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The role of MIS and DSS in managers Decision making process

Dr Mehdi Jamshidian Associate professor Isfahan University E-Mail:mehdijus@yahoo.com Ali Safari M.A. business management E-Mail: a_safari28@yahoo.com Key word: MIS, DSS, Decision making process, Models, Problem solving

Abstract
In todays business world, there are varieties of information systems such as TPS, DAS, KWS, MIS, DSS, ES, CSCWS, GDSS and ESS. Each plays a different role in organizational hierarchy and decision making process. At present article the authors selected two main information systems, namely, MIS and DSS. After discussing the decision making process based on each concept, its characteristics, its relations and their connections to decision-making process are determined. At the same time, different models and figures are presented to enrich the discussion and to clear the status of each MIS and DSS information system in organizational problem solving.

Introduction
For the last twenty years, different kinds of information systems are developed for different purposes, depending on the need of the business. Transaction Process System (TPS) function in operational level of the organization, Office Automation Systems (OAS) and Knowledge Work Systems (KWS) support work at the knowledge level. Higher-level systems include Management Information System (MIS) and Decision Support Systems (DSS). Expert System (ES) applies the expertise of decision makers to solve specific, structured problems. On the strategic level of management there is Executive Support Systems (ESS). Group Decision Support Systems (GDSS) and the more generally described Computer Supported Collaborative Work (CSCW) systems aid group level decision making of a semi structured or unstructured variety. In present article the authors discuss two kinds of information system, namely, MIS, and DSS, then based on each concept, its characteristics, its relation to other one and their relations with decisionmaking process in an organization is discussed

Decision Making Process


In the 1950s, Herbert Simon and James March for the first time introduced a different decision making framework for understanding organizational behavior. Although they labored on the on the

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On the bureaucratic model by emphasizing that individual work in rational organizations and thus behave rationally, their model (which eventually won Simon the Nobel Prize for economics) added a new dimension: The idea that a human beings rationality is limited. By offering a more realistic alternative to classical assumption of rational in decision-making, this model supported the behavioral view of individual and organizational functioning. The model suggested that when an individual makes decision, he examines a limited set of possible alternatives rather than all available options. Individual satisfies: That is, they accept satisfactory or good enough choice, rather than insist on optimal choices. He makes choices that are good enough because he does not search until he finds perfect solution to a problem [1]. Simon divided kinds of decisions into two basic types: programmed and none programmed.

Programmed decisions are routine and repetitive, and the organization typically develops specific way to handle them. For this kind of routine, repetitive problem, standard arrangement decisions are typically made according to established management guideline. Non-programmed decisions, in contrast, are typically one-shot decisions that are usually less structured than programmed decision [2]. Simons model of decision-making has three steps:
Intelligence The problem and opportunities are thoroughly investigated

Design

Alternative solution are developed

Choice

Select an alternative

Figure1. Steps in Simon's Model [2].

After Simon, George Hubers expanded the model of problem solving and added two steps into Simons model [3]:
Intelligence The problem and opportunities are thoroughly investigated

Design

Alternative solution are developed

Choice

Select an alternative

Implementation

Putting solution into effect

Monitoring

Evaluation implemented solution and make change if necessary

Figure 2. Steps in Huber's Model [3].

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After them, G. Anthony Gory and Michael S. Scott Morton (1971) classified problems by problem structure into three levels; structured problem which the ingredients, or variables, that comprise a problem are known and they can be measured quantitatively. Unstructured problem is the one that the manager usually is able to identify and perhaps measure some of its variables. Semi structured problem is between structured and unstructured problems and most business problems are semi structured, then Gory and Morton continued on computer applications in terms of the degree of structure in the problem they are intended to solve and the manager level that they support[4]. Figure 3 below shows Gory and Morton grid.
Management levels
Operation control Management Control Strategic planning

Structured

Accounting receivable Order entry Inventory Control

Budget analysis Engineered cost Short term Forecasting

Tanker fleets mix

Warehouse and factory location

Degree Of Semi Problem structured structured

Production scheduling Cash management

Variance analysis overall budget Budget preparation

Mergers and acquisition New product planning

Unstructured

PERT/ Cost System

Sale and production

R&D planning

Figure 3. The Gory and Morton grid [4].

A review of decision making literature reveals that the core process of decision making process consists of mainly six steps which are shown in figure 4.

Situation analysis

Alternative search

Alternative evaluation

Objective and criteria setting

Making decision

Decision review

Figure 4. The six-step decision making process [2]

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What are the key elements of the situation?

Phase I

What constrain effect the decision?

Situational Analysis

What resources are available?

Is the problem stated clearly? Do group member understand what they will work on? By what criteria will decision-making be judged?

Phase II

Objective Setting

Are those individual most involved in the problem also involved in the decision-making?

Has complete information been sought? Are information holders involved in the decision-making?

Search for Alternative

Phase III
Is a diversity of means used to generate idea?

Is all idea encouraged, regardless of their content?

Do participate recognizing that the process has switched to evaluation?

Phase IV

Are different of option include in the education? Are some alternative pilot-test?

Evaluation of Alternative

Are group member clear that section is occurring?

Phase V

Are they awarding if they are satisfying or optimizing? Are group member committed to the decision?

Making The Decision

Are responsibilities for data collection, analysis and reporting clearly assigned?

Phase VI

Does a comprehensive evaluation plan exist?

Decision Review

Does an evaluation schedule exist?

Figure 5. The six-step decision making process in details

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The six-step decision making process increases the likelihood that a high quality, accepted and ethical decision will result. [2].
Management Information System (MIS)

The management information system (MIS) is one of the major computer based information systems. Its purpose is to meet the general information need of all the managers in the firm or in some organizational subunit of the firm. Subunit can be based on functional areas on management levels. There are many definitions for MIS, but one of the appropriate definitions describes management information system (MIS) as an organizational method of providing past, present and projection information related to internal operations and external intelligence. It supports the planning, control and operation functions of an organization by furnishing uniform information in the proper time frame to assist the decision maker [3]. The information in MIS describe the firm or one of its major systems in terms of what has happened in the past, what is happening now and what is likely to happen in the future. The information is made available in the form of periodic reports, special report and output of mathematical simulations. Both managers and management use the information output as they make decision to solve the firms problems [5]
An MIS Model An MIS model can be illustrated as in figure 6. The data based contain the data provided by accounting information system. In addition, both data and information are entered from the environment. The data based content is used by software that produces periodic and special report, as well as mathematical model that simulate various aspects of the firm operations. The software output are used by people who are responsible for solving the firms problems. Note that some of the problem solvers can exist in the firms environment. The environment becomes involved when the firm bonds together with such other organization as supplier to form an Inter Organizational Information System (IOS). In that case, the MIS supplies information to the other member of the IOS [5].
Organizational problem solver

Report writing software

Mathematical model

Database

Management Information System

Dat

Informatio

Figure 6. A MIS Model [5] December 20-22 2005 / 1384 1 29

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MIS Characteristics

In general, management information systems have a number of characteristic, which include the following: Report with fixed and standard formation. For example scheduled reports for inventory control may contain the same type of information placed in the same location on the reports. Have report developed and implemented using information system personnel, include systems analysts and computer programmer. Typically analysts and programmers are involved in developing and implementing MIS reports. User is normally involved in the design of the reports, but they are not typically involved in writing the computer programs to produce them. Require formal request from user. Because information systems personnel typically develop and implement MIS reports, a formal request to the information systems department for report is usually required. Use internal data stored in the computer system. MIS reports primarily use internal source of data that are contain in computerized files and databases. It is a typical for an MIS to use data source not stored in computerized file and databases. Produce scheduled demand and exception reports. As discussed, the major type of reports produced by a MIS are scheduled, demand and exception reports [6]. External data is not captured by the organization but are used by the MIS. (i.e., customer, supplier and competitor information).
The role of MIS in problem solving

The MIS and its organizational subsystems contribute to problem solving in the many basic ways.
Organizationwide information resource

The MIS is an organization wide effort to provide problem solving information. The system is a formal commitment by executive to make the computer available to all management. The MIS sets the stage for accomplishments in the other area DSS, the virtual office and knowledge based systems.
Situation analysis, problem identification and understanding

The main idea behind the MIS is to keep a continuous supply of information flowing to the management. The manager uses the MIS primarily to signal problem or impending problems and then to understand them by pinpointing their locations and causes.
Decision Support System (DSS)

A decision support system or DSS is a computer based system intended for use by a particular management or usually or a group of management on any organizational level in making a decision in the process of solving a semi structured problem. The DSS produces output in the form of periodic or special report or the results of mathematical simulations [7]. It is difficult to find problems that are completely structured or unstructured. The vast majorities are semi structured. This means that the DSS is aimed at the area where most problems are found.

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Computer Solution

Manager + Computer (DSS) Solution

Manger Solution

Structured

Semi Structured
Degree of problem structure

Unstructured

Figure 7. The DSS focuses on semi structured problems [7].

A DSS Model

A DSS model is composed of four parts as the following [5]: Data based produces both internal and environmental data are stored in the database. Report writing software produces both periodic and special reports. Periodical reports are prepared according to a schedule and typically they are produced by software that is coded in a procedural language such as COBOL or PL/I. The special report is prepared in response to unanticipated information need and takes form of database by users who use the query language of a DBMS or fourth generation language. Mathematical model produces information as a result either simulations that involve on or more components of the physical system of the firm or facts of its operations. Mathematical models can be written in any procedural programming language. However, special model languages make this task easier and have the potential of doing a better job. Groupware enables multiple problem solvers, working together as a group, to reach solutions. In this particular situation, the term GDSS, or a group decision support system is used. Perhaps the problem solvers represent a committee or a project team. The group members communicate with one another both, directly and by means of the group ware. The reports writing software and mathematical model have always been regarded as necessary DSS ingredients. As the DSS concept was broadened to provide support to two or more problem solver working together as a team or committee, the idea of special group oriented software or groupware, became a reality.

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Environment

Individual problem solver

Other group member

Report writing software

Mathematical models

Groupware

Database Decision support system

Data

Information

Communication

Figure 8. A DSS Model [5].

DSS Characteristics

Decision support system has a number of characteristics, which include the following:

DSS provide support for decision maker mainly in semi structured and unstructured situations by bringing together human judgment and computerize information. Such

problem can not be solve (can not be solve conveniently) by other computerized systems, such as MIS. DSS attempts to improve the effectiveness of decision-making (accuracy, timeliness, quality) rather than its efficiency (cost of making the decision, including the charges for computer time)[8] DSS provides support to individuals as well as to groups. Many organizational problems involved group decision-making. The less structured problem frequently requires the involvement of several individuals from different departments and organizational levels.

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Advance DSS are equipped with a knowledge component that enables the efficiency

and effective solution of very difficult problems [9].


A DSS can handle large amount of data for instance advance database management

package have allowed decision makers to search to search database for information. A DSS can also solve problems where a small amount of data is required. A DSS can be developed using a modular approach. With this approach, separate functions of the DSS are placed in separate modules - program or subroutinesallowing efficient testing and impalement of systems. It is also allows various modules to be used for multiple purpose in deferent systems. A DSS has a graphical orientation. It has often been said that a picture is worth a thousand words. Todays decision support systems can help managers make attractive, informative graphical presentations on computer screens and printed documents. Many of todays software packages can produce line drawing, pie chart, trend line and more. This graphical orientation can help decision makers a better understanding of the true situation in given market place. A DSS support optimization and heuristic approach. For smaller problems, DSS has the ability to find the best (optimal) situation. For more complex problems, heuristics are used. With heuristic, the computer system can determined a very good-but not necessary the best- solution. This approach gives the decision maker a great deal of flexibility in getting computer support for decision maker activities. A DSS can perform what if" and goal seeking analysis. What if analysis is the process of making hypothetical change to problem data and observing impact of the results. With what if analysis, a manager can make changes to problem data (the number of automobiles for next month) and immediately see the impact on the requirement for subpart (engines, windows, etc) [6].

The role of the DSS in problem solving

Previously mentioned that the MIS is best suited in identifying problem and helping managers understanding them but the main weakness of MIS is that it is not aimed at the specific need of the individual and group problem solvers. Very often the MIS does not provide exactly the information that is needed to solve problem for individual and group problem solving. DSS is tailored to the specific need of the individual and group managers. Therefore, the DSS can extend this support through the remaining steps (in objective and criteria setting, alternative search, alternative evaluation, making the decision and decision review) of the problem solving process. Finally DSS has more roles in decision-making and problem solving than MIS.
Discussion

Managers in all level of organization hierarchy need precise and suitable data and information to make decisions that increases organizational performance. Such concept suggests an informational need of supervisory level is different than top level. At the same time the kind of information also at each level is different. At lower level, supervisors need defined, clear, precise, quantifiable and internal organizational information but at the top level a manager needs undefined, future oriented, infrequent, summarized, relatively, non quantifiable and mostly external information. Such concept is diagrammed at figure 9.

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Undefined Strategic Management

External

Summery Future

Infrequent Less Accurate

Tactical Manageme Operational Management

Defined Internal

Detail Past

Frequent Very Accurate

Figure 9. Information and Decision-Making

In general different kinds of data and information suitable for decision-making in different levels of organizational hierarchy, require different information system to be designed. Such system could have explicit effect on each steps of decision process in solving problems. At the same time each information system can not fulfill complete informational needs of each level, but rather different information systems if integrated in different level could satisfy information needs of a level and at the same time fulfill part of information needs of other levels. For example TPS fulfills the lower level needs of an organization but MIS furnishes data and information for lower and middle level management needs. On the other hand DSS furnishes information for middle level and higher level of organizational hierarchy and ES fulfills only higher level managerial needs. Clearly by segregating of each IS, its particular function could be recognized and its overlapping distinguished. The role of different information systems is diagrammed in figure 10.

ES

EIS Strategic Management

DSS Tactical Manageme Operational Management TPS MIS

Figure 10. Organization and Information

The perceived concepts that was base on the role of MIS and DSS in the decision making process of organizational managers, specially with emphasize on MIS and DSS which provide

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information services for middle and higher level managers in the process of decision making could be summarized in figure 11.
Decision maker

Non- Programmed programmed decision making decision Making

EDP System

DSS

MIS Feedback DBMS

Data Base

Figure 11. Integration of Decision Making, DSS and MIS

In figure 11 it could be noted data from EDP system transfers to DBMS and helps managers to make programmed and non-programmed decisions. The flow of data after moving from EDP system to DBMS will move from MIS level to DSS and at the same time part of processed data will restore in EDP system.
Conclusion Apart from variety of information system in business world, MIS and DSS were the main concern of present article. MIS is best suited to identify problems and helping management to understand them. At the same time MIS is not aimed to help particular and specific need of the individual and group problem solving. On the other hand DSS are tailored to the specific need of individual and group managers. Therefore, it could be said, that DSS can extend its support to same steps of problem solving process and has more roles in decision-making and problem solving than MIS. References

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