Management Information Systems

(MIS)

Management Information Systems

 Instructor for the Course
• Mukul Gupta (Assistant Professor, Information Systems Area)
• Room: J-208,
• mukulg@iimidr.ac.in,
• 0731-2439-681

Management Information Systems

 Evaluation
• Assessment Details
• Part-1
• Quizzes 20%
• Part-2
• Group Project 20%
• Part-3
• Mid-Term Exam 30%
• End-Term Exam 30%
100%

Management Information Systems

 Course Strategy
• Lectures will be largely interactive.
• You will be called on randomly to answer questions.
• Lecture notes are NOT guaranteed.
• NO re-exam/re-quiz.

Management Information Systems

 What is an Information System?

Information System = Information + System

What is Information?

What is System?

Management Information Systems

 Information is Subjective
• Why do people need information?
• Individuals:
• entertainment and enlightenment
• Businesses:
• decision making, problem solving and control
• To ensure effective & efficient decision making leading to prosperity of the organization

Management Information Systems

 Data – Information
• Data
• consists of raw facts, such as an employee number, total hours worked in a
week, inventory part numbers, or sales orders
• Represents something in the real-world
• The raw materials in the production of information
• Information
• data that have meaning in a context; subjective
• data in relationships; data after manipulation
• provides answers to “who”, “what”, “where”, and “when” questions

Management Information Systems

Data – Information

Processing

Management Information Systems

Characteristics of Valuable Information

Management Information Systems

 Data – Information – Knowledge
• Knowledge
• application of data and information; answers “how” question
• awareness and understanding of a set of information and ways that
information can be made useful to support a specific task or reach a decision.

Management Information Systems

Data – Information – Knowledge – Wisdom
(DIKW)

Management Information Systems

 Concept of System
• A system is
• a collection of elements or components that are organized for a common
purpose.
• a set of elements or components that interact to accomplish goal(s).
• Closed system
• Stand-alone system that has no contact with other systems
• Open system
• System that interfaces with other systems

Management Information Systems

 Elements of a System
• Input
• Processing mechanism
• Output
• Feedback Feedback

Input Processing Output

Management Information Systems

 Example of a System

Elements
System Processing Goal
Inputs Outputs
elements
Actors, director, Filming, Finished Entertaining
staff, sets, editing, film movie, film
Movie equipment special delivered to awards,
effects, movie profits
distribution studio

Management Information Systems

Example of a System

Management Information Systems

Example of a System

Management Information Systems

 System Performance and Standard
• Efficiency
• A measure of what is produced divided by what is consumed
• Effectiveness
• A measure of the extent to which a system achieves its goals
• System performance standard
• A specific objective of the system

Management Information Systems

System Performance and Standard

Management Information Systems

System Performance and Standard

Management Information Systems

 Information – Adds To or Takes From?
• What information consumes is rather obvious: it consumes the
attentions of its recipients.
• Hence a wealth of information creates poverty of attention, and
• A need to allocate that attention efficiently among the
overabundance of information sources that might consume it.

Management Information Systems

 Information System
“An information system (IS) is a set of interrelated elements or
components that collect (input), manipulate (process), store, and
disseminate (output) data and information, and provide a
corrective reaction (feedback mechanism) to support decision
making and control in an organization.”

Management Information Systems

 Information System
• Input
• The activity of gathering and capturing data
• Whatever goes into the computer
• Processing
• Converting or transforming data into useful outputs
• Output
• Useful information, usually in the form of documents and/or reports
• Anything that comes out of a computer
• Feedback
• Output that is used to make changes to input or processing activities

Management Information Systems

 Information System in Organization
• An information system contains
information about an organization and
its surrounding environment.
• Environmental actors, such as
customers, suppliers, competitors,
stockholders, and regulatory agencies,
interact with the organization and its
information systems

Management Information Systems

 Information System

Information
Systems

Computerized
Manual Systems
Systems

Use paper + Pencil Hardware + software

technology for processing and
dissemination

Management Information Systems

 Computer-Based Information System
• A CBIS is composed of…
• Hardware Information
• Software Technology for
manipulating
• Databases data and
• Telecommunications information
• People
• Procedures/Processes
• Together they are…
• Configured to collect, manipulate, store, and process data into
information

Management Information Systems

 Computer-Based Information System
• A CBIS is composed of…
• Hardware
• Computer equipment used to perform input, processing, and output activities
• Software
• Computer programs that govern/determine/control the operation of the computer
• Databases
• An organized collection of facts and information
• Telecommunications
• The electronic transmission of signals for communications; enables organizations to link
computer systems into effective networks
• People
• Procedures

Management Information Systems

 People and Procedures
• People
• The most important element in most computer-based information
systems
• Includes people who manage, run, program, and maintain the system
• E.g., IT professionals (you!)
• Procedures
• Includes the strategies, policies, methods, and rules for using the CBIS

Management Information Systems

A Networked Information System

Management Information Systems

 Concept of Information Technology
• What do we mean by ‘IT’?
• Any tool for manipulating data, information
• Electronic: computer software and hardware (our focus)
• Paper: documents, filing techniques,… - still there, transformation into electronic

Management Information Systems

 Concept of Information System
Professionals,
Clerks, Managers
Provide System Adopt, Use, Evaluate
Requirements
Organizational
Outcomes:
System Design &
Development • Efficiency
• Effectiveness
Design & Build • Design
Vendors &
IS Dept.

• Manage people, work, time and money in system design/development, adoption, use, & evaluation
Managers
• Evaluate relationships b/w Users - System and System - Organizational Performance

Management Information Systems

 Business and Business Processes
• Business processes
• Workflows of material, information, knowledge
• Sets of activities, steps
• May be tied to functional area or be cross-functional
• Businesses
• Can be seen as collection of business processes

Management Information Systems

 Functional Business Processes
• Examples :
• Manufacturing and production
• Assembling the product
• Sales and marketing
• Identifying customers
• Finance and accounting
• Creating financial statements
• Human resources
• Hiring employees

Management Information Systems

 Business Processes and Information Systems
• Information technology enhances business processes in two main
ways:
• Increasing efficiency of existing processes
• Automating steps that were manual
• Enabling entirely new processes that are capable of transforming the
businesses
• Change flow of information
• Replace sequential steps with parallel steps
• Eliminate delays in decision making

Management Information Systems

Kinds of Business Information Systems

Management Information Systems

 Management Structures and Information
Requirements
• Higher up the pyramid, the less structured the decision
• Less defined (structured)
• internal/External orientation
• More summarized information
• Lower down the pyramid, the more structured the decision
• More defined (structured)
• Internal orientation
• More detailed information

Management Information Systems

 Four General Kinds of IS
• Operational-level systems
• support operational managers by monitoring the day-to-day’s elementary
activities and transactions of the organization. E.g. TPS
• Knowledge-level systems
• Support knowledge and data workers in designing products, distributing
information, and coping with paperwork in an organization. E.g. KWS, OAS
• Management-level systems
• support the monitoring, controlling, decision-making, and administrative
activities of middle managers. E.g. MIS, DSS
• Strategic-level systems
• Support long-range planning activities of senior management. E.g. ESS

Management Information Systems

 A Framework for IS
(with respect to support provided)
• Operational Level
• Transaction Processing Systems (TPS)
• Knowledge Level
• Knowledge Work Systems (KWS)
• Office Automation Systems (OAS)
• Management Level
• Management Information Systems (MIS)
• Decision Support Systems (DSS)
• Strategic Level
• Executive Support Systems

Management Information Systems

 Transaction Processing Systems (TPS)
Computerized system that performs and records the daily routine
transactions necessary to conduct the business; these systems serve the
operational level of the organization.
• TYPE: Operational-level
• INPUTS: transactions, events
• PROCESSING: updating
• OUTPUTS: detailed reports
• USERS: operations personnel, supervisors
EXAMPLE: payroll system

Management Information Systems

A Symbolic Representation for a payroll TPS

Management Information Systems

 Office Automation Systems (OAS)
Computer system, such as word processing, electronic mail system, and
scheduling system, that is designed to increase the productivity of data
workers in the office.
• TYPE: Knowledge-level
• INPUTS: documents, schedules
• PROCESSING: document management, scheduling, communication
• OUTPUTS: documents; schedules
• USERS: clerical workers
EXAMPLE: document imaging system

Management Information Systems

 Knowledge Work Systems (KWS)
Information system that aids knowledge workers in the creation and
integration of new knowledge in the organization.
• TYPE: Knowledge-level
• INPUTS: design specifications
• PROCESSING: modelling
• OUTPUTS: designs, graphics
• USERS: technical staff; professionals
EXAMPLE: Engineering workstations

Management Information Systems

 Decision Support Systems (DSS)
Information system at the management level of an organization that
combines data and sophisticated analytical models or data analysis
tools to support semi-structured and unstructured decision making.
• TYPE: Management-level
• INPUTS: low volume data
• PROCESSING: simulations, analysis
• OUTPUTS: decision analysis
• USERS: professionals, staff managers
EXAMPLE: sales region analysis

Management Information Systems

 Characteristics of Decision Support Systems
(DSS)
• DSS offer users flexibility, adaptability, and a quick response.
• DSS operate with little or no assistance from professional
programmers.
• DSS provide support for decisions and problems whose solutions
cannot be specified in advance.
• DSS use sophisticated data analysis and modelling tools.

Management Information Systems

 Decision Making as a Component of Problem
Solving
• After identifying a problem, the process of solving
the problem begins with decision making.
• The first part of problem solving, including three
stages: intelligence, design, and choice.
• intelligence stage - The first stage of decision making, in
which potential problems or opportunities are
identified and defined
• design stage - The second stage of decision making, in
which alternative solutions to the problem are
developed
• choice stage - The third stage of decision making, which
requires selecting a course of action.

Management Information Systems

 Nature of Decision
• Decision making is a complex situation.
• To resolve the complexity, the decisions are classified as programmed
& non programmed decisions.

Management Information Systems

 Nature of Decision
• Programmed decisions
• are made using a rule, procedure, or quantitative method.
• are easy to computerize using traditional information systems.
• for example, to say that inventory should be ordered when inventory levels
drop to 100 units is a programmed decision because it adheres to a rule.
• Nonprogrammed decisions
• deal with unusual or exceptional situations.
• are difficult to quantify.
• examples - determining the appropriate training program for a new employee,
deciding whether to develop a new type of product line, and weighing the
benefits and drawbacks of installing an upgraded pollution control system
Management Information Systems
 Methods for Deciding Decision Alternatives
• There are different methods to help the manager decide among the
alternatives.
• There are methods/models for selection of decision alternatives with
the goals.
• Optimization Model - A process to find the best solution, usually the one that
will best help the organization meet its goals.
• Satisficing Model - A model that will find a good but not necessarily the best
problem solution.
• Heuristics - Commonly accepted guidelines or procedures that usually find a
good solution.

Management Information Systems

 Optimization Techniques Under Certainty
• Linear Programming, Integer Programming, Dynamic Programming,
Queuing Models & so on are examples of optimization techniques.
• Computer algorithms and programs are readily available to handle
many problems of this class.
• The major problem is to construct the model correctly.

Management Information Systems

 Payoff Matrices in Statistical Decision Theory
• Statistical decision theory
• “Technique for evaluating (mathematically) potential outcomes of alternative
actions in a given decision situation.”
• In all cases decision maker has an objective (e.g. Maximize profit)
Strategy State of Nature (Events)
N1 N2 N3 N4
S1 V1 W1 Z1 X1
S2 V2 W2 Z2 X2
S3 V3 W3 Z3 X3

Payoff value (V2) if strategy S2 is followed and event N1 occurs

Management Information Systems

Payoff Matrix for a Restaurant

Strategy Condition with Probability

Same (0.5) New Comp. (0.2) Hwy. Moves (0.3)
Do nothing 2000 0 -1000
Refurbish 4000 3000 -3000
Rebuild 7000 2000 -10000

Strategy Computation Expected Value

Do nothing 2000*0.5 + 0 + (-1000)*0.3 $700
Refurbish 4000*0.5 + 3000*0.2 + (-3000)*0.3 $1700
Rebuild 7000*0.5 + 2000*0.2 + (-10000)*0.3 $900

Management Information Systems

 Other Rules
• Assumption – probability are reasonably exact?
• In highly uncertain environments.

Management Information Systems

 Other Rules: Minimize Regret (Equally Likely
Events)
• Regret = Best payoff for the event – other outcome
• Select a strategy that minimizes regret for the strategy.

Strategy Same New Comp. Hwy. Moves

Payoff Do nothing 2000 0 -1000
Matrix Refurbish 4000 3000 -3000
Rebuild 7000 2000 -10000

Strategy Same New Comp. Hwy. Moves

Regret Do nothing 5000 3000 0
Matrix Refurbish 3000 0 2000 Minimum regret
Rebuild 0 1000 90000

Management Information Systems

 Other Rules: Minimax Regret
• Regret = Best payoff for the event – other outcome
• Select a strategy that minimizes the worst (max.) regret.

Strategy Same New Comp. Hwy. Moves

Payoff Do nothing 2000 0 -1000
Matrix Refurbish 4000 3000 -3000
Rebuild 7000 2000 -10000

Strategy Same New Comp. Hwy. Moves

Regret Do nothing 5000 3000 0
Matrix Refurbish 3000 0 2000
Rebuild 0 1000 9000

Management Information Systems

 Other Rules: Maximin Rule
• Identify the minimum payoff values corresponding to each strategy
and choose the strategy with least unfavourable payoff.
• Pessimistic - appropriate for a pessimist who seeks to achieve the best results if
the worst happens.

Strategy Same New Comp. Hwy. Moves

Do nothing 2000 0 -1000
Refurbish 4000 3000 -3000
Rebuild 7000 2000 -10000

Management Information Systems

 Other Rules: Maximax Rule
• Locate the maximum payoff values corresponding to each strategy and
select the strategy for the best payoff for the event.
• suitable for an optimist, or 'risk-seeking' manager, who seeks to achieve the
best results if the best happens

Strategy Same New Comp. Hwy. Moves

Do nothing 2000 0 -1000
Refurbish 4000 3000 -3000
Rebuild 7000 2000 -10000

Management Information Systems

 Management Information Systems (MIS)
Information system at the management level of an organization that
serves the functions of planning, controlling, and decision making by
providing routine summary and exception reports.
• TYPE: Management-level
• INPUTS: high volume data
• PROCESSING: simple models
• OUTPUTS: summary reports
• USERS: middle managers
EXAMPLE: annual budgeting

Management Information Systems

 Characteristics of MIS
• MIS support structured decisions at the operational and management
control levels. However, they are also useful for planning purposes of senior
management staff.
• MIS are generally reporting and control oriented. They are designed to
report on existing operations and therefore to help provide day-to-day
control of operations.
• MIS rely an existing corporate data and data flows.
• MIS have little analytical capability.
• MIS generally aid in decision making using past and present data.
• MIS are relatively inflexible.
• MIS have an internal rather than an external orientation.

Management Information Systems

 Executive Support Systems (ESS)
Information system at the strategic level of an organization that address
unstructured decision making through advanced graphics and
communications.
• TYPE: Strategic-level
• INPUTS: aggregate data; internal and external
• PROCESSING: interactive
• OUTPUTS: projections
• USERS: senior managers
EXAMPLE: 5 year operating plan

Management Information Systems

Model of a Typical ESS

Management Information Systems

Management Information Systems