Download Chapter 10

Uma Gupta
Introduction to Information Systems
Chapter 10
Information
Systems for
Managerial
Decision
Making
 2000 by Prentice Hall.
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Learning Objectives
After studying this chapter, you will be able to:
 Explain how different types of information
systems aid decision makers
 Outline how transaction processing systems
support operational decision making
 Specify how management information systems
help managers make tactical decisions
 Discuss how intelligent support systems support
mid- and top-level managerial decision making
 2000 by Prentice Hall.
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The Three Types of Systems That
Support Employee Decision Making
Transaction
Processing
Systems
ORGANIZATION’S
INFORMATION
NEEDS
Management
Information
Systems
All three types
of systems
support
decision
making
Intelligent
Support
Systems
 2000 by Prentice Hall.
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Transaction Processing
System (TPS)
A system that records company
transactions, in which a
transaction is defined as an
exchange between two or more
business entities.
 2000 by Prentice Hall.
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Intelligent Support Systems
A set of systems that help
managers integrate data,
judgement, and intuition with
their decision-making models
and captures and preserves the
knowledge of a company’s
employees.
 2000 by Prentice Hall.
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Steps in Processing a
Transaction
Step 1
Step 2
Step 3
Enter data
Validate data
Process the
data into
information
Step 6
Step 5
Step 4
Support user
queries
Generate
output
Store the
processed
data
 2000 by Prentice Hall.
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Source Documents
Documents generated where
and when a transaction occurs;
the source of data for the
transaction processing system.
 2000 by Prentice Hall.
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On-Line Transaction
Processing (OLTP)
Transaction data that are
processed instantaneously.
 2000 by Prentice Hall.
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Batch Processing
Transactions are accumulated
over a certain period of time and
processed at periodic intervals.
 2000 by Prentice Hall.
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On-Line versus Batch
Transaction Processing
On-line
Data input device is linked to the
transaction processing system, so
data are processed as soon as they
are generated.
Batch
Data are updated at certain
intervals, such as daily, weekly
monthly, and so on.
 2000 by Prentice Hall.
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Characteristics of a Transaction
Processing System
 Records internal and external transactions that
take place in a company
 Is used mostly by lower-level managers to make
operational decisions
 Stores data that are frequently accessed by
other systems
 Is ideal for routine, repetitive tasks
 Records transactions in batch mode or on-line
 Requires six steps to process a transaction—
data entry, validation, data processing, storage,
output generation, and query support
 2000 by Prentice Hall.
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Management Information
Systems (MIS)
A group of general-purpose,
well-integrated systems that
monitor and control the internal
operations of an organization.
 2000 by Prentice Hall.
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Management Information
Systems for Decision Making
 Management information systems (MIS)
provide middle managers with the
information necessary to make
semistructured decisions
 The main input to an MIS is usually the
transaction processing system and other internal
company sources
 Summary and exception reports are the most
common output of a MIS
 2000 by Prentice Hall.
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Summary Report
A report that accumulates data
from several transactions and
presents the results in a
condensed form.
 2000 by Prentice Hall.
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Exception Report
A report that outlines any
deviations between actual
output and expected output.
 2000 by Prentice Hall.
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Relationship between a TPS
and MIS
TRANSACTION PROCESSING SYSTEM
Goal: Record and Process Transactions
Type of Decision Supported: Operational
TPS output becomes MIS input
MANAGEMENT INFORMATION SYSTEM
Goal: Produce Summary and Exception
Reports
Type of Decision Supported: Tactical
 2000 by Prentice Hall.
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Intelligent Support Systems
 Systems that augment a manager’s
intelligence and expertise are called
intelligent support systems (ISS)
 Decision support systems (DSS)
 Executive information systems (EIS)
 Artificial intelligence and expert
systems (ES)
 2000 by Prentice Hall.
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Decision Support Systems
A set of interactive software
programs that provide
managers with data, tools, and
models to make semistructured
decisions.
 2000 by Prentice Hall.
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Components of a Decision
Support System
 Database management
system (DBMS)
 Model management system
 Support tools
 2000 by Prentice Hall.
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A Simple Decision-Making
Model
Internal Data
Decision-making
Models
•What-if Analysis
•Goal Seeking
•Problem Solving
•Generate Alternatives
•Assess Risk
External Data
 2000 by Prentice Hall.
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Decision Models
 Statistical Models
 Financial and Accounting
Models
 Production Models
 Marketing Models
 Human Resource Models
 2000 by Prentice Hall.
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Group Decision Support
Systems (GDSS)
Computer-based systems that
enhance group decision making
and improve the flow of
information among group
members.
 2000 by Prentice Hall.
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Key GDSS Features
 Electronic questionnaires
 Filled out on computers rather than paper
 Electronic brainstorming tools
 Tools that allow anonymous expression and
sharing of ideas using computers
 Idea organizers
 Tools that allow groups to coordinate, compile,
and prioritize
 Voting tools
 Tools that allow people to vote for an idea from a
set of choices
 2000 by Prentice Hall.
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Executive Information
Systems (EIS)
Software that analyzes and
presents information to
executive decision makers in a
useful, friendly, and customized
format.
 2000 by Prentice Hall.
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DSS and EIS Characteristics







DSS and EIS provide middle and top managers with decision
support.
Both DSS and EIS are intuitive, interactive, user-friendly systems.
DSS and EIS are menu-driven and often have excellent color and
graphic capabilities.
Both systems use internal and external data to solve problems.
A DSS uses internal and external data and different decisionmaking models to provide managers with alternatives to a given
problem. An EIS provides managers with expert information in
the form of analysis and reports.
Both systems are equipped with decision-making tools such as
“what-if” analysis and ‘goal seeking”. EIS is also equipped with
drill-down capabilities.
A DSS can support both individual and group decision making.
DSS that support group decision making are known as group
decision support systems (GDSS).
 2000 by Prentice Hall.
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Artificial Intelligence (AI)
and Expert Systems (ES)
 Artificial intelligence is a field of
computer science that studies the
design and development of
computer systems that mimic
human intelligence.
 Expert systems are computer
programs that capture the
knowledge of a human expert and
use it to solve complex problems.
 2000 by Prentice Hall.
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Components of an Expert
System
User Interface
Knowledge Base
(captures expert’s
knowledge)
Inference Engine
(software that helps the
system apply knowledge
to solve problems)
 2000 by Prentice Hall.
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Characteristics of an Expert
System
 An expert system is a software program that
captures the knowledge and problem-solving
skills of a human expert.
 Expert systems are not targeted at any one level
of management.
 Expert systems are ideally suited for problems
that require knowledge, intuition, and judgment.
 Expert systems, unlike DSS and EIS, can replace
the decision maker.
 The three main components in an expert system
are the knowledge base, the inference engine,
and the user interface.
 2000 by Prentice Hall.
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Business Guidelines for
TPS, MIS, and ISS Success
 Get the Commitment of Top Management
 The CIO must convince top management of the
link between IS and quality managerial decision
making
 The More Integrated the System, the Greater
the Benefits
 Without integrated systems, decisions will be
made in isolation and the net impact will be
delayed and often confused decisions
 2000 by Prentice Hall.
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Business Guidelines for TPS,
MIS, and ISS Success (cont.)
 Benefits Are More than Just Bottom Line
 In some cases a simple cost-benefit analysis may
not be sufficient to make the investment decision
 Business Drives the Choice of Information
Systems Technology, Not the Other Way
Around
 Investing in technology for the sake of technology
is a disaster waiting to happen
 T Is for Trust
 Trust develops when the IS department delivers
successful and meaningful IS and IT services
 2000 by Prentice Hall.
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