Information systems forManagerial Decision

Chapter 9

Form of the Reports

Line chart

Bar chart

Pie chart

Image

Management tasks

Planning: goal seeking and strategy design

Organisation: develop organisational structures

Personnel: hiring , training , nominating

Management: motivation and communication

Guiding: evaluation of performance and draw conclusions

Management roles

The management has several roles to play: concerning persons

managecontact person

concerning informationcontroldistribute

concerning decisions takeproblem solvingdistribution of the resourcesnegotiate

Management levels

Strategic: strategic planning and management support for the direction committee

Tactic: tactic planning and support of the departments by the middle management

Operational: planning and support of the operations by the operations management

O’Brien p. 352

Information Requirements

Decision structure Information properties

Unstructured

Semistructured

Structured

Decisions

Information

Ad hocIrregularCompactNot frequentFuture OrientedExternalBroad

Pre-definedRegularDetailedFrequentHistoricalInternal

Strategic Management

Tactic Management

Operational Management

O’Brien p. 353

Model for the decision making process

Try to find and recognise situations that require a decision

Opportunities need to be identified and notified

Design and evaluate differences in behaviour

An information system has to contribute to create and evaluate opportunities

Decide on actions and control the implementation

The information system has to contribute to the decision making on the priorities of alternative decisions and has to provide feed-back for the execution

Researchactivities

Design activities

Choiceactivities

Decision making structure

Operations Management

Cash management

Credit management

Production scheduling

Daily work distribution

Stock management

Billing

Unstructured

Partially structured

Structured

Strategic Management

Planning new business

Company reorganisation

Production planningPlant locationCo-operation

Tactical Management

Work organisationPerformance

Analysis

Personnel evaluationBudgetingProject budgets

Program management

O’Brien p. 354

Decision Support Systems (DSS)

Computer supported Information systems designed to provide interactive and informative support for the managers during the decision making process.

DSS use :

analytical models

specialised databases

input and expertise of the person that has to take the decision

interactive , automated modelling process to support the usage of partially structured and unstructured decisions by individual managers

Ad-hoc quick response systems directed by mangers

Architecture

Hardware : workstation and communication system Software

DSS software packages (DSS generators)• database management• model base management• generate and manage dialogue windows

Datacompany databaseexternal databases personal databases for the manager

Models : libraries of mathematical models and analytical techniques

People

What is a decision support system?

More precise goal than a standard MIS system.The aim is to deliver capabilities and not only to provide information .

Database Model

DBMS MBMS

DGMSUSER

DBMS database management system

MBMS Model base management system

DGMS Dialogue generation and management software

Corporate MIS

TPS

Finance

Marketing

Production

Statistical model

Strategic plan

Operationalmodel

Flowchart analysis of investment decision

Portfoliodata

researchdata

Stockdata

Retrieve Portfolio

display performanceeach industry

pickstrategy

RetrieveResearchreports

Pickstock

graphstockperformance

A

A

No StockOK ?

Yes

projectFuturePerformance

StillOK ?

No

Yes

Purchase

Client

Decision process isfrozen as systemis developed

DSS approach to same problemSet of 4 capabilities

Representation

Operations

Memory aids

Control aids

Portfolio lists Graphs

Research reports

Simulationoutputs

Interface language

Listoperations

Graph operations

Reportoperations

Simulationoperations

Procedureoperations

Work spacerepresentations Storage Databases

Menus Trainingdocuments

A DSS is a decision-making scratch path , backed up by a database , that decision makers can use to support many decision making processes.

Differences

Dimension Microcomputing DSS MIS

Philosophy Provide computing Provide integrated Provide information power to end users tools, data models to end users and simple models and language to users

Objectives Increase productivity Directly impact key Enhance control of knowledge and decisions and enhance and monitoring office workers effectiveness of power of middle decision making managers

Systems Analysis Identify what software Establish what tools Identify information packages suitable for are used in the requirements task at hand decision process

Design Customise package Iterative process Deliver system to task never frozen based on frozen requirements

Three levels of DSS technology

Specific DSSsoftware to guide decision making ( spreadsheets , ... )

DSS generatorspackage of hardware and software , providing tools to build specific

DDS examples : IFPS ( Interactive Financial Planning System ) EIS ( Executive Information System )

DSS toolsbuilding blocks of generatorsspecial purpose languages ( APL )permit rapid development of applications , screens , menus , ...graphics routines , graphics hardware , supporting

telecommunications

Roles to play

Manager or end userresponsible for making key organisational decisionsa DSS must provide information on how things are going

The Intermediaryskilled staffer who helps to schedule manager’s or task force work

The DSS buildermust be familiar with the business problemmust have good understanding of how to make the technology work

The technical supportermember of the data processing groupdevelops and installs DSS generators and toolsDSS requires links to databases , graphic software , ...

The Toolsmithdevelops new technology , new softwareworks often for private vendors

Type of Analytical Model

What-if analysis

Sensitivity analysis

Goal-seeking analysis

Optimise

Examine how changes in selected variables influence other variablese.g.: what is the impact on sales if we spent 10% less on publicity?

Examine how repeated changes in a variable can influence other variables

e.g.: Lower the budget for publicity several years with € 5.000 to discover the relationship between publicity budget and sales

Modify selected variables until a specific variable reaches a pre-defined value

e.g.: Increase the publicity budget until sales reaches € 10M

Determine optimal value for variables

Executive information systems (EIS)

Information systems where the characteristics of modern information reporting systems are combined with characteristics of DSS’s .

Provide direct and easy access to information on CSF’s.Factors for good EIS: Involvement and support of top-management Knowledge of information sources Concentrate on crucial factors Response times Insight in the level of computer knowledge of managers Learning time for the development team Flexibility Ongoing support

Artificial Intelligence

Characteristics of intelligent behaviour think and logical reasoningproblem solving via logical reasoning learn and getting insight based on experiencegather knowledge and apply thiscreativity and imaginationhandle complex and chaotic situations react successfully on new situationsestimate the relative importance of different factors ability to work with ambiguous or incorrect information

AI tries to build computer systems that show this type of behaviour

Artificial Intelligence Family Tree

NaturalLanguage

Expert systems Robotics

Intelligent machines:AI hardware

PerceptiveSystems(vision, hearing)

Human and Artificial Intelligence

Successful AI systems are neither artificial nor intelligent

based on : human expertise

knowledge

selected reasoning patterns

act like textbooks

cannot learn without being rewritten

existing systems extend the powers of experts

they do not substitute experts

they have no common sense

Knowledge-based Expert Systems

An expert system is a knowledge-intensive program that normally requires human expertise.

An expert system can assist decision-making by asking relevant questions and explaining the reasons for adopting certain actions.

Characteristics:they perform some of the problem-solving work of humansthey use knowledge in the form of rules or framesthey interact with humansthey can consider multiple hypotheses simultaneously

Today’s expert systems are quite narrow , they do not think , do not resort to reasoning , do not draw analogies , lack common sense .

Three levels assistant

helps doing routine analysis

Colleagueuser discusses the problem until a joint decision is reached

when system is wrong , user adds additional information

Complete expert automatonmakes the decisions for the user without questions

operates remotely beyond human intervention

not yet applied in practical areas

Components of an expert system

Development team Expert(s)

Knowledge Engineers

Development Interface

Production RulesSemantic netsFrames

User Interfaces

Users

suggestedsolutions

Questions

Answers data

Commands

Corpus ofKnowledge

Shell orDevelopmentenvironment

Expert systems vs. Decision Support Systems

Support of human decision maker

the man or the system

man inquiries system

individuals , groups and

Numeric

complex, broad

ad hoc, uniquefactsno

limited

Copy or replace human advisor

the system

system inquiries man

individuals and groups

symbolic

limited , specialised

repeatingprocedures and factsyes , limited

yes

Goals

Who makes decisions or recommendations?

Direction of the inquiry

Type of support

type of data manipulation

Characteristics of the problem domain

Type of problems

Database contents

Deduction capacity

Explain capacity

DSS ES

ES applications Decision making management

evaluate performances, insurance's , ... Diagnostics / problem solving

help desk, error detection in software, ... Maintenance / planning

maintenance planning , production planning , training , ... Intelligent text / documentation

regulations , security standards , taxation , ... Design / configuration

feasibility studies , assembly schema’s, ... Selection / classification

material selection, information classification, person identification Process management / Steering

machine steering, production control, stock management, ...