Chapter 12The The

Management Management

Information SystemInformation System

MANAGEMENT INFORMATION SYSTEMS 8/ERaymond McLeod, Jr. and George Schell

Copyright 2001 Prentice-Hall, Inc.

12-1

MIS DefinitionMIS Definition

� A computer-based system that makes A computer-based system that makes information available to users with similar information available to users with similar needs.needs.– Users are typically comprise a formal Users are typically comprise a formal

organizational entityorganizational entity– Describes what has happened in the pastDescribes what has happened in the past

12-2

Early MIS EffortsEarly MIS Efforts� Popular in business by the mid 1960sPopular in business by the mid 1960s� Punched card and keydriven machines were Punched card and keydriven machines were

used only for data processingused only for data processing� The first computers were applied the same The first computers were applied the same

wayway� Only a few computer-literate people in the Only a few computer-literate people in the

firmsfirms� Managers became aware of computer’s Managers became aware of computer’s

processes and powerprocesses and power12-3

MIS is an Organizational MIS is an Organizational ResourceResource

� InformationInformation– Past, present, futurePast, present, future

– Periodic reports, special reports, simulationsPeriodic reports, special reports, simulations

� Similar needsSimilar needs– Functional areaFunctional area

– Management levelManagement level– Managers and non-managersManagers and non-managers

12-4

An MIS ModelAn MIS Model

� DatabaseDatabase– AIS data and informationAIS data and information

– Environmental data and informationEnvironmental data and information

� Interorganizational information systems Interorganizational information systems (IOS)(IOS)– Firms band together with other organizations Firms band together with other organizations

such as supplierssuch as suppliers

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EnvironmentEnvironmentOrganizational Organizational

problemproblemsolverssolvers

Report writingReport writingsoftwaresoftware

MathematicalMathematicalmodelsmodels

Management Management InformationInformation

SystemSystem

An MIS ModelAn MIS ModelData Data Information Information

EnvironmentEnvironment

DatabaseDatabase

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ExecutiveInformation

System(EIS)

Organizational Information SystemsOrganizational Information Systems

Marketinginformation

system

Manufacturinginformation

system

Financialinformation

system

Human resourceinformation

system 12-7

Organizational Information SystemsOrganizational Information Systems� Executive Information Systems:Executive Information Systems:

– for managers in the level of strategic planningfor managers in the level of strategic planning� Marketing Information Systems:Marketing Information Systems:

– provide information to solve marketing provide information to solve marketing problemsproblems

– include: marketing research, marketing include: marketing research, marketing intelligence, productions, promotions, pricingintelligence, productions, promotions, pricing

� Manufacturing Information Systems:Manufacturing Information Systems:– provide information to solve manufacturing provide information to solve manufacturing

problemsproblems– include: industrial engineering, manufacturing include: industrial engineering, manufacturing

intelligence, productions, inventory, quality, intelligence, productions, inventory, quality, and cost.and cost.

Functional Information SystemsFunctional Information Systems� MIS tailored to meet users’ needs for MIS tailored to meet users’ needs for

information concerning functional areasinformation concerning functional areas– ManufacturingManufacturing

– HRISHRIS– OthersOthers

� Executive information systems (EIS)Executive information systems (EIS)� Enterprise information systemEnterprise information system

– Pulls functional ISs togetherPulls functional ISs together– Enterprise resource planning (ERP) Enterprise resource planning (ERP)

Report Writing SoftwareReport Writing Software

� Periodic and special reports may look the Periodic and special reports may look the samesame

� Difference is in what Difference is in what triggerstriggers the report the report– Periodic report Periodic report

» Produced on a scheduleProduced on a schedule

– Special report Special report » Produced when something out of the ordinary Produced when something out of the ordinary

occursoccurs

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Incorporating Management Incorporating Management by Exceptionby Exception

� Prepare the report only when exceptions Prepare the report only when exceptions occuroccur

� Use the report sequence to highlight Use the report sequence to highlight exceptionsexceptions

� Group exceptions togetherGroup exceptions together� Show the variance from the normShow the variance from the norm

12-11

An Overtime Earnings ReportAn Overtime Earnings Report

OVERTIME EARNINGS REPORTFOR WEEK ENDING AUGUST 19

OVERTIME EARNINGSDepartment No. Department Name Current Month Year-to-Date

16-10 Receiving $ 2,305.00 $ 5,319.2016-11 Inspection $ 1,025.60 $ 4,386.1216-12 Materials Handling $ 3,392.50 $12,629.0016-13 Tooling $ 78.00 $ 1,049.0016-14 Assembly $ 0.00 $ 792.8016-15 Plating $ 3,504.90 $12,635.2016-16 Shipping $ 5,219.16 $18,294.16 TOTALS $15,525.16 $55,105.48

12-12

SALES BY PRODUCT FOR THE MONTH OF JUNE

PRODUCT PRODUCT CURRENT MONTH YEAR-TO-DATE

NUMBER NAME SALES SALES

129875 GASKET CENTER CASE $ 5,090.23 $ 31,764.00

087235 MAINSHAFT 4,760.01 29,329.45

118320 1ST MOTION SHAFT 1,789.45 28,243.59

250067 OIL SEAL REAR 11,560.24 23,450.07

228203 LAYGEAR 8,369.34 14,709.03

576000 HUB 5TH .00 13,623.68

516012 SHIFT FORK 1-2 450.95 12,634.44

090407 SYNCHRO RING 2ND 2,243.27 9,963.58

282130 BUSH SHIFT LEVER .00 490.00

576301 OIL SLINGER .00 11.50

12-13

AGED ACCOUNTS RECEIVABLE REPORT AS OF MAY 31

-----------------------------------------------------------------

----CUSTOMER-------- CURRENT 30-60 60-90 OVER 90 TOTAL

NUMBER NAME AMOUNT DAYS DAYS DAYS AMOUNT

-----------------------------------------------------------------

51212 KELLY & MARLEY INC 1,003.10 20.26 1023.26

51221 KENNEDY ELECTRIC 181.34 181.34

52472 KENYON MACHINERY 443.10 443.10

53204 KEPNER DANA CO 153.26 114.14 11.12 278.52

54233 KERITE CO 367.94 101.74 469.68

54574 KEYMAN ASSOCIATES 432.71 431.71

55081 KIMBULIANS 24.12 122.81 146.93

55430 KIRSCH CO 26.30 26.30

60245 LEBEN DRILLING 1.10 476.93 174.96 652.39

60772 LEEMONT INC 35.87 35.95 71.82

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SALES BY SALESPERSON REPORT FOR THE MONTH ENDING MARCH 31

SALESPERSON CURRENT-MONTH YEAR-TO-DATE

----------- ---------------------- ----------------------

NO. NAME QUOTA ACTUAL VARIANCE QUOTA ACTUAL VARIANCE

0120 JOHN NELSON 1200 1083 -117 3600 3505 -95

10469 LYNN SHERRY 1000 1162 +162 3000 3320 +320

19261 DARVIN UPSHAW 800 1090 +290 2400 2510 +110

20234 JANIE EVANS 1500 1305 -195 4500 4110 -390

61604 TRAVIS BURKE 2000 2333 +333 6000 6712 +712

62083 CATHY HAGER 1000 990 -10 3000 2319 -681

63049 STEVE JENNER 1100 1250 +150 3300 2416 -884

64040 SAM MOSELY 1050 985 -65 3150 3020 -130

TOTALS 9650 10198 548 28950 27912 -1028

12-15

ModelingModeling

� Models are abstractionsModels are abstractions� Models may be:Models may be:

– PhysicalPhysical– NarrativeNarrative– GraphicGraphic

– MathematicalMathematical

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Mathematical ModelingMathematical Modeling

� Most important to MIS usersMost important to MIS users� Three dimensionsThree dimensions

– Influence of timeInfluence of time– Degree of uncertaintyDegree of uncertainty– Ability to optimizeAbility to optimize

12-17

Mathematical Model TypesMathematical Model Types

� StaticStatic– Does not include timeDoes not include time

– Like a snapshot Like a snapshot

� DynamicDynamic– Includes timeIncludes time

– Like a motion pictureLike a motion picture

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Mathematical Model Types Mathematical Model Types (cont.)(cont.)

� ProbabilisticProbabilistic– Includes probabilities of events that occurIncludes probabilities of events that occur

– 0.00 to 1.000.00 to 1.00

� DeterministicDeterministic– Events are certainEvents are certain

– Not randomNot random

12-19

Mathematical Model Types Mathematical Model Types (cont.)(cont.)

� OptimizingOptimizing– Selects best solutionSelects best solution

– Requires structured problemsRequires structured problems

� Sub-optimizingSub-optimizing– Also called satisficingAlso called satisficing

– Model identifies outcomes for manager to Model identifies outcomes for manager to select amongselect among

12-20

SimulationSimulation

� Use of a model is called simulationUse of a model is called simulation� ScenarioScenario

– Conditions that influence the simulationConditions that influence the simulation– Scenario data elementsScenario data elements

� Decision variablesDecision variables– Input valuesInput values

� Output format variesOutput format varies

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Simulation (cont.)Simulation (cont.)

� Simulation TechniqueSimulation Technique– Single scenario for optimizing modelSingle scenario for optimizing model

– What-if game for sub-optimizing modelsWhat-if game for sub-optimizing models– Change only single decision variable per runChange only single decision variable per run– Systematically discover answers to problemsSystematically discover answers to problems

� Output formatOutput format– Include both decision variables and outcomes Include both decision variables and outcomes

on same reporton same report

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Modeling ExampleModeling Example

� Use model to simulate the effect of:Use model to simulate the effect of:– Price of productPrice of product

– Amount of plant investment necessary to Amount of plant investment necessary to provide sufficient capacityprovide sufficient capacity

– Amount to invest in marketing activityAmount to invest in marketing activity– Amount to invest in R & DAmount to invest in R & D

� Enter model inputEnter model input� Review model outputs Review model outputs

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More on ModelingMore on Modeling

� AdvantagesAdvantages– Can be a learning experienceCan be a learning experience

– Speed allows consideration of more optionsSpeed allows consideration of more options– Provides predictive powerProvides predictive power– Less expensive than trial-and-error methodLess expensive than trial-and-error method

� DisadvantagesDisadvantages– Difficult to model a business systemDifficult to model a business system– High degree of mathematical skills requiredHigh degree of mathematical skills required

12-24

INVENTORY PLANNING MODEL OCTOBER 11

SCENARIO:

BEGINNING BALANCE: 200

DAILY SALES UNITS: 20

DECISIONS:

0RDER QUANTITY: 100

REORDER POINT: 175

LEAD TIME: 3

RESULTS:

BEGINNING ENDING ORDER RECEIPT

DAY BALANCE RECEIPTS SALES BALANCE QUANTITY DUE DATE

1 200 20 180 25 5

2 180 50 20 160

3 160 20 140 12-25

Graphic OutputGraphic Output

� Use graphics toUse graphics to– present a quick summarypresent a quick summary

– detect trends over timedetect trends over time– forecast activitiesforecast activities– seek relatively simple impressions from a large seek relatively simple impressions from a large

volume of data volume of data

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Graphical OutputGraphical Output

� Reports and model outputs can be produced Reports and model outputs can be produced in tabular or graphical formin tabular or graphical form

� Spreadsheets have encouraged the use of Spreadsheets have encouraged the use of graphicsgraphics

� Can improve decision making capabilityCan improve decision making capability

12-27

Which Graphs to UseWhich Graphs to Use� Line or bar charts are best to summarize Line or bar charts are best to summarize

datadata� Grouped line or bar charts show trends over Grouped line or bar charts show trends over

timetime� Grouped bar charts are better for Grouped bar charts are better for

representing parts of a wholerepresenting parts of a whole� Compare variables using horizontal, not Compare variables using horizontal, not

vertical, barsvertical, bars� Use single line or bar charts to compare Use single line or bar charts to compare

data pointsdata points12-28

1980 1981 1982 1983 19840

10

20

30

40

50

60

70

80

90

1980 1981 1982 1983 1984

Apples Oranges Peanuts

0

10

20

30

40

50

60

70

80

90

1980 1981 1982 1983 1984

Apples

Oranges

Peanuts

Years

(c)

Years

(a)

GROUPED/MULTIPLE LINE CHARTGROUPED/MULTIPLE LINE CHART GROUPED BAR CHARTGROUPED BAR CHART Sales RevenueSales Revenue

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Segmented Line ChartSegmented Line Chart

0

50

100

150

200

1980 1981 1982 1983 1984

Years (b) Legend:

ApplesOrangesPeanuts

Dol

lars

in M

illi

ons

12-30

Segmented/Divided Bar ChartSegmented/Divided Bar Chart

0

50

100

150

200

Sales Revenue

1980 1981 1982 1983 1984

Years (d)

Dol

lars

in M

illi

ons

Legend:ApplesOrangesPeanuts

12-31

Human Factors ConsiderationHuman Factors Consideration

� Behavioral influences can affect employees Behavioral influences can affect employees in their computer-related tasksin their computer-related tasks

� FearFear– Replacement of people by computersReplacement of people by computers– Computer systems tailored to organizations, not Computer systems tailored to organizations, not

individualsindividuals– Managers and line workers are affectedManagers and line workers are affected

12-32

Minimizing FearMinimizing Fear

� Use computer as a means of achieving job Use computer as a means of achieving job enhancementenhancement

� Use formal communications to keep Use formal communications to keep employees aware of firm’s intentionsemployees aware of firm’s intentions

� Build a relationship of trust with employeesBuild a relationship of trust with employees� Align employees’ needs with firm’s Align employees’ needs with firm’s

objectivesobjectives

12-33

Putting the MIS in PerspectivePutting the MIS in Perspective

� The first attempt to make information The first attempt to make information available to available to managementmanagement

� Enjoyed its greatest prominence in the Enjoyed its greatest prominence in the 1960s when it first originated1960s when it first originated

� Now integrated throughout the firmNow integrated throughout the firm

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MIS and Problem SolvingMIS and Problem Solving

� Organization-wide information resourcesOrganization-wide information resources– Provides problem solving informationProvides problem solving information– Sets stage for accomplishment in other areas such as Sets stage for accomplishment in other areas such as

DSS, the virtual office, and knowledge-basedDSS, the virtual office, and knowledge-based

� Problem identification and understandingProblem identification and understanding– Main idea is to keep information flowing to the Main idea is to keep information flowing to the

managermanager– Manager uses MIS to signal impending problemsManager uses MIS to signal impending problems

� Main weakness is that it is not aimed at individual Main weakness is that it is not aimed at individual problem solversproblem solvers

12-35

SummarySummary

� MIS is an organizational reason providing MIS is an organizational reason providing information to managers with similar needsinformation to managers with similar needs

� Functional MISs began to emergeFunctional MISs began to emerge� MIS subsystemsMIS subsystems

– Report-writing softwareReport-writing software– Mathematical modelsMathematical models

� Management by exception can be Management by exception can be incorporatedincorporated

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Summary [cont.]Summary [cont.]

� Mathematical modelingMathematical modeling– Only an approximationOnly an approximation

� Computer graphicsComputer graphics� Behavioral influencesBehavioral influences� Quality of ISQuality of IS

12-37