CHAPTER

Decision Support Systems and Management Information Systems

Decision Support Systems

Decision Support Systems Are oriented toward assisting in solving both semi-structured and unstructured problems. Can be used for structured problems, too. Offer the potential for higher profits, lower costs, and better products and services.

Structured Problem

Unstructured Problem

When to reorder

Where to a relocate plant...2

TPS, MIS, DSS, and AI/ES

Decision Support Systems (DSS) A DSS is an organized collection of people, procedures, software, databases, and devices used to support problemspecific decision making.

AI/ES

Examples: How will a labor strike affect our

production schedule? What are the potential affects of Cap-and-Trade on our profits? Should we introduce a new line of clothing?

DSS

MIS

TPS
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TPS, MIS, DSS, and AI/ES

Information
AI/ES DSS MIS TPS

Less

More

Less

More

Decision Routine support

I/O

Complex processing/ analysis

Data

More

Less

More

Less

Terms

Optimization Model Finding the best solution to a problem or opportunity. Satisficing Model Finding a good -- but not necessarily the best -solution to a problem or opportunity.. Heuristics (rules of thumb) Commonly accepted guidelines or procedures that usually find a good solution to a problem or opportunity. Time is money. Its not how much you know, but who you know. The moment you believe you are a victim is the moment you become one. Never show Microsoft your new product. If you repeat a lie often enough it becomes the truth.

Terms

Programmed Decisions Decisions made using a rule, procedure, or quantitative method. Sorry, but we cant take checks.

Non-programmed Decisions Decisions dealing with unusual or exceptional situations. Should we start selling on the internet.

Real Decision Support Systems

Office Depot They used Essbase from Arbor Software Corporation

and Compaq 7000 servers. Cost less than 5 million. Using this DSS they found they were carrying too much PC stock in the wrong stores. Using optimizing models, they reduced the number of PC models from 22 to 12. Eliminated unnecessary inventory. Avoided costly markdowns on equipment that was not selling. Saved millions.

Office Depots DSS

Real Decision Support Systems

Scotch Maid They were told by Kmart to use EDI and to ship exactly the right amount of each clothing item to satisfy customer demand--no more and no less. Using a DSS, Scotch Maid was about 99% effective in keeping 144 different items on the shelves with very little in backroom inventory.
Scotch Maids DSS K-Mart

Real Decision Support Systems

Trane Air-conditioning Products Used a DSS to assess the affects of quickly increasing production by 114 air-conditioning units. Determined how long it would take to produce the units. Determined that it would NOT affect existing customers delivery schedules.

Hurricane Andrew South Florida 1992

Real Decision Support Systems

Pitney Bowes ($3.3 billion company) Used a DSS to reduce its office equipment inventory reserve from 30 days to 15 days. Copiers, FAXs, Mailer, Etc. Used APS (Advanced Planning System) DSS. $150,100 to $1 million.

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Real Decision Support Systems

Sikorsky Aircraft Used a DSS to reduce inventory by 50%, while doubling its business. Used APS (Advanced Planning System) DSS. $150,100 to $1 million.
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Real Decision Support Systems

United Airlines Uses a DSS to schedule arrivals, departures, staffing needs, and gate assignment. It has reduced gate conflicts, traffic congestion, and staffing problems.

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Characteristics of a DSS

Characteristics of a DSS
Large amounts of data from many sources. DBMS and data warehouses.
Internets and intranets.

Wide variety of report and presentation formats. Computer screen or printer output. Textual or graphical orientations. Text, tables, line drawings, pie/bar charts, trend lines, etc.

Continue
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Characteristics of a DSS

Characteristics of a DSS (continued)

Drill-down analyses. Complex statistical analyses. Simulation analyses of the real world.
Use models Financial. Statistical. Graphical. Project management.

Optimization, satisficing, and heuristic approaches. What-if analyses. Goal-seeking analyses.

If a company wishes to increase sales by 10%, what must it do.
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DSS vs MIS

MIS Structured problems. Emphasizes information.

Basic MIS reports: scheduled, demand, exception, etc.

DSS Semi/unstructured problems. Emphasizes decision making.

What-if , simulation, goal -seeking .

Fixed format for output. Regularly occurring reports. Text oriented reports. Low user control over MIS.

Flexible format for output. Used when needed. Graphical or text reports. High user control over DSS.

MIS Information

DSS Decisions

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Simons Decision Making Model

Decision Making

Decision Making Model By Herman Simon Three stages: Intelligence

The problem/opportunities are thoroughly investigated.

Intelligence Design Choice

Design Alternative solutions

are developed.

Choice Select an alternative.

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Hubers Expanded Model of Problem Solving

Decision Making

Design Choice Implementation Monitoring

Put solution into effect.

Monitoring .Evaluate implemented solution. Make changes if necessary.

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Problem Solving Model

Problem Solving Model George Huber expanded Simons Model Added Two Stages Implementation

Intelligence

Group Decision Support Systems (GDSS)

GDSS Group decision room. Has the components of a DSS. GroupWare: software designed specifically for decisions made by groups.

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Group Decision Support Systems (GDSS)

Some GDSS Characteristics: Special Design to foster:

Creative thinking.
Effective communication. Good group decision making techniques.

Reduction of negative group behavior.

Dominant individuals taking over the discussion.

Ease of use and flexibility. Anonymous input. Parallel communication.

Two or more individuals can type comments at the same time. Comments instantly seen by all.

Group Decision Room

Automatic record keeping for: voting.

detailed comments. Continue
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Group Decision Support Systems (GDSS)

Some GDSS Characteristics:

Supports different decision making approaches: Delphi approach Brainstorming

Continue
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Group Decision Support Systems (GDSS)

Some GDSS Characteristics (Continued):

Supports different decision making approaches:

Group Consensus Approach

(Forces Unanimous Decision)

Nominal Group Technique

(Group Members Vote)

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Executive Support Systems (ESS)

ESS
A specialized DSS for executives. Individualized for each executive. High ability to analyze, compare, and highlight trends. Mostly used to track critical success factors and for strategic planning.

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Pratt & Whitneys ESS

ESS Tracked key-indicators of strategic plan success:

Used to track engine quality and

reliability by customer. Used to track the quality of service given to individual customers.

Commander EIS by Comshare.

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Management Information Systems

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Management Information Systems

Overview

MIS Inputs
MIS - Outputs Competitive Advantage
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MIS in Perspective
Without these reports, wed be as dumb as we look.

We are the bad guys from Bad Guys Auto.

Primary Purpose of an MIS:

To provide managers with information (reports) for effective decision making and feedback on daily operations.
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MIS Outputs (Reports)

We use these reports: scheduled reports, key-indicator reports, demand reports, exception reports, and drill-down reports. I get turned on by demand reports.

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MIS Scheduled Reports

Just what is a scheduled report for us at Bad Guys Auto? For us, a scheduled report might show how many cars were return last week because of serious defects.

Scheduled Report:
Reports which are produced on a schedule: Daily, weekly, monthly, quarterly, semiannually, and annually.
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MIS Scheduled Report

Scheduled Report

Weekly Defect Report

Week Ending November 22, 19XX

Sold 216

Condition Returns Minor Serious Status 129 19 110 Normal( >50%)

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MIS Key-indicator Report

What is a keyindicator report for us at Bad Guys Auto? For us, a key-indicator report would be the number of defective cars we sold at our daily auction.

Key-indicator Report:
A special type of scheduled report. Daily reports which summarize the previous days critical activities. Usually linked to critical success factors.
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MIS Key-indicator Report

Key-indicator Report

Daily Auction Report

Week Ending November 22, 19XX

Qty 24

Amount As Is $34,023 23

Status Normal
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MIS Demand Reports

Tell us how we use demand reports. Last week I demanded a report showing the revenues for salvaged cars over the last 10 years.

Demand Report: A non-scheduled report needed at the moment by management. A report produced on demand.
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MIS Demand Reports

Demand Report

Salvage Revenues (10 yrs.) Report

Week Ending November 22, 19XX

Cars Lost to Salvage Quanty Amount 24,524 $341,023

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MIS Exception Reports

If we have fewer than 50 percent returns because of defects, an exception report is generated. Tell us how we use exception reports.

Exception Report: A report automatically generated when an unusual event takes place, which usually requires management action.
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MIS Exception Reports

Yes Sir, I saw the exception report. Could it be that we are paying too much for our cars?

Exception Defect Report

Week Ending November 27, 19XX

Sold 126

Condition Returns Minor Serious Status 5 4 1 Abnormal ( <50%)

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MIS Drill-Down Reports

Lets use drill down reports and find out why earnings are up so much. I cant understand it. Our earnings are up 25% for the quarter.

Drill Down Reports: These reports provide increasingly detailed information about a situation.

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MIS Drill-Down Reports

1st Level Earnings by Quarter (Millions) Actual $12.5 $10.8 Forecast $10.0 $10.7 Variance 25.0% 0.9%

2nd Qtr.
1st Qtr.

2007
2007

2nd Level 2nd. Qtr. Gross Sales

Sales and Expenses (Millions) Actual $112.5 Forecast $100.0 Variance 12.5%

Expenses
Profit

$100.0
$12.5

$90.0
$10.0

11.1%
25.0%
3rd Level
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MIS Drill-Down Reports

3rd Level Adams, Tom Jones, Paul

Sales by Salesperson (Millions)

Actual 5.5
$6.2

Forecast $5.2
$6.0

Variance 5.7%
3.3%

Kim, Jim
Robbins, Julia Etc.

$2.3
$15.0 .

$2.5
$1.5 ..

-6.7%
900.0% ..%
Julia Robbins
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MIS Drill-Down Reports

Boys, as you can see. Ive got what it takes.

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MIS Inputs
Our inputs are internal data and external data.

Inputs to an MIS:
Internal Data(Always Used)

What are the inputs to our MIS.

TPS - Transaction Processing System

External Data (Could be Used) Customers, suppliers, competitors, marketplace, etc.

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The End of the Bad Guys

Sir, five people from the States Attorneys Office are here with warrants for your arrests. Theyre accusing you guys of consumer fraud.

Bye, bye bad guys.

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Microsofts Information System

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Characteristics of an MIS
1st Characteristic
Basic Reports
Drill Down Reports Exception Reports Demand Reports Scheduled Reports

Standardized and Fixed Report Formats

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Characteristics of an MIS
2nd Characteristic
Use Internal Data Stored in the Computer System

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Characteristics of an MIS
3rd Characteristic
MIS systems are developed & implemented by IS personnel, not users. Users help in the design.
Systems Analyst Programmer

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Characteristics of an MIS
4th Characteristic
MIS systems require formal requests from users.
Oh please accept this written request.

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MIS for a Competitive Advantage

Americans Sabre System

Sabre American Flights

Sabre System:

Americans flights came up first.

Gave American too much advantage.

Travel Agent

Legal problems.
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MIS for a Competitive Advantage

Uniteds Apollo System

Apollo Uniteds Flights

Apollo System: Uniteds flights came up first. Gave United too much advantage.

Travel Agent

Legal problems.
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MIS for a Competitive Advantage

American Hospital Supplys System

Welcome American Hospital Supply

American Hospital Supply System (AHS):

Online order entry system. AHS now dominates hospital supply market.
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Hospital purchasing agent

Functional Organization of MIS

Integrated MIS Sub-systems
Business transactions
Transaction Data

MIS
R&D MIS HR MIS Marketing MIS Financial MIS Manufacturing MIS Other ... MIS

Basic Reports

TPS

Drill Down Reports Exception Reports Demand Reports Scheduled Reports Key-indicator Reports

External Data

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Functional Organization of MIS

Shared reports Strategic reports Tactical reports Operational reports

Integration by Common Database

Manufacturing MIS systems and databases Database Marketing MIS systems and databases Data extract process Data cleanup process

Shared reports Strategic reports Tactical reports Operational reports

Shared reports Strategic reports Tactical reports Operational reports

Other MIS systems and databases

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Manufacturing MIS (Inputs)

Inputs to the Manufacturing MIS: (1) Strategic Plan: Quality goals Production goals Service goals Constraints

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Manufacturing MIS (Inputs)

Inputs to the Manufacturing MIS: (2) The TPS: Receiving and Inspecting Data Receiving Department. Inspects, accepts, and delivers to depts. Quantity, quality, and arrival of raw materials. Reports used to monitor suppliers.

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Manufacturing MIS (Inputs)

Inputs to the Manufacturing MIS: (3) The TPS: Inventory data. Quantity, use of raw materials, work in process, and finished goods. Reports used to reorder, identify shortages, surpluses, poor quality, and for tracking.

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Manufacturing MIS (Inputs)

Inputs to the Manufacturing MIS: (4) The TPS: Personnel data. Labor data using salaries, time cards and industrial data collection devices. Reports used to estimate labor costs and develop time schedules.

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Manufacturing MIS (Inputs)

Inputs to the Manufacturing MIS: (5) The TPS: Order Processing. Placing, canceling, and making adjustments to orders.. Reports used for production scheduling, labor and raw material requirements. Could be hooked to EDI.

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Manufacturing MIS (Inputs)

Inputs to the Manufacturing MIS: (6) External sources: New manufacturing and design techniques collected from outside companies, journals, seminars. Prediction of labor and material costs from labor supply and inflation data.

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (1) Design and Engineering CAD - Computer-Assisted Design Aids in the design of new products. Aids in updating existing products. Used to analyze problems with existing products.

CAD

AutoCAD

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (2) Master Production Scheduling Provides a detailed plan for every item to be manufactured. Indicates the quantity to be produce by time period, such as, the disks below.

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (3) Inventory control Automatic reordering, forecasting, shop reports and documents. EOQ- Economic Order Quantity. ROP- ReOrder Point. MRP- Material Requirements and Planning.
More

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (3) Inventory control MRPII - Manufacturing Resource Planning, which focuses on three questions for finished products: What does the customer need?
Demand forecasting.

What do we have in inventory?

Inventory control.

What should we make?

Production planning.

More

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (3) Inventory control MRPII - Manufacturing Resource Planning, which focuses on three questions for unfinished products: What materials are needed?
Bill of materials.

What do we have in inventory?

Inventory control.

What do we have to get?

Supply planning.

More

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Lucent Technologys Inventory Control system

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (3) Inventory control JIT - Just-In-Time Materials and supplies are delivered JUST in time for use. Auto industry approaches zero inventory. Has been very successful.

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems:
(4) CAM (Computer Assisted Manufacturing). Computers that directly control production equipment: Robots. Drilling Machines. Welding Machines. Assembly Lines. Have self-diagnostic routines. Usually easy to program.

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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (5) CIM (Computer Integrated Manufacturing). CIMs goal is to tie all aspects of production together. CIM
Harley Design
Manufacturing Shipping

Order Processing

Inspection
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Manufacturing MIS (Subsystems)

Manufacturing MIS subsystems: (5) CIM (Computer Integrated Manufacturing). CIMs goal is to tie all aspects of production together.

Play Nucor Steel video-1. (11 minutes) Play Nucor Steel video-2. (5 minutes)

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