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Learning Objectives
Describe different types of decisions and the decision-making process. Focuses on the specialized systems that firms use to achieve better decision making: Management Information Systems (MIS), Decision-support Systems (DSS), Group Decision-support Systems (GDSS), and Executive Support Systems (ESS).
Assess how information systems support the activities of managers and management decision making.
Types of Decisions
Unstructured: Non-routine decisions in which the decision maker must provide judgment, evaluation, and insights; there is no agreed-upon procedure for making the decision (e.g., decide on corporate objectives). Structured: Are repetitive, routine, and involve a definite procedure for handling (e.g., restock inventory) Semistructured: Only part of problem has clear-cut answer provided by accepted procedure (e.g., develop a marketing plan)
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Informational roles:
Decisional roles:
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Decision-support Systems
Decision support systems (DSS) are computer-based systems that provide managers and business professionals interactive information support for semistructured and unstructured decisions. Model-driven DSS: Use some type of model to perform what-if and other kinds of analyses. Earliest DSS were heavily model-driven Data-driven DSS: Support decision making by enabling users to extract useful information that was previously buried in large quantities of data. Online analytical processing (OLAP) and data mining can then be used to analyze the data. Some contemporary DSS are data-driven
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Components of DSS
Database: Used for query and analysis Current or historical data from number of applications or groups May be small database or large data warehouse User interface: Permits easy interaction between users of the system and the DSS software tools. Often a Web interface Software system: With models, data mining, other Management Information System analytical tools
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Example-Sensitivity Analysis
This table displays the results of a sensitivity analysis of the effect of changing the sales price of a necktie and the cost per unit on the products break-even point. It answers the question, What happens to the break-even point if the sales price and the cost to make each unit increase or decrease?
Management Information System
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Forecasting models:
Used to forecast future conditions, such as sales, given a range of historical data.
The decision maker could vary those future conditions (entering, for example, a rise in raw materials costs or the entry of a new, low-priced competitor in the market) to determine how new conditions might affect sales.
Companies often use this software to predict the actions of competitors. Model libraries exist for specific functions, such as financial and risk analysis models.
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Example
Sample List of Transactions for Online Management Training This list shows a portion of the order transactions for Online Management Training Inc. (OMT Inc.) on October 28, 2008.
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This graphic shows the same Microsoft Excel spreadsheet with a PivotTable with one dimension it shows where customers come from in terms of region.
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A Pivot Table that Examines Customer Regional Distribution and Advertising Source
This graphic shows the same Microsoft Excel spreadsheet with a PivotTable with two dimensions it shows where customers come from in terms of region and advertising source. It appears nearly 30 percent of the customers respond to e-mail campaigns, and there are some regional variations
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South Carolina used a GIS-based program called HAZUS to estimate and map the regional damage and losses resulting from an earthquake of a given location and intensity. HAZUS estimates the degree and geographic extent of earthquake damage across the state based on inputs of building use, type, and construction materials.
Management Information System The GIS helps the state plan for natural hazards mitigation and response. 29
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Components of GDSS
GDSS consist of three basic elements: hardware, software tools, and people. Hardware:
Including the room, the tables, and the chairs. electronic hardware, such as electronic display boards, as well as audiovisual, computer, and networking equipment.
Software: Electronic questionnaires, Electronic brainstorming tools, Idea organizers, Tools for voting or setting priorities, Policy formation tools, Group dictionaries etc.. People: Refers not only to the participants but also to a trained facilitator and often to a staff that supports the hardware and software.
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All data that the attendees forward from their workstations to the group are collected and saved on the file server.
The facilitator is able to project computer images onto the projection screen at the front of the room. Attendees have full control of their own desktop computers. An attendee is able to view the agenda, look at the integrated screen (or screens, as the session progresses), use ordinary desktop PC tools (such as a word processor or a spreadsheet), work on the screen associated with the current meeting step and tool (such as a brainstorming screen).
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The sequence of activities and collaborative support tools used in an electronic meeting system facilitate communication among attendees and generate a full record of the meeting.
Sources: From Nunamaker et al., Electronic Meeting Systems to Support Group Work, Communications of the ACM, July 1991. Reprinted by permission. Management Information System 33
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Balanced scorecard
Balanced scorecard: It is framework for operationalizing a firms strategic plan by focusing on measurable outcomes on four dimensions of firm performance.
Key performance indicators (KPIs) measure each dimension proposed by senior management An example of a KPI for an online retail firm is the average length of time to deliver a package to a consumer.
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