Data processing sunum-lesson 4-mis-dss

DATA PROCESSING IN INDUSTRIAL SYSTEMS

Associate Prof.Dr. Ufuk Cebeci

MANAGEMENT INFORMATION SYSTEMS

•Introduction•What is MIS?•Objectives, Decisions and Information•Levels of Decision Making•Strategic Decisions•Tactical Decisions•Operational Decisions•Management Uses of Information•Planning•Control

•Qualitative Characteristics of Information•Relevance•Timeliness•Accuracy•Verifiability•Data or Information Processing•Scheduled Reports•Demand Reports•Exception Reports•Predictive Reports•The MIS and Business

•The MIS and Data-Base Management Systems•Decision support Systems•The Impact of Management Information Systems on Business•Easier Business growth•Fewer Clerical Workers•Reduced Information-Processing Costs•Automation of Some Decisions•More and Better Information

Chapter Outline

Managers see computers as tools for providing information on which to base their decisions.

People who are successful with computers know that when developing computer applications they should first focus on their information needs rather than on hardware technology.

What they need most is conceptual knowledge about the information requirements of management and the methods for converting these often complex requirements into operational computer software.

What is a MIS? A management information system is a

formalized computer information system that can integrate data from various sources to provide the information necessary for management decision making.

What is a MIS The data-processing system supports

management information systems. Much of the information that the MIS uses is initially captured and stored by the data-processing system.

Data processing is oriented toward the capture, processing and storage of data whereas MIS is oriented toward using the data to produce management information.

What is a MIS The data-processing system performs

transaction processing. It is very much involved with processing orders, sales, payments on account, and so on. In the course of processing these transactions, the data-processing system collects and stores a large amount of detailed information. This information is the data base for the management information system.

What is a MIS

Management Information Systems

CharacteristicsOriented toward decision makingSummary informationMedium and long rangePeriodicPrediction and control oriented

Data ProcessingCharacteristics

-Performs Transaction Processing -Detail Data -Short Range -Realtime -Daily Operations Oriented

•The Relationship between Data Processing and Management Information Systems

Levels of Decision Making Decisions can be classified as;

Strategic Tactical Operational

These levels of decision making also correspond to management levels. Strategic decisions are made by top management; tactical decisions by middle management; and operational decisions by lower-level management.

Levels of Decision Making Strategic decisions are future oriented and

involve a great deal of uncertainty. Strategic decision making involves the establishment of objectives for the organization and the long range plans for attaining these objectives. Decisions regarding the location of plants, and decisions about capital sources about which products to produce, are examples of strategic decisions.

Levels of Decision Making Tactical decision making is concerned

with the implementation of the decisions made at the strategic level. This includes the allocation of resources to the pursuit of organizational objectives. Examples of tactical decision making include plant layout, personnel concerns, budget allocation, and production planning.

Levels of Decision Making Operational decisions involve the

execution of specific tasks to assure that they are carried out effectively and efficiently. These decisions are made primarily by lower-level supervisors. Standards are usually preset for operational decisions..

Levels of Decision Making Managers and supervisors at this level are

expected to make decisions that keep the operation in line with predetermined standards. Examples of operational decision making include acceptance or rejection of credit in a personal banking or an employee, determination of inventory reorder times and quantities, and assignment of jobs to individual workers.

Levels of Decision Making Programmable decisions are those decisions

for which policy standards or guidelines are already established. For this reason they are often called structured decisions. These decisions are routine in nature and can be made reference to previously established policy.

An example of a programmable decision is the credit-granting decision based on income, years employed, et cetera of the individual applying for credit.

Levels of Decision Making Note that programmable decisions are made

by lower-level managers or supervisors. Non-programmable decisions deal with ill-

defined and unstructured problems. These decisions are future oriented and contain many variables whose impact on the outcome cannot be quantified. These unstructured decisions are those regarding plant expansion, new products and mergers.

Levels of Decision Making

Strategic Level

Decisions

Data Processing(Transaction Processing)

Operarional-Level Decisions

Tactical-Level Decisions

Levels of Decision Making

Levels of Decision Making In our discussion of levels of decision

making, we touched on some of the characteristics of the information required at each level of decision making. Next table summarizes these characteristics. Most of the entries in this table are self-explanatory.

Levels of Decision MakingCharacteristics of the Three Levels of Decision Making

Levels of Decision Making

Characteristic Operational Tactical Strategic

Problem Variety Low Moderate High

Degree of Structure High Moderate Low

Degree of Uncertainty Low Moderate High

Degree of Judgement Low Moderate High

Time Horizon Days Months Years

Programmable Decisions Most Some None

Planning Decisions Few About half Most

Control Decisions Most About half Few

Levels of Decision Making However, we should look closely at some of

them such as the use of realtime information. Operational decision making depends heavily on realtime information.

For example, our school uses a realtime system for course registration. The operational decision allow you to sign up for a particular class depends on the realtime information whether the class is full or not.

Levels of Decision Making On the other hand, strategic decision

making depends much less realtime information. For instance, one important type of information used at the strategic level is income statements. These statements are usually generated at the end of each month. Therefore, they are not realtime.

Levels of Decision Making Strategic-level decision making also tends to

rely heavily on financial information. Decision makers at this level deal with capital requirements and profitability in dollars.

On the other hand, a frontline supervisor is more concerned about the hours worked on a job, the number of orders shipped, the number of defective units produced.

Characteristics of Information Required at Each Level of Decision Making Levels of Decision Making

Information Characteristic Operational Tactical Strategic

Dependence On Computer

Information Systems

High Moderate High

Dependence On Internal

Information

Very High High Moderate

Dependence on External

Information

Low Moderate Very High

Degree of Information

Summarization

Very Low Moderate High

Need For Online Information Very High High Moderate

Need For Computer Graphics Low Moderate High

Use Of Real time Information Very High High Moderate

Use Of Predictive Information Low High Very High

Use Of Historical Information High Moderate Low

Use Of What-If Information Low High Very High

Use Of Information Stated In

Dollars

Low Moderate High

Qualitative Characteristics of Information Relevance Information has relevance when it is

useful in decision making. In other words, if information improves the decision, it is relevant.

Qualitative Characteristics of Information Timeliness In the context of most management

information systems, as information value becomes older its value decreases. Generally lower level decisions in an organization must have more current and timely information and as we move up ladder to higher-level decisions the information can be somewhat older.

Qualitative Characteristics of Information Accuracy Accuracy refers to information being free of

error. The amount of error that we can tolerate is related to the other factors, especially timeliness and the dollar value of the decision to be made. If a decision maker must make a decision quickly, a greater degree of error can be tolerated than if he or she has considerable time and resources available to reduce error.

Qualitative Characteristics of Information Verifiability Verifiability means that the accuracy of

information can be confirmed. Information can be verified through comparison with other information that is known to be accurate.

Qualitative Characteristics of Information Traceability

Qualitative Characteristics of Information Integrity

Qualitative Characteristics of Information The term audit trail is often used to describe

the means by which summarized information can be traced back to its original source. This audit-trail is a very important part of any information processing system. Without this trail it is usually impossible to determine the accuracy of information, therefore bringing in to question the usefulness of such information.

Data or Information Processing Data are collected facts that generally

are not useful for decision making without further processing. Information is directly useful in decision making. It is based on processed data therefore is the output of a data-processing system.

TYPES OF REPORTS in MIS

Report: A printing or display of items. Scheduled (Regular) Reports Demand (Query) Reports Exception Reports Predictive Reports

Scheduled Reports Scheduled Reports are produced on a

regularly scheduled basis such as daily, weekly, or monthly.

These reports are widely distributed to users and often contain large amounts of information that are not used regularly.

Exception Reports One of the most efficient approaches to management is

the management by exception approach. Management by exception means that managers spend their time dealing with exceptions or those situations which are out of control.Activities that are proceeding as planned are in control and, therefore , do not need the manager’s attention.

Exception reports notify management when an activity or system is out of control so that corrective action can be taken.

Exception Reports (continue..) Listings that identify all customers with

account balances that are overdue are examples of exception reports.

Error reports are another type of exception reports. Error reports identify input or processing errors occurring during the computer’s execution of a particular application.

Demand Reports Demand reports are generated on request. These

reports fill irregular needs for information. In the earlier days of computing, the contents of a

demand report had to be previously anticipated or there was a delay of often weeks or months in receiving the data.Today, largely through the query languages of database management systems, we can fulfill unanticipated demands for information very quickly.This is possible because users and managers can use query languages to produce reports.

Predictive Reports They are useful in planning decisions. They often

make use of statistical and modeling techniques such as regression, time series analysis, and simulation.

These reports assist management in answering what-if questions. For example: What if Ad increased by 10% ?

The statistical and modeling techniques that produce predictive reports depend largely on historical data. Such data must be accessible by the MIS in a form that can be used by the models; otherwise, these models will be little use to management.

Scheduled (Regular)Reports

Demand(Query)Reports

ExceptionReports

PredictiveReports

- Produced on a regularly scheduled basis.- Daily, weekly, monthly- Widely distributed to users

- Generated upon request.- Easily produced with query languages.- Fill irregular needs for information.

-Notifies management of out-of control situations.- Periodical - Error listings- Edit listings.

- Assist management in answering what-if questions- Produced by statistical and modeling programs- Useful in planning

MIS REPORTS FOR SALES DEPT.

R: WEEKLY SALES REPORTE: WEEKLY COMPLAINTS ABOUT SALESQ: WHAT IS THE SITUATION OF CUSTOMER A?P: NEXT YEAR’S SALES

Weekly Deliveries Report Report Date:4.1.17 Time: 11:02 Page: 1/6 Week No:5

Customer Name Prod.Code Quantity Price Unit Amount Delivery Date

XYZ 315 29 10 KG 290 2.1.17 XYZ 433 10 15 KG 150 3.1.17 . . .

----------------------------------------------------------------------------------- COUNT : 2 AVERAGE 19.5 12.5 TOTAL 440

The MIS and Business Functions A MIS is a federation of functional information

system. Specialists within each of the functional areas

such as finance, production, accounting, or engineering are much more familiar with the information requirements of that function than anyone else in the firm. These specialists can design systems to produce the information required to manage their function.

Database management systems greatly enhance the ability of these functional systems to share the same data. The important point to remember is that these integrated functional information systems are the MIS.

Th e M IS as a F ed era tion o f F u n c tion a l In fo rm a tion S ys tem s

M ark etin g In form ation S ys tem F in an c e In form ation S ys tem

A cc ou n ts R ec e ivab le A c cou n ts P ayab le

D ata E d it an d B a lan c e M aster F ile U p d a te P ayro ll-C h ec k G en era to r L ab or D is trib u tion R ep ort G en erator

P ayro ll F ixed A ss e t A c c ou n tin g G en era l L ed g e r C os t A c cou n tin g

A cc ou n tin g In fo rm ation S ys tem P rod u c tion In form ation S ys tem E n g in eerin g In form a tion S ys tem P erson n e l In form a tion s ys tem

M IS

Functional Information

Systems

Accounting Application

Systems

Payroll Programs

The MIS and Data-Base Management Systems

Data are the central resource of MIS. A data-base management system is a program

that serves as an interface between applications programs and a set of coordinated and integrated files called a data base.

There are many opportunities for functional information systems to share the same data. For instance, the payroll application within the accounting information system could share data with the personnel information system. Examples of data that could be shared are employee names, addresses and pay rates.

MIS

Marketing Applications

FinanceApplications

Accounting Applications

Production Applications

Engineering Applications

PersonnelApplications

DBMS DataBase

Data-base management systems are an interface between the functional applications and the data base. The DBMS allows the various functional systems to access the same data.

The DBMS is perhaps the most important tool in making MIS possible.

Decision-Support Systems and the MIS A decision-support system provides a set of

integrated computer tools that allow a decision maker to interact directly with computers in order to retrieve information useful for semi structured and unstructured decisions. Such decisions might involve plant expansion, mergers, acquisitions, or new products, for example.

Decision-Support Systems and the MIS A decision-support system is an extension of a

MIS. It provides user-friendly languages, data retrieval, data processing, and modeling capabilities for the decision maker’s direct use.

Integrated form of electronic spreadsheets, database management, and graphics allows user’ s to react quickly to the changing information needs that usually go along with unstructured decisions. Asprova, Icron Prod.pln.

The Impact of Management Information Systems on Business

All businesses, whether large or small must perform data processing.

Since a small- business manager is very familiar with all the aspects of the business, there is less need for a formal data-processing system.

As a business grows larger, managers depend much more on data-processing systems for their information.

A business simply could not service its customers or make higher level decisions without information to support customer service and decision making.

The use of computers in information processing has had several impacts on business:

easier business growth fewer clerical workers reduced data- processing costs automation of some decisions availability of different types and greater quantities of

information.

The Impact of Management Information Systems on Business