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Types of decisions

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Executive Support Systems (ESS)Executive Support Systems (ESS)

Decision Support Systems (DSS)Decision Support Systems (DSS)

Management Information Systems (MIS)Management Information Systems (MIS)

Knowledge Work Systems (KWS)Knowledge Work Systems (KWS)

Office Automation Systems (OAS)Office Automation Systems (OAS)Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

Major Types of Systems/ Evolution of information systems

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Information System - Classification By Support Function

Operational Managers

Data Workers

Middle Managers

Senior Mgr Executive Support SystemExecutive Support System

Management Information SystemManagement Information SystemDecision Support SystemDecision Support SystemIntelligent Support SystemsIntelligent Support Systems

Knowledge Management SystemKnowledge Management System

Office Automation SystemOffice Automation System

Transaction Processing SystemTransaction Processing System

5-year sales trendProfit Planning5-year budget forecastingProduct development

Sales Management

Inventory ControlAnnual budgetProduction SchedulingCost AnalysisPricing Analysis

SimulationPgm codingSystem supportWord ProcessingDesktop Publishing

Order ProcessingFulfillmentMaterial MovementA/R, A/P, GLPayrollPOS

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O ffice Automation Systems ( O AS)

Electronic communication of data and infoword processing systems

document management systems

Ex: Fax machine, video conference, word processor

Input : Letters, documentsProcessing : Communication, sophistication (not much processing)O utput : Documents and reports

User : Clerical worker (Data worker)

Focus : communication

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Transaction Processing System (TPS) / EDP

Day to transactions are recorded and processed.

Batch Mode : files are updated periodically

O nline mode : transaction is recorded as it occurs

Input: Day to day transactions

Processing : sorting, listing, merging, updating

O utput : Detailed reports

User : O perational level managers

Focus : Data

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Figure 2-3

Payroll TPS

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Figure 2-4

Types of TPS Systems

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Management Information Systems (M IS)

Purpose : To provide routine reports required to facilitate managerialdecision making, planning, controlling.

Use simple analytical models.

reports such as:

(1) a daily list of employees and

(2) the hours they worked in a month

(3) or a monthly report of expenses as compared to a budgetInput : High volume data

Processing : Analysis, interpretation

O utput : Reports such as summary reportUser : O perational and Middle level managers

Focus : Information

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Figure 2-5

Management Information System (MIS)

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Decision Support Systems (DSS)

Provides managers the necessary info for making informed decisions.

A bit high end systems than M ISO ffer greater computing and higher capabilities.

These systems support complex non-routine decisions .(semistructured)

This information system not only presents the results but alsoexpands the information with alternatives.

Some DSS methodologies Mathematical Modeling Simulation Queries What- If (O LAP-Cubes) Data mining

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Data Analysis / Mining

Decision TreesDecision Trees ClusteringClustering Time SeriesTime Series

SequenceSequenceClusteringClustering

AssociationAssociation Nave BayesNave Bayes

Neural NetNeural Net

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Decision Support System (DSS):

Input : Analytical dataProcessing: Interactive processingO utput: Special reports with best possible

alternatives

User : Middle level managersFocus : O n a decision support

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Product

Process

Cost

Competitors

Promotion

Analytical modelcomprises of-

Graphics &ReportsOR Model

ManagementScience Model

Behavioral Model

Database DSS softwareModel Base

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Figure 2-6

Decision Support System (DSS)

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Difference between M IS and DSS

MI S DSS

Focus is on Information Focus is on decision support

Structured decision making Semi to unstructured decision making

O perational decision making Tactical decision making

Data or TPS output is given as input M IS info or analytical data is given as input

For junior and middle level management For middle level management

Focus is on operational efficiency Focus is on effective decision making

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GDSS(Group Decision Support System)

Targeted to a team of decision makers.Extension/ expansion of DSS.

Three Main Components of GDSS :Three Main Components of GDSS :

1.1. HardwareHardware

1.1. SoftwareSoftware

1.1. PeoplePeople

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GDSS Meeting

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Figure 13-7

Group System Tools

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Features of GDSS

Inputs given by participants are anonymous

Parallel communication

Quiet people can participate equally

Noisy people can t strongly drive meeting

Automated record keeping

No of participants can be 40 or even 50

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US Air Force

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Hardware : Conferencing infrastructure

Electronic display Board ScreensNetwork system connecting participants with each other

Software tools : Electronic questionnaires

electronic brainstorming toolsidea organizers

Tools for voting or setting priorities

This software is referred to as Groupware or Workgroup Software

People : Participants, Trained facilitator, Support staff

Three Main Components of Three Main Components of GDSSGDSS

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Databases

Model base GDSS processor GDSS software

Dialoguemanager

External databaseaccess

Users

Access to the internet

and corporate intranet,networks, and other

computer system

Externaldatabases

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Disadvantages of GDSS

Cost infrastructure costs to provide the hardware andsoftware/room/network connectivity can be veryexpensive

Technical Failure power loss, loss of connectivity, reliesheavily on bandwidth and LAN/WAN infrastructure properly setup system should minimize this risk

Perception of messages lack of verbal communicationcould lead to misinterpretation

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Executive Support Systems (ESS)

Targeted for Top level management.Information should be crossfunctional.In the form of summary and precise.

Input : Ext + Int DataProcessing : Graphics, SimulationsO utput : Projections

Ex: 5 Yr operating plan

Focus : Decision support for top management

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Executive Support System

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Knowledge Management Systems (KMS)

An additional level of staff support now exists between top and middlemanagement called knowledge worker.

Financial and marketing analysts Acts as advisors and assistants to both top and middle management.

KMS that support these knowledge workers range from(1) Internet search engines(2) expert systems,

User : Knowledge workersFocus : Providing required information to knowledge workers

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ES (Expert Systems)

These are Knowledge based systems

An information system that captures knowledge or expertise of a specialistand then simulates the thinking of that expert for those with less or noexpertise.

Provides expert advice and acts as expert consultant to users.

Input : Limited dataProcessing : If then kind of analysisO utput : Diagnostic reportsUser : Top managementFocus : O n consultation

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Loan Evaluation System

Works on If CONDITION Then ACTION

If purpose is car, then maximum loan will be X.If tenure of loan is 5 years

If interest rate is 10%

Then EM I will be XXIf borrower s annual income is Y

If his monthly payments are YYIf YY + XX is greater than 40% of Y

then loan request rejectedElse loan request approved.

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Artificial Intelligence

Intelligence : Ability to acquire, understand and apply knowledge.O R Ability to exercise thought and reason.

How does a thief/criminal escape from the cops? What are you doing while playing chess?

AI is an effort to develop computer based system that behaves as

human.AI is putting human intelligence in to a machine.

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Attributes of Natural ( Human) and Artificial (Machine)Intelligence

Attributes NaturalIntelligence

ArtificialIntelligence

Ability to use sensors (eyes,ears,touch,smell) H igh Low

Ability to be creative and imaginitive H igh Low

Ability to be adaptive H igh Low

Ability to use variety of information sources H igh H igh

Ability to acquire large amount of external information H igh H igh

Ability to make complex calculations Low H igh

Ability to make series of calculations rapidly andaccurately

Low H igh

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Artificialintelligence

Robotics

Visionsystems

Learningsystems

Natural languageprocessing

Neural networks

Expert systems

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AI Applications

Banks use artificial intelligence systems to organize operations,invest in stocks, and manage properties.

Deep Blue defeated the reigning world chess champion GarryKasparov in 1997 Game playing

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Example: DARPA Grand ChallengeGrand Challenge

Cash prizes ($1 to $2 million) offered to first robots to complete a longcourse completely unassisted

Stimulates research in vision, robotics, planning, machine learning,reasoning, etc

2004 Grand Challenge: 150 mile route in Nevada desert Furthest any robot went was about 7 miles but hardest terrain was at the beginning of the course

2005 Grand Challenge: 132 mile race Narrow tunnels, winding mountain passes, etc Stanford 1 st, CMU 2nd, both finished in about 6 hours

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2004: Barstow, CA, to Primm, NV

150 mile off-road robot raceacross the M ojave desertNatural and manmade hazardsNo driver, no remote controlNo dynamic passingFastest vehicle wins the race(and 2 million dollar prize)

150 mile off-road robot raceacross the M ojave desertNatural and manmade hazardsNo driver, no remote controlNo dynamic passingFastest vehicle wins the race(and 2 million dollar prize)

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Stanley RobotStanford Racing Team www.stanfordracing.org

Next few slides courtesy of Prof.Sebastian Thrun, Stanford University

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Figure 2-9

INTERRELATIONSHIPS AMONG SYSTEMS

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Type of InformationSystem

Input Processing Output User

OAS - OfficeAutomation System

Letters &Documents

Communication,Sophistication

Documents Clerical

TPS/O LTP -

Transaction Processingsystem

Day-to-DayTransactions

Sorting, Listing,Merging, Updating Detailed Reports Operations Staff

MISSummary

InformationAnalysis,

InterpretationSummary Report

Middle Managers and jrmanagers

DSS Analytical Data Interactive Processing Special Reports Middle Managers

ESSExceptionalInternal +

External Data

Graphics,Simulations,Interactiv

eProjections Senior Management

KS/ES - Knowledgebased/Expert Systems

Limited DataRule Based: If .Then

kind of AnalysisDiagnostics Reports

Top Management, TopProfessional (Drs)

Types of Information Systems

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Functional Subsystems of M IS

MarketingManufacturing

LogisticsPersonnelFinance and Accounting

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SYSTEMSFROM A FUNCTIONAL PERSPECTIVE

Figure 2-1

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TYPES OF SYSTEMS

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Cross- Functional Business Processes

All the departments in the organization are interlinked.

Employees of these different departments work together to

complete a piece off work

Example: O rder Fulfillment Process

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Figure 2-12

The Order Fulfillment Process

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Information

Information is acquired from data .

Data Processing Information

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Information Processing Operations

Operations:

1. Capturing

2. Verifying

3. Classifying

4. Sorting

5. Calculating

6. Storing

7. Dissemination/Communication

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TYPES OF INFORMATION

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1. Strategic Level Information

Used by top level managementRequired for long term planningDraws heavily from external environment

Unstructured

Example :

Futuristic information such as

1. Emerging technologies2. Competition3. Consumer preferences4. Socio political changes

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2. Tactical Level Information

Used by middle Level management.For medium or short term planning.Drawn mostly from int. environment & partly from ext environment.

Semistructured

Example :

Last quarters sales + Customer perceptions about the product/Competitor s strategy/ Competitor s pricing

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3. Operational Level Information

Used by operational level managersFor short term planningDrawn heavily from internal environmentStructured

Example :

No of orders in hand, stock in hand for daily production

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Characteristics Strategic Level Tactical level Operational level

Source Largely ExternalInternet and

External Largely Internal

TimelinessH istorical and

forecastRecent Very recent

Frequency of use InfrequentRegular

(monthly/weekly)Frequently

(daily/hourly)

Required Not urgent Fairly up - to - dateurgent and up - to -

date

Accuracy low Fairly accurate H igh accurate

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Internal Information

Information generated within and about the organization.

Type of Internal Information:

1. Marketing and Sales Information:O n performance, revenues, market shares, distribution channels etc.

2. Production and Operational information:O n assets, capacities, lead time, quality, standard, etc.

3. Financial Information:O n profits, costs, margins, cash flow, investments, etc.

4. Research and Development Information:on new products and development copyrights, knowledge base, etc.

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External Information

Information generated through agencies outside the organization

Types of External Information:

1. Market Competition:

What is the pricing structure of competitors?What are our competitors doing? Etc

2. Technological Changes:

Can the organization adapt to take advantage of new technology?How will it affect the organization?

3. Industrial Structure:How many new firms are entering in the industry? Etc.

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Q uantitative Information

Quantitative information provides numerical information

This numerical information is very important for the information

user .

Example: Sales Report Cash flow statement

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Q ualitative Information

Such type of information does not contain any numerical data.

Example :

How happy are you to be employed by XYZ company?

Customer satisfaction survey reportAdvertisement effectiveness

1 2 3 4 5

Very happy Fairlyhappy

Neither happynor unhappy

FairlyUnhappy

Very Unhappy

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Recurring Vs Non Recurring Information

Recurring Information :Collected and reported on regular basis.

Example : Daily, weekly sales report

Non Recurring Information :Collected and reported on selective or exceptional basis.

Example : Market Research ReportFinancial analysis report on new product or new strategy

Pl i g C t l d O ti g I f ti

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Planning, Control and Operating Information:( On Basis of use of Info)

Planning Information :Used for planning activity.Usually be forward looking and subject to some degree of uncertainty.

May include qualitative information as well as quantitativeinformation .

Example :

ForecastingCorporate planning

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Control Information

Used for controlling activity.

Compares actual results and the objectives that have beenpreviously set.

Example:

Quarterly/Annual Sales report

Operating Information:Needed for day to day running of organization

Example :Daily details of products delivered are necessary for invoice.

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TYPES OF INFO

Proprietary/Owne d Public

ProtectedEx:

Trade SecretsCustomer s data

Sales data

Shared

FreeEx:

Population StatisticsEconomic Forecasts

Fee BasedEx:

Govt Publications

Fee BasedEx

Market ResearchO nline Database

FreeEx:

Co s website

Co s publication

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Characteristics / Attributes of Information

Accuracy

Understandability

Timeliness

ReliabilityComplete

Conciseness/ Volume : O nly required info should be given

Value of Information

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Information should have some values, otherwise it would not beworth the cost of gathering processing, and filling it.

The benefits obtainable from the information must alsoexceed the cost of acquiring it.

Benefits : reducing costs, eliminating losses, increasing sales,better utilization of resources

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Appropriateness/Relevance of Information for

ProblemUnderstanding by User Value of Information

None None None (Still Data)

H igh None None (Still Data)

None Some None

Some Good ModerateH igh Good H igh

Critical Good Maximum

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Model of Human as Information Processor

Input fromsensory

receptors

NervousSystem

as Channel

Processingby Brain

NervousSystem

As Channel

Response asOutput

Memory

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The decision Making Process Identify and define

problem

Develop Alternative Solutions

Evaluate alternative solutions

Selectalternative

Implement decision

Evaluate and Control

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The Herbert Simon Model

Three interrelated phases:

1. The intellegence phase

2. The Design Phase

3. The Choice Phase

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1. Intelligence Phase:Identify and define the problem

2. Design phase:Develop diff alternativesEvaluate diff alternatives

3. Intelligence Phase:Selection of one alternative

Does not include the steps :

Evaluating the decision takenControling the decision taken