Structure of MIS
MIS for decision making:
Decision making can be classified into two types:
1. Structured, programmable decisions
When a decision can be programmed, an organization can prepare a decision rule or a decision procedure. This can be expressed as a set of steps to follow, a flowchart, a decision table, or a formula. The decision procedure will also specify the information to be acquired before the decision rules are applied. Since structured programmable decisions can be pre specified, many of these decisions can be handled by lower level personal with little specialized knowledge. This procedure can also be completely automated although human review may be required. The process of structured decision making includes entering the required input data, validation procedure to check the input, processing of the input using decision logic and output of the programmed decision in a form that is useful for action.
2. Unstructured, non programmable decisions
The unstructured decision has no pre-established decision procedure either because the decision is too in frequent to justify the cost involves in preparing the decision procedure, or because the decision process in not understood well enough, or is too changeable to establish a decision procedure. The support requirements for an unstructured decision making include access to data and a variety of analysis & decision procedures. The data requirements are not completely know in advance hence data retrieval must allow ad hoc retrieval requests.
MIS Structure based on Management activity: MIS supports management activities. This means that the structure of an information system can be classified in terms of hierarchy of management planning and control activities.
Hierarchy of Management activities –
1.Strategic Planning – Definition of goals, policies, objectives and general guidelines for an organization.
2. Management control and tactical planning – Acquisition of resources, tactics, plant location, new products. Establishment and monitoring of budgets.
3. Operational planning and control – Effective and efficient use of existing facilities and
resources to carry out activities within budget constraints.
The following 3 sections summarize the characteristics of information system support for the 3 levels of hierarchy of Management planning and control.
1.Operational Control – This is a process of ensuring that the operational activities are carried out effectively and efficiently. A large % of decisions are programmable and the procedure used is quite stable. It makes use of pre-established procedures and decision rules. Individual transactions are often important; hence the system must be able to respond to both individual transactions and summaries of transactions. The data required for this process is generally current and the sequence of processing is often significant.
Processing support for operational control consists of
-Transaction processing – Inventory withdrawal transaction can examine balance on hand, calculate order quantity, produce action document.
–Enquiry processing – An enquiry for personal files describing the requirement for a position.
- Report processing – A report showing orders still outstanding after 30 days.
2.Management Control – This system is required by managers of departments, profit centers to measure performance, decision on control actions, formulate new decision rules and allocate resources. Summary information is needed and it must be processed so that trends may be observed, reasons for performance variations and solutions may be suggested.
The control process requires the following types of information:
-Planned performance – To assist managers in finding problems and reviewing plans
and budgets. It projects the effect of current action.
-Variance from planned performance – This report shows performance and variations from planned performance.
-Problem analysis models to analyze data to provide input for decision making. - Decision models to analyze a problem situation and provide possible solutions.
- Inquiry model to provide assistance to enquiries.
3.Strategic Planning – The purpose of strategic planning is to develop strategies by which an organization will be able to achieve its objectives. These activities do not occur on a periodic basis. Data required for strategic planning are generally for processed
summarized data from a variety of sources. Information system support can provide substantial aid to the process of strategic planning.
- Evaluation of current capabilities based on internal data.
- Internal projection of future capabilities by analyzing past data.
- Fundamental market data on the industry and the competitors.
- Databanks of public information regarding industry and competitors.
MIS structure based on Organizational functions:
The structure of information system can also be described in terms of organizational functions which use information. There are no standard classifications of functions but a typical set of functions in an organization includes Production, Sales & Marketing, Finance & Accounting, Logistics and Personal information system. Top management can also be considered as a separate function. Each of these functions has unique information needs and each requires information system support designed for it.
1.Sales & Marketing – The transactions involved in this subsystem are Sales order,
promotion order, etc. Operational activities include hiring and training of sales force, day
to day scheduling of sales and promotion effort, periodic analysis of sales volume by
region, product, customer, etc. Managerial control concerns comparison of overall
performance against planned. Strategic planning involves new markets and marketing
2.Production – It includes planning, scheduling and operation of production facility,
employment and training of production personnel, quality control and inspection.
Transactions include production order, assembly order, finished parts tickets, scrap
tickets. Operational control requires reports comparing actual performance to the
production schedule. Management control requires summary report comparing oval
planned performance to standard performance. Strategic planning includes alternative
manufacturing approach and approach to automation.
3.Logistics – Transaction process includes purchase, manufacturing and receiving report.
Tickets for inventory, shipping and orders. Operational control includes past-due
purchases, shipment, out of stock items. Strategic planning involves analysis of new
distribution strategy, policies, etc.
4.Finance & Accounting – Transaction involves credit applications, sales, payment
vouchers, checks, ledgers, stock transfer, etc. Operations include exception reports, records of processing delays and reports of unprocessed transactions. Managerial control
utilizes information on budget vs. actual costs of financial resources and processing accounting data. Strategic planning includes accounting policies for minimizing tax
impact, long run strategies to ensure adequate financing.
The conceptual structure of an information system consists of a group of information subsystems for different functions. Each subsystem provides support for transaction processing, operational control, management control and strategic planning. The conceptual structure includes some unique files for each subsystem plus a common database. There is unique software for each subsystem and there is common software used by all subsystems, i.e. a data management system, some software routines, planning & decision models.
The actual organizational information system will defer from the above model because certain elements are not cost justified. The physical structure of an information system is affected by the use of common modules for many processing operations. It is designed as an informational system with a number of small sets of processing instructions called modules. These modules can be written and tested separately allowing more efficient maintenance by identification of the boundaries of the module being changed.