Chapter 6 - Repository UNIKOM

  Four Model Types

  

Four Model Types

1) Physical models

  1) Physical models

• –

  Three dimensional representation such as a scale

  

Three dimensional representation such as a scale

model model

  2) Narrative models 2) Narrative models

• – Spoken or written

  Spoken or written 3) Graphic models

  3) Graphic models

• – Abstraction of lines, symbols, or shapes

  Abstraction of lines, symbols, or shapes 4) Mathematical models

  4) Mathematical models

• – Equation(s)

  Equation(s)

  Cost

Order Quantity

  EOQ Total cost Mai nten anc e co st

  Purchasing cost

  A Graphic Model of the

  A Graphic Model of the

  Economic Order Quantity Concept

  Economic Order Quantity Concept

Sales

Sales

  Edit Sales Orders

  Enter Sales Order Data Prepare Sales Order Report Sales Order History File

  Customers

  1.

  1.

  2.

  2.

  3.

  Sales

Orders Orders

Orders Orders Sales Sales Order Order Data Data Sales Sales Order Order Report Report Enter Sales Enter Sales Orders Orders Edit Sales Edit Sales Orders Orders 1

  Edit Sales Orders 2. Enter Sales Order Data 3. Prepare Sales Order Report Sales Order History File

  Sales Manager Uses of Models

  

Uses of Models



  All four models facilitate understanding and

  All four models facilitate understanding and communication. communication.

  

  

The mathematical model also helps predict

the future. the future.

The mathematical model also helps predict

  The General Systems Model

  

The General Systems Model



  Graphic diagram with an accompanying Graphic diagram with an accompanying narrative that depicts all organizations in a narrative that depicts all organizations in a general way using a systems framework general way using a systems framework

   The Physical System

  The Physical System

• – Material flow

  Material flow

• – Personnel flow

  Personnel flow

• – Machine flow

  Machine flow

• – Money flow

  Money flow The Physical System of the Firm

  The Physical System of the Firm

  Input Output

  Transformation Resources

  Process Resources

  Boundary of the Firm The Conceptual System

  

The Conceptual System



  Open-loop systems

  Open-loop systems 

  Closed-loop systems (feedback loop)

  Closed-loop systems (feedback loop) 

  Management control

  Management control 

  The information processor

  The information processor

A Closed-Loop System

  

Transformation

Process

Control

Mechanism

  Input Resources Output Resources

  A Closed-Loop System

  Feedback Feedback

  Management Transformation Process

  Input Resources Output Resources

  Information

  The Physical System of the Firm

  The Physical System of the Firm

  as a Controlled System

  as a Controlled System

Information

  A Sales Report of

  A Sales Report of

  Fast-Moving Products

  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

  Information is Gathered from All of

  Information is Gathered from All of

  the Physical System Elements

  the Physical System Elements Management

  Transformation Process Output Resources

  Input Resources Information

  Information Information

  Information Supplier Analysis Report

  Supplier Analysis Report

Item Number: Item Number: 410615 410615 Item Description: Item Description: Upper Door Hinge Upper Door Hinge SUPPLIER SUPPLIER LAST LAST UNIT UNIT DAYS TO PCT. DAYS TO PCT. NUMBER NAME NUMBER NAME DATE DATE P.O. # QTY. P.O. # QTY. PRICE PRICE RECEIPT REJECTS RECEIPT REJECTS 3062 3062 CARTER

  7/12 7/12 1048-10 360 1048-10 360 $8.75 $8.75 12 .00 12 .00

  & SONS & SONS

  4189 4189 PACIFIC PACIFIC 4/13 4/13 962-10 350 9.10 08 .02 962-10 350 9.10 08 .02

  MACHINING MACHINING

  0140 0140 A.B.

  A.B.

  1/04 1/04 550-10 550-10 350 8.12 350 8.12 A Job Status Report Provides Information A Job Status Report Provides Information

about the Transformation Process

about the Transformation Process

  CARTER

   03 .00 .00

  MERRIL MERRIL

  2111 2111

   BAY AREA BAY AREA

  8/19 8/19 1196-10 1196-10 360 360

   11.60

   11.60 19 .04 19 .04

   03

Job Number: 84-182 Job Number: 84-182 Customer: Wankel Automotive Customer: Wankel Automotive CURRENT STATUS CURRENT STATUS

   Step 4-weld supports to frame

Step 4-weld supports to frame

   Department 410-Welding

Department 410-Welding

   Date and Time Begun-10/8; 10:15A

Date and Time Begun-10/8; 10:15A

   Projected Job Completion-10/14; 9:30A

Projected Job Completion-10/14; 9:30A NEXT PROCESS NEXT PROCESS

• Step 5-paint frame

Step 5-paint frame

• Department 632-Paint

  Department 632-Paint

  

The Information Processor Transforms

The Information Processor Transforms

  

Data into Information

Data into Information

  Information Information

Information Management Processor

  Data Transformation

  Input Output

   Process Resources

  Resources Conceptual System (cont.)

  Conceptual System (cont.) 

  Dimensions of Information

  Dimensions of Information

• – Relevancy

  Relevancy

• – Accuracy

  Accuracy

• – Timeliness

  Timeliness

• – Completeness

  Completeness

  Too Much Information is called ‘Information Overload’

• – Measure of acceptable

• – Overall goal that a
• – Usually stated in specific

• – Systems have one or

  Management Management »

  Overall goal that a system is to obtain system is to obtain

  Objectives

   Objectives

• – Used to control physical
• – Consists of:

  Standards Standards

  Information processor Information processor »

  Used to control physical system system

  Consists of: »

  Usually stated in specific terms terms

  Measure of acceptable performance performance

  Standards Standards

  Conceptual System (cont.) 

  Conceptual System (cont.)

  Systems have one or more objectives more objectives

  

A Comparison of Objectives and Standards

A Comparison of Objectives and Standards

Objectives Objectives Standards of Performance Standards of Performance

  Achieve an annual sales volume of at least $25 million Achieve an annual sales volume of at least $25 million Maintain a 20% share of the market Maintain a 20% share of the market Maintain an annual growth rate of 15% Maintain an annual growth rate of 15% Pay dividends to stockholders each quarter

  Pay dividends to stockholders each quarter

  Maintain the price of the firm’s common stock above

  Maintain the price of the firm’s common stock above

  $85 per share

  $85 per share

  Realize an after-tax profit of 15% of sales Realize an after-tax profit of 15% of sales Maintain a record of accident-free days Maintain a record of accident-free days Keep employee turnover below 10% Keep employee turnover below 10% Invest in a minimum of 15% of sales revenue in research

  Invest in a minimum of 15% of sales revenue in research

  and development

  and development

  Achieve stockout on no more than 2% of the items in Achieve stockout on no more than 2% of the items in inventory during the year inventory during the year Keep the number of backorders to less than 5% of all Keep the number of backorders to less than 5% of all orders processed orders processed Have no plant shutdowns due to unavailable materials Have no plant shutdowns due to unavailable materials Have no legal actions filed against the firm by

  Have no legal actions filed against the firm by Satisfy Customer Satisfy Customer Needs Needs Produce a return Produce a return on investment for on investment for the owners the owners Operate efficiently Operate efficiently Invest in the future Invest in the future Develop sources Develop sources of supply of supply Performance Standards are Made Available to Both

  

Performance Standards are Made Available to Both

  Management and the Information Processor

  

Management and the Information Processor

Output Input Management Information Processor Transformation Standards Information Information Data

  Conceptual System (cont.)

  Conceptual System (cont.) 

  Management by exception

  Management by exception

• – Compares standards with information output of

  Compares standards with information output of

  system

  system

• – Manager becomes involved when system falls

  Manager becomes involved when system falls

  outside range of acceptable performance

  outside range of acceptable performance

• – Capability provided by CBIS

  Capability provided by CBIS

  Conceptual System (cont.)

  Conceptual System (cont.) 

  Critical Success Factors (CSFs)

  Critical Success Factors (CSFs)

• – A CSF is one of the firm’s activities that has a

  A CSF is one of the firm’s activities that has a

  strong influence on the firm’s ability to meet its

  strong influence on the firm’s ability to meet its

  objectives

  objectives

• – Firms have multiple CSFs

  Firms have multiple CSFs

• – CSFs focuses attention on a portion of a firm’s

  CSFs focuses attention on a portion of a firm’s

  activities

  activities

  

Changes are Made in the Physical

Changes are Made in the Physical

  

System Through the Decision Flow

System Through the Decision Flow

  Standards Decisions

  Information Information Management Processor

  Data

Output

  Transformation Input

Resources

  Process Resources Conceptual System (cont.)

  Conceptual System (cont.) 

  Decision Flow

  Decision Flow

• –

  Data is transformed into information by the

  Data is transformed into information by the

  information processor

  information processor

• – Manager transforms information into decisions

  Manager transforms information into decisions

  

The General Systems Model of the Firm

The General Systems Model of the Firm

Environment

  Standards Information and Data

  Decisions Information Information Management Processor

  Data Physical

  Physical Resources Resources

  Transformation Output Input

  Process Resources Resources General Systems

  

General Systems

  Model in Context

  

Model in Context



  Helps adjust firm

  Helps adjust firm 

  Provides a sense of stability

  Provides a sense of stability 

  Provides mental picture of what to expect

  Provides mental picture of what to expect

  

Problems -- Good and Bad

  Problems -- Good and Bad Problems -- Good and Bad

  Problems -- Good and Bad 

  Problem solving

  Problem solving

• – Suppress harmful effects

  Suppress harmful effects

• – Capitalize on opportunity for benefit

  Capitalize on opportunity for benefit

  

  Decision

  Decision

• – The act of selecting a strategy or action

  The act of selecting a strategy or action

  Elements of Problem Solving

  Elements of Problem Solving Elements of Problem Solving

  Elements of Problem Solving 

  Desired state

  Desired state 

  Current state

  Current state 

  Constraints

  Constraints

• – Internal -- limited resources
• – Environmental -- pressures to restrict resource

  Internal -- limited resources

  Environmental -- pressures to restrict resource

  flows

  flows

  }

  Difference = Solution Criterion

  

Problem

Standards

  Information Problem solver (manager)

  Alternate solutions Constraints

  Desired state Current state Elements of the conceptual system

  Elements of the Problem-Solving

  Elements of the Problem-Solving Process

Process

  Problems versus Symptoms

  Problems versus Symptoms Problems versus Symptoms

  Problems versus Symptoms

  Know the difference

  Know the difference

• – Symptoms are produced by the problem

  Symptoms are produced by the problem

• – The problem causes the symptoms

  The problem causes the symptoms

• – When the problem is corrected the symptoms

  When the problem is corrected the symptoms

  will cease, but not vice versa

  will cease, but not vice versa

  

Problem Structure

  Problem Structure Problem Structure

  Problem Structure 

  Structured Structured

• – Elements and relationships understood

  Elements and relationships understood 

  Unstructured Unstructured

• – No elements or relationships understood

  No elements or relationships understood 

  Semistructured Semistructured

• – Some elements understood

  Some elements understood 

  DSS concept of managers and the computer DSS concept of managers and the computer working jointly towards a solution working jointly towards a solution

  Problem Structure

  Problem Structure Problem Structure

  Problem Structure DSS DSS Computer Solve

  Manager Solve Structured Semi-structured Unstructured The Systems Approach

  The Systems Approach The Systems Approach

  The Systems Approach John Dewey, 1910

  John Dewey, 1910

  Columbia philosophy professor

  Columbia philosophy professor

  

  1. Recognize the controversy

  1. Recognize the controversy Problem

  Problem 

  2. Weigh alternative claims

  2. Weigh alternative claims

  

  3. Form a judgment

  3. Form a judgment Solution

  Solution Phases and Steps of the Systems Approach

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

  Preparation Effort

  Preparation Effort Preparation Effort

  

Preparation Effort



  Step 1 View the firm as a system

  Step 1 View the firm as a system

   Step 2 Recognize environmental system

  Step 2 Recognize environmental system

   Step 3 Identify the firm’s subsystems

  Step 3 Identify the firm’s subsystems

• – Business areas

  Business areas

• – Levels of management

  Levels of management

• – Resource flows

  Resource flows

  

The Systems Approach Requires Decision Making

  The Systems Approach Requires Decision Making

PHASE STEP

DECISION PHASE STEP

  4. Proceed from a system Proceed from a system 4.

  Do new data need to be gathered, or do data Definition

  Definition to a subsystem level. to a subsystem level. already exist?

  Effort Effort

  5. Analyze system parts in a Analyze system parts in a How will data be gathered? 5.

  certain sequence. certain sequence.

  What is causing the problem? How many alternatives should be identified?

  6. Identify alternative

  6. Identify alternative Are these alternatives feasible? solutions.

  solutions.

  Solution Solution

  Which criteria should be used? Effort

  Effort

  7. Evaluate the alternative

  7. Evaluate the alternative How does each alternative measure up to solutions.

  solutions.

  each criterion? Do all criterion have equal weight? Select the best solution.

  8.

  8. Select the best solution. Is there enough information to make a selection? Which alternative measures up best to the criteria? 9. Implement the solution.

  9. Implement the solution. When should this solution be implemented? How should the solution be implemented? Who should perform the evaluation?

  Follow up to ensure that Each Functional Area is a Subsystem Human Resources Information Services

Marketing Subsystem Manufacturing Subsystem Finance Subsystem President

  

Something Triggers the Definition Effort

Something Triggers the Definition Effort Something Triggers the Definition Effort

  Something Triggers the Definition Effort

  The trigger can be:

  The trigger can be: 1.

  1. An action An action

  2.

  2. The passage of time The passage of time

  3. From within the firm or the environment

  3. From within the firm or the environment

  

Definition Effort

  Definition Effort Definition Effort

  Definition Effort 

  

Step 4: Proceed from System to Subsystem Level

Step 4: Proceed from System to Subsystem Level

• – Each level is a system

  Each level is a system

• – Are subsystems integrated into a smoothly functioning

  Are subsystems integrated into a smoothly functioning unit? unit?

• –

  Does the subsystem need to be broken down further?

  

Does the subsystem need to be broken down further?

  

Definition Effort [cont.]

  3. Evaluate management

  7. Evaluate the output resources

  6. Evaluate the transformation processes Evaluate the transformation processes

  6.

  5. Evaluate the inputs and input resources Evaluate the inputs and input resources

  4. Evaluate the information processor 5.

  4. Evaluate the information processor

  3. Evaluate management

  Definition Effort [cont.] Definition Effort [cont.]

  2. Compare system outputs with standards

  2. Compare system outputs with standards

  1. Evaluation standards. They must be valid, realistic, understandable, measurable understandable, measurable

  1. Evaluation standards. They must be valid, realistic,

  Step 5: Analyze System Parts in a Certain Sequence

Step 5: Analyze System Parts in a Certain Sequence

  

Definition Effort [cont.]



  7. Evaluate the output resources

  1.

  1. Standards Standards

3.

  

3.

Management

  4. Information Information processor processor 5.

  5. Input Input resources resources

6.

  

6.

Transformation

• + + Inputs. Inputs.

  

processes

processes

7.

  7. Output Output resources resources 2.

  2. Outputs Outputs

  Each Part of the System Is Analyzed in Sequence

  

Each Part of the System Is Analyzed in Sequence

Management 4

Transformation

  

Solution Effort

  Solution Effort Solution Effort

  

Solution Effort



  Step 6: Identify alternatives Step 6: Identify alternatives

• – Find

  Find different different ways to solve the ways to solve the same same problem problem

  » Brainstorming

  Brainstorming » Joint Application Design (JAD) session

  Joint Application Design (JAD) session 

  Step 7: Evaluate alternative solutions Step 7: Evaluate alternative solutions

   Step 8: Select the best solution

  Step 8: Select the best solution »

  Analysis Analysis »

  Judgment Judgment »

  Bargaining Bargaining

  

Final Steps of the Solution Effort

  Final Steps of the Solution Effort Final Steps of the Solution Effort

  Final Steps of the Solution Effort 

  Step 9: Implement the solution

  Step 9: Implement the solution 

  Step 10: Follow-up to ensure that the

  Step 10: Follow-up to ensure that the

  solution is effective

  solution is effective

  

An Integrative Model of the Systems Approach

  An Integrative Model of the Systems Approach Definition Effort Definition Effort

  4. Proceed from a system to a subsystem level subsystem level

  4. Proceed from a system to a

  5. Analyze system parts in a certain

  5. Analyze system parts in a certain sequence sequence Solution Effort Solution Effort

  6. Identify alternative solutions

  6. Identify alternative solutions

  7. Evaluate the alternative solutions

  7. Evaluate the alternative solutions

  8. Select the best solution

  8. Select the best solution

  9. Implement the solution

  9. Implement the solution

  10. Follow-up to ensure solution is effective

  10. Follow-up to ensure solution is effective Review of Systems Approach

  Review of Systems Approach 

  

Integrating each step of the systems approach is a

Integrating each step of the systems approach is a

managerial challenge managerial challenge

   Managerial preparation effort is a good starting

  Managerial preparation effort is a good starting point point

   Next, manager engages in functional decomposition

  Next, manager engages in functional decomposition

• – Definition effort

  Definition effort 

  Finally, manager solves problem Finally, manager solves problem

• – Solution effort

  Solution effort

  Summary

  Summary 

  Models are abstractions of reality Models are abstractions of reality

• – Four types of models

  Four types of models

• – General systems model

  General systems model 

  Physical system Physical system

   Conceptual system

  Conceptual system 

  Information Processor Information Processor

• – Computer

  Computer

• – Noncomputer

  Noncomputer

  Summary [cont.]

  Summary [cont.] 

  Management by exception

  Management by exception 

  Managerial problem solving

  Managerial problem solving 

  Classification of problems

  Classification of problems

• – Structured

  Structured

• – Unstructured

  Unstructured

  

  Use of the systems approach

  Use of the systems approach