MANAGEMENT INFORMATION

SYSTEM-
unit - 2
KMBN208
-Prerna Shrivastava
ITS ,MBA dept.
INFORMATION AND DECISION MAKING
 THE METHODS OF DECISION MAKING PROVIDE PROBLEM
SOLVING ABILITY IN DECISION MAKING PROCESS TO
DECISION MAKER .

 The concepts of organisational and behavioural aspects provide problem

 The MIS DESIGN addressing these significant factors turns out to be best
design
Attributes of information :-
Data are the raw facts and figures which is
incomplete in nature. Information is an
indispensable resource for any organization
and should be managed and maintained
with efficiency and diligence .
Following attributes and value to the quality of
information
1. Promptness in availability and updation .
2. Accuracy
3. Precision
4. Completeness
5. Unambiguity
Process of decision making :
Contd…
Role of information –one need to indentify a problem and put in structured
Manner .Without information about a problem or opportunity ,the decision
making process does not even start .
Putting the problem in context –Role of information ;Without information
about the context in which problem is solved .
Generation of alternatives ;
Information is key ingredient in the generation of alternatives for decision –
making .One has to have information about possible solutions to generate
alternatives .
Choice of best alternatives –based on the information about the suitability of
the alternatives ,a choice is made to select the best alternative .
DECISION MAKING
Information relevance to decision makers-MIS help decision
makers the understand the implications of their decisions .The
system collate raw data into reports in a format that enables
decision making to quickly identify patterns and trends that would
not have been obvious in the raw data .Information is a basic
requirement for decision making .It is significantly determines the
effectiveness of not only the final decision but also the process of
decision making itself. Therefore, decision making is sometimes
regarded as the processing and conversation of information into
action .
Models of Decision Making
Classic or rational Model
Administrative Models
The rational models are based on cognitive judgments and help in
selecting the most logical and sensible alternative.
Eg of such models include –decision matrix analysis ,pugh
matrix ,SWOT analysis ,Pareto analysis ,decision trees ,selection
matrix etc.
Contd…
A rational decision making models takes the following steps :
 Identifying the problem
 Identifying the important criteria for the result
 Considering all the possible situations
 Calculating the sequences of all the solutions and comparing the
probability of satisfying the criteria
 Selecting the best option
Normative model
Normative Model of decision-making considers constraints that may arise
in making decisions, such as time ,complexity ,uncertainty and inadequacy
of resources .
According to this model ,decision –making is characterized by –
Limited information processing ;A person can manage only limited
amount of information
Judgmental heuristics (It is an ad hoc mode of decision making or
simplification that reduces or limits )the search in a large problem space.
They are the rules of the thumb and reflect bounded rationality. –A person
may use shortcuts to simplify the decision making process .
Satisfying ;A person may choose solution that is just “good enough”.
Types of decision making
Structured Decision making -An organization has a wide variety of
decisions to make, ranging from highly structured decisions to
unstructured decisions. A structured decision is one that is made quite
often, and one in which the decision is based directly on the inputs. With
structured decisions, once you know the necessary information you also
know the decision that needs to be made. For example, inventory reorder
levels can be structured decisions. Once your inventory of widgets gets
below a specific threshold, there is a need to order more. Processes like
this, based on structured decisions, are good candidates for automation.
They can also be referred to as programmed decisions.
Contd..
Programmed decisions, -managers often develop heuristics, or mental
shortcuts, to help reach a decision. For example, the retail store manager
may not know how busy the store will be the week of a big sale, but might
routinely increase staff by 30% every time there is a big sale (because this
has been fairly effective in the past). Heuristics are efficient—they save
time for the decision maker by generating an adequate solution quickly.
Heuristics don’t necessarily yield the optimal solution, but a good
solution. Heuristics are often used for programmed decisions, because
experience in making the decision over and over helps the decision maker
know what to expect and how to react. Programmed decision-making can
also be taught fairly easily to another person.
Unstructured Decision
In contrast, an unstructured decision or non programmed decision
involves a lot of unknowns. They are generally based on criteria that are
not well-defined, and information is more likely to be ambiguous or
incomplete. The decision maker may need to exercise some thoughtful
judgment and creative thinking to reach a good solution. An information
system can support these types of decisions by providing the decision
makers with information gathering tools and collaborative capabilities. An
example of an unstructured decision might be dealing with a labor issue or
setting policy for the implementation of a new technology.
Semi –Structured decision
A semi-structured decision is one in which most of the factors needed for
making the decision are known but human experience and other outside
factors may still impact the decision. A good example of a semi-structured
decision is the hiring process. Part of the decision is structured (years of
experience, education, etc.) and part of the decision is based on human
experience (for example: social skills, problem solving skills etc.) Take a
look at how companies are trying to
program this decision and use algorithms. Semi-structured and
unstructured decisions are more challenging and systems may not be able
to assist in the process fully. However, advances in artificial intelligence
are helping to change this.
Strategic decision
Strategic decisions set the course of an organization. Tactical/Managerial
decisions are decisions about how things will get done. Finally, operational
decisions refer to decisions that employees make each day to make the
organization run. For example, think about the restaurant that routinely offers a
free dessert when a customer complaint is received. The owner of the
restaurant made a strategic decision to have great customer service. The
manager of the restaurant implemented the free dessert policy as a way to
handle customer complaints, which is a tactical decision. Finally, the servers at
the restaurant are making individual decisions each day by evaluating whether
each customer complaint received is legitimate and warrants a free dessert.
Different information systems are used at each level of the company structure
to support the different decision types
EXAMPLE
Process of Information
Herbert Simon’s Model
Contd…
Decision making can also be considered as a type of problem solving .In
the first stage ,that of intelligence Phase This is the first step towards the
decision-making process. In this step the decision-maker identifies/detects the
problem or opportunity
An example of problem is the detection of sudden very high attrition for
the present month by a HR manager among workers. Opportunity seeking
on the other hand is the identification of a promising circumstance that
might lead to better results. An example of identification of opportunity
is-a marketing manager gets to know that two of his competitors will shut
down operations (demand being constant) for some reason in the next
three months, this means that he will be able to sell more in the market.
Thus, we see that either in the case of a problem or for the purpose of
opportunity seeking the decision-making process is initiated and the first stage
is the clear understanding of the stimulus that triggers this process. So if a
problem/opportunity triggers this process then the first stage deals with the
complete understanding of the problem/opportunity. Intelligence phase of
decision-making process involves:
Problem Searching: For searching the problem, the reality or actual is
compared to some standards. Differences are measured & the differences are
evaluated to determine whether there is any problem or not.
Problem Formulation: When the problem is identified, there is always a risk
of solving the wrong problem. In problem formulation, establishing relations
with some problem solved earlier or an analogy proves quite useful.
Design phase-
 Design is the process of designing solution outlines for the problem. Alternative solutions are
designed to solve the same problem. Each alternative solution is evaluated after gathering data
about the solution. The evaluation is done on the basic of criteria to identify the positive and
negative aspects of each solution. Quantitative tools and models are used to arrive at these
solutions. At this stage the solutions are only outlines of actual solutions and are meant for
analysis of their suitability alone. A lot of creativity and innovation is required to design
solutions.
 Choice Phase
It is the stage in which the possible solutions are compared against one another to find out the most
suitable solution. The ‘best’ solution may be identified using quantitative tools like decision tree
analysis or qualitative tools like the six thinking hats technique, force field analysis, etc.
This is not as easy as it sounds because each solution presents a scenario and the problem itself
may have multiple objectives making the choice process a very difficult one. Also uncertainty
about the outcomes and scenarios make the choice of a single solution difficult.
Management support system :Decision support system
MSS ,are computer based system that provide
information to manage for planning and decision
makers.
These are supposed to be used by managers or at
least to assist managerial staff.
The information provided by these systems is based
on both internal and external data by using various
data analysis tools .
Decision support system :-
Characteristics ;
 Interactive: DSSs provide an interactive interface that allows users to
manipulate data, adjust parameters, and explore different scenarios. Users can
engage with the system in real-time and receive instant feedback.
 Support for Decision-Making: The primary purpose of a DSS is to assist
decision-makers in making informed choices. DSSs provide relevant data,
analyses, and insights to facilitate decision-making.
 Modeling and Analysis: DSSs incorporate various models, algorithms, and
analytical tools to process data and generate insights. These tools aid in
predicting outcomes, identifying trends, and evaluating alternatives.
 User-Friendly Interface: DSSs offer user-friendly interfaces that make it
accessible to non-technical users. These interfaces often include visualizations
and easy-to-understand reports.
DSS
Components ;
 Data Management: This involves gathering, storing, and organizing relevant data from various
sources. It may include historical data, real-time information, external databases, etc.
 Modeling and Analysis Tools: DSSs use various models, algorithms, and analytical techniques to
process data and generate insights. These tools can include statistical analysis, optimization algorithms,
forecasting models, and simulation methods.
 User Interface: The user interface allows decision-makers to interact with the DSS. It presents data,
visualizations, and results in a user-friendly manner, enabling users to input parameters, run analyses,
and interpret outcomes.
 Database Management System (DBMS): A DBMS manages the storage and retrieval of data for the
DSS. It ensures data integrity, security, and efficient access to the required information.
 Knowledge Base: This component stores domain-specific knowledge, rules, and guidelines for
decision-making. It helps the DSS understand the context and constraints of the problem.
 Communication and Collaboration Tools: DSSs often support communication and collaboration
among team members. They enable sharing of information, analysis results, and scenarios, facilitating
group decision-making.
TYPES ;
 Model-Driven DSS: These systems use mathematical and analytical models to support
decision-making. They rely on data inputs and algorithms to generate predictions,
simulations, and optimization solutions. Examples include financial forecasting systems
and inventory management tools.
 Data-Driven DSS: These DSSs focus on data analysis and visualization to aid decisions.
They help users explore patterns, trends, and relationships in data through charts, graphs, and
reports. Business intelligence and data visualization tools fall into this category.
 Document-Driven DSS: These DSSs manage and provide access to textual information
relevant to decision-making. They can organize documents, reports, and research papers,
making them easily accessible to users.
 Knowledge-Driven DSS: These systems incorporate expert knowledge and rules to support
decisions. They can answer queries, provide advice, and offer recommendations based on
predefined rules and expertise. Medical diagnosis systems and legal advisory systems are
examples.
APPLICATIONS
Let us look at the applications of DSS:
 Business Management: DSS aids in strategic planning, resource allocation, and
performance analysis for businesses. It assists in setting goals, evaluating alternatives, and
optimizing operational processes.
 Healthcare: DSS supports medical professionals in diagnosis, treatment planning, and
patient management. It helps doctors make informed decisions by providing access to
patient records, medical literature, and clinical guidelines.
 Finance: DSS is used for financial forecasting, risk assessment, portfolio management,
and investment analysis. It helps financial analysts make informed decisions about
investment opportunities and market trends.
 Supply Chain Management: DSS assists inventory management, demand forecasting,
and logistics optimization. It helps organizations maintain optimal inventory levels, reduce
costs, and improve supply chain efficiency.
EIS –Executive information system
A EIS is a kind of decision support system (DSS)used in organization to
help executives in decision making .It does so by providing easy access to
important data needed in an organization to achieve strategic goals .An
EIS usually has graphical displays on a user-friendly interface .
This information is based on data,
Business intelligence
Financial intelligence
Data with technology support to analyze
Detailed data – EIS provides absolute data from its existing database.
Integrate external and internal data – EIS integrates integrate external
and internal data. The external data collected from various sources.
Presenting information – EIS represents available data in graphical form
which helps to analyze it easily.
Trend analysis – EIS helps executives of the organizations to data
prediction based on trend data.
Easy to use – It is a very simplest system to use.
ADVANTAGES
Trend Analysis
Improvement of corporate performance in the marketplace
Development of managerial leadership skills
Improves decision-making
Simple to use by senior executives
Better reporting method
Improved office efficiency
Distinguish Between
Disadvantages
Due to technical functions, not to easy to use by everyone
Executives may encounter overload of information
Difficult to manage database due to the large size of data
Excessive costs for small business organizations
Key Points ;
Decision support systems are designed to assist decision-makers by
providing them with relevant information, data analysis, and tools to
enhance the quality of their decisions.
DSS offers interactive interfaces that allow users to manipulate data,
explore scenarios, and perform “what-if” analyses, fostering more
informed decision-making.
It utilizes advanced data analysis techniques, predictive modeling, and
simulations to process and interpret complex data, enabling insights and
predictions.
DSS can support various decision types, from unstructured strategic
decisions to structured operational choices, catering to different
organizational needs.