Chapter 8 - MIS DSS PDF

Chapter 08: Management Information and Decision Support Systems Stair, Reynolds and Chesney: Principles of Business Information Systems, Fourth edition (9781473774605) © Cengage Learning 2021  Principles Good decision-makin...

Chapter 08: Management Information and Decision Support Systems Stair, Reynolds and Chesney: Principles of Business Information Systems, Fourth edition (9781473774605) © Cengage Learning 2021  Principles 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 A management information system (MIS) must provide the right information to the right person in the right format at the right time. Explain the uses of MIS and describe their inputs and outputs Discuss information systems in the functional areas of business organization Decision support systems (DSS) support decision-making effectiveness when faced with unstructured or semi- structured business problems. Discuss the important characteristics of DSS Describe the basic components of a DSS Specialized support systems, such as group support systems (GSS) and executive support systems (ESS), use the overall approach of a DSS in situations such as group and executive decision making. State the goals and characteristics of a GSS For use with Principles of Business Information Systems, 4e Identify the fundamental uses of an ESS by Stair, Reynolds & Chesney © 2021 Cengage Learning  Decision making and Problem solving Every organization needs effective decision making In most cases, strategic planning and overall goals of the organization set the course for decision making Information systems can assist with strategic planning and problem solving For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning Decision making as a component of problem solving Problem solving is a critical activity for any business organization. After identifying a problem, you begin the problem-solving process with decision making. A model developed by Herbert Simon divides the decision-making phase of the problem-solving process into three stages: – Intelligence stage: potential problems or opportunities are identified and defined. E.g., how can a South African farmer market produce to neighboring countries – Design stage: you develop alternative solutions to the problem and evaluate the feasibility of these alternatives. E.g. alternative methods of shipping the farm produce and associated cost – Choice stage: requires selecting a course of action. E.g., selecting a particular transportation option – to air freight Problem solving: goes beyond decision making to include implementation and monitoring stages Implementation stage: a solution is put into effect. E.g., choosing a specific air freight company, taking fruits to the airport, and air freighting Monitoring stage: decision makers evaluate the implementation to determine if anticipated results are achieved and to modify the process if For use with Principles of Business Information Systems, 4e necessary by Stair, Reynolds & Chesney © 2021 Cengage Learning  Programmed Versus Non-programmed Decisions In the choice stage, various factors influence the decision maker’s selection of a solution. Such as whether the decision can be programmed or not. Programmed decision – Decision made using a rule, procedure, or quantitative method, e.g., replenish inventory if inventory level drops below 100. – Easy to computerize using traditional information systems Non-programmed decision – Decision that deals with unusual or exceptional situations – Not easily quantifiable, and standard rule or procedures might not apply e.g., determining the appropriate training program for a new employee, deciding whether to start a new product line For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Optimization, Satisficing, and Heuristic approaches Computerized decision support system can be either optimize or satisfice. Optimization model: find the best solution, usually the one that will best help the organization meet its goals, e.g., number of products a business should produce to meet a profit goal. Satisficing model: find a good – but not necessarily the best solution, used where modelling the optimal decision might be difficult, complex, or costly, E.g., selecting a location for a new manufacturing plant. Heuristics: (rules of thumb) commonly accepted guidelines or procedures that usually find a good solution. E.g., order three months stock when inventory level drop to 50 units or less. It serves as a good rule of thumb to avoid running out of stock without maintaining excess inventory. For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Sense and Respond Sense and Respond (SaR) approach – Determining problems or opportunities (sense) – Developing systems to solve the problems or take advantage of the opportunities (respond) One way to implement SaR is through management information and decision support systems For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  An Overview of Management Information Systems Management information system (MIS) – Integrated collection of people, procedures, databases, and devices – Provides managers and decision makers with information to help achieve organizational goals by providing managers with insights into the regular operations of the organization, so that they can control, organize and plan more effectively. – Can give the organization a competitive advantage – Providing the right information to the right people in the right format and at the right time – Provides managers with information that supports effective decision making and provides feedback on daily operations. – For example, a manager might request a report on weekly or monthly sales by products or branches. For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Inputs to an MIS 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 – Internet – Extranets For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Outputs from an MIS Output of MIS is a collection of reports distributed to managers in the form of tabulations, summaries, charts and graphs. It includes scheduled reports, key-indicators report, demand reports, exception and drill-down reports. Scheduled report: produced periodically, or on schedule, such as daily, weekly, or monthly – Key-indicator report: summary of previous day’s critical activities Demand report: developed to give certain information at someone’s request, reports produced on demand. Exception report: automatically produced when a situation is unusual or requires management action Drill-down reports: provide increasingly detailed data about a situation For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Characteristics of an MIS Provide reports with fixed and standard formats Produce hard-copy and soft-copy reports Use internal data stored in computer system Allow users to develop custom reports Require user requests for reports developed by systems personnel For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Financial MIS Financial MIS: provides financial information to executives and others Some financial MIS subsystems and outputs – Profit/loss and cost systems: profit and revenue centres – Auditing: internal and external – Uses and management of funds For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Manufacturing MIS Manufacturing MIS subsystems and outputs monitor and control the flow of materials, products and services through the organization Design and engineering: CAD systems Master production scheduling and inventory control – Methods: EOQ, MRP, JIT Process control – Techniques: CAM, CIM, FMS Quality control and testing For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Marketing MIS Marketing MIS: supports managerial activities in product development, distribution, pricing decisions and promotional effectiveness Subsystems – Marketing research – Product development – Promotion and advertising – Product pricing – Sales analysis For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Human Resource MIS Human resource MIS: concerned with activities related to employees and potential employees Subsystems – Human resource planning – Personnel selection and recruiting – Training and skills inventory – Scheduling and job placement – Wage and salary administration – Outplacement For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Other MIS 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 For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Decision Support Systems (DSS) A DSS is an organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems Focus of a DSS is on decision-making effectiveness regarding unstructured or semi- structured business problems Used by managers at all levels For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Characteristics of a DSS 1 Provide rapid access to information Handle large amounts of data from different sources Provide report and presentation flexibility Offer both textual and graphical orientation Support drill-down analysis Perform complex, sophisticated analysis and comparisons using advanced software packages For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Characteristics of a DSS 2 Support optimization, satisficing, and heuristic approaches What-if analysis: making hypothetical changes to problem data and observing impact on results Goal-seeking analysis: determining problem data required for a given result Simulation: ability of the DSS to duplicate features of a real system For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Capabilities of a Decision Support System Support problem-solving phases Support different decision frequencies – Ad hoc DSS – Institutional DSS Support different problem structures – Highly structured problems – Semistructured or unstructured problems Support various decision-making levels For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Components of a DSS Database Model base Dialogue manager: user interface that allows decision makers to: – Easily access and manipulate the DSS – Use common business terms and phrases Access to the Internet, networks, and other computer-based systems For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  The Database Database management system – Allows managers and decision makers to perform qualitative analysis on data stored in company’s databases, data warehouses, and data marts – Can also be used to connect to external databases For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  The Model Base Model base: provides decision makers with access to a variety of models and assists them in decision making – Allows them to perform quantitative analysis on both internal and external data For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  The User Interface or Dialogue Manager Allows users to interact with the DSS to obtain information Assists with all aspects of communications between user and hardware and software that constitute the DSS For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  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 decision support system or computerized collaborative work system For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Characteristics of a GSS That Enhance Decision Making Special design Ease of use Flexibility Decision-making support – Delphi approach – Brainstorming – Group consensus approach – Nominal group technique Anonymous input Reduction of negative group behavior Parallel communication Automated record keeping For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Executive Support Systems Executive support system (ESS): – Specialized DSS – Includes hardware, software, data, procedures, and people used to assist senior-level executives – Also called an executive information system (EIS) For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  ESS Characteristics Tailored to individual executives Easy to use Drill-down capabilities Support need for external data Can help with situations that have a high degree of uncertainty Future-oriented Linked to value-added business processes For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Capabilities of ESS Support for defining overall vision Support for strategic planning – Determining long-term objectives through analysis of current organization and prediction of future trends Support for strategic organizing and staffing Support for strategic control Support for crisis management For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Summary Decision-making phase: includes intelligence, design, and choice stages Problem-solving process: includes decision-making phase, and implementation and monitoring stages Management information system (MIS): provides managers with information that supports effective decision making and provides feedback on daily operations Financial MIS: provides financial information to executives and others For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Summary (cont.) Manufacturing MIS: monitors and controls flow of materials, products, and services through the organization Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness Human resource MIS: concerned with activities related to employees and potential employees For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Summary (cont.) Accounting MIS: provides aggregate information on accounts payable, accounts receivable, payroll, and other applications Geographic information system (GIS): capable of assembling, storing, manipulating, and displaying geographic information DSS: organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning  Summary (cont.) Group support system (GSS): consists of most elements in a DSS, plus software to provide effective support in group decision making Executive support system (ESS): specialized DSS; includes all hardware, software, data, procedures, and people used to assist senior- level executives For use with Principles of Business Information Systems, 4e by Stair, Reynolds & Chesney © 2021 Cengage Learning