CHAPTER 8

• Good decision-making and problem-solving skills


  • Key to developing effective information and decision support systems
• Management information system (MIS)


  Provides the right information to the right person in the right format at the right time
• Decision support systems (DSS)


  Support decision-making effectiveness when faced with unstructured or semi-structured business problems
• Specialized support systems


  • 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
• Decision making


  Every organization needs effective decision making
• Strategic planning and overall goals of the organization

  Set the course for decision making
• Information systems


  Can assist with strategic planning and problem solving
• Decision-making phase


  1. Intelligence stage

  2. Design stage

  3. Choice stage
• Problem solving


  1. Goes beyond decision making to include implementation and monitoring stages

  2. Implementation stage

  3. Monitoring stage
• Programmed decision


  Decision made using a rule, procedure, or quantitative method
• Non-programmed decision


  Decision that deals with unusual or exceptional situations
• Optimization model


  • 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
• Sense and Respond (SaR) approach

  1. Determining problems or opportunities (sense)

  2. Developing systems to solve the problems or take advantage of the opportunities (respond)
• Management information system (MIS)


  Integrated collection of people, procedures, databases, and devices that provides managers and decision makers with information to help achieve organizational goals
• MIS


  Can give the organization a competitive advantage
• Inputs to an MIS


  • Internal data sources
  • External data sources
• Outputs from an MIS

  • Scheduled report
  • Key-indicator report
  • Demand report
  • Exception report
  • Drill-down reports
• 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
• Financial MIS


  Provides financial information to executives and others
• Financial MIS subsystems and outputs

  • Profit/loss and cost systems
  • Auditing
• Manufacturing MIS subsystems and outputs

  • Design and engineering
  • Master production scheduling and inventory control
  • Methods
  • Process control
  • Quality control and testing
• Marketing MIS


  Supports managerial activities in product development, distribution, pricing decisions and promotional effectiveness
• Marketing MIS subsystems


  • Marketing research
  • Product development
  • Promotion and advertising
  • Product pricing
  • Sales analysis
• Human resource MIS


  Concerned with activities related to employees and potential employees
• Human resource MIS subsystems


  • Human resource planning
  • Personnel selection and recruiting
  • Training and skills inventory
  • Scheduling and job placement
  • Wage and salary administration
  • Outplacement
• 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
• Decision Support Systems (DSS)


  An organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems
• 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
• Characteristics of a DSS 2

  • Support optimization, satisficing, and heuristic approaches
  • What-if analysis
  • Goal-seeking analysis
  • Simulation
• Capabilities of a Decision Support System

  • Support problem-solving phases
  • Support different decision frequencies
  • Support different problem structures
  • Support various decision-making levels
• Components of a DSS

  • Database
  • Model base
  • Dialogue manager
• Database management system


  Allows managers and decision makers to perform qualitative analysis on data stored in company's databases, data warehouses, and data marts
• Model base


  Provides decision makers with access to a variety of models and assists them in decision making
• User Interface or Dialogue Manager


  Allows users to interact with the DSS to obtain information
• Group support system (GSS)


  Consists of most elements in a DSS, plus software to provide effective support in group decision making
• 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
• Executive support system (ESS)


  Specialized DSS; includes all hardware, software, data, procedures, and people used to assist senior-level executives