MANAGEMENT INFORMATION SYSTEMS 8/E
Raymond McLeod, Jr. and George Schell
Chapter 6
Systems Concepts
Copyright 2001 Prentice-Hall, Inc.
6-1
Four Model Types
1) Physical models
– Three dimensional representation such as a scale
model
2) Narrative models
– Spoken or written
3) Graphic models
– Abstraction of lines, symbols, or shapes
4) Mathematical models
– Equation(s)
EOQ =
2PS
M
6-2
A Graphic Model of the
Economic Order Quantity Concept
Cost
Total cost
Purchasing cost
0
EOQ
Order Quantity
6-3
Sales
Orders
Sales
Orders
Customers
1.
1.
Edit
Sales
Orders
2.
2.
3.
Sales
Order
Data
Enter Sales
Orders
Sales
Orders
Prepare Sales
Order Report
Sales
Orders
Report
Edit
Sales
Orders
Enter
Sales
Order
Data
Sales
Orders
Enter Sales
Order Data
Edit Sales
Orders
Sales Order
History
File
A. A Flowchart
3.
Sales Order
History File
Prepare
Sales
Order
Report Sales
Order
Report
Sales
Manager
B. A Data Flow Diagram
6-4
Uses of Models

All four models facilitate understanding and
communication.

The mathematical model also helps predict
the future.
6-5
The General Systems Model
Graphic diagram with an accompanying
narrative that depicts all organizations in a
general way using a systems framework
 The Physical System

–
–
–
–
Material flow
Personnel flow
Machine flow
Money flow
6-6
The Physical System of the Firm
Input
Resources
Transformation
Process
Output
Resources
Boundary of
the Firm
6-7
The Conceptual System

Open-loop systems

Closed-loop systems (feedback loop)

Management control

The information processor
6-8
A Closed-Loop System
Feedback
Input
Resources
Control
Mechanism
Transformation
Process
Feedback
Output
Resources
6-9
The Physical System of the Firm
as a Controlled System
Information
Information
Management
Input
Resources
Transformation
Process
Output
Resources
6-10
A Sales Report of
Fast-Moving Products
Item Number
400293
319421
786402
190796
001007
739792
722210
410615
963214
000123
Item Description
Year-to-Date
Sales Volume
BRAKE PIPE
DOOR HANDLE GASKET
CLUTCH DRIVEN PLATE
CARPET SNAP
SPARK PLUG
HOSE CLIP
RUBBER PLUG
UPPER DOOR HINGE
REAR TUBE SHOCK
NEEDLE VALVE
Totals
% of Total
Year-to-Date Sales
$1,702.93
1,624.00
1,403.97
1,102.00
1,010.79
949.20
946.73
938.40
922.19
919.26
.068
.065
.056
.044
.040
.038
.038
.038
.037
.037
$11,519.47
.461
6-11
Information is Gathered from All of
the Physical System Elements
Information
Input
Resources
Management
Transformation
Process
Information
Output
Resources
6-12
Supplier Analysis Report
Item Number: 410615
Item Description: Upper Door Hinge
SUPPLIER
NUMBER
3062
4189
0140
2111
NAME
CARTER
& SONS
PACIFIC
MACHINING
A.B.
MERRIL
BAY AREA
LAST
DATE
P.O. #
7/12
1048-10
360
$8.75
12
.00
4/13
962-10
350
9.10
08
.02
1/04
550-10
350
8.12
03
.00
8/19
1196-10
360
11.60
19
.04
QTY.
UNIT
DAYS TO
PRICE RECEIPT
PCT.
REJECTS
6-13
A Job Status Report Provides Information
about the Transformation Process
Job Number: 84-182
Customer: Wankel Automotive
CURRENT STATUS
Step 4-weld supports to frame
Department 410-Welding
Date and Time Begun-10/8; 10:15A
Projected Job Completion-10/14; 9:30A
NEXT PROCESS
•Step 5-paint frame
•Department 632-Paint
6-14
The Information Processor Transforms
Data into Information
Information
Information
Management
Information
Processor
Data
Input
Resources
Transformation
Process
Output
Resources
6-15
Conceptual System (cont.)

Dimensions of Information
–
–
–
–
Relevancy
Accuracy
Timeliness
Completeness
Too Much Information is called ‘Information Overload’
6-16
Conceptual System (cont.)

Standards
– Measure of acceptable
performance
– Usually stated in
specific terms
– Used to control
physical system
– Consists of:

Objectives
– Overall goal that a
system is to obtain
– Systems have one or
more objectives
» Management
» Information processor
» Standards
6-17
A Comparison of Objectives and Standards
Objectives
Satisfy Customer
Needs
Produce a return
on investment for
the owners
Operate efficiently
Invest in the future
Develop sources
of supply
Operate ethically
Standards of Performance
Achieve an annual sales volume of at least $25 million
Maintain a 20% share of the market
Maintain an annual growth rate of 15%
Pay dividends to stockholders each quarter
Maintain the price of the firm’s common stock above
$85 per share
Realize an after-tax profit of 15% of sales
Maintain a record of accident-free days
Keep employee turnover below 10%
Invest in a minimum of 15% of sales revenue in research
and development
Achieve stockout on no more than 2% of the items in
inventory during the year
Keep the number of backorders to less than 5% of all
orders processed
Have no plant shutdowns due to unavailable materials
Have no legal actions filed against the firm by
customers, suppliers, and the government
6-18
Performance Standards are Made Available to Both
Management and the Information Processor
Standards
Information
Information
Management
Information
Processor
Data
Input
Resources
Transformation
Process
Output
Resources
6-19
Conceptual System (cont.)

Management by exception
– Compares standards with information output of
system
– Manager becomes involved when system falls
outside range of acceptable performance
– Capability provided by CBIS
6-20
Conceptual System (cont.)

Critical Success Factors (CSFs)
– A CSF is one of the firm’s activities that has a
strong influence on the firm’s ability to meet its
objectives
– Firms have multiple CSFs
– CSFs focuses attention on a portion of a firm’s
activities
6-21
Changes are Made in the Physical
System Through the Decision Flow
Standards
Decisions
Management
Information Information
Processor
Data
Input
Resources
Transformation
Process
Output
Resources
6-22
Conceptual System (cont.)

Decision Flow
– Data is transformed into information by the
information processor
– Manager transforms information into decisions
6-23
The General Systems Model of the Firm
Environment
Standards
Decisions
Information
and
Data
Information
Management
Information
Processor
Data
Physical
Resources
Input
Resources
Transformation
Process
Output
Resources
Physical
Resources
6-24
General Systems
Model in Context
Helps adjust firm
 Provides a sense of stability
 Provides mental picture of what to expect

6-25
Problems -- Good and Bad

Problem solving
– Suppress harmful effects
– Capitalize on opportunity for benefit

Decision
– The act of selecting a strategy or action
6-26
Elements of Problem Solving
Desired state
 Current state
 Constraints

}
Difference =
Solution Criterion
– Internal -- limited resources
– Environmental -- pressures to restrict resource
flows
6-27
Problem
Elements of the
Problem-Solving
Process
Elements of the conceptual system
Standards
Alternate
solutions
Desired state
Current state
Problem
solver
(manager)
Information
Constraints
Solution
6-28
Problems versus Symptoms
Know the difference
– Symptoms are produced by the problem
– The problem causes the symptoms
– When the problem is corrected the symptoms
will cease, but not vice versa
6-29
Problem Structure

Structured
– Elements and relationships understood

Unstructured
– No elements or relationships understood

Semistructured
– Some elements understood

DSS concept of managers and the computer
working jointly towards a solution
6-30
Problem Structure
Computer
Solve
Structured
DSS
Semi-structured
Manager
Solve
Unstructured
6-31
The Systems Approach
John Dewey, 1910
Columbia philosophy professor
 1. Recognize the controversy
 2. Weigh alternative claims
 3. Form a judgment
Problem
Solution
6-32
Phases and Steps of the Systems Approach
Phase I: Preparation Effort
Step 1.
Step 2.
Step 3.
View the firm as a system
Recognize the environmental system
Identify the firm’s subsystems
Phase II: Definition Effort
Step 4.
Step 5.
Proceed from a system to a subsystem level
Analyze system parts in a certain sequence
Phase III: Solution Effort
Step 6.
Step 7.
Step 8.
Step 9.
Step 10.
Identify the alternative solutions
Evaluate the alternative solutions
Select the best solution
Implement the solution
Follow up to ensure that the solution is effective
Decisions are made at each step of
the definition and solution phases
6-33
Preparation Effort

Step 1
View the firm as a system

Step 2
Recognize environmental system

Step 3
Identify the firm’s subsystems
– Business areas
– Levels of management
– Resource flows
Steps taken in any order or at the same time
6-34
The Systems Approach Requires Decision Making
PHASE
Definition
Effort
Solution
Effort
STEP
DECISION
Where is the problem?
Do new data need to be gathered, or do data
to a subsystem level.
already exist?
5. Analyze system parts in a How will data be gathered?
certain sequence.
What is causing the problem?
How many alternatives should be identified?
6. Identify alternative
Are these alternatives feasible?
solutions.
Which criteria should be used?
How does each alternative measure up to
7. Evaluate the alternative
each criterion?
solutions.
Do all criterion have equal weight?
8. Select the best solution. Is there enough information to make a
selection?
Which alternative measures up best to the
criteria?
When should this solution be implemented?
9. Implement the solution.
How should the solution be implemented?
Who should perform the evaluation?
10. Follow up to ensure that How well is the solution meeting the
the solution is effective.
objectives?
6-35
4. Proceed from a system
Each Functional Area is a Subsystem
President
Marketing Subsystem
Manufacturing Subsystem
Human Resources
Subsystem
Finance Subsystem
Information Services
Subsystem
6-36
Something Triggers the Definition Effort
The trigger can be:
1.An action
2.The passage of time
3. From within the firm or the environment
6-37
Definition Effort

Step 4: Proceed from System to Subsystem
Level
– Each level is a system
– Are subsystems integrated into a smoothly
functioning unit?
– Does the subsystem need to be broken down
further?
6-38
Definition Effort [cont.]

Step 5: Analyze System Parts in a Certain
Sequence
1. Evaluation standards. They must be valid,
realistic, understandable, measurable
2. Compare system outputs with standards
3. Evaluate management
4. Evaluate the information processor
5. Evaluate the inputs and input resources
6. Evaluate the transformation processes
7. Evaluate the output resources
6-39
Each Part of the System Is Analyzed in Sequence
1.
Standards
3.
5.
Inputs.
+
Input
resources
4.
Management
Information
processor
6.
7.
Transformation
processes
Output
resources
2.
Outputs
6-40
Solution Effort

Step 6: Identify alternatives
– Find different ways to solve the same problem
» Brainstorming
» Joint Application Design (JAD) session
Step 7: Evaluate alternative solutions
 Step 8: Select the best solution

» Analysis
» Judgment
» Bargaining
6-41
Final Steps of the Solution Effort

Step 9: Implement the solution

Step 10: Follow-up to ensure that the
solution is effective
6-42
An Integrative Model of the Systems Approach
Definition Effort
4. Proceed from a system to a
subsystem level
5. Analyze system parts in a certain
sequence
Solution Effort
6. Identify alternative solutions
7. Evaluate the alternative solutions
8. Select the best solution
9. Implement the solution
10. Follow-up to ensure solution is effective
6-43
Review of Systems Approach
Integrating each step of the systems
approach is a managerial challenge
 Managerial preparation effort is a good
starting point
 Next, manager engages in functional
decomposition

– Definition effort

Finally, manager solves problem
– Solution effort
6-44
Summary

Models are abstractions of reality
– Four types of models
– General systems model
Physical system
 Conceptual system
 Information Processor

– Computer
– Noncomputer
6-45
Summary [cont.]
Management by exception
 Managerial problem solving
 Classification of problems

– Structured
– Unstructured

Use of the systems approach
6-46