Fundamentals of Information Systems

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Chapter 06 Information and Decision Support Systems

TRUEFALSE

1. The ultimate goal of management information and decision support systems is to help managers
and executives at all levels make better decisions and solve important problems.

(A) True

(B) False

Answer : (A)

2. A well-known model developed by Herbert Simon divides the decision making phase of the
problem solving process into five stages.

(A) True

(B) False

Answer : (B)

3. The first stage of the problem-solving process involves identifying and defining potential problems
or opportunities.

(A) True

(B) False

Answer : (A)

4. Programmed decisions are made using a rule, procedure, or quantitative method.

(A) True

(B) False

Answer : (A)

5. A satisficing model is one that finds a good, but not necessarily the best, solution to a problem.

(A) True

(B) False

Answer : (A)

6. The primary purpose of an MIS is to help an organization achieve its goals by providing managers
with insight into the regular operations of the organization so they can control, organize, and plan
more effectively.

(A) True

(B) False

Answer : (A)

7. The use of management information systems spans all levels of management in an organization.

(A) True

(B) False

Answer : (A)

8. The input to most management information systems is a collection of reports that are provided by
managers.

(A) True

(B) False

Answer : (B)

9. Scheduled reports generated by management information systems are produced periodically,

such as daily weekly, or monthly.

(A) True

(B) False

Answer : (A)

10. An executive dashboard is a diagram that presents a set of key performance indicators about the
state of a process at a specific point in time to enable managers make better real-time decisions.

(A) True

(B) False

Answer : (A)

11. A management information system can be divided along functional lines to produce reports
tailored to individual functions.

(A) True
(B) False

Answer : (A)

12. Most financial management information systems integrate financial and operational information
from multiple sources, including the Internet, into a single system.

(A) True

(B) False

Answer : (A)

13. In the context of financial management information systems, transaction processing systems or
enterprise systems capture transactions entered by workers in all functional areas of the business.

(A) True

(B) False

Answer : (A)

14. Auditing provides an objective appraisal of the accounting, financial, and operational procedures
and information of an organization.

(A) True

(B) False

Answer : (A)

15. Many manufacturing operations have been dramatically improved over the last decade as a
result of advances in information systems.

(A) True

(B) False

Answer : (A)

16. Manufacturing companies seldom use computer-assisted design with new or existing products.

(A) True

(B) False

Answer : (B)
17. The economic order quantity is calculated to minimize the number of times an inventory item
must be reordered.

(A) True

(B) False

Answer : (B)

18. When the inventory level for a particular item falls to the reorder point, an inventory
management system generates a report to stop any further orders of the item.

(A) True

(B) False

Answer : (B)

19. Marketing functions determine the various media to be used to inform potential customers about
a product or service.

(A) True

(B) False

Answer : (A)

20. Marketing functions are increasingly being performed on the Internet and mobile devices.

(A) True

(B) False

Answer : (A)

21. Product pricing is important to identify products, sales personnel, and customers that contribute
to profits and those that do not.

(A) True

(B) False

Answer : (B)

22. Smaller companies hesitate to hire outside accounting firms to assist them with their accounting
functions.

(A) True
(B) False

Answer : (B)

23. Developers of decision support systems have made them less flexible compared to management
information systems.

(A) True

(B) False

Answer : (B)

24. Decision support systems can provide help for managers at various levels within an organization.

(A) True

(B) False

Answer : (A)

25. Decision support systems and management information systems are actually quite similar in
numerous ways, including the types of problems solved, the support given to users, and the decision
emphasis and approach.

(A) True

(B) False

Answer : (B)

26. The dialogue manager of a decision support system can also connect to external databases to
give decision makers even more information and decision support beyond that available through just
corporate databases.

(A) True

(B) False

Answer : (B)

27. The Delphi approach is a group decision making approach that encourages diversity among
group members and fosters creativity and original thinking in decision making.

(A) True

(B) False

Answer : (B)
28. The nominal group technique (NGT) is a structured method for group brainstorming that
encourages contributions from the top management of an organization.

(A) True

(B) False

Answer : (B)

29. Multivoting is any one of a number of voting processes used in the nominal group technique of
decision-making to reduce the number of options to be considered.

(A) True

(B) False

Answer : (A)

30. With a group decision support system, people must take turns addressing various issues, and
one person normally talks at a time.

(A) True

(B) False

Answer : (B)

MULTICHOICE

31. In the context of decision support system framework developed by Anthony Gorry and Michael
Scott Morton, one characteristic of a structured decision is that _____.

(A) it involves known variables that can be measured quantitatively

(B) the relationships among the pieces of data are not always clear

(C) it involves known variables that cannot be measured quantitatively

(D) the decision maker might not know the information requirements of the decision in advance

Answer : (A)

32. According to Anthony Gorry and Michael Scott Morton's framework on decision support
systems, the decisions where only some of the variables can be measured quantitatively are called
_____.

(A) programmed decisions

(B) unstructured decisions

(C) nonprogrammed decisions

(D) semistructured decisions

Answer : (D)

33. The two phases of problem solving added by Huber to Simon's original three-stage model of
decision-making are _____.

(A) intelligence and design

(B) implementation and monitoring

(C) choice and implementation

(D) design and choice

Answer : (B)

34. In the _____ stage of the problem-solving process, alternative solutions to a problem are
developed and their feasibility is evaluated.

(A) intelligence

(B) implementation

(C) design

(D) choice

Answer : (C)

35. During the _____ stage of the decision-making phase, a course of action is selected.

(A) intelligence

(B) implementation

(C) choice

(D) design

Answer : (C)

36. _____ is the stage of the problem-solving process in which a solution is put into effect.

(A) Decision

(B) Monitoring

(C) Choice
(D) Implementation

Answer : (D)

37. The performance of decision support systems is typically a function of decision quality and _____.

(A) hardware compatibility

(B) cost effeectiveness

(C) problem complexity

(D) software design

Answer : (C)

38. The most significant internal data sources for a management information system are an
organization's _____.

(A) data from customers, suppliers, competitors, and stockholders

(B) various Transaction Processing Systems (TPS) and Enterprise Resource Planning (ERP) systems
and related databases

(C) executive dashboards containing a set of key performance indicators about the state of a process
at a specific point in time

(D) various decision supporting systems (DSS) and group decision supporting systems (GSS) and
users

Answer : (B)

39. A(n) _____ is a type of management report that is automatically produced when a situation is
unusual or requires management action.

(A) exception report

(B) drill-down report

(C) scheduled report

(D) demand report

Answer : (A)

40. In the context of types of reports generated by management information systems (MIS), a(n)
_____ summarizes the previous day's critical activities in an organization and is typically available at
the beginning of each workday.

(A) exception report

(B) drill-down report

(C) key-indicator report

(D) demand report

Answer : (C)

41. In the context of financial MIS subsystems and outputs, a _____ is an independent business unit
that is treated as a distinct entity enabling its revenues and expenses to be determined and its
profitability to be measured.

(A) cost center

(B) revenue center

(C) profit center

(D) sales center

Answer : (C)

42. _____ are divisions within a company that do not directly generate revenue.

(A) Profit centers

(B) Sales centers

(C) Revenue centers

(D) Cost centers

Answer : (D)

43. A(n) _____ is an assessment of how well management uses the resources of an organization and
how effectively organizational plans are being executed.

(A) external audit

(B) financial audit

(C) internal audit

(D) operational audit

Answer : (D)

44. _____ auditing is performed by employees within an organization.

(A) Employee
(B) Financial

(C) Internal

(D) Operational

Answer : (C)

45. The _____ MIS subsystems and outputs are used to monitor and control the flow of materials,
products, and services through an organization.

(A) human resources

(B) marketing

(C) financial

(D) manufacturing

Answer : (D)

46. In the context of number of technologies used to control and streamline a manufacturing
process, the goal of a _____ system is to tie together all aspects of production, including order
processing, product design, manufacturing, inspection and quality control, and shipping.

(A) computer-assisted manufacturing

(B) computer integrated manufacturing

(C) flexible manufacturing system

(D) computer-assisted design

Answer : (B)

47. A _____ MIS uses data gathered from both internal and external sources to provide reporting and
aid decision making in areas of product design, media selection, channel distribution, and product
pricing.

(A) human resources

(B) financial

(C) marketing

(D) manufacturing

Answer : (C)

48. An effective _____ MIS enables an organization to keep personnel costs at a minimum while
serving the required business processes needed to achieve corporate goals.

(A) financial

(B) manufacturing

(C) human resource

(D) sales forecasting

Answer : (C)

49. A typical decision support system (DSS) includes many components including a(n) _____ which
allows decision makers to easily access and manipulate the DSS and to use common business terms
and phrases.

(A) model base

(B) dialogue manager

(C) database

(D) external database access

Answer : (B)

50. A(n) _____ is the component of a decision support system that allows managers and decision
makers to perform quantitative analysis on both internal and external data.

(A) model base

(B) dialogue manager

(C) executive dashboard

(D) database

Answer : (A)

51. The focus of a DSS is on decision-making _____ when faced with unstructured or semistructured
business problems.

(A) accuracy

(B) efficiency

(C) effectiveness

(D) timeliness

Answer : (C)
52. The _____ is NOT a component of the typical DSS.

(A) database

(B) user interface

(C) model base

(D) inference engine

Answer : (D)

53. Developers of _____ try to build on the advantages of individual support systems while adding
new approaches unique to group decision making.

(A) DSS

(B) MIS

(C) GSS

(D) GIS

Answer : (C)

54. The _____ approach forces members of a decision making group to reach a unanimous decision.

(A) Delphi

(B) brainstorming

(C) group consensus

(D) nominal group

Answer : (C)

55. In the context of group decision support system alternatives, _____ can be used when group
members are located in the same building or geographic area and under conditions in which group
decision making is frequent.

(A) decision rooms

(B) wide area decision networks

(C) teleconferencing

(D) local area decision networks

Answer : (D)
SHORTANSWER

56. _____ includes and goes beyond decision making, and it also includes the implementation stage
when the solution is put into effect.Answer : Problem solving

57. The final stage of the problem-solving process during which decision makers evaluate the
implementation is called the _____ stage.Answer : monitoring

58. _____ decisions deal with unusual or exceptional situations and, in many cases, these decisions
are difficult to quantify.Answer : Nonprogrammed

59. In general, computerized decision support systems can either optimize or _____.Answer :
satisfice

60. In the context of computerized decision support systems, a(n) _____ model finds the best solution
to a problem, usually the one that will best help an organization meet its goals.Answer :
optimization

61. In the context of computerized decision support systems, _____ is used when modeling a problem
properly to get an optimal decision would be too difficult, complex, or costly.Answer : Satisficing

62. _____ are commonly accepted guidelines or procedures that experience has shown usually leads
to a good solution.Answer : Heuristics or “Rules of thumb”

63. A(n) _____ provides managers with information that supports effective decision making and
provides feedback on daily operations.Answer : management information system (MIS)

64. _____ reports are a type of MIS reports that are developed to provide certain information upon
request than on a schedule.Answer : Demand

65. In the context of types of reports generated by MIS, _____ reports provide increasingly detailed
data about a situation that helps analysts to see data at a high level first and then at a more detailed
level.Answer : drill-down

66. A(n) _____ MIS provides financial information for workers who need to make better decisions on
a daily basis.Answer : financial

67. A(n) _____ is an organizational unit that gains revenue from the sale of products or
services.Answer : revenue center

68. An organization might hire an outside accounting firm to perform a(n) _____ to assess the
financial condition of the firm and determine whether financial statements and reports produced by
its financial MIS are accurate.Answer : external audit

69. In the context of process control, computers can directly control manufacturing equipment using
_____ systems to control drilling machines, assembly lines, and more.Answer : computer-aided
manufacturing (CAM)

70. _____ is an approach that maintains inventory at the lowest levels without sacrificing the
availability of finished products.Answer : Just-in-time inventory
71. A(n) _____ is an approach that allows manufacturing facilities to rapidly and efficiently change
from making one product to making another.
Answer : flexible manufacturing system (FMS)

72. The purpose of _____ is to analyze the market to identify threats, opportunities, and customer
needs and wants.Answer : market research

73. In the context of subsystems for a marketing MIS, _____ is the combination of various advertising
channels used to meet the objectives of a marketing program.Answer : media mix

74. _____ services are offered by many companies when employees leave the company in order to
help them make the transition.Answer : Outplacement

75. A(n) _____ MIS helps in providing aggregate information on accounts payable, accounts
receivable, payroll, and many other applications.Answer : accounting

76. A(n) _____ is a computer system capable of assembling, storing, manipulating, and displaying
geographically referenced information; that is, data identified according to its location. Answer :
geographic information system (GIS)

77. A(n) _____ DSS is concerned with situations or decisions that come up only a few times during
the life of an organization.Answer : ad hoc

78. A(n) _____ DSS handles situations or decisions that occur more than once, usually several times
per year or more.Answer : institutional

79. In the _____ decision-making approach, members of a group offer suggestions "off the top of
their heads."Answer : brainstorming

80. _____ communications are used by many organizations to support decision making, it ties
together and integrates various communications systems, including traditional phones, cell phones,
e-mail, text messages, the Internet, and more.Answer : Unified

ESSAY

81. Briefly describe the five stage decision-making process.

Answer :

The first stage of the problem-solving process is the intelligence stage, wherein the potential
problems or opportunities are identified and defined, as well as resource and environmental
constraints are investigated. During the design phase, several alternative solutions to the problem
are identified and evaluated for their feasibility. During the choice stage, a course of action is
selected. During the implementation stage, the solution is put into effect. In the monitoring stage,
the implementation is evaluated to determine whether the anticipated results were achieved and to
modify the implementation if needed.

82. Explain the difference between an optimization and satisficing model.

Answer :

An optimization model use problem constraints and finds the best solution to a problem that will best
help an organization meet its goals. A satisficing model is one that finds a good, but not necessarily,
the best solution to a problem. Satisficing is used when modeling a problem properly to get an
optimal decision would be too difficult, complex, or costly. Satisficing does not look at all possible
solutions but only at those likely to give good results.

83. Identify and briefly describe the various kinds of reports frequently produced by an MIS.

Answer :

There are different types of reports generated by an MIS. Scheduled reports are produced
periodically, such as daily, weekly, or monthly. A key indicator report summarizes the previous day's
critical activities in an organization and is typically available at the beginning of each workday.
Demand reports are developed to provide certain information upon request. Exception reports are
reports automatically produced when a situation is unusual or requires management action. Drill-
down reports provide increasing detailed data about a situation.

84. Define the term decision support system (DSS) and briefly describe the basic capabilities of a
DSS.

Answer :

A DSS is an organized collection of people, procedures, software, databases, and devices used to
help make decisions that solve problems. Decision support systems offer the potential to generate
higher profits, lower costs, and better products and services. A DSS can assist with all problem
solving phases, decision frequencies, and varying degrees of problem structure. They can also help
at all levels of the decision-making process.

85. What sort of negative group behavior can lead to ineffective group decision making?

Answer :

In some group settings, dominant individuals can take over a discussion, which can prevent other
members of the group from participating. In other cases, one or two group members can sidetrack
or subvert the group into areas that are nonproductive and do not help solve a problem at hand.
Other times, members of a group may assume that they have made the right decision without
examining alternatives.