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Information Management System
Programmed decisions are of repetitive and routine nature whereas both of these features are absent in case of non-programmed decisions. In fact, a non-programmed decision relates to a new situation altogether every time. For example, the settlement of a bill is a programmed decision, as it can be made in accordance with the set procedure but a decision to manufacture a new product cannot be programmed as it is neither a repetitive nor a routine one and is thus a non-programmed one.
Programmed decision can be delegated but non-programmed one cannot. For example the routine purchase of standard material for manufacturing operations is a programmed decision as it can be delegated to a clerk. But a decision concerning the purchase of a special and scarce material under fluctuating price conditions cannot be delegated and thus, it is characterized as non-programmed decision.
Programmed decisions are made with the help of pdecided rules, regulations and procedures laid down by the management for the purpose- whereas non-programmed decisions are mainly based on management direction, thinking and deliberations. Besides these factors judgment, experience, expertise and intuition of the manager also play a vital role in taking. such decisions.
The cost of taking non-programmed decision is quite high which is contrary to that involved in taking programmed decisions.
To solve a problem under programmed approach may use a string of pdecided rules, regulations and instructions to arrive at its solution. In this way, programmed decision-making helps in the achievement of management information systems objective to program more and more decisions. On the other hand, under non-programmed approach of decision making, due to the absence of decision rules, the executives have to fall back upon the general problem. solving methodology, which is known as a system’s approach to problem solving.
Programmed decision can be made with the help of a computer system also but the services of computer cannot be utilized directly in making non-programmed decisions. However, in this computer may be used to process huge volumes of necessary data.
The other classification of decisions:
Strategic Planning: In this area, the decision maker develops the objectives of the organization and allocates the resources to achieve these objectives. Policies that are to govern the acquisition, use and disposition of the resources are developed in this phase. Decisions of this type are made over a long period of time and involve substantial investment. For example, diversification in a new area, introduction of a new product is strategic decisions.
Management Control: These decisions deal with the process by which managers assure that resources are obtained and used effectively and efficiently to accomplish the organization’s objectives. Formulation of budgets, variance analysis, working capital planning is examples of this type.
Operational Control: These decisions deal with the short-term day-to-day operations of the organization. Here the objective is to ensure that specific jobs are carried out efficiently. Some examples ainventory control, measuring, appraising and improving workers efficiency, daily production plans.
The important contribution of these classifications of decisions is that the information requirements for each type varies considerably and hence appropriate information for systems each category must be designed looking at the characteristics of information requirements.
Decision support systems (DSS) are interactive software-based systems intended to help managers in decision-making by accessing large volumes of information generated from various related information systems involved in organizational business processes, such as office automation system, transaction processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical models. A decision support system helps in decision-making but does not necessarily give a decision itself. The decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions.
Programmed and Non-programmed Decisions
There are two types of decisions - programmed and non-programmed decisions.
Programmed decisions are basically automated processes, general routine work, where −
These decisions have been taken several times.
These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
It would be a new decision.
There will not be any rules to follow.
These decisions are made based on the available information.
These decisions are based on the manger's discretion, instinct, perception and judgment.
For example, investing in a new technology is a non-programmed decision.
Decision support systems generally involve non-programmed decisions. Therefore, there will be no exact report, content, or format for these systems. Reports are generated on the fly.
Attributes of a DSS
- Adaptability and flexibility
- High level of Interactivity
- Ease of use
- Efficiency and effectiveness
- Complete control by decision-makers
- Ease of development
- Extendibility
- Support for modeling and analysis
- Support for data access
- Standalone, integrated, and Web-based
Characteristics of a DSS
Support for decision-makers in semi-structured and unstructured problems.
Support for managers at various managerial levels, ranging from top executive to line managers.
Support for individuals and groups. Less structured problems often requires the involvement of several individuals from different departments and organization level.
Support for interdependent or sequential decisions.
Support for intelligence, design, choice, and implementation.
Support for variety of decision processes and styles.
DSSs are adaptive over time.
Benefits of DSS
Improves efficiency and speed of decision-making activities.
Increases the control, competitiveness and capability of futuristic decision-making of the organization.
Facilitates interpersonal communication.
Encourages learning or training.
Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up new evidences for an unusual decision.
Helps automate managerial processes.
Components of a DSS
Following are the components of the Decision Support System −
Database Management System (DBMS) − To solve a problem the necessary data may come from internal or external database. In an organization, internal data are generated by a system such as TPS and MIS. External data come from a variety of sources such as newspapers, online data services, databases (financial, marketing, human resources).
Model Management System − It stores and accesses models that managers use to make decisions. Such models are used for designing manufacturing facility, analyzing the financial health of an organization, forecasting demand of a product or service, etc.
Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical analysis, error correction mechanism, facilitates the user interactions with the system.
Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
Text Oriented DSS − It contains textually represented information that could have a bearing on decision. It allows documents to be electronically created, revised and viewed as needed.
Database Oriented DSS − Database plays a major role here; it contains organized and highly structured data.
Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view, modify procedural knowledge and also instructs the system to execute self-contained instructions. The most popular tool is Excel and Lotus 1-2-3.
Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for performing certain calculations and particular program type.
Rules Oriented DSS − It follows certain procedures adopted as rules.
Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the example.
Compound DSS − It is built by using two or more of the five structures explained above.
Types of DSS
Following are some typical DSSs −
Status Inquiry System − It helps in taking operational, management level, or middle level management decisions, for example daily schedules of jobs to machines or machines to operators.
Data Analysis System − It needs comparative analysis and makes use of formula or an algorithm, for example cash flow analysis, inventory analysis etc.
Information Analysis System − In this system data is analyzed and the information report is generated. For example, sales analysis, accounts receivable systems, market analysis etc.
Accounting System − It keeps track of accounting and finance related information, for example, final account, accounts receivables, accounts payables, etc. that keep track of the major aspects of the business.
Model Based System − Simulation models or optimization models used for decision-making are used infrequently and creates general guidelines for operation or management.