Principles of Information Systems, Sixth Edition
Chapter 10
Chapter 10
Information and Decision Support Systems
At a Glance
Instructor’s Manual Table of Contents

Chapter Overview

Chapter Outline

Chapter Principles and Objectives

Teacher Notes

Quick Quizzes

Teaching Tips

Further Readings or Resources

Discussion Questions

Projects to Assign

Key Terms
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Principles of Information Systems, Sixth Edition
Chapter 10
Chapter Overview
Information and decision support systems are the lifeblood of today’s organizations. Thanks to information
and decision support systems, managers and employees can obtain useful information in real time. TPSs
capture a wealth of data and when this is filtered and manipulated, it can provide powerful support for
managers and employees. The ultimate goal of management information and decision support systems is to
help managers and executives at all levels make better decisions and solve important problems. The result
can be increased revenues, reduced costs, and the realization of corporate goals.
Chapter Outline
Lecture Topics
Decision Making and Problem Solving
An Overview of Management Information
Systems
Functional Aspects of the MIS
An Overview of Decision Support Systems
Components of a Decision Support System
The Group Decision Support System
The Executive Support System
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Chapter Principles and Objectives
Principles
Learning Objectives
Good decision-making and problem-solving skills
are the key to developing effective information and
decision support systems.
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
Define the stages of decision making.
Discuss the importance of implementation and
monitoring in problem solving.
The management information system (MIS) must
provide the right information to the right person in
the right fashion at the right time.

Define the term MIS and clearly distinguish the
difference between a TPS and an MIS.
Discuss information systems in the functional
areas of business organizations.
Decision support systems (DSSs) are used when the
problems are more unstructured.
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Specialized support systems, such as group decision
support systems (GDSSs) and executive support
systems (ESSs), use the overall approach of a DSS
in situations such as group and executive decision
making.
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List and discuss important characteristics of
DSSs that give them the potential to be
effective management support tools.
Identify and describe the basic components of a
DSS.
State the goal of a GDSS and identify the
characteristics that distinguish it from a DSS.
Identify the fundamental uses of an ESS and list
the characteristics of such a system.
Principles of Information Systems, Sixth Edition
Chapter 10
Teacher Notes
Decision Making and Problem Solving
Problem solving is a critical activity for any business organization. Once a problem has been identified, the
problem-solving process begins with decision making. A well-known model developed by Herbert Simon
divides the decision-making phase of the problem-solving process into three stages: intelligence, design,
and choice. This model was later incorporated by George Huber into the following expanded model:
Problem
Solving
Stages:
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Intelligence
Design
Choice
Implementation
Monitoring
During the intelligence stage, potential problems or opportunities are identified and defined, and
information is gathered that relates to the cause and scope of the problem. In the design stage, alternative
solutions to the problem are developed and their feasibility is evaluated. The last stage of the decisionmaking phase, the choice stage, requires the selection of a course of action.
Problem solving goes beyond decision making and includes the implementation stage. It is during this
phase that the solution is put into effect. The final stage of the problem-solving process is the monitoring
stage where decision makers evaluate the implementation in order to determine whether the anticipated
results were achieved. In light of new information, the process is then modified.
Optimization, Satisficing, and Heuristic Approaches
In general, computerized decision support systems can either optimize or satisfice. An optimization model
will find the best solution, usually the one that will best help the organization meet its goals. For example,
an optimization model can find the appropriate number of products an organization should produce to meet
a profit goal, given certain conditions and assumptions. Satisficing is usually used because modeling the
problem properly to get an optimal decision would be too difficult, complex, or costly. It normally does
not look at all possible solutions but only at those likely to give good results. Heuristics, often referred to as
“rules of thumb” (commonly accepted guidelines or procedures that usually find a good solution) are very
often used in decision making.
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Chapter 10
Quick Quiz
1.
What is the first step in the decision-making model?
ANSWER: Intelligence
2.
The decision-making model was expanded by the addition of _____.
ANSWER: implementation and monitoring
3.
Which stage of the decision-making model involves selecting a course of action?
ANSWER: Choice
4.
Who is credited with developing the decision-making model?
ANSWER: Herbert Simon
5.
Which stage of the decision-making model involves developing alternative solutions?
ANSWER: Design
An Overview of Management Information Systems
A management information system (MIS) is an integrated collection of people, procedures, databases, and
devices that provide managers and decision makers with information to help achieve organizational goals.
The primary purpose of an MIS is to help an organization achieve its goals by providing managers with
insight into the regular operations of the organization so that they can control, organize, and plan more
effectively and efficiently. In short, an MIS provides managers with information, typically in reports, that
support effective decision making and provides feedback on daily operations. The primary difference
between the reports generated by the TPS and those generated by the MIS is that MIS reports support
managerial decision making at the higher levels of management.
Data that enters the MIS originates from both internal and external sources and the most significant internal
source of data is the organization’s various TPSs and ERP systems. Note however, that data warehouses
and data marts also provide important input data. External sources of data for the MIS include extranets,
customers, suppliers, competitors, and stockholders.
The output of most management information systems is a collection of reports that are distributed to
managers. These include:
Order Entry
System
Components:
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Scheduled reports
Key-indicator reports
Demand reports
Exception reports
Drill down reports
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Chapter 10
The following guidelines should be followed when designing and developing reports to yield the best
results:
Quick Quiz
1.
What type of report can provide increasingly detailed views of information concerning
situations of interest?
ANSWER: Drill down reports
2.
What type of report is generated on a regular basis?
ANSWER: Scheduled reports
3.
What type of report can a manager obtain by request?
ANSWER: Demand report.
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Chapter 10
Functional Aspects of the MIS
As most organizations are structured along functional lines or areas, MISs can be divided in the same
manner. MISs typically support: finance, accounting, manufacturing, marketing, and human resources and
each system is composed of inputs, processing subsystems, and outputs. Most MISs receive inputs from the
corporate strategic plan, TPSs, other functional areas, and external sources, including the Internet.
A financial MIS provides finance information to appropriate managers within a firm. It is composed of a
number of subsystems including:
Financial
MIS:
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Financial forecasting
Profit/Loss and cost systems
Use and management of funds
Auditing
A manufacturing MIS supports the production operations within an organization and typically has
subsystems comprised of:
Manufacturing
MIS
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Design and engineering
Master production scheduling
Inventory control
Just-in-time manufacturing
Process control
Quality control
Marketing MISs support management in their efforts to develop, promote, and sell new products. Included
among its subsystems are:
Marketing
MIS:

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Product development
Promotion and advertising
Product pricing
Marketing research
Human resource MISs are concerned with employee activities such as:
Human
Resource MIS
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Human resource planning
Personnel selection and recruitment
Training and skills inventories
Scheduling and job placement
Wage and salary administration
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Accounting MISs provide aggregate information on:
Accounting
MIS:
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Accounts payable
Accounts receivable
Payroll
Other applications
Geographic information systems provide regional data in graphic and report form.
Quick Quiz
1.
What is an important source of external data for MISs?
ANSWER: Internet
2.
True or False: TPSs provide important input for most MISs.
ANSWER: True
3.
What functional MIS provides aggregate data on accounts payable?
ANSWER: Accounting
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Principles of Information Systems, Sixth Edition
Chapter 10
An Overview of Decision Support Systems
Decision support systems are organized collections of people, procedures, software, databases, and devices
that are in place to support managerial decision-making and problem-solving activities. DSSs are generally
structured for use at all levels within an organization, although upper managers are more likely to find a
need for these systems. DSSs are used to bring structure to the unstructured problems that are found within
a firm. Quite often, DSSs are used to assist in routine problems since many contain programmable
parameters. Most DSSs share the following set of characteristics:
Common
Characteristics
of a DSS:

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Handle large amounts of data from different sources.
Provide report and presentation flexibility.
Offer both textual and graphical orientation.
Support drill down analysis.
Perform complex, sophisticated analysis and comparisons using advanced software
packages in areas such as what-if analysis, simulation, and goal-seeking analysis.
DSSs offer a range of capabilities. They are typically more flexible than either MISs or TPSs and are
available to aid decision-makers in a variety of situations. They also provide support for all phases of the
problem-solving process, and are designed to support a variety of decision frequencies and differing
problem structures.
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Chapter 10
A Comparison of DSS and MIS
A DSS differs from an MIS in numerous in the following ways:
Factor
Problem Type
Users
Support
Emphasis
Approach
System
Speed
Output
Development
DSS
A DSS is good at handling
unstructured problems that cannot
be easily programmed.
A DSS supports individuals,
small groups, and the entire
organization. In the short run,
users typically have more control
over a DSS.
A DSS supports all aspects and
phases of decision making; it
does not replace the decision
maker - people still make the
decisions.
A DSS emphasizes actual
decisions and decision-making
styles.
A DSS is a direct support system
that provides interactive reports
on computer screens.
The computer equipment that
provides decision support is
usually on-line
(directly connected to the
computer system) and related to
real time (providing immediate
results). Computer terminals and
display screens are examples these devices can provide
immediate information and
answers to questions.
Because a DSS is flexible and can
be implemented by users, it
usually takes less time to develop
and is better able to respond to
requests.
DSS reports are usually screen
oriented, with the ability to
generate reports on a printer.
DSS users are usually more
directly involved in its
development. User involvement
usually means better systems that
provide superior support. For all
systems, user involvement is the
most important factor for the
development of a successful
system.
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MIS
An MIS is normally used only
with more structured problems.
An MIS supports primarily the
organization. In the short run,
users have less control over an
MIS.
This is not true of all MIS
systems - some make automatic
decisions and replace the decision
maker.
An MIS usually emphasizes
information only.
An MIS is typically an indirect
support system that uses regularly
produced reports.
An MIS, using printed reports
that may be delivered to
managers once a week, may not
provide immediate results.
An MIS’s response time is
usually longer.
An MIS, however, typically is
oriented toward printed reports
and documents.
DSS users are usually more
directly involved in its
development. User involvement
usually means better systems that
provide superior support. For
all systems, user involvement is
the most important factor for the
development of a successful
system.
Principles of Information Systems, Sixth Edition
Chapter 10
Quick Quiz
1.
True or False: DSSs are more flexible than MISs
ANSWER: True
2.
What DSS type is concerned with recurring situations?
ANSWER: Institutional DSS
3.
What decision-making level uses the DSS?
ANSWER: All levels
Components of a Decision Support System
The main components of a DSS include a database, model base, dialogue manager, and links to external
sources of data such as the Internet, corporate intranets, and other external databases. The database
component contains the facts used by the DSS to arrive at its decisions while the model base contains a
variety of models that have been used by analysts and decision-makers in different functional areas. Models
may be found in areas such as finance, statistics, graphics, and project management. The dialogue manager
provides menus and other mechanisms to facilitate communication between the user and the system.
Quick Quiz
1.
What component of a DSS is used to house models used in different functional areas?
ANSWER: Model base
2.
What types of models are used to coordinate large projects?
ANSWER: Project management models
3.
Which DSS model provides cash flow information?
ANSWER: Financial models
The Group Decision Support System
A group decision support system (GDSS) or computerized collaborative work system takes the
functionality of a DSS and adds to it software that allows it to be used in group settings. GDSSs are
typically easy to use and offer a variety of decision support. One type of GDSS software, called groupware,
is designed to help generate lists of decision alternatives and perform data analysis. Group work is
facilitated through these mechanisms.
A variety of GDSS alternatives are available and among these are decision rooms, which are ideal for
situations in which decision makers are located in the same building or geographic area and the decision
makers are occasional users of the GDSS approach. Another alternative is the local area decision network
which can be used when members are in the same geographic area and meet frequently. The
teleconferencing alternative can be used when decision frequency is low and the location of group members
is distant. The last alternative, wide area decision network, is used for situations where decision frequency
is high and location of members is distant.
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The following characteristics of a GDSS enhance decision making:
Common
Characteristics
of a GDSS:

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Special design
Ease of use
Flexibility
Decision-making support
Anonymous input
Reduction of negative group behavior
Parallel communication
Automated record keeping
Quick Quiz
1.
What name is used to describe teams of people located around the globe?
ANSWER: Virtual workgroups
2.
What GDSS alternative should be used for infrequent meetings of geographically centralized people?
ANSWER: Decision room
3.
What GDSS is best suited to geographically dispersed participants that meet frequently?
ANSWER: Wide area decision network
4.
True or False: GDSS software is inherently flexible.
ANSWER: True
5.
True or False: GDSSs are also called computerized collaborative work systems.
ANSWER: True
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Chapter 10
The Executive Support System
Executive support systems (ESSs) are specialized DSSs designed for use by senior-level management.
They are used in strategic matters and for high-level decision making and provide top executives with a
means of tracking critical success factors.
The following are general characteristics of ESSs:
Common
Characteristics
of an ESS:

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
Tailored to individual executives.
Easy to use.
Have drill down capabilities.
Support the need for external data.
Can help with situations that have a high degree of uncertainty.
Have a futures orientation.
Are linked with value-added business processes.
Some of the major decision-making areas that can be supported through an ESS are:
Common
Capabilities of
an ESS:





Support for defining an overall vision.
Support for strategic planning.
Support for strategic organizing and staffing.
Support for strategic control.
Support for crisis management.
Quick Quiz
1.
What type of DSS is specifically designed for use by senior management?
ANSWER: ESS
2.
True or False: ESSs have a futures orientation.
ANSWER: True
3.
True or False: ESSs can only be used by upper management.
ANSWER: False
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Chapter 10
Teaching Tips
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Invite a speaker in from an organization using a DSS, ESS or MIS.
Spend a lab day building spreadsheet-based models that demonstrate the various components
of a DSS or ESS.
Ask students to break into small groups based on similar majors or interests. Ask each group to visit
with local corporations and obtain copies of managerial reports generated by function MISs. Compare
the reports in class. What are common items found on each? What appears to be the most important
aspect of each?
Locate management reports on the Web. Do many organizations post them in areas that can be
accessed by the general public?
Obtain management reports and bring them to class. An effective way to lecture about each functional
area is to structure the talk around the reports.
Use Web-based DSSs in class to demonstrate the use of decision support systems.
Use a simple spreadsheet application to illustrate the idea of “what-if” analysis.
Download example DSS software from sites on the Internet and demonstrate it during class time.
Student assignments can also be designed to encourage students to download and try demo versions of
larger packages.
Contact simulation software providers. Secure one of their videotapes used in product advertising.
Further Readings and Resources
Readings
Gallegos, Frederick, “Decision Support Systems: Areas Of Risk,” Information Strategy: The Executive's
Journal 15(2), Winter 1999, 46-48.
Kersten, G. (editor), Z. Mikolajuk (editor), and A. Gar-on Yeh. 2000. Decision Support Systems for
Sustainable Development : A Resource Book of Methods and Applications. Intl Development Research
Center Publishing.
Informational on-line sites
DSS
http://www.elsevier.com/homepage/sae/orms/dss/menu.htm
Simulation
http://www.scs.org/
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Chapter 10
Discussion Questions
Some interesting topics of discussion in this chapter include the following:



Discuss the different type of MIS reports: Who needs them and why?
What are the different uses of DSS?
What are the drawbacks of using GDSS?
Projects to Assign
1.
2.
3.
Assign Review Questions: 3, 5, 8,13, and 17.
Assign Problem Solving Exercise 1.
Assign Team Activity 1 or Web Exercise 2 or Case3.
Key Terms
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

Brainstorming - decision-making approach which often consists of members offering ideas “off
the top of their heads”
Cost centers - divisions within a company that do not directly generate revenue
Decision room – a room that supports decision making
Heuristics - commonly accepted guidelines or procedures that usually find a good solution
Virtual workgroups - teams of people located around the world working on common problem
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