MANAGEMENT INFORMATION SYSTEMS 8/E

Raymond McLeod, Jr. and George Schell

Chapter 6
Systems Concepts

Copyright 2001 Prentice-Hall, Inc. 6-1

 Four Model Types

1) Physical models
Three dimensional representation such as a scale
model
2) Narrative models
Spoken or written
3) Graphic models
Abstraction of lines, symbols, or shapes
4) Mathematical models
Equation(s) 2PS
EOQ = M
6-2
 A Graphic Model of the
Economic Order Quantity Concept

Cost
Total cost

Purchasing cost
0
EOQ

Order Quantity
6-3
 Sales
Customers Sales
Orders Orders
1.
Edit
Edit Sales
Sales
Edit 2. Orders Orders
1. Sales Enter
Orders Sales
Order Sales
Sales Data Order
Data
Orders
Enter Sales
Orders
Sales 3.
Enter Sales Sales Order Prepare
2. Order Data Orders History File
Sales
Order
Prepare Sales Report Sales
3. Order Report Order
Sales Order Report
History
Sales File
Sales
Orders
Report Manager

A. A Flowchart B. A Data Flow Diagram

6-4
 Uses of Models
All four models facilitate understanding and
communication.

The mathematical model also helps predict

the future.

6-5
 The General Systems Model
Graphic diagram with an accompanying
narrative that depicts all organizations in a
general way using a systems framework
The Physical System
Material flow
Personnel flow
Machine flow
Money flow
6-6
The Physical System of the Firm

Input Transformation Output

Resources Process Resources

Boundary of
the Firm
6-7
 The Conceptual System

Open-loop systems

Closed-loop systems (feedback loop)

Management control

The information processor

6-8
 A Closed-Loop System
Feedback Feedback
Control
Mechanism

Input Transformation Output

Resources Process Resources

6-9
The Physical System of the Firm
as a Controlled System
Information Information
Management

Input Transformation Output

Resources Process Resources

6-10
 A Sales Report of
Fast-Moving Products
Year-to-Date % of Total
Item Number Item Description Sales Volume Year-to-Date Sales

400293 BRAKE PIPE $1,702.93 .068

319421 DOOR HANDLE GASKET 1,624.00 .065
786402 CLUTCH DRIVEN PLATE 1,403.97 .056
190796 CARPET SNAP 1,102.00 .044
001007 SPARK PLUG 1,010.79 .040
739792 HOSE CLIP 949.20 .038
722210 RUBBER PLUG 946.73 .038
410615 UPPER DOOR HINGE 938.40 .038
963214 REAR TUBE SHOCK 922.19 .037
000123 NEEDLE VALVE 919.26 .037

Totals $11,519.47 .461 6-11

 Information is Gathered from All of
the Physical System Elements

Information Information
Management

Input Transformation Output

Resources Process Resources

6-12
 Supplier Analysis Report
Item Number: 410615
Item Description: Upper Door Hinge
SUPPLIER LAST UNIT DAYS TO PCT.
NUMBER NAME DATE P.O. # QTY. PRICE RECEIPT REJECTS

3062 CARTER 7/12 1048-10 360 $8.75 12 .00

& SONS
4189 PACIFIC 4/13 962-10 350 9.10 08 .02
MACHINING
0140 A.B. 1/04 550-10 350 8.12 03 .00
MERRIL
2111 BAY AREA 8/19 1196-10 360 11.60 19 .04

6-13
A Job Status Report Provides Information
about the Transformation Process
Job Number: 84-182
Customer: Wankel Automotive

CURRENT STATUS
Step 4-weld supports to frame
Department 410-Welding
Date and Time Begun-10/8; 10:15A
Projected Job Completion-10/14; 9:30A
NEXT PROCESS
Step 5-paint frame
Department 632-Paint
6-14
The Information Processor Transforms
Data into Information

Information Information
Management Information
Processor

Data

Input Transformation Output

Process
Resources Resources

6-15
 Conceptual System (cont.)

Dimensions of Information
Relevancy
Accuracy
Timeliness
Completeness

Too Much Information is called Information Overload

6-16
 Conceptual System (cont.)

Standards Objectives
Measure of acceptable Overall goal that a
performance system is to obtain
Usually stated in Systems have one or
specific terms more objectives
Used to control
physical system
Consists of:
Management
Information processor
Standards
6-17
A Comparison of Objectives and Standards
Objectives Standards of Performance
Satisfy Customer Achieve an annual sales volume of at least $25 million
Needs Maintain a 20% share of the market
Maintain an annual growth rate of 15%
Produce a return Pay dividends to stockholders each quarter
on investment for Maintain the price of the firms common stock above
the owners $85 per share
Realize an after-tax profit of 15% of sales
Operate efficiently Maintain a record of accident-free days
Keep employee turnover below 10%
Invest in the future Invest in a minimum of 15% of sales revenue in research
and development
Develop sources Achieve stockout on no more than 2% of the items in
inventory during the year
of supply
Keep the number of backorders to less than 5% of all
orders processed
Have no plant shutdowns due to unavailable materials
Operate ethically Have no legal actions filed against the firm by
customers, suppliers, and the government 6-18
Performance Standards are Made Available to Both
Management and the Information Processor

Standards

Information Information

Information
Management Processor

Data

Input Transformation Output

Resources Resources
Process
6-19
 Conceptual System (cont.)

Management by exception
Compares standards with information output of
system
Manager becomes involved when system falls
outside range of acceptable performance
Capability provided by CBIS

6-20
 Conceptual System (cont.)

Critical Success Factors (CSFs)

A CSF is one of the firms activities that has a
strong influence on the firms ability to meet its
objectives
Firms have multiple CSFs
CSFs focuses attention on a portion of a firms
activities

6-21
 Changes are Made in the Physical
System Through the Decision Flow
Standards

Decisions Information Information

Management
Processor

Data

Input Transformation Output

Resources Process Resources

6-22
 Conceptual System (cont.)

Decision Flow
Data is transformed into information by the
information processor
Manager transforms information into decisions

6-23
 The General Systems Model of the Firm
Environment

Standards

Information
and
Decisions Information Data
Management Information
Processor

Data
Physical
Resources Physical
Resources
Input Transformation Output
Process Resources
Resources
6-24
 General Systems
Model in Context

Helps adjust firm

Provides a sense of stability
Provides mental picture of what to expect

6-25
 Problems -- Good and Bad

Problem solving
Suppress harmful effects
Capitalize on opportunity for benefit
Decision
The act of selecting a strategy or action

6-26
Elements of Problem Solving

Desired state Difference =

Current state } Solution Criterion
Constraints
Internal -- limited resources
Environmental -- pressures to restrict resource
flows

6-27
 Elements of the
Problem Problem-Solving
Process

Elements of the conceptual system

Alternate
Standards Desired state solutions
Problem
Current state solver
(manager)
Information Constraints

Solution
6-28
 Problems versus Symptoms

Know the difference

Symptoms are produced by the problem
The problem causes the symptoms
When the problem is corrected the symptoms
will cease, but not vice versa

6-29
 Problem Structure

Structured
Elements and relationships understood
Unstructured
No elements or relationships understood
Semistructured
Some elements understood
DSS concept of managers and the computer
working jointly towards a solution
6-30
 Problem Structure

Computer Manager
Solve DSS Solve

Structured Semi-structured Unstructured

6-31
 The Systems Approach

John Dewey, 1910

Columbia philosophy professor
1. Recognize the controversy Problem
2. Weigh alternative claims
3. Form a judgment Solution

6-32
 Phases and Steps of the Systems Approach
Phase I: Preparation Effort
Step 1. View the firm as a system
Step 2. Recognize the environmental system
Step 3. Identify the firms subsystems

Phase II: Definition Effort

Step 4. Proceed from a system to a subsystem level
Step 5. Analyze system parts in a certain sequence

Phase III: Solution Effort

Step 6. Identify the alternative solutions
Step 7. Evaluate the alternative solutions
Step 8. Select the best solution
Step 9. Implement the solution
Step 10. Follow up to ensure that the solution is effective

Decisions are made at each step of

6-33
the definition and solution phases
 Preparation Effort
Step 1 View the firm as a system

Step 2 Recognize environmental system

Step 3 Identify the firms subsystems

Business areas
Levels of management
Resource flows

Steps taken in any order or at the same time 6-34

 The Systems Approach Requires Decision Making
PHASE STEP DECISION
Where is the problem?
4. Proceed from a system
Definition to a subsystem level. Do new data need to be gathered, or do data
already exist?
Effort
5. Analyze system parts in a How will data be gathered?
certain sequence. What is causing the problem?
How many alternatives should be identified?
6. Identify alternative Are these alternatives feasible?
Solution solutions.
Which criteria should be used?
Effort
7. Evaluate the alternative How does each alternative measure up to
solutions. each criterion?
Do all criterion have equal weight?
8. Select the best solution. Is there enough information to make a
selection?
Which alternative measures up best to the
criteria?
9. Implement the solution. When should this solution be implemented?
How should the solution be implemented?
Who should perform the evaluation?
10. Follow up to ensure that How well is the solution meeting the
the solution is effective. objectives? 6-35
 Each Functional Area is a Subsystem
President

Marketing Subsystem Manufacturing Subsystem Finance Subsystem

Human Resources Information Services

Subsystem Subsystem
6-36
Something Triggers the Definition Effort

The trigger can be:

1.An action
2.The passage of time
3. From within the firm or the environment

6-37
 Definition Effort
Step 4: Proceed from System to Subsystem
Level
Each level is a system
Are subsystems integrated into a smoothly
functioning unit?
Does the subsystem need to be broken down
further?

6-38
 Definition Effort [cont.]
Step 5: Analyze System Parts in a Certain
Sequence
1. Evaluation standards. They must be valid,
realistic, understandable, measurable
2. Compare system outputs with standards
3. Evaluate management
4. Evaluate the information processor
5. Evaluate the inputs and input resources
6. Evaluate the transformation processes
6-39
7. Evaluate the output resources
 Each Part of the System Is Analyzed in Sequence
1.
Standards

3. 4.
Information
Management
processor

5. Input 6. 7. 2.
Inputs. + resources
Transformation Output Outputs
processes resources

6-40
 Solution Effort
Step 6: Identify alternatives
Find different ways to solve the same problem
Brainstorming
Joint Application Design (JAD) session
Step 7: Evaluate alternative solutions
Step 8: Select the best solution
Analysis
Judgment
Bargaining

6-41
Final Steps of the Solution Effort

Step 9: Implement the solution

Step 10: Follow-up to ensure that the

solution is effective

6-42
An Integrative Model of the Systems Approach

Definition Effort
4. Proceed from a system to a
subsystem level
5. Analyze system parts in a certain
sequence

Solution Effort
6. Identify alternative solutions
7. Evaluate the alternative solutions
8. Select the best solution
9. Implement the solution
10. Follow-up to ensure solution is effective

6-43
 Review of Systems Approach
Integrating each step of the systems
approach is a managerial challenge
Managerial preparation effort is a good
starting point
Next, manager engages in functional
decomposition
Definition effort
Finally, manager solves problem
Solution effort
6-44
 Summary

Models are abstractions of reality

Four types of models
General systems model
Physical system
Conceptual system
Information Processor
Computer
Noncomputer
6-45
 Summary [cont.]

Management by exception
Managerial problem solving
Classification of problems
Structured
Unstructured
Use of the systems approach

6-46