSS is useful for one-of-a kind or less structured decisions, while an institutional DSS handles situations that happen on an ongoing basis. Institutional DSSs are refined over time. For instance, deciding where to locate a regional airport is likely a one of a kind decision, whereas investment decisions are recurring. Thus, a DSS can support decisions ranging from unstructured to structured.
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27. Selected DSS Applications
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28. Support for Various Decision-Making Levels
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29. Comparison of DSSs and MISs
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30. Fundamentals of Information Systems, Second Edition
Components of a DSS
Decision support systems are composed of several interrelated parts.
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31. Conceptual Model of a DSS
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32. Fundamentals of Information Systems, Second Edition
The Model Base
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33. Group Decision Support Systems
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34. Fundamentals of Information Systems, Second Edition
Configuration of a DSS
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35. Characteristics of a GDSS
Special design
Ease of use
Flexibility
Decision-making support
Anonymous input
Reduction of negative group behavior
Parallel communication
Automated record keeping
GDSSs are designed to support effective group communication and good decision making techniques, as well as creative thinking.
As a general rule, any software that is hard to use, won’t be used. GDSS software must be especially user friendly, since often groups have less patience with bad software than do individuals.
Since different people may solve the same problem in different ways, a GDSS should support different approaches to decision-making, as well as integrate their output into a common view.
A GDSS supports group decision-making techniques, such as the Delphi approach, brainstorming, group consensus, and the nominal group technique.
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36. Fundamentals of Information Systems, Second Edition
GDSS Alternatives
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37. Fundamentals of Information Systems, Second Edition
The GDSS Decision Room
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38. Executive Support Systems
Executive support systems, or executive information systems, were developed to provide senior managers the type of information they need, in the format that they need it. Executive support systems include a DSS, as well as other tools, such as office automation.
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39. The Layers of Executive Decision Making
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40. Executive Support Systems (ESS) in Perspective
Tailored to individual executives
Easy to use
Drill down capabilities
Support need for external data
Can help when uncertainty is high
Future-oriented
Linked to value-added processes
Although executive support systems have much in common with decision support systems, they have important differences. Generally, a DSS provides a number of modeling tools and is designed to help a user answer a question. Executive support systems allow executives to ask the right questions. An ESS is interactive and helps an executive focus, filter and organize data and information.
Unlike a DSS, an ESS is usually customized for a specific individual. Content and format can both be customized.
Since executives are typically busy, an ESS must be easy to learn and to use – or it won’t be used.
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41. Fundamentals of Information Systems, Second Edition
Capabilities of an ESS
Support for defining an overall vision
Support for strategic planning
Support for strategic organizing & staffing
Support for strategic control
Support for crisis management
Most executive support systems are designed to give the user a top-down view of business processes and allow him to drill down to greater levels of detail. This capability, as well as access to external databases and to DSS modeling tools, allows top-level managers to work on long term, strategic issues that affect the whole company.
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42. Fundamentals of Information Systems, Second Edition
Summary
Decision-making phase - includes intelligence, design, and choice
Problem solving - also includes implementation and monitoring
Decision approaches - optimization, satisficing, and heuristic
Management information system - an integrated collection of people, procedures, databases, and devices that provide managers and decision makers with information to help achieve organizational goals
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43. Fundamentals of Information Systems, Second Edition
Summary
Decision support system (DSS) - an organized collection of people, procedures, software, databases, and devices working to support managerial decision making
Group decision support system (GDSS) - also called a computerized collaborative work system, consists of most of the elements in a DSS, plus software needed to provide effective support in group decision-making settings
Executive support systems (ESSs) - specialized decision support systems designed to meet the needs of senior management
Fundamentals of Information Systems, Second Edition