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Uma Gupta Introduction to Information Systems. Information Systems for Managerial Decision Making. Learning Objectives. After studying this chapter, you will be able to: Explain how different types of information systems aid decision makers - PowerPoint PPT Presentation
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2000 by Prentice Hall. 10-1
Chapter 10
InformationSystems for
Managerial Decision
Making
Uma GuptaIntroduction to Information Systems
2000 by Prentice Hall. 10-2
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. 10-3
The Three Types of Systems That Support Employee Decision Making
TransactionProcessingSystems
ManagementInformationSystems
IntelligentSupportSystems
ORGANIZATION’SINFORMATIONNEEDS
All three types of systems supportdecisionmaking
2000 by Prentice Hall. 10-4
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. 10-5
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. 10-6
Steps in Processing a Transaction
Enter data
Step 1
Validate data
Step 2
Process thedata intoinformation
Step 3
Store theprocesseddata
Step 4
Generateoutput
Step 5
Support userqueries
Step 6
2000 by Prentice Hall. 10-7
Source Documents
Documents generated where and when a transaction occurs; the source of data for the transaction processing system.
2000 by Prentice Hall. 10-8
On-Line Transaction Processing (OLTP)
Transaction data that are processed instantaneously.
2000 by Prentice Hall. 10-9
Batch Processing
Transactions are accumulated over a certain period of time and processed at periodic intervals.
2000 by Prentice Hall. 10-10
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.
Data are updated at certain intervals, such as daily, weekly monthly, and so on.
Batch
2000 by Prentice Hall. 10-11
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. 10-12
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. 10-13
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. 10-14
Summary Report
A report that accumulates data from several transactions and presents the results in a condensed form.
2000 by Prentice Hall. 10-15
Exception Report
A report that outlines any deviations between actual output and expected output.
2000 by Prentice Hall. 10-16
Relationship between a TPS and MIS
Goal: Record and Process TransactionsType of Decision Supported: Operational
TRANSACTION PROCESSING SYSTEM
Goal: Produce Summary and Exception Reports
Type of Decision Supported: Tactical
MANAGEMENT INFORMATION SYSTEM
TPS output becomes MIS input
2000 by Prentice Hall. 10-17
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. 10-18
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. 10-19
Components of a Decision Support System
Database management system (DBMS)
Model management system Support tools
2000 by Prentice Hall. 10-20
A Simple Decision-Making Model
Internal Data
External Data
Decision-makingModels
•What-if Analysis•Goal Seeking•Problem Solving•Generate Alternatives•Assess Risk
2000 by Prentice Hall. 10-21
Decision Models
Statistical Models Financial and Accounting
Models Production Models Marketing Models Human Resource Models
2000 by Prentice Hall. 10-22
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. 10-23
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. 10-24
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. 10-25
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 decision-making
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. 10-26
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. 10-27
Components of an Expert System
User Interface
Knowledge Base(captures expert’s knowledge)
Inference Engine(software that helps the system apply knowledgeto solve problems)
2000 by Prentice Hall. 10-28
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. 10-29
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. 10-30
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
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