Information Systems for Decision Making
1. Introduction
Organizations rely on Information Systems (IS) to support decision-making at all levels. An
effective Management Information System (MIS) helps managers collect, process, and
analyze data to make timely and accurate decisions.
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This topic covers:
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Definition of Information Systems for Decision Making
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Types of Decisions: Programmed & Non-Programmed
Levels of Decision Making
2. Definition of Information Systems for Decision Making
What is Decision Making?
Decision making is the process of choosing the best course of action from multiple
alternatives based on available data and business objectives.
What is an Information System (IS)?
An Information System (IS) is a structured framework that collects, processes, stores, and
disseminates information to support decision-making, coordination, analysis, and control in
an organization.
How IS Helps in Decision Making?
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Information Systems provide:
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Real-time data for better accuracy.
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Analytical tools to process complex information.
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Automation for faster decision-making.
Data visualization (charts, graphs) for easy interpretation.
🔍 Example:
● A Retail MIS helps managers decide which products to stock by analyzing sales
trends.
● A Banking IS helps detect fraudulent transactions and alert authorities.
3. Programmed and Non-Programmed Decisions
Decision-making can be routine or complex, leading to two major types of decisions:
3.1 Programmed Decisions (Structured Decisions)
✅ Routine, repetitive, and well-defined decisions.
✅ Follows fixed rules, policies, or standard operating procedures (SOPs).
✅ Can be automated using MIS.
🔍 Examples:
● Inventory Reordering: A supermarket automatically restocks products when inventory
is low.
● Loan Approval Process: A bank grants loans based on credit score and income.
● Employee Leave Management: HR systems approve leave if it meets company policy.
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Role of IS:
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Transaction Processing Systems (TPS) automate programmed decisions.
Decision Support Systems (DSS) use historical data for routine tasks.
3.2 Non-Programmed Decisions (Unstructured Decisions)
✅ Complex, unique, and require judgment.
✅ No predefined rules; based on experience, intuition, and expert opinions.
✅ Require analysis of uncertain and incomplete data.
🔍 Examples:
● Product Launch Strategy: Deciding whether to launch a new smartphone model.
● Mergers & Acquisitions: Evaluating if a company should acquire a competitor.
● Crisis Management: Responding to a cybersecurity attack or PR crisis.
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Role of IS:
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Executive Information Systems (EIS) provide dashboards and analytics.
Artificial Intelligence (AI) & Big Data help analyze trends.
📌 Comparison of Programmed vs. Non-Programmed Decisions
Feature Programmed Decisions Non-Programmed Decisions
Nature Routine, structured Complex, unstructured
Automation Easily automated Requires human judgment
Data Requirement Historical, predefined New, uncertain data
Examples Inventory control, payroll Business expansion, crisis
processing response
4. Levels of Decision Making
Decision-making occurs at different levels of management, each requiring different types of
information systems.
4.1 Strategic Level (Top-Level Management)
✅ Long-term planning & overall direction of the organization.
✅ Decisions are non-programmed, high-risk, and uncertain.
✅ Requires External Data (market trends, competition, economy).
🔍 Examples:
● Should the company expand to international markets?
● Should we invest in AI-driven automation?
● How to respond to a cybersecurity breach?
📌 Information System Used:
● Executive Information System (EIS) → Provides dashboards, data analytics, and
forecasting.
● Big Data & AI Tools → Analyze customer trends and financial risks.
4.2 Tactical Level (Middle-Level Management)
✅ Medium-term planning & resource allocation.
✅ Decisions are semi-structured (combination of programmed & non-programmed).
✅ Requires Internal & External Data (financial reports, production stats, competitor
analysis).
🔍 Examples:
● How to optimize the supply chain?
● Which marketing strategy should we use for the next quarter?
● How to improve employee productivity?
📌 Information System Used:
● Decision Support System (DSS) → Uses past data for forecasting.
● Management Information System (MIS) → Generates sales, finance, and HR reports.
4.3 Operational Level (Lower-Level Management)
✅ Day-to-day operations & short-term tasks.
✅ Decisions are highly structured & repetitive (programmed decisions).
✅ Requires Internal Data (sales figures, inventory levels, employee attendance).
🔍 Examples:
● Processing customer orders & payments.
● Monitoring inventory & restocking.
● Scheduling employee shifts.
📌 Information System Used:
● Transaction Processing System (TPS) → Automates payroll, billing, and inventory
tracking.
● Enterprise Resource Planning (ERP) → Integrates finance, HR, and supply chain
data.
5. Summary of Decision-Making Levels & IS Used
Level of Management Type of Example Information System
Decision Used
Strategic (Top-Level) Unstructured Expansion, Mergers EIS, Big Data, AI
Tactical (Middle-Level) Semi-structured Marketing, HR DSS, MIS
policies
Operational Structured Payroll, inventory TPS, ERP
(Lower-Level) control
6. Conclusion
📌 Key Takeaways:
✅ Programmed decisions are routine and automated, while non-programmed decisions
✅ Decision-making happens at three levels – Strategic (long-term), Tactical (medium-term),
require analysis and judgment.
✅ Different Information Systems support decision-making at each level.
and Operational (day-to-day).
By leveraging advanced Information Systems, organizations can make faster, data-driven,
and more effective decisions, improving efficiency and competitiveness.
😊
Would you like case studies on how companies like Amazon, Tesla, or Google use IS for
decision-making?
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