1. Information and Decision Support Systems
Indr Information Systems
Information and Decision Support Systems
Chapter 6

2. In this chapter, we will study:
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In this chapter, we will study:
decision-making and problem-solving
decision support systems (DSS)
management information system (MIS)
Functional areas
Specialized support systems
Group decision support system (GDSS)
executive support system (ESS)

3. How Decision Making Relates to Problem Solving
A well-known model developed by Herbert Simon and expanded by George Huber
Any decision involves a choice selected from a number of alternatives, directed toward an organizational goal or subgoal.
The task of rational decision making is to select the alternative that results in the more preferred set of all the possible consequences. This task can be divided into three required steps:
1. the identification and listing of all the alternatives;
2. the determination of all the consequences resulting from each of the alternatives; and
3. the comparison of the accuracy and efficiency of each of these sets of consequences.

4. Programmed versus Nonprogrammed Decisions
Easy to computerize
Non-programmed 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.

5. Problem Solving Approaches
Optimization: find the best solution
Satisficing: find a good solution
Heuristics: methods that find good solutions
Optimization
Satisficing
Heuristics
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.

6. 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.

7. Purpose of an MIS Provides managers
information, typically in reports, that support effective decision making
feedback on daily operations
Difference between the reports generated by the TPS and those generated by the MIS?

8. Sources of Managerial Information

9. Inputs to a Management Information System
Internal sources
TPSs and ERP systems
Data warehouses and data marts
External sources
extranets, customers, suppliers, competitors, and stockholders

10. Outputs of a Management Information System
Scheduled reports
Key-indicator reports
Demand reports
Exception reports
Drill down reports

11. Reports Generated by an MIS

12. Reports Generated by an MIS

13. Guidelines for Developing MIS Reports

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

15. Functional Aspects of MIS

16. Financial MISs
Subsystems
Financial forecasting
Profit/Loss and cost systems
Use and management of funds
Auditing
Integrates financial and operational information from multiple sources into a single MIS

17. Overview of a Financial MIS

18. Manufacturing MISs Computer aided design (CAD)
Monitor and control flow of materials, products and services
Computer aided design (CAD)
Design and engineering
Production scheduling
Just in time (JIT) inventory system
Inventory control
Material requirements planning (MRP)
Manufacturing resource planning (MRPII)
Material requirements planning
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.

19. Overview of a Manufacturing MIS

20. Marketing MISs Sales forecasting Marketing research
Product development
Product pricing
Promotion and advertising
Customer Relationship Management (CRM)

21. Overview of a Marketing MIS

22. 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

23. Overview of a Human Resource MIS

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.
A geographic information system (GIS) lets us visualize, question, analyze, interpret, and understand data in many ways that reveal relationships, patterns, and trends in the form of maps, globes, reports, and charts.

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.

26. Capabilities of a Decision Support System
Support for problem-solving phases
Support for different decision frequencies
Ad hoc DSS – one of a kind decisions
Institutional DSS – repetitive decisions
Support for different problem structures
Highly and semi-structured, unstructured
Support for various decision-making levels
Operational, tactical, strategic
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.

27. Support for Various Decision-Making Levels

28. Selected DSS Applications

29. Comparison of DSSs and MISs
Factor
DSS
MIS
Problem Type
A DSS is good at handling unstructured problems that cannot be easily programmed.
An MIS is normally used only with more structured problems.
Users
A DSS supports individuals, small groups, and the entire organization. In the short run, users typically have more control over a DSS.
An MIS supports primarily the organization. In the short run, users have less control over an MIS.
Support
A DSS supports all aspects and phases of decision making; it does not replace the decision maker - people still make the decisions.
This is not true of all MIS systems - some make automatic decisions and replace the decision maker.
Emphasis
A DSS emphasizes actual decisions and decision-making styles.
An MIS usually emphasizes information only.
Approach
A DSS is a direct support system that provides interactive reports on computer screens.
An MIS is typically an indirect support system that uses regularly produced reports.

30. Comparison of DSSs and MISs
Factor
DSS
MIS
System
The computer equipment that provides decision support is usually on-line
(directly connected to the computer system) and related to real time (providing immediate results).
An MIS, using printed reports that may be delivered to managers once a week, may not provide immediate results.
Speed
Because a DSS is flexible and can be implemented by users, it usually takes less time to develop and is better able to respond to requests.
An MIS’s response time is usually longer.
Output
DSS reports are usually screen oriented, with the ability to generate reports on a printer.
An MIS, however, typically is oriented toward printed reports and documents.
Develop-ment
DSS users are usually more directly involved in its development. User involvement usually means better systems that provide superior support.
An MIS often outlives people involved in its design.

31. Components of a DSS
Decision support systems are composed of several interrelated parts.

32. Conceptual Model of a DSS

33. The Model Base
Allows model-driven quantitative analysis

34. Group Decision Support Systems

35. Configuration of a GDSS

36. Characteristics of a GDSS
Special design
Ease of use
Flexibility
Decision-making support
Delphi approach, brainstorming, group consensus, nominal group technique
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.

37. GDSS Alternatives

38. The GDSS Decision Room

39. Decision Room
A room that supports decision making with the decision makers in the same building, combining face to face verbal interaction with technology to make the meeting more effective and efficient
Anonymity: Each participant is anonymous during the meeting
Parallel working:  Participants contribute their ideas in parallel
enables fast input gathering, creativity and breath in brainstorming and quick voting. 
Automatic Minutes:  
In a GSS session a complete report of the electronic interaction is available any time during or after the meeting.
Structured discussion:
Software offers various ways to structure and organize the contributions of group-members.

40. GDSS Alternatives
Local Area Decision Network: Groups are located in the same building and geographic area and under conditions in which group decision making is frequent. Technology and equipment are placed in the offices.
Teleconferencing: Used when the decision frequency is low and the location of group members is distant. Multiple GSS Decision Rooms can be connected here.
Wide Area Decision Network: Used when the decision is frequent and the location of the group members is distant. Gss allows to work in virtual groups, in which teams of people located around the world can communicate.

41. 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.

42. Executive Support Systems (ESS)
Special type of DSS designed to support higer level decision making in an organization.
The DSS is a modeling and analysis tool whereas ESSs provide structured information to the executives.

43. 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.

44. The Layers of Executive Decision Making

45. 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.

46. 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

47. 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