Decision Making

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Decision Making Information Systems
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• 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

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• 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

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• 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

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• 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

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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

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Figure 10.1 How Decision Making Relates to
Problem Solving
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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

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Programmed Versus Nonprogrammed Decisions

• Programmed decisions
• Decision made using a rule, procedure, or
  quantitative method
• Easy to computerize using traditional information
  systems

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Programmed Versus Nonprogrammed Decisions
(continued)

• Nonprogrammed decisions
• Decision that deals with unusual or exceptional
  situations
• Not easily quantifiable

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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 goodbut not
  necessarily the bestproblem solution
• Heuristics commonly accepted guidelines or
  procedures that usually find a good solution

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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

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Figure 10.3 Sources of Managerial Information
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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)

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Outputs of a Management Information System

• Scheduled report produced periodically, or on a
  schedule
• Key-indicator report summary of the previous
  days critical activities
• Demand report developed to give certain
  information at someones request
• Exception report automatically produced when a
  situation is unusual or requires management
  action
• Drill-down reports provide increasingly detailed
  data about a situation

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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

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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

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Figure 10.5 MIS is an integrated collection of
functional information systems
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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

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Figure 10.6 Overview of a Financial MIS
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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

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Figure 10.7 Overview of a Manufacturing MIS
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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

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Figure 10.10 Overview of a Marketing MIS
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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

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Human Resource Management Information Systems
(continued)

• Training and skills inventory
• Scheduling and job placement
• Wage and salary administration
• Outplacement

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Figure 10.13 Overview of a Human Resource MIS
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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

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Figure 10.4
REPORTS
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Figure 10.4 contd
REPORTS
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Functional Aspects of the MIS
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Functional Areas

• Finance
• Manufacturing
• Marketing
• Human Resources

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Figure 10.5
MIS is an integrated collection of functional
systems, each supporting particular functional
areas.
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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

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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

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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

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Capabilities of a Decision Support System

• Support all problem-solving phases
• Support different decision frequencies
• Support different problem structures
• Support various decision-making levels

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

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A DSS Model
Environment
Individual problem
solvers
Other group members

Report writing software
Mathematical Models
GDSS software
GDSS
software
Database
Decision support
system
Environment
Data
Information
Communication
Legend
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Figure 10.15 Decision-Making Level
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Table 10.3 Comparison of DSSs and MISs
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Table 10.3 Comparison of DSSs and MISs
(continued)
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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

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Figure 10.16 Conceptual Model of a DSS
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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

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Characteristics of a GSS That Enhance Decision
Making (continued)

• Anonymous input
• Reduction of negative group behavior
• Parallel communication
• Automated record keeping

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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

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Executive Support Systems in Perspective

• Tailored to individual executives
• Easy to use
• Drill-down capabilities
• Support need for external data

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Executive Support Systems in Perspective
(continued)

• Can help when uncertainty is high
• Future-oriented
• Linked to value-added processes

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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

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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

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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

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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

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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.

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Summary (continued)
1-34

• 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.

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Summary (continued)
1-35

• 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)

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Summary (continued)
1-36
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