MIS & Decision Making

By Arun Mishra

DECISION MAKING Decision making is the developing

concepts leading to the selection of a course of action among variations. Every decision making process produces a final choice

It can be an action or an opinion. It begins when we need to do something but we do not know what

e.g. Decision to raise a Purchase Order

Decision making in business and management

In general, business and management systems should be set up to allow decision making at the lowest possible level.

Several decision making models or practices for business include:– SWOT Analysis - Evaluation by the decision making

individual or organization of Strengths, Weaknesses, Opportunities and Threats with respect to desired end state or objective.

– Buyer decision processes - transaction before, during, and after a purchase

• Corporate finance:• The investment decision• The financing decision• The dividend decision• working capital management decisions

– Cost-benefit analysis - process of weighing the total expected costs vs. the total expected benefits

Types of Decisions

Unstructured/ Nonprogrammed

Structured/ Programmed

Semi-structured

Information Requirements of Key Decision-Making Groups in a Firm

The Decision-Making Process

Phases of Decision Making ProcessIntelligence

Design

Choice

Implementation

Stages in Decision Making

Phases of Decision Making Process Intelligence gathering

– Definition of problem– Data gathered on scope– Constraints identified

Design phase– Alternatives identified and assessed

Choice– Selection of an alternative

Implementation– Testing the selected alternative.

Typical Inputs and Outputs

Inputs: Information from the TPS Outputs: hard and softcopy reports

– Scheduled reports– On-demand reports– Key-indicator (business fundamentals)– Exception reports

MIS Support to Decision Making

Process

Functional Perspectives of MIS

Financial MIS–Will integrate information from

multiple sources–Functions

• Costing• P&L reporting• Auditing• Funds management

Functional Perspectives of MIS

Manufacturing–Design and Engineering–Master Production Scheduling– Inventory Control–Materials Planning–Manufacturing and Process Control–Quality Control

Functional Perspectives of MIS

Marketing–Market research

• Web-based market research–Pricing

Functional Perspectives of MIS

Transportation and Logistics–Route and schedule optimization

Human Resources Accounting

Systems for Supporting Decisions

• Management information systems (MIS)

• Decision-support systems (DSS)

• Executive support systems (ESS)

• Group-decision support systems (GDSS)

• Intelligent techniques

Management Information Systems (MIS)

• Help managers monitor and control a business

• Produce regular reports on performance, such as monthly or annual sales

• Sometimes highlight exceptional conditions

• Reports often available online

Decision Support Systems (DSS)

Support semi-structured and unstructured problem analysis

Characteristics– Data from multiple sources internal and

external to organization– Presentation flexibility– Simulation and what-if capability– Support for multiple decision approaches– Statistical analysis

Components of DSS• DSS database

• DSS software system

• Models

• Sensitivity analysis

• DSS user interface

Examples of DSS• DSS for pricing decisions in FMCG & Pharma

Companies.

• DSS for customer relationship management in Banks

Group Decision-Support Systems (GDSS)

Very interesting field How can information technology improve how

decisions are made by groups? Interactive, computer-based systems that

facilitates solving of unstructured problems by a set of decision makers

Used in conference rooms with special hardware and software

Support increased meeting sizes with increased productivity

Applications– Where time is critical– Where participants are geographically

dispersed– Where authority obstructs communication– Military– Business– Government

Group Decision-Support Systems (GDSS)

Common characteristics– Meeting moderation/facilitation– Signed and anonymous comments– Structured deliberations

• Presentation period• Comment period• Automated collation of comments• “Voting”

Face-to-face and remote

Group Decision-Support Systems (GDSS)

Executive Information Systems What information does a chief executive

of board member require? High level with drill down Key business and industry data Structured and unstructured information

–Structured: orders–Unstructured: Industry newsfeed

Graphical

Executive Information Systems Give senior executives a picture of the

overall performance of an organization

Enable an executive to zoom in on details or zoom out for a broader view

Drill down capability

Digital dashboard

Intelligent Systems for Decision Support

• Artificial intelligence (AI)

• Expert systems

• Case-based reasoning

• Intelligent agents

Intelligent Agents in P&G’s Supply Chain Network

Intelligent agents are helping Procter & Gamble shorten the replenishment cycles for products, such as a box of Tide.