Management Information System and Decision Support System

Semiester - 3
Kolhan University

Sandeep Ghatuary

Management Information System and Decision Support System Management Information System

It is combination of three words i.e. Management, Information and System. To understand the concept MIS, we try to understand these three words. 1. Management: Management is the art of getting things done through and with the efforts of other people. However, a manager gets things done by performing basic managerial functions. These functions are: Planning, Organizing, Staffing, Directing and Controlling. 2. Information: It is the second component of MIS. Information is a data which is processed and presented to decision makers and helps them in making decisions. 3. System: The word System is a set of elements that are inter-related and interdependent to achieve a common goal.

MIS: Definition:
1. Management, Information and System, it has been cleared that decision making is an important part of managerial functions. For taking adequate decisions, Management Information (MI) is necessary as it works as a vital input. 2. A system which consists of people, machines, procedures, databases and data models as its components is known as Management Information System. This system collects data from external and internal sources of an organization, analyses it and supplies management information to managers and helps them in making decisions. MIS follows the system approach in which output is greater than the sum total of input. 3. According to G.B. Davis, MIS is a man or machine that provides information to support management in decision making process.

Nature of MIS
1. Report orientation: Through MIS, every individual can perform their duty and the system automatically produces performance reports to send for evaluation to the next level of hierarchy according to the company and system specifications and / or requirements. 2. Action oriented: MIS performs regulating and scheduled actions on behalf of the user as the system is customized on the basis of need and requirements at the users end. 3. Expectation oriented: The reports and automatic transactions are expected from a CBS (Computer Based System). 4. Database oriented: Almost every MIS software is based on a Database backbone to support efficient storage and retrieval of data to and from the system respectively simultaneously and concurrently from more than one workstation at a time. 5. End-user oriented: Main emphasis is given on the end-user, who uses the system. The system must be understandable and easy to access for the end user for a seamless operation of the system.

Framework of MIS / Needs to have MIS

1. Input of MIS Strategic plan or corporate policies Contains major financial objectives and often projects financial needs. Transaction processing system (TPS) Important financial information collected from almost every TPS - payroll, inventory control, order processing, accounts payable, accounts receivable, general ledger. External sources Annual reports and financial statements of competitors and general news items. 2. Output of MIS Scheduled reports Produced periodically, or on a schedule (daily, weekly, monthly) Key-indicator report Summarizes the previous days critical activities

Management Information System and Decision Support System

Typically available at the beginning of each day Demand report Gives certain information at a managers request Exception report Automatically produced when a situation is unusual or requires management action.

MIS Functions:Data is collected from various internal and external sources. Collected data may be manual or computerized. Then data is processed. Information is stored for future use. Stored information is retrieved by users when required.

Characteristics of MIS:The information system follows the systems approach to study the system and its performance in the light of purpose for which it has been developed. MIS is management oriented. MIS is designed according to the information needs of managers at different levels i.e. strategic planning level, management control level and operational control level. MIS is future oriented. Integration is essential for MIS because of its ability to produce meaningful information. In MIS, common data flows provide an opportunity to avoid data redundancy, joining similar functions, data storage and retrieval process, wherever possible. The constitution of common data flows is economically and logically sound concept. Long Term Planning is involved for developing MIS. MIS is a sub system concept. MIS is computerized. MIS is user friendly.

Decision making process

Decision making can be hard. Almost any decision involves some conflicts or dissatisfaction. The difficult part is to pick one solution where the positive outcome can outweigh possible losses. Avoiding decisions often seems easier. Yet, making your own decisions and accepting the consequence is the only way to stay in control of your time, your success, and your life. 1. Decision under Certainty - We say that the decision is taken under certainty if each action is known to lead invariably to a specic outcome (prospect, alternative, etc.).When the decision maker knows with reasonable certainty about what the available alternatives are, and what conditions are associated with each alternative; then a state of certainty is said to exist. For example, Air India needs to buy ten jumbo jets. The decision is from whom to buy. Air India has two choices: McDonnell Douglas, and Airbus. Each of these companies is known for their quality products. Air India can choose from any of these alternatives. Here, for making the choice, there is less ambiguity and there is a relatively lower chance of making a bad decision. 2. Decision under Risk - We say that the decision is taken under risk if each action leads to one of a set of possible specic outcomes, each outcome occurring with a known probability. In some situations, a manager is able to estimate the level of probability at which certain variables could occur. The ability to estimate may be due to experience, incomplete but reliable information or, in some cases, an accurate report. When estimates are made, a degree of risk is involved. However some amount of information about the situation is available. The situation requires estimating the probability that one or more known variables might influence the decision being made. 3. Decision under Uncertainty - We say that the decision is taken under uncertainty if either action has as its consequence a set of possible specic outcomes, but the probabilities of these outcomes are completely unknown or are not even meaningful. A condition of uncertainty exists when a manager is faced with

Management Information System and Decision Support System

reaching a decision with no historical data concerning the variables and/or unknowns and their probability of occurrence. For instance, the decision to introduce Kellogg corn flakes in India was made under uncertainty. Modern Approach to Decision Making Under Uncertainty - Modern approach to decision making under uncertainty helps in improving the quality of decision making. For making such decisions, there are three approaches: risk analysis, decision trees and preference theory. Risk analysis : Risk analysis involves knowledge of the size and the nature of the risk involved, in choosing a particular course of action. Before the launch of its Versa model, Maruti, conducted risk analysis in the areas of capital investment, cost of production and pricing. Decision trees: A graphical representation of alternative courses of action with the possible outcomes comprises a decision tree. It depicts the various decision points, chances, events and probabilities involved in various decision- courses that might be undertaken. Preference or utility theory: This theory is based on the notion that individuals' attitudes towards risk will vary. Some individuals are willing to take risk (gamble), whereas others are not willing to take risk or take only low risk (risk averters). Managers play both these roles, when they are uncertain about the outcome.

SIMON'S MODEL OF DECISION MAKING

Herbert A. Simon developed a model of decision making. The model consisted of three steps, intelligence, design, and choice. In the intelligence phase, the problem is identified, and information is collected concerning the problem. This can be a long process, as the decision to be made comes from the information. The design phase develops several possible solutions for the problem. Finally, the choice phase chooses the solution. 1. The Intelligence Phase - The intelligence phase consists of finding, identifying, and formulating the problem or situation that calls for a decision. This has been called deciding what to decide. The intelligence stage may involve, for example, comparing the current status of a project or process with its plan. The end result of the intelligence phase is a decision statement. The name of this phase, intelligence, can be confusing. Intelligence as we usually use the term informally, is talking about decision making, it is what we use after we know a decision must be made. Simon borrowed the term from its military meaning, which involves the gathering of information without necessarily knowing what it will lead to in terms of decisions to be made. In business decision making, we must often collect a great deal of information before we realize that a decision is called for. 2. The Design Phase- The design phase is where we develop alternatives. This phase may involve a great deal of research into the available options. During the design phase we should also state our objectives for the decision we are to make. 3. The Choice Phase - In the choice phase, we evaluate the alternatives that we developed in the design phase and choose one of them. The end product of this phase is a decision that we can carry out. Extensions to Simon's Model 4. Implementation - The decision that is ultimately carried out. 5. Review - In this phase, decision implemented is evaluated. Was the course of action taken a good choice?

How does Simons Model correspond to the Scientific Method and to the Systems Development Life Cycle (SDLC)?
SIMON'S MODEL Intelligence Design Choice Implementation Review SCIENTIFIC APPROACH Define Problem Develop Alternatives Select Solution / Design Solution Implement Solution SDLC System Investigation System Analysis System Design Implementation Maintenance

Management Information System and Decision Support System Decision Support Systems

Decision Support Systems (DSS) are a specific class of computerized information system that supports business and organizational decision-making activities. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions.

Typical information that a decision support application might gather and present would be:
1. Accessing all of your current information assets, including legacy and relational data sources, cubes, data warehouses, and data marts 2. Comparative sales figures between one week and the next 3. Projected revenue figures based on new product sales assumptions 4. The consequences of different decision alternatives, given past experience in a context that is described 5. A DSS supports all phases of decision making and may include a knowledge component 6. A DSS can be used by a single user on a PC or can be Web-based for use by many people at several locations typical information that a decision support application might gather and present would be.

Characteristics and capabilities of DSS

1. DSS provide support for decision makers mainly semi structured and unstructured situations by bringing together human judgment and computer. 2. Support is provided for various managerial levels. 3. Support is provided to individuals as well as to groups. 4. DSS provide support to several interdependent and sequential decisions. 5. It supports all phases of the decision-making process. 6. DSS attempt to improve the effectiveness of decision making. 7. Decision maker has complete control over all steps of the decision making process in solving a problem . 8. A DSS usually utilizes models for analyzing decision-making situations.

Types of Decision Support Systems (DSS) - There are a number of Decision Support Systems. These can be
categorized into five types: 1. Communication-driven DSS - Most communications-driven DSSs are targeted at internal teams, including partners. Its purpose are to help conduct a meeting, or for users to collaborate. The most common technology used to deploy the DSS is a web or client server. Examples: chats and instant messaging softwares, online collaboration and net-meeting systems. 2. Data-driven DSS - Most data-driven DSSs are targeted at managers, staff and also product/service suppliers. It is used to query a database or data warehouse to seek specific answers for specific purposes. It is deployed via a main frame system, client/server link, or via the web. Examples: computer-based databases that have a query system to check (including the incorporation of data to add value to existing databases. 3. Document-driven DSS - Document-driven DSSs are more common, targeted at a broad base of user groups. The purpose of such a DSS is to search web pages and find documents on a specific set of keywords or search terms. The usual technologies used to set up such DSSs are via the web or a client/server system. 4. Knowledge-driven DSS: Knowledge-driven DSSs or 'knowledgebase' are they are known, are a catch-all category covering a broad range of systems covering users within the organization setting it up, but may also include others interacting with the organization - for example, consumers of a business. It is essentially used to provide management advice or to choose products/services. The typical deployment technology used to set up such systems could be silent/server systems, the web, or software running on stand-alone PCs. 5. Model-driven DSS - Model-driven DSSs are complex systems that help analyze decisions or choose between different options. These are used by managers and staff members of a business, or people who interact with the organization, for a number of purposes depending on how the model is set up - scheduling, decision analyses etc. These DSSs can be deployed via software/hardware in stand-alone PCs, client/server systems, or the web.

Management Information System and Decision Support System

Components of Decision Support Systems

Decision support systems vary greatly in application and complexity, but they all share specific features. Typical Decision support system has four components: data management, model management, knowledge management and user interface management.

1. Data Management Component - The data management component performs the function of storing and maintaining the information that you want your Decision Support System to use. The data management component, therefore, consists of both the Decision Support System information and the Decision Support System database management system. The information you use in your Decision Support System comes from one or more of three sources: Organizational information - you may want to use virtually any information available in the organization for r your Decision Support System. What you use, of course, depends on what you need and whether it is available. You can design your Decision Support System to access this information directly from your companys database and data warehouse. However, specific specifi information is often copied to the Decision Support System database to save time in searching through the organizations database and data warehouses. External information - some decisions require input from external sources of information. Various branches hes of federal government, Dow Jones, Compustat data, and the internet, to mention just a few, can provide additional information for the use with a Decision Support System. Personal information - you can incorporate your own insights and experience your p personal information into your Decision Support System. You can design your Decision Support System so that you enter this personal information only as needed, or you can keep the information in a personal database that is accessible by the Decision Support System. 2. Model Management Component The model management component consists of both the Decision Support System models and the Decision Support System model management system. A model is a representation of some event, fact, or situation. As it is not a always lways practical, or wise, to experiment with reality, people build models and use them for experimentation. Models can take various forms. Businesses use models to represent variables and their relationships. For example, you would use a statistical model called analysis of variance to determine whether newspaper, TV, and billboard advertizing are equally effective in increasing sales. Decision Support Systems help in various decision decision-making making situations by utilizing models that allow you to analyze information information in many different ways. The models you use in a Decision Support System depend on the decision you are making and, consequently, the kind of analysis you require. For example, you would use what what-if if analysis to see what effect the change of one or more variables v

Management Information System and Decision Support System

will have on other variables, or optimization to find the most profitable solution given operating restrictions and limited resources. Spreadsheet software such as excel can be used as a Decision Support System for what-if analysis. The model management system stores and maintains the Decision Support Systems models. Its function of managing models is similar to that of a database management system. The model management component cannot select the best model for you to use for a particular problem that requires your expertise but it can help you create and manipulate models quickly and easily. 3. User Interface Management Component - The user interface management component allows you to communicate with the Decision Support System. It consists of the user interface management system. This is the component that allows you to combine your know-how with the storage and processing capabilities of the computer. The user interface is the part of the system you see through it when enter information, commands, and models. This is the only component of the system with which you have direct contract. If you have a Decision Support System with a poorly designed user interface, if it is too rigid or too cumbersome to use, you simply wont use it no matter what its capabilities. The best user interface uses your terminology and methods and is flexible, consistent, simple, and adaptable. 4. Knowledge Management Component - The knowledge management component, like that in an expert system, provides information about the relationship among data that is too complex for a database to represent. It consists of rules that can constrain possible solution as well as alternative solutions and methods for evaluating them.

Systems development life cycle (SDLC)

The systems development life cycle (SDLC), or software development process, or Software Development Life Cycle in systems engineering, information systems and software engineering, is a process of creating or altering information systems, and the models and methodologies that people use to develop these systems. In software engineering, the SDLC concept underpins many kinds of software development methodologies. These methodologies form the framework for planning and controlling the creation of an information system.

What is systems development life cycle (SDLC)?

The systems development life cycle (SDLC) is a conceptual model used in project management that describes the stages involved in an information system development project, from an initial feasibility study through maintenance of the completed application. Various SDLC methodologies have been developed to guide the processes involved, including the waterfall model (which was the original SDLC method); rapid application development (RAD); joint application development (JAD); the fountain model; the spiral model; build and fix; and synchronize-and-stabilize. Frequently, several models are combined into some sort of hybrid methodology. Documentation is crucial regardless of the type of model chosen or devised for any application, and is usually done in parallel with the development process. Some methods work better for specific types of projects, but in the final analysis, the most important factor for the success of a project may be how closely the particular plan was followed. In general, an SDLC methodology follows the following steps: 1. The existing system is evaluated. Deficiencies are identified. This can be done by interviewing users of the system and consulting with support personnel. 2. The new system requirements are defined. In particular, the deficiencies in the existing system must be addressed with specific proposals for improvement. 3. The proposed system is designed. Plans are laid out concerning the physical construction, hardware, operating systems, programming, communications, and security issues. 4. The new system is developed. The new components and programs must be obtained and installed. Users of the system must be trained in its use, and all aspects of performance must be tested. If necessary, adjustments must be made at this stage. 5. The system is put into use. This can be done in various ways. The new system can phased in, according to application or location, and the old system gradually replaced. In some cases, it may be more cost-effective to shut down the old system and implement the new system all at once.

Management Information System and Decision Support System

6. Once the new system is up and running for a while, it should be exhaustively evaluated. Maintenance must be kept up rigorously at all times. Users of the system should be kept up-to-date concerning the latest modifications and procedures.

Management Information System and Decision Support System Database Management System
What is database?

A database is a system intended to organize, store, and retrieve large amounts of data easily. It consists of an organized collection of data for one or more uses, typically in digital form. One way of classifying databases involves the type of their contents, for example: bibliographic, document-text, statistical. Digital databases are managed using database management systems, which store database contents, allowing data creation and maintenance, and search and other access.

Database Management System

A DBMS is a complex set of software programs that controls the organization, storage, management, and retrieval of data in a database. DBMS are categorized according to their data structures or types, sometime DBMS is also known as Data base Manager. It is a set of prewritten programs that are used to store, update and retrieve a Database a DBMS includes: A modeling language to define the schema of each database hosted in the DBMS, according to the DBMS data model.

The functions of a current generation DBMS may be summarized as follows:

1. Stores the definitions of data and their relationships (metadata) in a data dictionary; any changes made are automatically recorded in the data dictionary. 2. Creates the complex structures required for data storage. 3. Transforms entered data to conform to the data structures in item 2. 4. Creates a security system and enforces security within that system. 5. Creates complex structures that allow multiple user access to the data. 6. Performs backup and data recovery procedures to ensure data safety. 7. Promotes and enforces integrity rules to eliminate data integrity problems. 8. Provides access to the data via utility programs and from programming languages interfaces. 9. Provides end-user access to data within a computer network environment.

REQUIREMENTS FOR A DBMS - The various softwares which handle the data in a database i.e. DBMS (like Oracle,
FoxPro, and SQL Server etc.) should meet the following requirements: 1. Provide data definition facilities. Define Data Definition Language (DDL) Provide user accessible catalog (Data Dictionary) 2. Provide facilities for storing, retrieving and updating data. Define Data Manipulation Language (DML) 3. Support Multiple View of Data End User or application should see only the need data and information required. 4. Provides facilities for specifying Integrity constraints. Primary Key Constraints Foreign Key Constraints More General Constraints 5. Provide facilities for controlling access to data. Prevent unauthorized access and update. 6. Allow simultaneous access and update by multiple users. Provide concurrency control mechanism. 7. Support Transactions. A sequence of operations to be performed as a whole. All operations are performed or none. 8. Provide facilities for database recovery. Bring database back to consistent state after a failure such as disk failure, faulty program etc.

Management Information System and Decision Support System

9. Provide facilities for database maintenance. Maintenance operations: unload, reload, mass Insertion and deletion, validation etc.

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STRUCTURE OF DBMS - DBMS (Database Management System) acts as an interface between the user and the
database. The user requests the DBMS to perform various operations (insert, delete, update and retrieval) on the database. The components of DBMS perform these requested operations on the database and provide necessary data to the users. The various components of DBMS are shown below: -

1. DDL Compiler - Data Description Language compiler processes schema definitions specified in the DDL. It includes metadata information such as the name of the files, data items, storage details of each file, mapping information and constraints etc. 2. DML Compiler and Query optimizer - The DML commands such as insert, update, delete, retrieve from the application program are sent to the DML compiler for compilation into object code for database access. The object code is then optimized in the best way to execute a query by the query optimizer and then send to the data manager. 3. Data Manager - The Data Manager is the central software component of the DBMS also knows as Database Control System. The Main Functions Of Data Manager Are: Convert operations in user's Queries coming from the application programs or combination of DML Compiler and Query optimizer which is known as Query Processor from user's logical view to physical file system. Controls DBMS information access that is stored on disk. It also controls handling buffers in main memory. It also enforces constraints to maintain consistency and integrity of the data. It also synchronizes the simultaneous operations performed by the concurrent users. It also controls the backup and recovery operations. 4. Data Dictionary - Data Dictionary is a repository of description of data in the database. It contains information about Data - names of the tables, names of attributes of each table, length of attributes, and number of rows in each table. Relationships between database transactions and data items referenced by them which is useful in determining which transactions are affected when certain data definitions are changed. Constraints on data i.e. range of values permitted. Detailed information on physical database design such as storage structure, access paths, files and record sizes. Access Authorization - is the Description of database users their responsibilities and their access rights. Usage statistics such as frequency of query and transactions. Data dictionary is used to actually control the data integrity, database operation and accuracy. It may be used as an important part of the DBMS. Importance of Data Dictionary - Data Dictionary is necessary in the databases due to following reasons:

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It improves the control of DBA over the information system and user's understanding of use of the system. It helps in document ting the database design process by storing documentation of the result of every design phase and design decisions. It helps in searching the views on the database definitions of those views. It provides great assistance in producing a report of which data elements (i.e. data values) are used in all the programs. It promotes data independence i.e. by addition or modifications of structures in the database application program are not affected. 5. Data Files - It contains the data portion of the database. 6. Compiled DML - The DML complier converts the high level Queries into low level file access commands known as compiled DML. 7. End Users - They are already discussed in previous section.

The advantages of DBMS

1. 2. 3. 4. 5. 6. 7. 8. It represents complex relationships among different data items. Keeps a tight control on data redundancy. Enforces user defined rules to ensure the integrity of data in a table form. Maintains data dictionary for the storage of information pertaining to data fields and data manipulation. Ensures that data can be shared across all applications. Enforces data access authorization. Has an automatic intelligent backup and recovery procedure of data. Have different interfaces through which users can manipulate data.

Types of DBMS: There are four structural types of database management systems: hierarchical, network, relational,
and object-oriented. 1. Hierarchical Databases- Hierarchical Databases (DBMS), commonly used on mainframe computers, have been around for a long time. It is one of the oldest methods of organizing and storing data, and it is still used by some organizations for making travel reservations. A hierarchical database is organized in pyramid fashion, like the branches of a tree extending downwards. Related fields or records are grouped together so that there are higher-level records and lower-level records, just like the parents in a family tree sit above the subordinated children. Based on this analogy, the parent record at the top of the pyramid is called the root record. A child record always has only one parent record to which it is linked, just like in a normal family tree. In contrast, a parent record may have more than one child record linked to it. Hierarchical databases work by moving from the top down. A record search is conducted by starting at the top of the pyramid and working down through the tree from parent to child until the appropriate child record is found. Furthermore, each child can also be a parent with children underneath it. The advantage of hierarchical databases is that they can be accessed and updated rapidly because the tree-like structure and the relationships between records are defined in advance. However, this feature is a two-edged sword. The disadvantage of this type of database structure is that each child in the tree may have only one parent, and relationships or linkages between children are not permitted, even if they make sense from a logical standpoint. Hierarchical databases are so rigid in their design that adding a new field or record requires that the entire database be redefined.

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2. Network Databases - Network databases are similar to hierarchical databases by also having a hierarchical structure. There are a few key differences, however. Instead of looking like an upside-down tree, a network database looks more like a cobweb or interconnected network of records. In network databases, children are called members and parents are called owners. The most important difference is that each child or member can have more than one parent (or owner).Like hierarchical databases, network databases are principally used on mainframe computers. Since more connections can be made between different types of data, network databases are considered more flexible. However, two limitations must be considered when using this kind of database. Similar to hierarchical databases, network databases must be defined in advance. There is also a limit to the number of connections that can be made between records.

3. Relational Databases - In relational databases, the relationship between data files is relational, not hierarchical. Hierarchical and network databases require the user to pass down through a hierarchy in order to access needed data. Relational databases connect data in different files by using common data elements or a key field. Data in relational databases is stored in different tables, each having a key field that uniquely identifies each row. Relational databases are more flexible than either the hierarchical or network database structures. In relational databases, tables or files filled with data are called relations, a tipple designates a row or record, and columns are referred to as attributes or fields. Relational databases work on the principle that each table has a key field that uniquely identifies each row, and that these key fields can be used to connect one table of data to another. Thus, one table might have a row consisting of a customer account number as the key field along with address and telephone number. The customer account number in this table could be linked to another table of data that also includes customer account number (a key field), but in this case, contains information about product returns, including an item number (another key field). This key field can be linked to another table that contains item numbers and other product information such as production location, color, quality control person, and other data. Therefore, using this database, customer information can be linked to specific product information. The relational database has become quite popular for two major reasons. First, relational databases can be used with little or no training. Second, database entries can be modified without redefining the entire structure. The downside of using a relational database is that searching for data can take more time than if other methods are used.

4. Object-oriented Databases (OODBMS) - Able to handle many new data types, including graphics, photographs, audio, and video, object-oriented databases represent a significant advance over their other database cousins. Hierarchical and network databases are all designed to handle structured data; that is, data that fits nicely into fields, rows, and columns. They are useful for handling small snippets of information such as names, addresses, zip codes, product numbers, and any kind of statistic or number you can think of. On the other hand, an object-oriented database can be used to store data from a variety of media sources, such as photographs and text, and produce work, as output, in a multimedia format. Object-oriented databases use

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small, reusable chunks of software called objects. The objects themselves are stored in the object-oriented database. Each object consists of two elements: 1) a piece of data (e.g., sound, video, text, or graphics), and 2) the instructions, or software programs called methods, for what to do with the data. Part two of this definition requires a little more explanation. The instructions contained within the object are used to do something with the data in the object. For example, test scores would be within the object as would the instructions for calculating average test score. Object-oriented databases have two disadvantages. First, they are more costly to develop. Second, most organizations are reluctant to abandon or convert from those databases that they have already invested money in developing and implementing. However, the benefits to object-oriented databases are compelling. The ability to mix and match reusable objects provides incredible multimedia capability. Healthcare organizations, for example, can store, track, and recall CAT scans, X-rays, electrocardiograms and many other forms of crucial data.