Information systems by checkmate...

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MANAGEMENT INFORMATION SYSTEM

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Information systems by checkmate...

  1. 1. Information System An information system is a set of interrelated components that collect, manipulate and disseminate data & information & provide a feedback mechanism to meet an objective. We all interact daily with information system, both personally & professionally. We use automated teller machine at banks, checkout clerks scan our purchases using barcodes & scanners, we access information over the internet and we get information with touch screen. --> Data: Data consists of raw facts, such as an employees name and number of hours worked in a week, inventory part numbers or sales orders.  Information: Information is a collection of facts organized in such a way that they have additional value beyond the value of the facts themselves.  Data Vs information: Data consists of raw facts, such as an employees name and number of hours worked in a week, inventory part numbers and sales orders. Several types of data can be used to represent these facts. When these are organized or arranged in a meaningful manner, they become information. Information is collection of facts organized in such a way that they have additional value beyond the value of the facts themselves. E.g. a particular manager might find the knowledge of total monthly sales more suited to his purpose than the number of sales for individual sales representatives. Data represents real world things, as we have stated data, simply raw facts has little value beyond its existence. The type of information created depends on the relationships defined among existing data. Turning data into information is a process or a set of logically related tasks performed to achieve a define outcome. The process of defining relationships among data to create useful information requires knowledge. Knowledge is awareness & understanding of a set of information & ways that information can be made useful to support a specific task or reach to a decision.  The Process of Transforming Data into Information: -
  2. 2.  Characteristic of Valuable Information: OR Value of Information: To be valuable to managers and decision makers, information should have the characteristics. These characteristics also make the information more valuable to the organization. If the information is inaccurate or incompatible poor decision can be made. Furthermore, if information is not pertinent to the situation, not delivered to decision makers in a timely fashion or too complex to understand, it may be little value to the organization. The following are the characteristics of information. 1. Accurate: Accurate information is error free. In some cases, inaccurate information is generated because incorrect data is fed into the transformation process. 2. Complete: Complete information contains all the important facts. E.g. an investment report that does not include all important costs is not complete. 3. Economical: Information should also be relatively economical to produce decision makers must always balance the value of information with the cost of producing it. 4. Flexible: Flexible information can be used for a verity & purposes. E.g. information on how much inventory is on hand for a particular part can be used by a sales representative in closing sale. 5. Reliable: Reliable information ca be depended on in many cases, the reliability & information depends on the reliability & the data collection method. 6. Relevant: Relevant information is important to the decision maker. Information that lumber prices might drop may not be relevant to a computer chip manufacture. 7. Simple: -
  3. 3. Information should also be simple, not overly complex, sophisticated & detailed information may not be needed. Infect, too much information can cause information overload. 8. Timely: Timely information is delivered where it is needed. Knowing last week’s whether conditions will not help when trying to decide what coat to wear today. 9. Verifiable: Information should be verifiable. This means that you can check it to make sure it is correct, perhaps by checking many sources for the same information. 10. Accessible: Information should be easily accessible by authorized user to be obtained in the right format and at the right time meet their needs. 11. Secure: Information should be secure from access by unauthorized users.  Components of Information System: OR What is Information System:The value of information is directly linked to how it helps decision makers achieve their organizational goals. An information system is a specialized type of system and can be defined in a number of different ways. As mentioned previously, it is a set of interrelated elements or components that collects, manipulate and determinate data & information and provide a feedback mechanism to meet an objective.  Input: In information system, input is the activity of gathering and capturing raw data. In producing paycheck, e.g. the number of hours worked for every employee must be collected before paycheck can be calculated or printed. In a university grading system, student grades must be obtained from instructions before a total summary of grades for the semester or quarter can be compiled and sent to the appropriate students.  Processing: In information system, processing involves converting or transforming data into useful output. Processing can involve making calculating, making comparisons and taking alternate action, and storing data for future use.
  4. 4.  Output: In information system, output involves producing useful information, usually in the form of documents & reports. Output can include paychecks for employee. Reports for managers and information supplied to stockholders, banks, government agencies and other groups. In some cases output from one system can become input for another.  Feedback: In information system, feedback is output that is used to make changes to input or processing activities. The feedback is used to check and correct the input on the number of hours worked.  Computer Based Information System(CBIS): A computer based information system is a single set of hardware, software, database, telecommunication, people and procedures that are configured to collect, manipulate, store and process data into information. A business technology infrastructure includes all the hardware, software, database, telecommunication, people and procedures that are configured to collect, manipulate, store and process data into information.  Hardware: - Hardware consists of computer equipments used to perform input processing and output activities. Input devices include keyboards, automatic scanning devices, equipment that can read magnetic ink and many other devices. Processing device include CPU and main memory. There are many output devices like printers and computer screen.  Software: Software is the computer programs that govern the operation of the computer. This program allows the computer to provide managers with information to increase profits reduce cost and provide better customer service. There are two types of software,  System Software: System software controls basic computer operation such as start up.  Application Software: Application software allows specific task to be accomplished such as word.  Database: A database is an organized collection of facts and information. An organized database contains facts & information on customers, employees, inventory, competitor’s sales information and much more. Host managers and executives believe a database is one of the most valuable & important parts of a computer based information system.  Telecommunication, Network and Internet: -
  5. 5. Telecommunication is the electric transmission of signals for communication and enables organization to carry out their processes and tasks through effective computer networks. Networks are used to connect computers and computer equipment in a building, around the country or around the world to enable communications. The internet is the world’s largest computer network, actually consisting of thousands of interconnected networks, all freely exchanging information.  People: People are the most important element in most computer based information system. Information system personnel include all the people who manage, run program and maintain the system. Users are any people who use information system to get results.  Procedures: Procedures include the strategies, polices, methods and rules for using a computer based information system. E.g. some procedure describes when each program is to be run or executed. Other describes who can have access to facts in the database. Other procedure describes what is to be done incase of disaster.  Organizations and Information system: An organization is a formal collection of people and other resources established to accomplish a set of goals.  Organizational Structure: It refers to organizational subunits and the way they relate to overall organization. Depending on the goals of the organization and its approach to management, a number of structures can be used. An organization structure can affect how information systems are viewed and what kinds are used. Although there are many possibilities organizational structure typically falls into one of the following categories. 1. Traditional Organizational Structure: In this type of structure known as traditional organizational structure, a managerial pyramid shows the hierarchy of decision making and authority from the strategic management to operational management and non management employee. The strategic level, including the president of the company and vice president has a higher degree of decision authority, more impact on corporate
  6. 6. goals and more unique. In most cases, major department heads report to a president or top level manager. The major department divided according t function and can include marketing production, is etc. The departments that are associated with making, packing or shipping goods are called line positions. Other department may not be directly involved with formal chain but department or area; these are known as staff positions. The traditional organization structure is also known as hierarchical structure, since it can be viewed as a series of levels, with those at higher levels having more power and authority within the organization. A structure with a reduced number of management layers is often called as flat organizational structure. Empowerment gives employees and their manager more responsibility and authority to make decision, take certain actions and in general have more control over their jobs. 2. Project Organizational Structure: A project organizational structure is centered on major products or services. E.g. in a manufacturing firm that produced body products, each type is produced by a separate unit. Traditional functions like marketing, finance & production are positioned within these major units. Many project teams are temporary when the project is complete; the members go on to new teams formed for another project. 3. Team Organizational Structure: The team organizational structure is centered on work teams or groups. In some cases, these teams are small; in other they are very large. Typically each team has a team leader who reports to an upper level manager in the organization. Depending on the task being performed, the team can be either temporary or permanent. 4. Multidimensional Organizational Structure: A multidimensional organizational structure, also called matrix organizational structure, incorporate several structure at the same time. E.g. an organization might have both traditional functional area & major project units. One advantage of the multidimensional organizational structure is the ability to simultaneously stress both traditional corporate area & product lines.  Manual Information System: In manual information system some investment analysts manually draw charts and trend lines to help them make investment decision. Tracking data on stock prices over the last few months or years, these analysts develop patterns on graph paper that help them determine what stock prices are likely to do in the next few
  7. 7. days or weeks. Some investors have made millions o dollars using manual stock analysis information system. Many information systems begin as manual system and become computerized. E.g. postal service sorts mail. At one time most letters were visually scanned by postal employees to determine the ZIP code and were than manually placed in an appropriate bin. Today the bar-coded address on letters passing through the postal system are read electronically & automatically routed to appropriate bin via conveyors.  System: System is a set of elements or components that interact to accomplish goals. The elements themselves and the relationships among them determine how the system works. Systems have inputs, processing mechanism output and feedback.  System Components and Concepts: The system boundary defines the system & distinguishes it from everything else. The way system elements are organized or arranged is called the configuration. Much like data, relationships among elements in a system are defined through knowledge. In most cases, knowing the purpose or desired outcome of a system is the first step in defining the way system elements are configured.  System Types: Systems can be classified along numerous dimensions. They can be simple or complex, open or close, stable or dynamic, adaptive or non adaptive and permanent or temporary.  Simple: Simple system has few components, and the relationship or interaction between elements is uncomplicated & straight forward.  Complex: Complex system has many elements that are highly related and interconnected.  Open: Open system interacts with its environment.  Closed: Close system has no interaction with environment.  Stable: Stable system undergoes very little change over time.  Dynamic: Dynamic system undergoes rapid & constant change over time.  Adaptive: -
  8. 8. Adaptive system is able to change in response to changes in the environment.  Non-adaptive: Non-adaptive system is able to change in response to changes in the environment.  Permanent: Permanent system exists for a relatively long period of time.  Temporary: Temporary system exists for only a relatively short period of time.  System Performance and Standards: 1. Efficiency: It is a measure of what is produced divided by what is consumed. It can be range from 0 to 100%. 2. Effectiveness: It is a measure of the extent to which a system achieves its goals; it can be compacted by dividing the goals actually achieved by the total of the stated goals. 3. System Performance Standards: It is a specific objective of the system.  System Variables & Parameters:  System Variables: System variables are quality or item that can be controlled by the decision maker. E.g. price of product.  System Parameters: System Parameters are value or quantity that cannot be controlled such as the cost of a raw material. E.g. number of ponds of chemical to produce a certain type of plastic which is control by laws of chemistry not the decision makers.  Business Information System: Workers at all levels, in all kinds of forms, and in all industries are using information system to improve their own effectiveness. At the corporate level, the most common types of is used in business are E - Commerce system, transaction processing system, management information system and decision support system.  Transaction Processing System: A transaction is any business related exchange such as payments to employees, sales to customers and payments to suppliers. Thus, processing business transaction was the first application of computer for most organization. A transaction processing system is an organized collection of people, procedures, software, database and devices used to record completed business transaction.
  9. 9. The primary inputs for a payroll transaction processing system are the numbers of employee hours worked during the week and pay rate. The primary output consists of pay checks. Early payroll systems were able to produce employee pay checks along with important employee related reports. In improved forms, these systems are still vital to most modern organization. Transaction processing system represent the application of information concepts and technology to routine, repetitive and usually ordinary business transactions but transactions that are critical to the daily functions of that business.  Workflow System: A workflow system is ruled based management software that directs, coordinates and monitors execution of an interrelated set of task arranged to form a business process. The primary purpose of workflow system is to provide employees with tracking, rooting, document imaging and other capabilities designed to improve business process. Transactional workflow system holds the promise of improving the productivity & dependability of business processes. The system streamlines the reimbursement process by simplifying expense entries & automating the approval process.  Enterprise Resource Planning: An enterprise resource planning system is a set of integrated programs capable of managing a company’s vital business operations for an entire multi side, global organization. The scope of an enterprise resource planning system may very from company to company; most enterprise resource planning system provides integrated software to support the manufacturing and finance business function of an organization. The enterprise resource planning system checks what is already avail in finished product inventory to meet the projected demand. The enterprise resource planning system checks the raw material & packing material inventory & determines what needs to be ordered to meet the planned production schedule. The primary benefits of implementing an enterprise resource planning system include adopting & improved work processes & improving access to timely data for operational decision making.  Management Information System: A management information system is an organized collection of people, procedures, software, database and devices used to provide routine information to
  10. 10. managers and decision makers. The focus of a management information system is primarily on operational efficiency. Marketing, production, finance and other functional areas are supported by management information system and linked through a common database. Management information systems are characterized by the use of information system to produce managerial reports. In most cases these reports periodically daily, weekly, monthly or yearly. They were called scheduled reports. These scheduled reports helped managers perform their duties. Other types of reports were also developed during the early stages of management information system. Demand reports were developed to give decision maskers certain information upon request. The exceptions reports describe unusual or critical situations, like low inventory levels. This report is produced only if a certain condition exists.  Decision Support System: A decision support system is an organized collection of people, procedures, software, database and devices used to support problem specific decision making. The focus of decision support system is on decision making effectiveness whereas a management information system helps an organization “do things rights” a decision support system helps a manager “do the right thing”. A decision support system supports & assists all aspects of problem specific decision making. It goes beyond the traditional management information system. A decision support system can provide immediate assistance in solving complex problem not supported by a management information system. Decision support systems are used when the problem is complex & the information needed to make the best decision is difficult to obtain and use. So a decision support system also involves management judgment. A decision support system operates from a managerial perspective and it recognizes that different managerial styles and decision type require different system. The essential elements of a decision support system include a collection of models used to support a decision maker or user.
  11. 11.  Business System Planning: Business is needed for a wide verity of task. The business system helps firms to supervise employee control production process. Forecast future events and maintain records for managers. Business system planning is define by IBM as a structural approach that assists on help organization in developing is plans to satisfy its short & long term information requirement. Business system planning has 3 major objectives. 1. Translate the mission, strategies, objectives & structure of business into an information system mission, strategies, objectives & structure of business. 2. Determine information system priorities & allocate information system resource to high return project that support business goals. 3. Plan long life information system based on enduring business process.  Information Utility: It is a powerful technology to efficiently store multimedia information available in geographically dispersed location indexed them for easy retrieval & access information from anywhere in the world using a personal computer connected to the international network of computer.  Utility: 1. Information sources & geographically distributed & interconnected by high speed digital communication links. 2. Access and store methods are standard to enable any user connected to the net to access information store any where. 3. Regulations are formulated to control storage & access of information & charges for usage.  Components: 1. Information Resources: Information resource can be of various types including textual data, numerical data, graphical data, audio data, video data and photographs. A. Textual Data: Textual data consists of book & journals. E.g. Books, Text File. B. Numerical Data: Numerical data consists of tables of various types. E.g. experiments property data. C. Graphical Data: Graphical data can be photographs maps, drawings etc. D. Audio Data: Audio data are digital compress using a commonly accepted standard. E. Video Data: Video data consists of enormous storage space due to need for repeating frameset 30 times/sec.
  12. 12. F. Photography: Both color & monochromic photographs are store in bitmap form using compression. 2. Indexing: Indexing and interlinking multimedia data are extremely important for case of retrieval. Keywords interval documents are selected and linked to related works with logical link by appropriate software. This is called hypertext. For material in other media related elements are selected & link in what is known as hypermedia. Such link would allow a user to navigate through multimedia material. 3. Linking: Collection of information of digital library will normally not be store in one computer. It will be distributed in many computers known as servers. All these servers will be linked by high speed communication list. The fact that information is distribution need not be known to a user as it is not relevant from his point of view. A user gets access to the information based on his request regardless of its geographical location. 4. Searching: Information resources are spread over many computers and it is not feasible for every user to keep a directory of available resources. User requires assistance from the system for retraining information. This is done by search engine. These are pieces of software which accept keyword given by user & search using on all servers index using the keyword to facilitate search. 5. User: A user may accessed information from any where at any time using a terminal or a computer connected to network to which information. Servers are connected with the emergence of wireless network; it would also become possible to access an information utility from a portable computer.  Advantages of Information Utility: 1. Unlike traditional library, documents are not physically handled by a user. A user views the necessary documents & paints the portion of interest in his/her location. 2. Unlike printed text where tables of number can be studied but not easily process if they are in the digital form the number in a table can be processed. 3. An information utility can store unconventional information such as reading obtains from some scientific instruments such as spectral. 4. Searching for information is much easier due to global indexing & use of hyper text & search engine. 5. The ability to digitally store & retrieve multimedia data allows one to effectively provided access to audio & video information.  Intranet and Extranet: -
  13. 13.  Intranet: It is an internal network based on web technologies that allows people within organization exchange information & works on projects. Intranet support work group technology. Intranet support real time meting with people with over network, instead of making them travel to one face. Only authorized employees are able to use it. It is expensive compare to extranet. Intranet operates as private with limited access. Intranet can be used to entrance communication & collaboration among authorized employee customers, suppliers & other business partner. It allows access through intranet. It doesn’t require any additional implementation of leased network. It provides infrastructure for many internal business commercial application.  Extranet: Extranet is a network based on web technology that allows selected outsiders, such as business partners and customers to access authorized resources of intranet and companies. It is a network that links selected resources of the intranet of a company with its customer, supplier or other business partners. An extranet uses TCP/IP protocol of internet. It cannot people who are external to company. It support activities such supply change management etc. Authentication & privacy are critical on an extranet so that information is protected. Performance is good to provide quick response. It provides secure connectivity between corporation intranet & intranet of its business partner material supplier, financial services, government & customer.  Transaction Processing System: Transaction processing was one of the first business process to be computerized & without information system. System recording and processing business transactions would consumed huge amount of an organization resources. The transaction processing system also provides employee involved in other business process the management information system and special purpose information system to achieve their goals. A transaction processing system serves the foundation for the other systems. Transaction processing system performs routine operations such as sales ordering and billing often performing the same operations daily or weekly. These systems require a large amount of input data & produced an amount of output without requiring sophisticated o complex processing. As we move from transaction processing to MI/DS and AI/ES we can see less routine move decision support less input and output an move sophisticated & complex processing & analysis. Every organization has manual and automated transaction processing system, which process the detailed data necessary to update records about fundamental business operations of the organization. These systems includes
  14. 14.  Order entry  Inventory control  Payroll  Account payable  account receivable  general ledger Impact of these systems  Customer order  Purchase order  Receipts  Carrels  Invoice  Payroll checks The result of processing business transaction is that  Database  Telecommunication people  Procedure  Software  Hardware device used to process transactions. The processing activities include  Data collection  Data edit  Data correction  Data manipulation  Data storage  Document production  Tradition Transaction Processing System: When computerized transaction processing system first evolved, all transactions were collected group, called batches & processed together. 1. Batch Processing System: Batch processing system is the method of computerized processing in which business transactions are accumulated over a period of time & for processing as a single unit or batch. E.g. it may be important to process invoices and customer payments for the account receivable system daily, on the other hand the payroll system may receive time cards & process them weekly to create checks, update employee earning records & to distribute labor cost. The essential characteristic of the batch processing system is that there is some delay between the occurrence of the event and the final processing of the related transaction to update the organization’s records. For many applications batch processing is more appropriate and cost effective. Payroll transactions and billing are typically done via batch processing.
  15. 15. 2. On - Line Real Time or On - Line Transaction Processing : The on - line transaction processing is computerized processing in which each transaction is processed immediately without the delay of accumulating transaction into a batch. As soon as the input is available, a computer program performs the necessary processing & updates the records affected by that single transaction. At any time the data in an on - line system always reflect the current status. When you make an airline reservation, for instance the transaction is processed and all databases, such as seat occupancy & account receivable are update immediately. This type of processing is essential for business that requires data quickly & update if often such as airline ticket agency etc. 3. On - Line Entry with Delayed Processing: On - line entry with delayed processing is a compromise between batch and on line processing. With this type of system, orders or transactions are entered into computer system, when they occur by they are not processed immediately. E.g. when you call a toll free number & order a product your order is typically entered into the computer when you make the call. However the order may not processed until that evening after business hours.  Transaction processing Activities: All transaction processing systems perform a common set of basic data processing activities. Transaction processing systems capture and process data that describes fundamental business transactions. This data is used to update databases & to produce a variety of reports for use by people both within and outside the enterprise. 1. Data Collection: Data collection is the process of data capturing & gathering all data necessary to complete transactions. It can be done manually or automated. Data collection begins with a transaction results in the organization of data that is input to the transaction processing system. Data should be captured at its source, and it should be recorded accurately with minimal effect and in a form that can be directly entered into computer rather than keying the data from some type of documents. This approach is called source data automation. An example of source data automation is the use of devices at a retail store checkout to read the Universal Product Code automatically. The Universal Product Code reading is more accurate and faster than having a cash registers clerk enter codes manually. Another example of automation is industrial data collection devices. These devices allow employees to scan their magnetized ID cards to enter data in payroll transaction processing system when they start or end the job. 2. Data Editing: -
  16. 16. It is process of checking data for validity & completeness to detect any problems with the data. E.g. quantity and cost data must be numeric and names must be alphabetic otherwise the data is not valid. Often the codes associated with an individual transaction are edited against database containing valid codes. If any code entered is not present in the database, the transaction is rejected. 3. Data Correction: It is not valid to reject invalid data. The system should provide error message that alert those responsible for the data edit function. This error message not specifies what problem is occurring so that correction can be made. Data corrections is the process o reentering miss keyed or miss scanned data that was found during data editing. E.g. a Universal Product Code that is scanned must be in a master table of valid Universal Product Codes. It doesn’t have it than the appropriate action can be taken. 4. Data Manipulation: Data manipulation is the process of performing calculations and other data transformations related to business transaction. Data manipulation can include  Classifying data  Sorting data into categories  Performing calculation  Summarizing results  Storing data in the organization databases. In payroll transaction processing system data manipulation include  Multiplying an employees hours worked by his pay rate.  Overtime calculation  Deductions are also performed 5. Data Storage: It involves updating one or more databases with new transactions. This data can be further processed and manipulated by other systems so that it is available for management decision making. Thus although transaction database can be considered a by product of transaction processing, they have a pronounced effect on other information system & decision making process in an organization. 6. Document Production & Reports: It involves generating output records & reports. These documents may be hard copy paper reports or displayed on computer screens. E.g. paychecks are hard copy document produced by payroll transaction processing system while an outstanding balance report for invoices might be a soft copy report displayed by an account report for invoices might be a soft copy report displayed by an accounts receivable transaction processing system. Often result from on transaction processing systems are passed downstream as input to other system where the results of updating the inventory database are used to create the stock exception report of items whose inventory level is less
  17. 17. than the recorder point. These reports can be printed or displayed on computer screen. A transaction processing system can also produce reports required by local & federal agencies such as stat of tax withholding & quarterly invoice statement.  An Objective of Transaction Processing System: Process data generated by and about transactions. The primary objective of any transaction processing system is to capture process and store transactions and to produce a verity of document related to routine business activities. These business activities can be directly or indirectly related to selling products and services to customer. Following activities are results from customer order & result in transactions that are processed by  Processing orders  Purchasing materials  Controlling inventory  Billing customer  Paying suppliers & employees  1. Maintain a High Degree of Accuracy & Integrity: One objective of any transaction processing system is error free data input & processing. In early day employees visually inspected all document & reports introduced into or produced by the transaction processing system. Because human are fallible the transaction were often inaccurate, resulting in wastage time and effort and requiring resources to correct them. It is important to avoid fraudulent transactions. E - Commerce companies face these problems when accepting credit or debit card information. One solution is for this, the digital certificate. It is small computer file that serves as both ID card and a signature. 2. Produce Timely Documents and Reports: Manual transaction processing system can take days to produce routine documents frequently the use of computerized transaction processing systems significantly reduces the response time. Improvements in information technology especially hardware & telecommunication links allow transaction to be processed in a matter of seconds. Timing is also crucial for related application such as order processing, invoicing, account receivable, inventory control & account payable. Balance of electronic recording and transmission of sales information the transaction can process in second rather than overnight. 3. Increase Labor Efficiency: Before computer existed, manual processes often required full of clerk & equipment to process necessary business transactions. Today transaction processing system substantially reduce clerical and other labor requirement. A small minicomputer linked to company cash registers
  18. 18. replaces a room full of clerk, typewriter & filing cabinets. Many transaction processing system are cost justified by labor savings. 4. Help Provide Increased Service: We are quickly becoming service oriented economy. A transaction processing system tickets from ticket master, for e.g. allows concert enthusiasts to order tickets over the internet instead of standing in line for hours or even days. Some companies have EDI systems that allow customers to place orders electronically thus by passing slower & more error methods of written or oral communication. 5. Help Build & Maintain Customer Loyalty: A firm’s transaction processing systems are often the means for customer to communicate. It is important that the customer interaction with this system keeps customer satisfied and returning. 6. Archive Competitive Advantage: One goal of almost all organization is to gain & maintain a competitive advantage. A competitive advantage provides a significance & long term benefit for the organization where a transaction processing system is developed or modified, the personnel involved should carefully consider how the new or modified system might provide a significant & long term benefit. Depending on the specific nature & goals of the organization, any of these objectives may be more important than others. By meeting these objectives transaction processing system can support corporate goals such as reducing costs in productivity quality an. Customer satisfaction & running more efficient & effective operation.  Traditional Transaction Processing System: 1. Order Processing System: It includes order entry, sales configurations, shipment planning, shipment execution, inventory control, invoicing, customer interaction and routing & scheduling. The business process supported by there system are so critical to in an operation of the enterprise that the order processing system are sometimes referred to as the “Life Blood of the Organization”. The following figure sows the various systems and the information that flows between them. A rectangle represents a system; a line represents the flow of in from one system to another. The circle represents any entity outside the system.
  19. 19.  Order Entry: It captures the basic data needed to process a customer order. The DFD of a typical entry system shows the various business processes that are supported by the system and flow of data between the processes. A rectangle with the rounded corners represents the business process. With an on - line order processing system, the inventory status of each inventory item on the order is checked to determine whether sufficient finished product is available. If an order it cannot be filled a substitute item maybe suggested or a back order is created the order will be filled later. Order processing system suggests related item order takes to mention to promote add on sales. Order takes also review customer payment history data from the accounts receivable system determine whether credit can be extended.  Open Order: Once an order is entered & accepted, it becomes an open order typically, a daily sales journal is generated.  Sales Configuration: It ensures that the products & services ordered are efficient to accomplish the customer’s objectiveness and will work together. 1. Sales representative 2. Suggest optional equipment.  Sales configuration software can solve customer problems and give the answers of customer’s questions.  Sales configuration program can eliminate mistakes, reduce cost and increase revenues.  Shipment Planning: -
  20. 20. Shipment planning system determines which open orders will be filled a form which location they will be shipped. It is an extremely complicated task for a large global corporation.  Output: 1. Plan show where each order is to be filled? Precise schedule for shipping. 2. Picking list from the shipment planning system.  Shipment Execution: The shipment execution system coordinates the outflow a products and. Goods from the organization. The objective is delivering quality products on time to customer. The shipping department is usually given responsibility for physical packing & delivering all products to customer & suppliers. This delivery can include mail services, tracking operation and rail service. The output will be back order request generate customer invoice packing document.  Inventory Control: It is defined as the system that updates computerized inventory records to reflect exact quality on hand.  Once products have been picked out of inventory, other document & reports are generated. E.g. the inventory status report summarizes all inventory items shipped over a specified time period.  It can include stock numbers, decryption, number of units on hand, number of units order back order units, average cost and related information.  It is used to determine when to order more inventory and how much of each item to order.  It helps minimize stock outs and back orders.  One objective is to minimize the amount of cash tied up in inventory by placing just the right amount of inventory.  To gain a competitive advantage, many manufacturing organizations use real time inventory control system based on bar-coding.  The inventory data is more accurate and correct for people performing order entry, production planning & shipment planning.  Inventory control is essential for industries are the service sector. Such organizations hotels, airlines etc.  Invoicing:  Customer invoices are generated based on received from the shipment execution transaction processing system. This application encourages follow up on existing sales activities, increases productivity and improves customer service. Most invoicing programs automatically compute discount, sales taxes and other miscellaneous charges.
  21. 21.  Many invoicing applications require only information on the items orders are the client identification number. The invoicing application does the rest. It looks up the full name and address of the customer, determines whether the customer has the credit routine, automatically computes discounts and taxes and other charges & prepare invoices & envelopes for mailing.  Customer Interaction: To keep current customers happy, some companies use a customer interaction system to monitor & track each customer interaction with the company. The goal of such system is to build customer loyalty. These software systems capture data whenever a customer contacts the company. Often the initial contact is a request for a proposal or a request for product information from a potential customer. Valuable data about the potential customer can be gathered at this time. The customer interaction system captures valuable data from each interaction and passes the data to others in the organization that can use it. The customer interaction data represents a gold mine of data that can be used to keep customers satisfied, generate new leads for future sales and lead to new products or product improvements. It helps an organization build large database about its customer that describes relationships in sufficient detail so that management, sales people, customer service providers and customers can access information to match customer needs with product plans and offering remained customers of service requirements know what other products a customer has purchased.  Routing & Scheduling: A routing system helps determine best way to get products from one location to another. Scheduling system determine best time to pick up or deliver goods and services. 2. Purchasing System: -  Inventory Control: -
  22. 22. A manufacturing firm has several kinds of inventory such as raw materials, packing materials, finished goods and maintenance parts. In addition the firm needs to ensure that sufficient raw material; packing material and maintenance parts are available. The same or similar transaction processing system can be used to manage the inventory of these items.  Purchase Order Processing: This system helps purchasing departments complete their transactions quickly and efficiently. Every organization has its own policies, practices and procedure for purchasing supplies and equipments. E.g. IBM has a policy to use the internet to streamline its own operations. The purchasing department can facilitate the buying process by keeping data on supplier’s goods & services. The increased use of telecommunications has given many purchasing departments easier access to this information. For instance technologies like internet and public networks allow purchasing managers to compare products & prices listed in internet catalogs & large scale consumer database. One the supplier is selected, order can be sent via EDI reducing purchasing cost and time spent and helping companies maintain low yet adequate inventory levels.  Receiving: Like centralized purchasing, many organizations have centralized receiving department responsible for taking passion of all incoming items, inspecting them & routing them to the people or department that ordered them. In addition the receiving department notifies the purchasing department when items have been received. This notification may be done using a proper form called a receiving report or electronically through a business transaction created by entering data into the receiving transaction processing system. An important function of many receiving department is quality control by inspection. Inspecting procedure & practices are setup to monitor the quality of incoming items. Any items that fail inspecting are sent back to the supplier.  Account Payable: The accounts payable system attempt to increase an organizations control over purchasing, improve cash flow, increase profitability & provide more effectiveness management of current liabilities. Most accounts payable applications strive to manage cash flow and minimize manual data entry. Input from the purchase order processing system provides an electronic record to account payable application that updates the accounts payable database to create a liability record showing that the firm has made a commitment to purchase a specific good or service. A common reports produced by the accounts payable application is the purchases journal. This report summarized all the organizations bill paying activities for particular periods. Financial managers use this report to analyze bills that have been paid by the organization. This information is also used to help analyze current & future cash flow needs.
  23. 23. The accounts payable applications into other information system, including cash flow analysis, which helps an organization, ensure that sufficient funds are available for the accounts payable application. 3. Accounting System: - 1) Budget: A budget is a financial plan that identifies items & amounts that the organization estimates it will spend. In some organization budgeting can be expensive & time consuming process manually distributing & consolidating information. The budget transaction processing system is a system that automates many of the tasks required to amass budget data, distribute it to user and consolidate the prepared budgets. Automating budget process gives more time to manage it to meet organizational goals by setting enterprise wide budgeting targets, ensuring a consistent budget model & assumption across the organization & monitoring status of each department’s spending. 2) Accounts Receivable: It is a system that manages the cash flow of the company by keeping track of the money owned the company on charges for goods & services performed when goods are shipped to a customer, the customer’s accounts payable system receives a business transaction from the invoicing system, and the customer’s account is update in the accounts receivable system of a supplier. The major output of the accounts receivable application is monthly bills or statements sent to customers. The bills can include, I. The data items are purchased. II. Description. III. Allowances for discount.
  24. 24. IV. Amounts. The accounts receivable application should monitor sales activity, improve cash flow by reducing the time between a customer’s receipt of items ordered & payments of bills for those items. Most system can handle payment in a variety of ways. I. Standard bank cheques. II. Credit cards. III. Money wiring services. IV. Electronic funds transfer via EDI. The account receivable system is vital to managing the cash flow of the firm. One major way to increase a cash flow is by identifying overdue an account. Reports are generated to identify customer whose accounts are overdue by more than 30, 60 or go ways. Special action may be initiated to collect funds or reduce the customer credit limit. An important function of the accounts receivable application is to identify bad credit risks. Because a sizable amount of an organizations assets can be tied up in accounts receivable. One object of an account receivable application is to minimize losses due to bad dept through early identification of potential bad dept customers. The accounts receivable aging report is valuable aspect of an accounts receivable application. This reports sorts all outstanding dept or bill by date. 3) Payroll: The two primary outputs of the payroll system are the payroll cheque & stub, which are distributed to the employees and the payroll register, which is a summary report of all payroll transactions. The payroll system prepares W-2 statement of the end of year for tax purposes. Rather than write their own payroll application, many firms rely on a purchased software application for payroll processing. In most cases, the number of hour worked by each employee is collected using a verity of data entry devices, including time clocks, time cards and industrial data collection deices. Payroll system can handle overtime, vacation pay, variable & multi rate salary structures and incentive programs & commissions. Most payroll application automatically generates both federal & state tax, deduction, saving plans & government saving bonds. Often payroll applications have EDI arrangements with employees’ banks to make direct deposit into employees’ account. In addition to pay cheques, most payroll program produces a payroll journal. A typical payroll journal contains,  Employees’ name  The areas where employees worked during the week.  Hours worked, the pay rate  A premium factor for overtime pay  Earnings, the earning types  Various deduction  Net pay calculation Payroll transaction processing system application also provides input into various weekly, quarterly and yearly reports. Most of these reports are used by
  25. 25. financial management to help control payroll costs and cash flow. All payroll entries are entered to the general ledger system. These can be a direct link between payroll activities & production/inventory control operation. 4) Asset Management: Capital assets represent major investment for the organization whose value appears on the balance sheet under fixed assets. The assets have a useful life of several years or more over which their value is depreciated resulting in tax reduction.  The Asset Management Transaction Processing System: The asset management transaction processing system is a system that controls investments in capital equipment and manages depreciation for maximum tax benefits. Key feature of this application includes,  Efficient handling of a wide range of depreciation methods.  Country specific tax reporting & depreciation structures for the various countries in which the firm does business.  Workflow managed processes to easily add, transfer and retire assets. 5) General Ledger: Every monetary transaction that occurs within an organization must be properly recorded. Payment of a supplier’s invoice, receipt of payment from a customer and payment to an employee are examples of monetary transactions. A computerized general ledger system is designed to allow automated financial reporting & data entry. The general ledger application produces a detailed list of all business transactions and activities. The reports includes,  Profit & loss statements  Balance sheet  General ledger statement Historical data can be kept & used to generate trend analyses & reports for various accounts & groups of accounts used in the general ledger package. Various incomes & expense accounts can be generated for the account period, year to date & month to date as required. The reports generated by the general ledger application are used by accounting & financial managers to monitor the profitability of the organization & to control cash flows. Financial reports that summarized sales by customer & inventory items can also be produced. These reports are used by marketing & financial managers to determine which customers are control bating sales & inventory items that a selling as expected.  Business as a System: -
  26. 26. A business firm is an open, adaptive organizational system operating in business system components. A business consists of following interrelated system components.  Input  Processing  Output  Feedback & control  Environment A business must maintain appropriate relationship with other economics, political and social system in its environment. The group includes its stock holders such as customers, suppliers, competitors, stock holders, labor union, financial institute, government agencies and community. All of which have a share in the proper & successful operation of the business. Business is a system of many subsystems. These subsystems are having relationship between them. This relationship is complex because of the amount of information that must be generated to meet the needs of business. These systems are connected by information oriented & product oriented flow. The information needs are founds in three levels. 1. The top management needs strategic information. 2. Middle management needs tactical information supervisory information. 3. Bottom management needs operational information.  Management Information System: Management information system can often give companies competitive advantage by providing the right information to the right people in the right format & at the right time. The primary purpose of the management information system is to help an organization achieve its goals by providing manage with insight into the regular operations of the organization so that they provide control organize & plan more effectively & efficiently. In short management information system provides
  27. 27. managers with information & support for effective decision making & provides feedback on daily operation. A manufacturing management information system, foe e.g. is a set of integrated systems that can help managers monitor a manufacturing process to maximize the value of raw materials as they are assembled into finished products. This monitoring is accomplished by various summary reports produced by the management information system. These reports can be obtained by filtering & analyzing the detailed data contained in transaction processing databases & presenting the result to manage in a meaningful way.  Inputs of The Management Information System: Data that enters a management information system originates from both internal & external sources. The most significant internal source of data for the management information system is the organizations various transaction processing systems. One of the major activities of the transaction processing system is to capture & store the data resulting from on going business transaction. With every business transactions, various transactions processing systems application make changes to & update the organization database. E.g. billing application, these updated databases are primary internal sources of data or the management information system. Other internal data comes from specific functional areas throughout the firm. External sources of data can include customers, suppliers, competitors and stockholders whose data is not already captured by the transaction processing system, as well as other sources such as an internet. The management information system uses the data obtained from these sources and processes it into information more usable to managers, primarily in the form of predetermined reports.  Outputs / Reports of The Management Information System: The output of most management information system is a collection of reports that are distributed to managers. 1. Schedule Reports: These reports are produced periodically, or on a schedule, such as daily, weekly, or monthly. E.g. a production manager could use a weekly summary report that lists total payroll costs to monitor and control labor and job costs. A manufacturing report produced once a day to monitor the production of a new product is another example of scheduled reports. Other schedule can help managers control customer credit the performance of sales representatives inventory levels and more. 2. Key Indicator Reports: It summarizes the previous day’s critical activities and is typically available at the beginning of each workday. These reports can summarize inventory levels, production activity, sales volume and the like. Key indicator reports are used by
  28. 28. managers & executives to take quick corrective action on significant aspects of the business. 3. Demand Reports: These are developed to give certain information of the manager’s request. In other words, these reports are produced on demand. E.g. an executive may want to know the production of a particular item; a demand report can be generated to give the requested information. Other example of demand reports include reports requested by executives to show the hours worked by particular employee total sales to date for a product and so on. 4. Exception Reports: These are the reports that are automatically produced when a situation is unusual or requires management action. E.g. a manager might set a parameter that generates a report of all inventory items with fewer than the equivalent of five days of sales on hand. This unusual situation requires prompt action to avoid running out of stock on the item. The exception report generated by this parameter would contain only items with fewer than five days of sales in inventory. As with key indicator reports, exception reports are most often used to monitor aspects important to an organization success. In general, when an exception report is produced a manager or executive takes an action. 5. Drill Down Reports: Drill down reports provides increasingly detailed data about a situation. Though the use of drill down reports, analysis can see data at a high level first, then at a more detailed level and then at a very detailed level.  Characteristics of the Management Information System:  Provide Reports with Fixed & Standard Formats: For example, scheduled reports for inventory control may contain the same types of information placed in the same locations on the reports. Different managers may use the same report for different purposes.  Produce Hard - Copy & Soft - Copy Reports: Some management information system reports are printed on paper and considered hard - copy reports. Most output soft - copy using visual displays on computer screen. Soft - copy output is typically formatted in a report like fashion.  Use Internal Data Stored in the Computer System: Management information system reports use primarily internal sources of data that are contained in computerized. Some management information systems use external sources of data about competitors, the market place & so on. The internet is a frequently used source for external data.  Allow End Users to Develop Their Own Custom Reports: -
  29. 29. Although analysts & programmers may be involved in developing & implementing complex management information system reports that require data from many sources & users are increasingly developing their own simple programs to query dbase & produce basic reports.  Require User Requests for Reports Developed by System Personal: When information system personnel develop and implements management information system reports, a formal request to the information system department may be required. If a manager, for example wants a production reports to be used by in his or her department a formal request for the report is often require.  Functional Aspects of The Management Information System:  Financial Management Information System: A financial management information system provides financial information not only executives but also for a broader set of people who need to make better decisions on a daily basis. Finding opportunities and quickly identifying problems can mean the difference between a business’s success and failure. The financial management information system performs following functions.  Integrates financial and operational information from multiple sources, including the internet, into a single management information system.  Provide easy access to data for both financial and non financial users, often through use of the corporate internet to access corporate web pages of financial data and information.  Makes financial data available on a timely basis to shorten analysis turnaround time.  Enable analysis of financial data along multiple dimensions such ad time, geography, product, plant and customer.  Analysis historical and current financial activity.  Monitors and controls the use of funds over time.  Profit/Loss and Cost Systems: Two specialized financial functional systems are profit/loss and cost systems, which organized revenue and cost data for the company. Revenue and expense data for various departments is captured by the transaction processing system and becomes a primary internal source of financial information for the management information system. Many departments within an organization are profit centers, which mean they track total expenses and net profits. Other departments may be revenue centers, which mean they track total expenses and net profits. Other departments may be revenue centers which are divisions within the company that primarily track sales or revenues such as a marketing or sales department. Other departments are cost centers which are used for manufacturing or research and development.
  30. 30.  Auditing: Auditing involves analyzing the financial condition of an organization and determining whether financial statements and reports produced by the financial management information system are accurate. Auditing can reveal potential fraud such as credit card fraud. It can also reveal false or misleading information.  Internal Auditing: It is performed by individual within the organizations. E.g. financial department of a corporation may use a team of employees to perform an audit. It is conduct to see how well the organization is doing in terms of meeting established company goals and objectives.  External Auditing: It is performed by an outside group like an accounting or consulting firms. The purpose of an external audit is to provide an unbiased picture of the financial condition of an organization.  Uses and Management of Funds: Another important function of the financial management information system is funds usage and management companies that do not manage and use funds effectively often how lower profits or face bankruptcy. Output from the funds usage and management subsystem. Internal uses of funds include use as additional inventory new or updated plants and equipment, additional labor, the acquisition of other companies, new computer systems, marketing and advertising, raw materials, land, investments in new products and research and developments. External uses of funds are typically investment related. On occasion, a company might have access cash from sales that is placed into an external investment. External uses of funds often include bank accounts, stocks, bonds, bills, notes, futures, options and foreign currency.  Manufacturing Management Information System: The subsystems and output of the manufacturing management information system monitor and control the flow of materials, products and services through the organization. The objective the manufacturing management information system is to produce products that meet customer needs from the raw materials provided by suppliers to finished goods & services delivered to customers at the lowest possible cost. The activities of the manufacturing management information system subsystems support value added business processes. As raw materials are converted to finished goods, the manufacturing management information system monitors the process at almost every stage.
  31. 31.  Design & Engineering: During the early stages of product development engineering departments are involved in many aspects of design. The size & shape of parts, the way electrical components are attached to equipment, the placement of control on a product. In some cases Computer Assisted Design (CAD) assists this process which help salesmen selects the right colors, styles and configurations. The design software is inexpensive and very effective in developing attractive & functional offices. CAD can be used to determine how a product will respond to various conditions.  Master Production Scheduling: The overall objective of master production scheduling is to provide detailed plans for both short term and long range scheduling of manufacturing facilities. Master production scheduling software packages can include forecasting techniques that attempt to determine current and future demand for products and services. Master production scheduling package can determine the best way to engage the manufacturing facility and all its related equipment. Most programs also perform sensitivity analysis which allows a manager to determine how the production schedule would change with different assumptions concerning demand forecasts or cost figures. The production schedule is critical to the entire manufacturing process. Information generated from this application is used with all aspects of production and manufacturing. Inventory control, labor force planning, product delivery and maintenance programs depend on information generated from the master production schedule.  Inventory Control: An important key to the manufacturing process is inventory control. Great strides have been made in developing cost effective inventory control program and software packages that allow automatic reordering, forecasting, generation of shop documents and reports, determination of manufacturing costs, analysis of budgeted costs versus actual cost and the development of master manufacturing schedulers resources requirements and plans. One method of determining how much inventory to order is called the Economic Order Quantity (EOQ). This quantity is determined in such a way as to minimize the total inventory cost. Reorder Point (ROP) which is a critical inventory quantity level. Some inventory items are dependent on one another. This technique is called Material Requirement Planning (MRP). The basic goal of MRP is to determining when finished products are needed, then to work backward in determining deadlines & resources needed to complete the final product on schedule. Manufacturing resource planning refers to an integrated companywide system based on network scheduling that enables people to run their business with a high level of customer service and productivity while lowering the cost and inventory.
  32. 32.  Just-in-time Inventory and Manufacturing: High inventory levels on the factory floor means higher cost, the possibility of damage & an effective manufacturing process. Thus, one objective of a manufacturing management information system is to control inventory to the lowest levels. One way to do this is to adopt the JIT approach. With this approach inventory and materials are delivered just before they are used in a product. Although JIT has many advantages, it also renders firms more vulnerable to process disruptions. The JIT manufacturing approach requires better coordination and cooperation between suppliers & manufacturing companies, substantially reducing inventory costs.  Process Control: Managers can use number of technologies to control & streamline the manufacturing process E.g. the computer can be used to directly control manufacturing equipment using systems called Computer Assisted Manufacturing (CAM). CAM systems have the ability to control drilling machines, assembly lines, & more. Some of them operate quietly are easy to program have self diagnostic routines to test for difficulties with the computer system or the manufacturing equipments. Computer integrated manufacturing involves the use of computer to link the components of the production process into an effective system. CIM’s goal is to be tie together all aspects of production including order processing product design, manufacturing, inspection & quality control & shipping. CIM system also increaser efficiency by coordinating the action of various production units. A Flexible Manufacturing (FMS) is an approach that allows manufacturing facilities to rapidly & efficiently change from making one product to making another. In the middle of a production run e.g. changes can be made to the production process to make a different product or change manufacturing material. By using an FMS, the time and cost to change manufacturing jobs can be substantially reduced and companies can react quickly to market needs competition. FMS is normally implemented using computer system, robotics and other automated manufacturing equipments.  Quality Control & Testing: The manufacturing organizations are placing more emphasis on quality control, a process that ensures that the finished product meets the customer’s needs. For continues process, control charts are used to measure weight, volume temperature or similar attributes. When the manufacturing operation is not continuous, sampling plans can be developed that allow the producer or consumer to accept or reject one or more products. Whether the manufacturing operation is continuous or discrete, the results from quality control are analyzed closely to identify opportunities fro
  33. 33. improvements. Information generated from quality control program can also be used to design better products.  Marketing Management Information System: A marketing management information system supports managerial activities in product development distribution, pricing decision, promotional effectiveness & sales forecasting. Marketing functions are increasingly performed on the internet. Subsystems for the marketing management information system include marketing research product development, promotion & advertising & product pricing. These subsystems & their output help marketing managers & executives increase sales, reduce marketing expenses & develop plans for future products & services to meet the changing needs of customers.  Marketing Research: Surveys, questionnaires, pilot’s studies & interviews are popular marketing research tools. The purpose of marketing research is to conduct a formal study of the market & customer preferences. Marketing research can identify prospects as well as the features that current customers really want in a goods or services. Once entered into the marketing management information system, data collected from marketing research projects is manipulated to generate reports on key indicators like customer satisfaction and total service calls. Reports generated by marketing management information system help manager be better informed to help the organization meet its performance goals.  Product Development: This involves the conversion of raw materials into finished goods & services & focuses primarily on the physical attributes of the product. Many factors, including plant capacity, labor skills, engineering factors and materials are important in product development decisions. In many cases computer program is used to analyze these various factors & to select the appropriate mix of labor, materials, plant & equipment and engineering designs.  Promotion & Advertising: One of the most important functions of any marketing effort is promotion & advertising. Product success is a direct function of the type of advertising and sales promotion done. The size of promotion budget & the allocation of this budget to the various promotional campaigns are important factors in deciding on the type of campaign that will be launched.  Product Pricing: -
  34. 34. Product pricing is another important & complex marketing function. Retail price, wholesale price and price discounts must be determined. A major factor in determining pricing policy is analysis of the demand curve which attempts to determine the relationship between price and sales. Computer program can help determine price elasticity and various pricing policies, such as supply and demand curves for pricing analysis. Sales analysis is also important to identify products, sales personnel & customers that contribute to profit and loss that do not. Several reports can be generated to help marketing managers’ make good sales decision. These reports show which products are doing well & which ones need improvement or should be discarded altogether.  Human Resource Management Information System: The human resource management information system is also known as personnel management information system, is concerned with activities related to employees and potential employees of the organizations. Because the personnel function relates to all other functional areas in the business, the human resource management information system plays a valuable role in ensuring organizational success. Some activities performed by this management information system are work-force analysis and planning; hiring; & training; job & task assignment etc. human resource subsystems & output range from the determination of human resource needs & hiring through retirement & out placement. Most medium sized and large organization has computer system to assist with human resource planning; hiring; training & skills inventory and wages & salary administration. Outputs of the human resource management information system include reports such as human resource planning reports, job application review profiles, skill inventory reports and salary surveys.  Human Resource Planning: One of the first aspects of any human resource management information system is determining personnel needs. The overall purpose of this management information system subsystem is to put the right number & kinds of employees in the right jobs when they are needed. Effective human resource planning requires defining the future number of employees needed & anticipating information future supply of people for these jobs.  Personnel Selection & Recruiting: If the human resource plans reveals that additional personnel are required, the next logical step is recruiting & selection o personnel. This subsystem performs one of the most important & critical functions of any organization especially in service organizations where employees can define the company’s success. Management information systems can be used to help rank & select potential employees for every applicant, the results of interviews, tests and company visits can be analyzed by the system & printed. This report called a job applicant review profile, can assists corporate recruiting teams in find selections.
  35. 35.  Training & Skills Inventory: Some jobs, such as programming, equipment repair & tax preparation, require very specific training. Other jobs may require general training about the organizational, culture, orientation, dress standards & expectation of the organization. Today, many organizations conduct their own training with the assistance of information system & technology. Self paced training can involve computerized tutorials, video programs & CD-ROM books & materials. This text and supporting material for example can be used in a distance learning environment. When training is complete, employee may be required to take computer scored tests to reveal their mastery of skills & new material. The results are given to the employee supervisor or boss in the form of skill inventory reports. In some cases skill inventory reports are used for job placement. The skill inventory report would help them evaluate current employees to determine their potential for the position.  Scheduling & Job Placement: Scheduling people & jobs can be relatively straightforward or extremely complex. For some service companies, scheduling &job placement are based on which customer walk through the door. Determining the best schedule for flights & airline pilots, the placement of military recruits to jobs and the truck delivers and equipments that should be used to transport materials across the country require good computer program. Employee schedules are developed for each employee showing their job assignments over the next week or month. Job placements are often determined based on skill inventory reports, which show which employee might be nest suited to particular task or job.  Wage & Salary Administration: The last of the major human resource management information system subsystem involves determining wages, salaries & benefits including medical payments, saving plans ans. Retirement accounts, huge data such as industry averages for positions can be taken from the corporate database & manipulated by human resource management information system to provide wage information & reports to higher levels of management. These reports are called salary surveys can be used to compare salaries with budget plans, the cost of salaries versus sales & the wages required for any one department or office. The report help show backup of key positions in the company wage & salary administrator also entails designing retirement program for employee.  Other Management Information System: In addition to finance, manufacturing, marketing and human resource management information system some companies have other functional management information system. 1. Accounting Management Information System: -
  36. 36. An accounting management information system performs a number of important activities, providing aggregate information on accounts, accounts receivable, payrolls & many other applications. The organization’s transaction processing system captures accounting data which is also used by most other functional information system. Some smaller companies hire outside accounting firms to assist them with their accounting functions. These outside companies’ produces reports for firm using raw accounting data. Depending on the needs of the small organization & its personnel’s computer experience, using these computerized accounting systems can be very cost effective approach to managing information. 2. Geographic Information System (GIS): A geographic information system (GIS) is a computer system capable of assembling, storing, manipulating & displaying geographically referenced information that is data identified according to their location. A GIS enables users to pair predawn maps or map outlines with tabular data to describe aspects of a particular geographic region. For example sales managers may want to plot total sales for each country in the states they serve. Using GIS, they can specify that each county be drawn with a degree of shading that indicates the relative amount of sales.  Decision Support System (DSS): - A decision support system is an organized collection of people, procedures, software, dbases, & devices used to support problem specific decision making & problem solving. The focus of a decision support system is on decision making effectiveness when faced with unstructured or semi-structured business problem. Decision support system offers the potential to generate higher profits, lower costs & better products & services. Decision support system should be designed, developed & used to help the organization achieve its goals & objectives. Many organizations face a bureaucracy of complex rules, procedures & decision. Decision support systems are used to bring more structure to these problems to aid the decision making process. In addition because of the inherent flexibility of decision support system, managers at all levels can use. Decision support system to assist in some relatively routine, programmable decision in lieu of more formalized management information system.  Characteristics of Decision Support System: Decision support systems have a number of characteristics that allow them to effective management support tools. 1. Handle Large Amount of Data From Different Sources: For instance, advanced database management system & data warehouses have allowed decision makers to search dbases for information when using a decision
  37. 37. support system, even when some data sources reside in different dbases stored in different computer system or network. 2. Provide Report & Presentation Flexibility: Managers can get the information they want, presented in a format that suits their needs. Furthermore output can be presented on computer screens or produced on printers, depending on the needs & desires of the problem solver. 3. Offer Both Textual & Graphical Orientation: Today’s decision support systems can producer text, tables, line drawings, pie chart & more. By using their preferred orientation, managers can use decision support system to get a better understanding of a true situation if require & to convey this understanding to other. 4. Support Drill-Down Analysis: A manager can get more levels of detail when needed by drilling down through data. For example a manager can get more detailed information for a project if needed. Here he can view the overall project cost or drill-down & see the cost for each project phase, activity & task. 5. Perform Complex, Sophisticated analysis & Comparisons Using Advanced Software Packages: Marketing research surveys for example can be analyzed in a verity of ways using analysis program that are part of decision support system. Many of the analytical programs associated with decision support system are actually stand alone program. The decision support system provides minas of bringing these further. 6. Support Optimization Satisfying & Heuristic Approaches: By supporting all types of decision making approaches, a decision support system gives the decision maker a great deal of activity in getting computer support for decision making activities. The process of making hypothetical changes to problem data & observing the impact on the results can be used to control inventory with what-if analysis a manager can make changes to problem data. 7. Simulation: It is the ability of the decision support system to duplicate the feature of a real system. In most cases, probability or uncertainty is involved. For example the mean time between failure & the mean time to repair key components of a manufacturing line can be calculated to determine the impact on the number of products that can be produced each shift. Engineers use this data to determine which components need to be reengineered to increase the mean time between failures and which components need to have an ample supply of spare parts to reduce the mean time to repair. 8. Goal Seeking Analysis: -
  38. 38. It is a process of determining the problem data require for a given result. For example a financial manager is considering an investment with a certain monthly net income. Further more the manager might have a goal to earn a return of 9% on the investment. Goal seeking allows the manager to determine what monthly net income is needed to have return of 9%.  Capabilities of Decision Support System: Developers of decision support system strive to make them more flexible than management information system & to give them the potential to assist decision makers in a variety of situation. Decision support system approaches can also help at all levels of the decision making process. 1. Support for Problem Solving Phases: The objective of most decision support system is to assist decision makers with the phases of the problem solving process. As previously discussed these phases include intelligence and monitoring. A specific decision support system might support only one or a few problem solving phases. 2. Support for Different Decision Frequencies: Decision can range on continues from one of kind to repetitive decisions. One of kind decisions are typically handled by an ad hoc decision support system. An ad hoc decision support system is concerned with situations or decisions that come up only a few times during the life of organization for example a company might be faced with a decision on whether to build a new manufacturing facility in another area of the country. An institutional decision support system handles situations or decisions that occur more than ones, usually several times a year of more. An institutional decision support system is used repeatedly & refined over the years. 3. Support for Different Problem Structures: As discussed previously decisions can range from highly structured & programmed to unstructured & non-programmed. Highly structured problems are straightforward requiring known facts & relationship semi-structured or unstructured problems on the other hand are move complex. 4. Support for Various Decision Making: Decision support system can often help for managers at different levels when the organizational operational level managers can be assisted with daily and routine decision making. Tactical level decision makers can be supported with analyzer tools that assist in proper planning and control. At the strategic level decision support system can help managers by providing analysis for long-term decisions required by the internal and external infrastructure.  Comparison of Information System: - Decision Support System & Management
  39. 39. Decision support system differs from the management information system in numerous ways including the types of problems. Factor Decision support system Management information system Problem A decision support The management information Types system is good at handling system is normally used only unstructured problems that with more structured problems. cannot be easily programmed. Users A decision support The management information system supports individual system supports primarily the small groups and the entire organization. In the short run organization. In the short users have less control over on run user typically have management information system. more control over a decision support system. Support A decision support This is not true of all system support all aspects management information system and phases of decision some make automatic decision making it does not replace and replace the decision maker. the decision maker people still make the decisions. Emphasis A decision support The management information system emphasis actual system usually emphasized decision and decision information only. making styles. Approach A decision support The management information system is direct support system is typically an indirect system that provides support system that uses interactive support on the regularly produced reports. computer screen. Systems A decision support The management information system provides decisions system using printed reports that support is usually on-line & maybe delivered to managers related to real time. once a week no immediate results. Speed Decision support system The management information is flexible & can be system response time is usually implemented by users to longer. usually take time to develop & is better able to respond to user request. Output Decision support system The management information reports are usually screen system however typically is oriented with the ability to oriented towards printed reports
  40. 40. print the reports with and documents. device. Development Users are usually more The management information directly involves units’ system is several years old and developments. User often writes a shell script that can involvement usually means develops for people who are no better system that provides longer performing the work superior supports. supported by the management information system.  Components of Decision Support System: At the core of decision support system is a database & model base. In addition typical decision support systems contains a dialogue manager which allows decision makers to easily access & manipulate the decision support system & use comment business terms & phrases. External dbase access allows the decision support system to tap into vast stores of information contained in the corporate database, letting the decision support system retrieve information on inventory, sales, personnel, production, finance, accounting and other areas.  The Model Base: The purpose of the model base in a decision support system is to give decision makers access to variety of model and & assist them in the decision making process. The model base can include Model Management Software (MMS) that coordinates the use of models in a decision support system including financial statistical analysis graphical and project management model. 1. Financial Model: -
  41. 41. It provides cash flow, internal rate of return and other investment analysis spreadsheet programs such as excel is often used for this purpose. In addition more sophisticated financial planning and modeling programs can be employed. Some organization develops customized financial models to handle the unique situation and problems faced by the organization. 2. Statistical Analysis Model: It can provide summary statistics trend projections, hypothesis testing and more. These programs are available on both personnel & mainframe system. Many software packages including SPSS & SAS provide outstanding statistical analysis for organization of all sizes. These statistical problems can compute averages, standard deviation, correlation & coefficient and regression analysis; do hypotheses testing. Some statistical programs also have the ability to produce graphic displays that reveal the relationship between variables or quantities. 3. Graphical Model: These are software packages that assist decision makers’ decision making in designing, developing & using graphic displays of data & information PC programs that can perform this type of analysis. 4. Project Management Model: These are used to handle and coordinate large project; they are also used to identify critical activities and tasks that could delay or jeopardize an entire project if they are not completed in time & cost effectively. Some of these programs can also determine the best way to speed up a project by using additional resources, including cash, labor & equipment. This allows managers to keep tight control over projects of all size & types.  The Dialogue Manager: The dialogue manager allows users to interact with the decision support system to obtain information. It assists with all aspects of communications between the user & the hardware and software that constitute the decision support system. In a practical sense to most decision support system users the dialogue manager is the decision support system. Upper-level decision makers are often less interested in where the information come from or how it write a shell script that can gathered than that the information is both understandable & accessible.  The Group Decision Support System (GDSS): The decision support system approach has resulted in better decision making for all levels of individual users. However many decision support system approaches & techniques are not suitable for a group decision making environment. Although not all workers & managers are involved in committee meets and group decision making sessions. Some tactical and strategic level managers can spend time for group decision. This can be done by group decision support system.
  42. 42.  Characteristics of Group Decision Support System: The following are the characteristics of the group decision support system. 1. Special Design: The group decision support system approach acknowledges that special procedure devices and approaches are needed in group decision making settings. These procedures must faster, creative thinking, effective communication and group decision making technique. 2. Ease of Use: Like an individual decision support system, a group decision support system must be easy to learn and use. Systems that are complex and hard to operate will seldom be used. Many groups have less tolerance that does individual decisions makers for poorly developed systems. 3. Flexibility: Two or more decision makers working on the same problem may have different decision making styles and preferences. Each managers makes decisions in a unique way, an effective group decision support system not only has to support the different approaches that managers perspectives into a common view of the task at hand. 4. Decision Making Support: A group decision support system can support different decision making approaches including the Delphi approach in which group decision makers are geographically dispersed throughout the country or the world. This approach encourages diversity among group members and fosters creativity and original thinking in decision making. Brain storming which often involves members offering ideas “off the top of their heads”. The group consensus forces members in the group to reach unanimous decisions with nominal group technique, each decision maker can participate; this technique encourage feedback from individual group members. 5. Anonymous Input: Many group decision support systems allow anonymous input, where the person giving the input is not known to other group members. For example some organizations use a group decision support system to help rank the performance of managers. Anonymous input allows the group decision makers to concentrate on the merits of the input without considering who gave it. In other words input given by a top-level manager is giving the same consider action as input from lower-level employees to other members of the group. 6. Reduction of Effective Group Behavior: One key Character of any group decision support system is the ability to suppress or eliminate group behavior that is counter productive or harmful to effective decision making. In some group settings dominant individuals can take
  43. 43. over the discussion which can prevent other member of the group from presenting creative alternative. 7. Parallel Communications: With traditional group meeting people must take turns addressing various issues. One person normally tasks at a time with group decision support system it’s possible for every group member to address issue or make comments at the same time by entering them to PC or workstation. 8. Automated Record Keeping: Most group decision support system have the ability to keep detailed records of a meeting automatically. Each comment that is meeting into a group member’s PC or workstation can be anonymously recorded.  Group Decision Support System Software: Group decision support system software often called groupware or workgroup software helps with joint workgroup scheduling, communication and management. One popular package Lotus Notes can capture, store, manipulate and distribute memos and communication that are developed working group project. This software allows users to setup electronic bulletin boards, schedule, and group meetings and use email in a group setting. Other software is Collabra Share, Open Mind and Team Ware.  Group Decision Support System Alternatives: Group decision support system can take on a number of alternative network configurations depending on the needs of group. 1. The Decision Room: This is ideal for situation in which decision makers are located in the same building or geographic are and decision makers are occasional users of group decision support system. The decision room alternative combines face-to-face verbal interaction with the client. 2. The Local Area Decision Network: The local area decision network can be used when group members are located in the same buildings or geographic area and under conditions in which group decision making is frequent. 3. The Teleconferencing Alternative: The teleconferencing alternative is used for situations in which the decision frequency is low and location of group member is distant. Using long distance communication technology there decisions rooms are electronically connected in teleconference and video conference. This provides high degree of flexibility. 4. The Wide Area Decision Network: The wide area decision network is under for situations in which the decision frequency is high and the location of group member is distant. This group decision

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