Chapter 10:

Information and Decision Support Systems

Agenda
What is MIS?

Characteristics of MIS
Overview of Management Information Systems Applications
Outputs of MIS
Guidelines for Developing MIS reports
Decision Making and Problem Solving
Types of Decisions
Optimization, Satisficing, and Heuristic
Problem Solving Factors
What is a DSS?
Characteristics of a DSS
Capabilities of a DSS
Decision Support System Components
The Group Decision Support System
Capabilities of a GDSS
The Executive Support System
Capabilities of an ESS

What is MIS?
A Management Information System (MIS) is an organized

method of providing past, present and projection

information relating to internal operations and external
intelligence. It supports the planning, control and
operational functions of an organization by furnishing
uniform information in the proper time-frame to assist the
decision-maker.
A Management Information System provides managers
with information and support for effective decision making
and provides feedback on daily operations.

Characteristics of MIS
The most important source of internal data is the TPS
External data is not captured by the organization but are used by the

MIS (i.e., customer, supplier and competitor information)

Produce scheduled, demand, and exception reports
Output reports with fixed and standard formats
Produce hard-copy and soft-copy reports
Use internal data stored in the computer system
Have reports developed and implemented by information systems
personnel
Require formal requests from users

Overview of Management Information

Systems Applications

Outputs of MIS
Scheduled reports are produced periodically or on a schedule, such as

daily, weekly, or monthly (i.e., a monthly summary report that list total
payroll costs).
A key indicator report is a special type of scheduled report that
summarizes the previous day's critical activities (i.e., inventory levels or
sales volume).
Demand reports are produced to give certain information at a

manager's request (i.e., an inventory report for a particular item).

Exception reports are reports that are automatically produced when a
situation is unusual or requires management action (i.e., a report for all
customers that are late in their payments.
Drill Down Reports are reports that provide detailed data about a
situation

Guidelines for Developing MIS reports

Tailor each report to user need: user involvement and input
Produce only needed reports
Pay attention to report content and layout: user friendly

and right to the point

Use management by exception reporting: for problem
solving or taking action
Set parameters carefully: proper number of reports
Produce all reports in a timely fashion: no outdated reports
Review reports

Functional Aspects of the MIS

Financial management information systems: profit/loss and cost

systems, auditing, use and management of fund

Manufacturing management information systems: design and
engineering, master production scheduling and inventory control
(economic order quantity, reorder point, material requirements
planning, manufacturing resource planning, just-in-time inventory),
process control (computer-assisted manufacturing, computerintegrated manufacturing, a flexible manufacturing system), quality
control and testing
Marketing management information systems: marketing research,
product development, promotion and advertising, product pricing
Human resource management information systems: human resource
planning, personnel selection and recruiting, training and skills
inventory, scheduling and job placement, wage and salary
administration
Other management information systems: accounting and geographic
information system

Decision Making and Problem Solving

Problem solving is the most critical activity a business organization

undertakes. Problem solving begins with decision making.

In the intelligence stage, potential problems and /or opportunities are
identified and defined
In the design stage, alternative solutions to the problem are developed
In the choice stage, a course of action is selected
In the implementation stage, action is taken to put the solution into
effect
In the monitoring stage, the implementation of the solution is evaluated
to determine if the anticipated results were achieved and modify the
process

Types of Decisions
Programmed decisions are the ones that are made using a

rule, procedure or quantitative method. For example, to say

that inventory should be ordered when inventory levels
drop to 100 units is to adhere to a rule.
Non programmed decisions deal with unusual or
exceptional situations. In many cases these decisions are
difficult to quantify. For example, determining the
appropriate training program.

Optimization, Satisficing, and Heuristic

Optimizing is finding the best solution and is usually best

fit for problems that can be modeled mathematically with a

low degree of estimation risk. For example, find how many
products an organization should produce to meet a profit
goal.
Satisficing is finding a good, but not necessarily the best,
solution. Satisficing does not look at all possible solutions,
but at those that are likely to give good results. Satisficing
is a good decision method because it it is sometimes too
expensive to analyze every alternative to get the best
solution. A satisficing example is when you have to select
a location for a new plant.
Heuristics are guidelines or procedures that usually find a
good solution by using rules of thumb.

Problem Solving Factors

A number of factors are important in solving problems. An awareness of

these factors will increase a manager's ability to properly analyze a problem
and make good decisions.
Multiple Decision objectives. The goals of many organizations go beyond
merely increased profits or reduced costs.
Increased alternatives. There are more alternatives to consider today, than
few years ago.
Increased Competition. The number and type of competitors in the
marketplace has made it difficult for many organizations to meet defined
goals.
Social and political actions have a profound impact on problem solving.
Technology has provided managers with a variety of problem-solving tools
and advances in its capabilities has increased decision alternatives.
International aspects like NAFTA and changes in Asia have increased the
decision alternatives.
Time compression is a phenomenon whereby activities occur in a shorter
time frame than was previously possible.
Creativity and imagination can differentiate one company from another.

What is a DSS?
A Decision Support System (DSS) is an interactive

computer based information system with an organized

collection of models, people, procedures, software,
databases, telecommunication, and devices, which helps
decision makers to solve unstructured or semi-structured
business problems.

Characteristics of a DSS
Handle large amounts of data like database searches
Obtain and process data from different sources including

internal and external data stored on mainframe systems

and networks
Provide report and presentation flexibility to suit the
decision maker's needs
Have both textual and graphical orientation like charts,
trend lines, tables and more
Perform complex, sophisticated analysis and comparisons
using advanced software packages
Support optimization, satisficing, and heuristic approaches
giving the decision maker a great deal of flexibility in
solving simple and complex problems
Perform "what-if" and goal-seeking analysis

Capabilities of a DSS
Support for problem-solving phases including the

intelligence, design, choice, implementation and

monitoring
Support for different decision frequencies that range from
one-of-a-kind (i.e., merging with another company) to
repetitive (i.e., how much inventory to purchase this week)
One-of-a-kind decisions are handled by an ad hoc DSS
Repetitive decisions are handled by institutional DSS
Support for different problem structures ranging from high
structured and programmed to unstructured and nonprogrammed
Support for various decision-making levels including
operational-level decisions, tactical-level decisions and
strategic decisions

Decision Support System Components

The data subsystem includes the Database that allows the DSS to tap into

information stored in the corporate database and the External Database

Access that allows the use of external data sources.
The model base gives decision makers access to a variety of models and
assist them in decision making. The model base can include the model
management software (MMS) that coordinates the use of models in a DSS.
The user interface, also called the dialog management facility, it allows
users to interact with the DSS to obtain information. The user interface
requires two capabilities; the action language that tells the DSS what is
required and pass the data to the DSS and the presentation language that
transfers and presents the user results.
The DSS generator acts as a buffer between the user and the other DSS
components, interacting with the database, the model base and the user
interface.

The Group Decision Support System

The Group Decision Support System (GDSS) is a CBIS that provides
support in group decision-making settings.
Characteristics of a GDSS:
Special design of software packages called groupware to allow two or
more individuals in a group to effectively work together
Easy to use eliminating complexities that will make the system unusable
Flexible to allow two or more decision makers working on the same
problem utilize their decision-making styles and preferences
Specific and general support capabilities
Anonymous input to foster objective and unbiased decision making
Reduction of negative group behavior that is counterproductive or
harmful to effective decision making
Support of positive group behavior
Software
Lotus Notes, Microsofts NetMeeting and Exchange

Capabilities of a GDSS
Decision-making aids include computer programs that

assist in listing alternatives, analyzing potential solutions

and ranking alternatives
Word processing and text manipulation allowing group
members to access common files
Database and file manipulation allowing access to several
types of databases and DBMSs
Spreadsheet capabilities to allow calculations and analysis
in group meetings
Communications facilities that support teleconferencing
and videoconferencing often called electronic meeting
systems (EMS)

The Executive Support System

The Executive Support System (ESS) is a CBIS used to assist seniorlevel executives within the organization
Characteristics of a GDSS:
Easy to use eliminating complexities and saving time for decision
makers who are often not technically oriented
Offer a wide range of computing resources including personal
computers, mainframe systems and networks
Perform sophisticated data analysis including "what-if" and goalseeking analysis as related to executive decisions
Offer a high degree of specialization allowing the decision maker to
accurately see the "big picture" of the organization, the economy, and
competitors
Provide flexibility because the decision making environments can
change rapidly in the future
Provide comprehensive communications abilities with other managers
around the world

Capabilities of an ESS
Support for defining the overall vision
Support for strategic planning
Support for strategic organizing and staffing
Support for strategic control
Support of crisis management

Points
to Remember
What is MIS?

Characteristics of MIS
Overview of Management Information Systems Applications
Outputs of MIS
Guidelines for Developing MIS reports
Decision Making and Problem Solving
Types of Decisions
Optimization, Satisficing, and Heuristic
Problem Solving Factors
What is a DSS?
Characteristics of a DSS
Capabilities of a DSS
Decision Support System Components
The Group Decision Support System
Capabilities of a GDSS
The Executive Support System
Capabilities of an ESS

Group Assignment
Name five management information systems that can be used by the

Home Depot.
Name one system (management information or decision support or
group decision support or executive support) that can utilize the
Internet technology for Home Depot.
Name the problems generated by standardizing the management
information systems and decision support systems for every store of
Home Depot located in the United States and other countries.
Name the differences between the decision support system and
management information system for any organization.
Name the differences between the decision support system and group
decision support system for any organization.
Name the differences between the decision support system and
executive support system for any organization.