Managerial Decision Making - Supporting Systems

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Transaction Processing Systems (TPS):

Are concerned with such applications as payroll and personnel records. They usually handle large volumes of data and are concerned with the efficient storage and retrieval of such data and the optimisation of production runs. However, the quantitative techniques involved in any application tend to consist of simple arithmetic operations.

Management Information Systems (MIS):

Were meant to overcome the main drawback with TPS in respect of managerial decision-making. The large volumes of data produced by a TPS are not immediately applicable to the specific and narrow problem that might be faced by a manager at any one time. Therefore a MIS tries to summarise data to a level relevant to the managerial problem, omitting unnecessary detail that tends to obscure the essence of the situation. Exception reporting would be a typical example. A MIS might allow a manager to monitor the departmental budget against overall actual expenditure without bothering about the minute detail of these expenditures. The data used by a MIS may very well be the output of a TPS but the quantitative techniques used to summarise the data will be descriptive statistics, namely averages and measures of dispersion. For example: the 'variance' could be used in exception reporting.

Decision Support Systems (DSS):

First appeared in the early 1970's. Although a MIS might alert a manager to the fact that a problem existed, it was felt that it did not necessarily help in solving it. There was obviously a need for a system that included analytical models that could be applied to a given problem as an aid to its solution. The distinguishing feature of a DSS is the model-base. This may contain operational research, management science, statistical models and others. The manager is able to choose a model appropriate to the problem in hand and, with the requisite data, receive help in finding a solution. DSS’s were particularly useful in tactical decision-making when they first appeared, but can now be found at all levels of the organisation.

Group Decision Support Systems (GDDS)

As the name implies, are systems designed to support collective decision-making. Very often, decisions are taken by committees or taken by an individual after consulting with others. These systems allow persons to communicate with one another via computer terminals. The system includes special software that allows brainstorming, the classification of generated ideas and different voting methods. It also allows easy access to both internal and external information.

Expert Systems (ES)

Are similar to decision support systems but the models they contain are logic models based on propositional calculus and human reasoning. They incorporate the assumptions and knowledge of experts in that particular field.

Executive Information Systems (EIS)

Started to emerge in the early 1980's. These were systems whose basic architecture resembled that of a DSS. They consisted of a database, a database management system, a model-base, a model-based management system and a user interface. However, whereas a DSS puts emphasis on the model-base and its management system, an EIS tends to emphasise the database side and the user interface. This is necessary because top executives, who tend not to be computer-literate, require an interface that is extremely user-friendly. In addition, they are mainly concerned with strategic decision-making. Thus, aggregate time-series data that shows trends in total product sales, market share etc., is more relevant to their needs. They do not have the same requirement for analytical models as might the middle manager. The quantitative techniques used in such systems are those that would come under the heading of descriptive statistics. However, these are usually presented pictorially in terms of line charts, bar charts, pie charts and other graphical means.

Artificial Neural Networks (ANN)

Are the latest type of computer technology. Their architecture tries to mimic the construction of the human brain. The human brain consists of billions of neurons that are interconnected. As different parts of the brain are activated, depending on the thought-processes at work, electrical signals pass along the neural network. In the computer system, neurons are represented by processors connected together in order to achieve parallel processing. Unlike ES, ANN’s can learn by experience and increase their knowledge by self-discovery. Thus, they learn in a way similar to that of a human being, through pattern-recognition. They are now used widely in industry.

Enterprise Information Systems (EES)

Are large systems that try to encompass many of the functions of the previous systems outlined above. Thus, people in the organisation are allowed access to only that part of the system relevant to their work. It is clear that DSS's and EIS's are there to support managers but not necessarily to take the decision for them. In the end, managers must make their own judgement in deciding what is best and this can include taking into account political, social and even psychological factors that do not lend themselves to computerisation. However, if information systems that support managers are to be built, then an appreciation of how managers go about their work and reach decisions is necessary.

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Reference(s)
	Book		Laudon, K. C. & Laudon, J. P. (2007) Management Information Systems: Managing the Digital Firm. 10th Edition. Pearson Prentice Hall: United States of America (USA), New Jersey (NJ), Bergen, Upper Saddle River. [ISBN: 9780132415798]. [Available on: Amazon: https://amzn.to/3UhgqDH].
	Book		Marakas, G. M. (2003) Decision Support Systems in the Twenty-first Century. 2nd Edition. Pearson Education: United States of America (USA), Pennsylvania (PA), Philadelphia. [ISBN: 9780131230415]. [Available on: Amazon: https://amzn.to/3TLCKVO].
	Book		Pfaffenberger, B. (2002) Computers in Your Future 2003. 5th Edition. Prentice Hall: United States of America (USA), New Jersey (NJ), Bergen, Upper Saddle River. [ISBN: 9780139227820]. [Available on: Amazon: https://amzn.to/3gv8n7D].
	Book		Sauter, V. L. (1997) Decision Support Systems: An Applied Managerial Approach. John Wiley & Sons: United States of America (USA), New York (NY). [ISBN: 9780471173359]. [Available on: Amazon: https://amzn.to/3gDvD3h].
	Book		Stair, R. M. & Reynolds, G. W. (1999) Principles of Information Systems: A Managerial Approach. 4th Edition. Thomson Course Technology: United States of America (USA), Massachusetts (MA), Middlesex, Cambridge. [ISBN: 9780760010792]. [Available on: Amazon: https://amzn.to/3F8ncY4].
	Book		Turban, E. & Aronson, J. E. (2000) Decision support systems and intelligent systems. 6th Edition. Prentice Hall: United States of America (USA), New Jersey (NJ), Bergen, Upper Saddle River. [ISBN: 9780130327239]. [Available on: Amazon: https://amzn.to/3SALNI5].

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Reference (or cite) Article
	Kahlon, R. S. (2012) Managerial Decision Making - Supporting Systems [Online]. dkode: United Kingdom, England, London. [Published on: 2012-06-28]. [Article ID: RSK666-0000049]. [Available on: dkode | Ravi - https://ravi.dkode.co/2012/06/managerial-decision-making-supporting.html].

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