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  • Chap06

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