Download - DSS-MIS Ch2

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C H A P T E R

Decision Support Systems Decision Support Systems and Management and Management

Information SystemsInformation Systems

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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

When to reorder …

Unstructured Problem

Where to a relocate plant...

Decision Support Systems

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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 problem-specific decision making.

• 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? TPS

MIS

DSS

AI/ES

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TPS, MIS, DSS, and AI/ES

TPS

MIS

DSS

AI/ESInformation

Data

Less

Routine

More

More

Decisionsupport

Less

Less

I/O

More

More

Complexprocessing/

analysis

Less

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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.

• It’s 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.

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Terms

Programmed Decisions Non-programmed Decisions

Decisions made using a rule, procedure, or quantitative method.

Decisions dealing with unusual or exceptional situations.

Sorry, but we can’t take

checks.

Should westart selling

on the internet.

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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 Depot’s DSS

Real Decision Support Systems

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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 Maid’s DSS K-Mart


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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 AndrewSouth Florida

1992


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Pitney Bowes ($3.3 billion company) • Used a DSS to reduce its office equipment inventory reserve from 30 days to 15 days.

• Copiers, FAX’s, Mailer, Etc.• Used APS (Advanced Planning System) DSS.

• $150,100 to $1 million.


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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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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• 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.

Characteristics of a DSS

Continue

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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.

Characteristics of a DSS

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DSS vs MIS

MIS• Structured problems.• Emphasizes information.

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

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

MIS “Information” DSS “Decisions”

DSS• Semi/unstructured problems.• Emphasizes decision making.

• “What-if” , simulation, goal -seeking .

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

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Simon’s Decision Making Model

Decision Making Model •By Herman Simon•Three stages:• Intelligence• The problem/opportunities are thoroughly investigated.

• Design• Alternative solutions are developed.

• Choice• Select an alternative.

Intelligence

Design

ChoiceDec

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akin

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Huber’s Expanded Model of Problem Solving

Problem Solving Model • George Huber expanded Simon’s Model• Added Two Stages• Implementation• Put solution into effect.

• Monitoring•.Evaluate implemented solution.• Make changes if necessary.

Intelligence

Design

ChoiceDec

isio

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akin

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Monitoring

Implementation

Pro

ble

m S

olvi

ng

Mod

el

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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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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.

• Automatic record keeping for:• voting.• detailed comments.

Group Decision Room

Continue

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Some GDSS Characteristics:• Supports different decision making approaches: Delphi approach


Brainstorming

Continue

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Some GDSS Characteristics (Continued):• Supports different decision making approaches:


Nominal Group Technique

(Group Members Vote)

Group Consensus Approach

(Forces Unanimous Decision)

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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 & Whitney’s 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

Functions

MIS Inputs

MIS - Outputs

Characteristics

Overview

Competitive Advantage

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MIS in Perspective

Primary Purpose of an MIS:• To provide managers with information

(reports) for effective decision making and feedback on daily operations.

Without these reports, we’dbe as dumb as we look.

We are the bad guysfrom Bad Guy’s Auto.

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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 bydemand reports.

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Just what is ascheduled reportfor us at Bad Guy’sAuto?

MIS Scheduled Reports

Scheduled Report:• Reports which are produced on a schedule:

• Daily, weekly, monthly, quarterly, semiannually, and annually.

For us, a scheduledreport might showhow many cars werereturn last weekbecause of seriousdefects.

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MIS Scheduled Report

Weekly Defect ReportWeek Ending November 22, 19XX

Scheduled Report

ConditionSold Returns Minor Serious Status 216 129 19 110 Normal( >50%)

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MIS Key-indicator Report

Key-indicator Report:• A special type of scheduled report.• Daily reports which summarize the previous

day’s critical activities.• Usually linked to critical success factors.

What is a key-indicator reportfor us at Bad Guy’sAuto?

For us, a key-indicatorreport would be thenumber of defective carswe sold at our dailyauction.

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MIS Key-indicator Report

Daily Auction ReportWeek Ending November 22, 19XX

Key-indicator Report

Qty Amount As Is Status24 $34,023 23 Normal

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MIS Demand Reports

Demand Report:

• A non-scheduled report needed at the moment by management.

• A report produced on demand.

Tell us how weuse demand reports.

Last week I demandeda report showing therevenues for salvagedcars over the last 10years.

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MIS Demand Reports

Salvage Revenues (10 yrs.) ReportWeek Ending November 22, 19XX

Demand Report

Cars Lost to Salvage Quanty Amount

24,524 $341,023

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MIS Exception Reports

Exception Report:

• A report automatically generated when an unusual event takes place, which usually requires management action.

Tell us how weuse exceptionreports.

If we have fewer than50 percent returnsbecause of defects,an exception reportis generated.

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MIS Exception Reports

Yes Sir, I saw the exceptionreport. Could it be that weare paying too much for ourcars?

Exception Defect ReportWeek Ending November 27, 19XX

ConditionSold Returns Minor Serious Status 126 5 4 1 Abnormal ( <50%)

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MIS Drill-Down Reports

Drill Down Reports:

• These reports provide increasingly detailed information about a situation.

I can’t understand it. Ourearnings are up 25% forthe quarter.

Let’s use drill downreports and find outwhy earnings are upso much.

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2nd Qtr. 2007 $12.5 $10.0 25.0%

1st Qtr. 2007 $10.8 $10.7 0.9%

Earnings by Quarter (Millions)

Actual Forecast Variance

1st Level

Gross Sales $112.5 $100.0 12.5%

Expenses $100.0 $90.0 11.1%

Profit $12.5 $10.0 25.0%

Sales and Expenses (Millions)

2nd. Qtr. Actual Forecast Variance

2nd Level

3rd Level

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Adams, Tom 5.5 $5.2 5.7%

Jones, Paul $6.2 $6.0 3.3%

Kim, Jim $2.3 $2.5 -6.7%

Robbins, Julia $15.0 $1.5 900.0%

Etc. ……. ….. ……..%

Sales by Salesperson (Millions)

Actual Forecast Variance

3rd Level

Julia Robbins

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Boys, as you can see.I’ve got what it takes.

Bad G

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MIS Inputs

Inputs to an MIS:• Internal Data(Always Used)

• TPS - Transaction Processing System• External Data (Could be Used)

• Customers, suppliers, competitors, marketplace, etc.

What are the inputsto our MIS.

Our inputs are internal data and external data.

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The End of the Bad Guy’s

Sir, five people from the State’sAttorney’s Office are here withwarrants for your arrests. They’reaccusing you guys of consumerfraud.

Bye, bye bad guy’s.

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Microsoft’s Information System

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Characteristics of an MIS

1st Characteristic

Drill Down ReportsException Reports

Demand ReportsScheduled Reports

Basic Reports Standardized and Fixed Report Formats

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2nd Characteristic

Use Internal Data Stored in the Computer System

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3rd Characteristic

MIS systems are developed & implemented byIS personnel, not users. Users help in the design.

Systems Analyst Programmer

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4th Characteristic

MIS systems require formal requests from users.

Oh please acceptthis written request.

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Travel Agent

MIS for a Competitive Advantage

American’s Sabre System

SabreAmerican

Flights

Sabre System:

•American’s flights came up first.

•Gave American too much advantage.

•Legal problems.

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Travel Agent


United’s Apollo System

ApolloUnited’sFlights

Apollo System:

•United’s flights came up first.

•Gave United too much advantage.

•Legal problems.

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Hospitalpurchasingagent


American Hospital Supply’s System

WelcomeAmericanHospitalSupply

American Hospital Supply System (AHS):

•Online order entry system.

•AHS now dominates hospital supply market.

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Functional Organization of MIS

FinancialMIS

ManufacturingMIS

MarketingMIS

HRMIS

R&DMIS

Other ...MIS

MIS

Drill Down ReportsException Reports

Demand ReportsScheduled Reports

Basic Reports

Key-indicatorReports

Businesstrans-actions

TPS

ExternalData

TransactionData

Integrated MIS Sub-systems

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Functional Organization of MIS

Integration by Common Database

ManufacturingMIS systemsand databases

Marketing MISsystems anddatabases

Other MISsystems anddatabases

Shared reportsStrategic reports

Tactical reportsOperational reports





Dataextractprocess

Datacleanupprocess

Database

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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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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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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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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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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:(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:(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 Technology’s Inventory Control system

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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:(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:(5) CIM (Computer Integrated Manufacturing).• CIM’s goal is to tie all aspects of

production together.


Design

Order Processing

Shipping

Harley

Manufacturing

Inspection

CIM

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Manufacturing MIS subsystems:(5) CIM (Computer Integrated Manufacturing).• CIM’s goal is to tie all aspects of

production together.


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