MIS CHAPTER FOUR.ppt

CHAPTER FOUR
Applications in Business and
Management

Chapter Contents
 Transaction Processing and Information
Reporting Systems
 Managerial Decision Making and Decision
Support Systems
 Office Automation Systems
 Business Information Systems

4.1 Transaction Processing and
Information Reporting Systems
1) Transaction processing systems
 Transaction processing systems are information
systems that process data resulting from the
occurrence of business transactions.
 A transaction is a record of an event, which the
business must respond.

Transaction processing
systems…Cont’d
 For example, data about an order that has just
been recorded constitute a transaction. The
company responds to this transaction by:
 filling the order
 adjusting its inventory to account for the items used to
fill the order
 generating a packing slip
 packaging and shipping the order
 billing the customer

systems…Cont’d
 The transaction thus triggers a whole series of
events that eventually update the firm's
business records and produce appropriate
documents.
 Thus, transaction processing activities are
needed to capture and process such data or the
operations of a business would grind to a halt.

systems…Cont’d
 The transaction processing cycle
 Transaction processing systems capture and
process data describing business transactions.
 Then they update organizational files and
databases and process a variety of information
products for internal and external use.

systems…Cont’d
 Transaction processing systems go through a
five-stage cycle of:
 data entry
 transaction processing
 file and database processing
 document and report generation, and
 inquiry processing activities

systems…Cont’d
1) The Data Entry Process
 The input activity in transaction processing systems
involves a data entry process. In this process, data is
captured or collected by recording, coding, and editing
activities. Then, data may be converted to a form that
can be entered into a computer system.
 Data entry activities have always been a bottleneck in
the use of computers for transaction processing. It has
always been a problem getting data into computers
accurately and quickly enough to match their awesome
processing speeds.
 Traditional manual data entry methods are being replaced
by direct automated methods.

systems…Cont’d
 Methods of data entry
 Traditional Data Entry
 Source Data Automation
 Electronic Data Interchange /EDI/

systems…Cont’d
 Traditional Data Entry
 These methods typically rely on the end users of
an information system to capture data on source
documents such as purchase orders, payroll time
sheets, and sales order forms.
 These source documents are then usually
accumulated into batches and transferred to data
processing professionals specializing in data
entry.

systems…Cont’d
 Periodically, the source documents are subjected to
one of the following additional data entry activities:
 The data is converted into a machine-readable medium,
such as magnetic tape or magnetic disks. This means,
using such devices as key-to-tape machines and key-to-
disk systems. These media are then read by input devices
that enter the data into a computer system.
 The data from source documents could alternatively be
directly entered into a computer system, using a direct
input device (such as the keyboard) without the use of
machine readable media.

systems…Cont’d
 Problems with this data entry method:
 It requires too many activities, people, and data
media.
 It results in high costs and increases the potential
for errors.
 Therefore, the response of both end users and
the computer industry has been to move
toward source data automation.

systems…Cont’d
 Source Data Automation
 captures data as early as possible after a transaction or
other event occurs by using point-of-sale (POS) terminals.
 captures transaction data as close as possible to the
source that generates the data.
 salespersons at POS terminals capture and edit data right on the
sales floor.
 captures data by using machine- readable media initially
(bar-coded tags and mag stripe credit cards), instead of
preparing written source documents.
 captures data directly without the use of data media by
optical scanning of bar codes printed on product
packaging.

systems…Cont’d
 Major types of hardware involved include:
 Transaction terminals- such as POS terminals
 Optical character recognition (OCR) devices such as
optical scanning wands and grocery checkout scanners.
 Magnetic ink character recognition (MICR) devices such
as MICR reader/ sorters used in banking for check
processing.
 Other technologies, such as electronic mice, light pens,
voice input, etc.

systems…Cont’d
 Electronic Data Interchange /EDI/
 A fast-growing area of transaction processing - is the EDI.
 This involves the electronic transmission of business
transaction data over telecommunications links between
the computers of trading partners. (Organizations and
their customers and suppliers).
 Data representing a variety of business transactions (Such
as purchase orders, invoices, requests for quotations, and
shipping notices) is electronically transmitted using
standard document message formats without paper
documents or human intervention.

systems…Cont’d
 Some of the benefits of EDI are:
 Reductions in paper, postage, and labor costs;
 faster flow of transactions;
 reductions in inventory levels;
 better customer service.

systems…Cont’d
 Transaction processing - Transaction processing
systems process data in two basic ways: Batch and
real-time processing.
a) Batch processing
 In batch processing system, transaction data is
accumulated over a period of time and processed
periodically.
 In such a system, not only are the transaction data for a
particular application accumulated into batches, but a
number of different transaction processing jobs are run
periodically (daily, weekly, monthly).

systems…Cont’d
 The rationale for batch processing is that the
grouping of data and the periodic processing
of jobs more efficiently uses computer system
resources, compared to allowing data and jobs
to be processed in an unorganized, random
manner.
 Of course, this efficiency, economy, and
control are accomplished by sacrificing the
immediate processing of data for end users.

systems…Cont’d
 Advantages of batch processing
 Is an economical method when large volume of
transaction data must be processed.
 It is ideally suited for many applications where it
is not necessary to update databases as
transactions occur, and where documents and
reports are required only at scheduled intervals.

systems…Cont’d
 For example:
 customer bank statements may be prepared on a
monthly basis
 payroll processing might be done on a weekly
basis
 customer bank balances are updated on a daily
basis.

systems…Cont’d
 Disadvantages
 Master files are frequently out-of-date between
scheduled processing, as are the periodic
scheduled reports that are produced.
 Immediate updated responses to inquiries cannot
be made.
 For these reasons, more and more computer
applications use real-time processing.

systems…Cont’d
b) Real-time processing
 Real-time processing systems process transaction data immediately
after they are generated and can provide immediate output to end
users.
 Data is fed directly into the computer system from online
terminals, without being sorted, and it is always stored online in
direct access files.
 Files and databases are always up to date since they are updated
whenever data is originated, regardless of its frequency.
 Responses to end users' inquiries are immediate, since
information stored on direct access devices can be retrieved
almost instantaneously.
 Real-time processing depends on telecommunication networks of
online terminals and computers.

systems…Cont’d
 Advantages of real-time processing
 Real-time processing systems provide immediate
updating of files and immediate responses to user
inquiries.
 particularly important for applications where a
high frequency of changes must be made to a
database during a short time to keep it updated.

systems…Cont’d
 Disadvantages
 The many advantages of real-time processing systems
must be balanced with extra costs and security
precautions that are necessary.
 Because of the online, direct access nature of real-time
processing, special precautions must be taken to protect
the contents of databases.
 Thus, many real-time systems use magnetic tape files
 as control logs (to record all transactions made)
 as backup files (by periodically making a magnetic tape copy of a
file)

systems…Cont’d
 Also, more controls have to be built into the
software and processing procedures to protect
against unauthorized access or accidental
destruction of data.
 However, many computer-using firms are
willing to pay this price for the speed,
efficiency, and superior service that real-time
processing provides.

systems…Cont’d
 File and database processing
 Also known as file and database maintenance. This
emphasizes that an organization's files and databases must
be maintained by its transaction processing systems so
that they are always correct and up to date.
 For example:
 A credit sale made to a customer will cause the customer's
account balance to be increased and the amount of inventory on
hand to be decreased.
 These and other changes must be reflected in the data records
stored in the files and databases of the company.

systems…Cont’d
 Document and Report Generation
 Documents produced by transaction processing
systems are called transaction documents.
 There are several major types of such documents:
 Action documents - are documents that initiate
actions or transactions on the part of their recipient.
 For example - A purchase order authorizes a
purchase from a supplier. A paycheck authorizes a
bank to pay an employee.

systems…Cont’d
 Information documents - These documents relate,
confirm, or prove to their recipients that transactions
have occurred.
 For example - sales receipts, sales order confirmations,
customer invoices, etc.
 Turnaround documents - some types of transaction
documents are designed to be read by magnetic or
optical scanning devices. Forms produced in this
manner are known as turnaround documents because
they are designed to be returned to the sender.

systems…Cont’d
 For example: - Many computer - printed
invoices consist of a turnaround portion, which is
returned by a customer along with his or her
payment.
 The turnaround document can then be
automatically processed by optical scanning
devices.
 Thus, turnaround documents combine the
functions of an action document (the turnaround
portion) and an information document (the receipt
portion).

systems…Cont’d
 Inquiry Processing
 Transaction processing systems frequently support the
real-time interrogation of online files and databases by
end users.
 This activity of transaction processing systems depends
on the use of telecommunications networks and database
management query languages.
 It allows end users at workstations throughout an
organization to make inquiries and receive responses
concerning the results of transaction activity.

systems…Cont’d
 For example Employees can check on the
 status of a sales order
 the balance in an account, or
 the amount of stock in inventory, and receive
immediate responses at their workstations.

 Attributes of Information Quality
 We defined information as data that has been
transformed into a meaningful and useful form
for people.
 But what characteristics make information
meaningful and useful to managers? What
qualities give it value for managerial end users?
 One way to answer these important questions is
to examine the characteristics or attributes of
information quality.

 It is useful to think of information as having the
three dimensions of time, content, and form.
 Time Dimension
 Timeliness - Information should be provided when it is
needed.
 Currency - Information should be up-to-date when it is
provided.
 Frequency - Information should be provided as often as
needed.
 Time Period - Information can be provided about past,
present, and future time period.

 It is not enough to provide managers with
historical (backward looking) information and
analysis. Future (forward-looking)
information and analysis concerning trends
developing inside the organization or in the
business environment must also be provided.
 e.g. Providing forecasts of expected trends in
sales and in factors that might affect sales
performance.

 Content Dimension - (most important dimension)
 Accuracy - Information should be free from errors. What
good is information that is attractive and timely if it is
also wrong? Thus, accuracy is a vital attribute.
 Relevance - Information should be related to the
information needs of a specific recipient for a specific
situation. If information is correct but not really related to
one's information needs, then it is not relevant, and very
valuable.
 Completeness - All the information that is needed should
be provided. Even if information is accurate and relevant,
it may be inadequate because it is incomplete.

 Conciseness - Only the information that is needed should be
provided. Flooding managers with unnecessary information
must be restrained.
 Scope - Information can have a broad or narrow scope, or an
internal or external focus
 Performance - Information must frequently reveal the
performance attained by individuals or organizations.
Therefore, information can be provided
 about activities accomplished during a specific period
 about the progress made toward specified objectives
 about resources accumulated by individuals or
organizations at a point in time. (Financial assets, plant
&equipment, product inventories, personnel, etc).

 Form Dimension
 Clarity - Information should be provided in a form that is
easy to understand
 Detail - Information can be provided in detail or
summary form. An information system can produce
 detailed listings of all sales transactions
 sales product summary reports, which only show sales
totals for each product, or
 more condensed executive summary reports, which show
sales totals by each department in a retail store.

 Order - Information can be arranged in a
predetermined sequence
 Presentation - Information can be presented
in narrative, numeric, graphic or other forms
(a mix or combination of all )
 Media - Information can be provided in the
form of printed paper documents, video
displays, or other media such as voice
response.

Information reporting Alternatives
 Information reporting systems provide a variety of
information products to managers. The three major
reporting alternatives provided by such systems are
summarized below:
 Periodic Scheduled Reports
 uses a pre-specified format designed to provide managers
with information on a regular basis.
 For example: weekly sales analysis reports, monthly
financial statements

 Exception Reports
 In some cases, reports are produced only when
exceptional conditions occur.
 In other cases, reports are produced periodically but
contain information only about these exceptional
conditions.
 such exception reporting promotes management by
exception, instead of overwhelming managers with
periodic detailed reports.
 For example, a credit manager can be provided with a
report which contains only information on customers who
exceed their credit limit.

 Demand Reports and Responses
 Information is provided whenever a manager
needs it.
 For example, DBMS query languages and report
generators allow managers at online workstations
to get immediate responses or reports as a result
of their requests for information.
 Thus, managers do not have to wait for periodic
reports.

4.2. Managerial Decision Making
and Decision Support Systems
 Managerial Decision Making
 Information systems can significantly support
managerial decision making
 Understanding how information systems can
contribute to each step of the decision making
process is vital.

Managerial Decision Making
Information and Decision Making
 Herbert A. Simon's model divides the decision
making process into the following three stages:
 Intelligence activities - search the environment and
identify events and conditions requiring a decision.
 Design activities- Develop and evaluate alternative
courses of action.
 Choice activities- select a particular course of action

Managerial decision making
 Other researchers have emphasized that the
implementation of a decision is as important
to its success as the steps that lead up to
making it. So, a fourth stage
 Implementation activities- Implement the
decision and monitor its success.
 Each of these stages of decision making has
unique information requirements.

 Information for the intelligence stage
 Information systems can help in the intelligence
stage by providing information about internal and
external conditions that might require decision
making by appropriate managers.
 Thus information systems can be used to scan
 the operations of an organization or the activities taking
place in the business environment
 the external environment to identify potential decision
situations.

 Sales analysis reports can be furnished to managers
 Periodically
 when exceptional sales situations occur,
 or on demand.
 These help managers identify the status of sales
performance, sales trends, and exceptional sales
conditions for the firm
 Information from market research studies and
external databases could also help managers identify
changes in consumer preferences or competitive
activity.

 A major information system capability is needed in this stage.
Managers should have the ability to make ad hoc inquiries,
that is, unique, unscheduled, situation- specific information
requests.
 Pre-specified reports provided to managers periodically, on
an exception basis, or even on demand are not satisfactory.
 such information products may not give a manager enough
information to recognize whether a problem or opportunity
exists.
 For Example - A disturbing sales trend can be brought to a manager's
attention by a weekly sales report that spotlights unusual sales
activity. However, the manager may need to make further inquires to
isolate the sales problem. Therefore information systems frequently
provide a query language capability

 Information for the Design stage
 The design stage of decision making involves
developing and evaluating alternative courses of
action.
 A major consideration here is whether the
decision situation is programmable or non-
programmable. Or more popularly structured or
unstructured.

 Structured decisions
 involve situations where the procedures to follow when a
decision is needed can be specified in advance.
 structured problems are repetitive and routine and have a
specified procedure for handling them.
 A structured decision may involve what is known as a
deterministic or algorithmic decision.
 In this case, a decision's outcome can be determined with
certainty if a specified sequence of activities is performed.

 Or a structured decision may involve a
probabilistic decision situation.
 In this case, enough probabilities about possible
outcomes are known that a decision can be
statistically determined with an acceptable probability
of success.
 Unstructured decisions
 involve decision situations where it is not
possible or desirable to specify in advance
most of the decision procedures to follow.

 They are novel and non routine, with no-agreed-
upon procedure to follow.
 Many decision situations in the real world are
unstructured because they are subjected to too many
random or changeable events or involve too many
unknown factors or relationships.
 At most, many decision situations are semi
structured. That is, some decision procedures can be
pre-specified, but not enough to lead to a definite
recommended decision.

 Information systems can support such
decisions by providing
 the ability to make ad hoc inquiries for
information in company databases
 the ability to reach a decision in an interactive
process with the help of a decision support
system.

 Information for the choice stage
 Information systems can help managers in the
choice stage in several ways.
 Managers can be provided with summarized and
organized information emphasizing the main
points (such as major assumptions, resource
requirements, and expected results) of each
decision alternative.

 Information for the implementation stage
 Information systems can help managers monitor
the successful implementation of a decision.
Feedback about business operations affected by a
decision helps a manager assess the decision's
success or failure, and whether follow-up
decisions are needed.

Information and Management
(1) Information and the functions of
management
 Management is a process of leadership involving
the management functions of
 Planning
 Organizing
 Staffing
 Directing, and
 Controlling

Information and
Management…Cont’d
 Planning: involves the development of long-and
short-range plans requiring the formulation of goals,
objectives, strategies, policies, procedures, and
standards.
 Establishing goals and developing strategies & tactics
 Organizing: involves the development of
organizational structure that groups, assigns, and
coordinates activities by delegating authority,
offering responsibility, and requiring accountability.

Information and
 Staffing: involves the selection, training, and
assignment of personnel to specific
organizational activities.
 Directing: involves leading an organization
through communication, inspiration, and
motivation of personnel.
 Controlling: involves evaluating and
adjusting organizational performance.

Information and
 Information systems can assist managers by providing
information needed to accomplish each of the functions of
management.
 For Example:
 Information systems can help manager's plan by providing both
planning data and planning models.
 Information systems can help managers organize and staff their
organization with human resources. For example, information from a
personnel database and software for personnel requirements
forecasting and an employee skill inventory can help managers
organize and staff present and proposed work groups and project
teams. This helps ensure that employees with the necessary skills will
be available when needed.

Information and
 Information systems can also help managers direct
their organizations.
 For Example, the electronic mail capabilities of office
automation systems make it easier for managers to
communicate with people in their organization.
 Finally, information systems play a major role in the
control function of management.
 Through such information products as exception reports,
they help managers recognize deviations in performance
from standards, forecasts, and budgets.

Information and
(2) Information and the Roles of Management
 A manager has the authority and status to
play the following roles:
 Interpersonal roles - A manager should be
 a leader of subordinates
 a liaison with the external environment, and
 a figure head when ceremonial duties arise

Information and
 Information roles - A manager should be
 a monitor of information on organizational
performance
 a disseminator of information on organizational
within the organization
 a spokesperson to the external environment.

Information and
 Decision roles - A manager should be
 an entrepreneur in making innovative changes that affect
the organization.
 a disturbance handler when unanticipated events occur
 a resource allocator in determining the distribution of
financial and other resources within the organization and
 a negotiator who resolves both internal and external
disputes.

Information and
 Information systems help managers carryout each of these
roles by providing relevant information.
 Another point to remember is that many of the ten roles of
management can be related to the five managerial functions.
 For Example,
 The interpersonal role of a leader is directly related to the
organizing, staffing, and directing functions.
 The informational roles of a monitor and disseminator are
directly related to the functions of directing and
controlling
 The decisional roles of an entrepreneur and resource
allocator are directly related to the planning function.

Information and
 So, since information systems can supply
information to support these managerial
functions, then they can also supply the
information needed to perform the diverse
roles of management.

Information and
(3) Information and the levels of management
 The activities of management can be subdivided
into three major levels:
 Strategic management - strategic planning and control
of overall organizational direction by top management.
 Tactical management - tactical planning and control of
organizational sub units by middle management.
 Operational management - planning and control of
day-to-day operations by supervisory management.

Information and
Strategic
Management
Tactical
Management
Operational
Management
Unstructured
Semistructured
Ad Hoc
Unscheduled
summarized
Infrequent
Forward Looking
External
Wide Scope
Prespcified
Scheduled
Detailed
Frequent
Historical
Internal
Narrow Focus
Structured
Decision structure Information characteristics

Information and
 The figure emphasizes that the type of information required
by managers is directly related to the level of management
and the structure of decision situations they face.
 We can generalize that higher levels of management require
more ad hoc, unscheduled, infrequent summaries, with a wide,
external, forward looking scope.
 On the other hand, lower levels of management require more
pre-specified, frequently scheduled, and detailed information,
with a narrow internal, and historical focus.
 Decisions at the operational level tend to be more structured,
those at the tactical level more semi-structured, and those at
the strategic level more unstructured.

Information and
 Therefore, information systems must be
designed to produce a variety of information
products to meet the changing decision needs
of managers at different levels of an
organization.

Decision Support systems
 Information reporting versus decision
support systems

Information
reporting systems
Decision support
systems
Information provided
Information form and
frequency
Information format
Information processing
methodology
Periodic, exception, and
demand reports
Pre-specified, fixed
format
Information produced by
extraction and
manipulation of
operational data
Interactive inquiries and
responses
Ad hoc, flexible, and
adaptable format
Information produced by
analytical modeling of
operational and external
data

Information reporting
systems
Decision support
systems
Decision Support provided
Type of support
Stages of decision making
supported
Types of decisions
supported
Type of decision maker
supported
Provide information about
the performance of the
organization
Support the intelligence
and implementation stages
of decision making
Structured decisions for
operational and tactical
planning and control
Indirect support designed
for many managers
Provide information and
decision support techniques
to confront specific
problems or opportunities
Support the intelligence,
design, choice, and impl.
stages of decision making
Semi-structured and
unstructured decisions for
tactical and strategic
planning and control
Direct support tailored to
the decision making styles
of individual managers

 Decision support systems
 are a major category of MIS.
 are computer- based information systems that provide interactive
information support to managers during the decision making process.
 Decision Support Systems use
 analytical models,
 Specialized databases
 a decision maker's own insights and judgments, and
 an interactive, computer-based modeling process to support the
making of semi structured and unstructured decisions by individual
managers.
 Therefore, they are designed to be ad hoc, quick-response
systems that are initiated and controlled by managerial end
users.

 Components of a Decision support system.
 Hardware resources
 Executive workstations connected by
telecommunications networks to other computers
and devices in the organization provide the primary
hardware resource for a DSS.
 personal computers can be used on a stand-alone
basis, or they can be connected by networks to larger
computer systems for access to other DSS software,
model, and data resources.

Software resources
 DSS software packages are called DSS generators. They
contain modules for database, model, and dialogue
management.
 The database management module provides for the creation,
interrogation, and maintenance of the DSS database using
capabilities typically found in DBMS packages.
 A model base management module provides the ability to
create, maintain, and manipulate the mathematical models in the
model base using capabilities provided by modeling packages,
electronic spreadsheet packages, and user-written programs.
 A dialogue generation and management module provides an
attractive user interface that supports interactive input and output
by managers.

The Decision Support system concept
Management
Workstation
DSS software
Model Base
Management
Dialog
Generation and
Management
Database
Management
Manager or
Staff Specialists
Model
Base
Data
Base

Decision support systems
 Data resources
 A DSS database contains data and information extracted
from the databases of the organization, external databases,
and a manager's personal databases.
 It includes summarized data and information most needed
by the manager for specific types of decisions.
 Model resources
 The model base includes a library of mathematical
models and analytical techniques stored in a variety of
program modules and files.

 People resources
 A DSS can be used by managers or their staff
specialists to explore decision alternatives.
 However, the development of large or complex
DSSs and DSS generator software packages is
typically assigned to information systems
specialists.

The DSS model base
 Unlike management reporting systems, DSSs rely on
model bases as well as databases as vital system
resources.
 A DSS model base is an organized collection of
mathematical models. It includes:
 Models developed to support specific decisions and
general-purpose models.
 Models representing simple computational and analytical
routines as well as complex models that mathematically
express the relationships among a variety of variables.

 For Example:
 Models might express simple accounting
relationships among variables, such as Revenue-
Expenses = profit
 Or the DSS model base could include models and
analytical techniques used to express more
complex relationships among variables such as:
 Linear programming models
 Multiple regression forecasting models
 Capital budgeting present value models.

 Using Decision Support Systems
 Using a DSS involves an interactive analytical modeling process.
Typically, a manager or a staff specialist uses a DSS software
package at his/her workstation. This allows managers to make
inquiries and responses and issue commands using a key board, a
mouse, a touch screen, or possibly voice input.
 For example, using a DSS software package for decision support may
result in a series of displays in response to alternative "what if?"
changes keyed in by a manager.
 This differs from the demand responses of information reporting
systems, since managers are not demanding pre-specified
information. Rather, they are exploring possible alternatives. Thus,
they do not have to specify their information needs in advance.
 Instead, the DSS interactively helps them find the information they
need to make a decision.

 Analytical Modeling Alternatives - Using a
decision support system involves four basic types of
analytical modeling activities:
 What - if Analysis
 In what- if analysis, an end user makes changes to variables, or
relationships among variables, and observes the resulting
changes in the values of other variables.
 For example, a spreadsheet user might change a revenue amount
(variable) or a tax rate formula (a relationship among variables)
in a simple financial spreadsheet model.
 Then he/she could command the spreadsheet program to instantly
recalculate all affected variables in the spreadsheet.
 What happens to sales if advertising expense is cut by 10%?

 Sensitivity Analysis
 Is a special case of what if analysis.
 Typically, the value of only one variable is changed
repeatedly, and the resulting changes on other variables
are observed.
 Sensitivity analysis is used when decision makers are
uncertain about the assumptions made in estimating the
value of certain key variables.
 Let’s cut advertising by 1000 birr repeatedly so we can
see its relationship to sales.

 Goal seeking Analysis
 Goal seeking analysis reverses the direction of the
analysis done in what if and sensitivity analysis.
 Instead of observing how changes in a variable
affect other variables, goal seeking analysis (also
called "how can" analysis) sets a target value (a
goal) for a variable and then repeatedly changes
other variables until the target value is achieved.
 How can we achieve 2 million Birr in net profit
after taxes?

 Optimization Analysis
 Is a more complex extension of goal seeking analysis.
 Instead of setting a specific target value for a variable, the goal
is to find the optimum value for one or more target variables,
given certain constraints.
 Then one or more other variables are changed repeatedly,
subject to the specified constraints, until the best values for the
target variables are discovered.
 Optimization is typically accomplished by special- purpose
software packages for optimization techniques such as linear
programming, or by advanced DSS generators.
 What is the best amount of advertising to have, given our
budget and choice of media?

4.2. Business Information Systems
Business Information Systems
Marketing Manufacturing Accounting & Finance Human Resources
-Order Entry
-Call Reporting
-Marketing Research
-Marketing
Intelligence
-Marketing Mix Subsystem
-Sales Forecast
-Plant Floor
Systems
-Quality Inspection
-Order Processing
-Accounts
Receivable
-Accounts Payable
-Payroll
-Inventory Control
-General Ledger
-Product Design &
Engineering
-Production Scheduling
-Quality Control
-Facilities Planning
-Production Costing
-Facilities and Inventory
Management
-Human Resource
Planning
-Recruiting & Workforce
Management
-Compensation & Benefits
-Government Reporting & Labor
Relations Support
-Employee Information
System
-Applicant Tracking
-Position Tracking
-Skills Inventory Maintenance
-Benefits Maintenance
-Financial
Forecasting &
Control
-Funds Management
-Internal Auditing
Transaction
Processing Systems
Management &
Professional Support
Systems

(1)Marketing Information Systems
 The computer based information systems support
the marketing function in the following areas:
External
Databases &
Information
Bases
Boundary-Spanning
Subsystems
Transaction Processing
Subsystems
Marketing
Research
Marketing
Intelligence
Order Entry
Invoicing
Call Reporting
Marketing-Mix Subsystems
Product
Subsystem
Place
Subsystem
Promotion
Subsystem
Price
Subsystem
Sales
Forecasting
Subsystem
Customer & Prospect
Data
Competitor
Data
Transaction
Data
Internal
Databases &
Information
Bases

Business Information Systems…Cont’d
 Sales management
 plan and monitor sales performance of products and sales
people.
 produces sales analysis reports which analyze sales by
product, product line, customer, sales person, and sales
territory.

Business Information
Systems…Cont’d
 Product management
 plan and control the performance of specific products
 computers can help provide price, revenue, cost, and growth
information for existing products and new product
development.
 Sales forecasting
 marketing managers use market research data, historical
data, promotion plans, and statistical forecasting models to
generate short-range and long-range sales forecasts.
 Market research
 Computers and statistical analysis software help the market
research activity collect, analyze, and maintain information
on a wide variety of market variables subject to continual
change.

(2)Manufacturing Information
Systems
 Computer Integrated Manufacturing (CIM) is an
overall concept which stresses that the goals of
computer use in factory automation must be to
 Simplify production processes, product design, and
factory organization.
 Automate production processes, and business
functions that support them with computers and
robots.
 Integrate all production, and support processes using
computers and Tele networks.

Manufacturing information system
 fig2
Plant Floor
Systems
Production
Schedule
Quality Control
Facilities
Planning
Production
Costing
Logistics &
Inventory
Management
Quality
Inspection
Order
Processing
Manufacturing
Databases
Product Design
& Engineering
Management & Knowledge Work
Transaction Processing

Systems…Cont’d
 For Example:
 Engineers design
 better products using both CAE and CAD
 better production processes with CAPP - computer- aided
process planning
 Computers are also used to help
 plan the types of material needed in the production
process - called MRP
 integrate MRP with production scheduling and shop floor
control known as MRP II. (Manufacturing resource
planning)

Systems…Cont’d
 computer - aided manufacturing (CAM) may be used
to help manufacture products. This can be
accomplished by:
 Monitoring and controlling the production process in a
factory - Shop floor control
 Directly controlling a physical process - Process control
 Directly controlling a machine tool - Machine control
 Directly controlling a machine with some human like
capabilities- Robotics.

Systems…Cont’d
(3)Human Resource Information Systems
 Some of the major applications of
information systems that support HRM are:
 Staffing
 Training and Development
 Compensation

Systems…Cont’d
 Staffing
 Personnel record-keeping system - keeps track of
additions, deletions, and other changes to the records in a
personnel database. Changes in job assignments and
compensation, or hiring and terminations are examples.
 Employee skills inventory system - uses the employee
skills data from a personnel database to locate employees
within a company who have the skills required for
specific assignments and projects.
 Personnel requirements forecasting - to assure a
business an adequate supply of high-quality human
resources.

Systems…Cont’d
 Training and Development
 Computer-based training programs and appraisals of
employee job performance are available to help this area
of HRM.
 Compensation analysis
 Information systems can help analyze the range and
distribution of employee compensation wages and salaries
incentive payments fringe benefits with in a company, and
make comparison with compensation paid by similar
firms.

Systems…Cont’d
(4)Accounting Information systems
 Operational accounting systems - computer-based
information systems record and report the flow of funds
through an organization on a historical basis and produce
important financial statements such as balance sheets
income statements
 Management accounting systems - such systems also
produce forecasts of future conditions such as projected
financial statements, and financial budgets.
 They emphasize
 cost accounting reports,
 the development of financial budgets and projected financial statements.
 Analytical reports comparing actual to forecasted performance.

Systems…Cont’d
(4)Financial Information systems
 Computer-based financial information
systems support managers in decisions
concerning
 the financing of a business, and
 the allocation and control of financial resources
within a business

Systems…Cont’d
 Major financial information categories
include:
 Capital Budgeting
 involves evaluating the profitability and financial
impact of proposed capital expenditures
 long-term expenditure proposals for plant and
equipment can be analyzed using a variety of
techniques:
 present value analysis of expected cash flows
 probability analysis of risk

Systems…Cont’d
 Financial Forecasting
 A variety of statistical forecasting packages provide
techniques that result in financial forecasts of national
and local economic conditions, wage levels, price
levels, and interest rates.
 Financial Planning
 Financial planning systems use planning models to
evaluate the present and projected financial
performance of a business.
 They also help determine the financing needs of
business and analyze alternative methods of financing.

4.3 Office Automation Systems
 Introduction
 Office machines such as electric typewriters,
copying machines, and dictation machines have
made office work easier and more productive.
 But the mechanized office is giving way to the
automated office. Investment in computer-based
workstations and other automated equipment is
transforming traditional manual office methods
and paper communications media.

Office Automation…cont’d
 Office automation systems are computer-based information
systems that collect, process, store, and transmit electronic
messages, documents, and other forms of communications
among individuals, work groups, and organizations.
 Such systems can increase the productivity of managerial end
users and other professional and staff personnel by
significantly reducing the time and effort needed to produce,
access, and receive business communications.
 Think of office automation systems as computer-based
information systems involving input, process, output, storage,
and control.

 For example, one can speak into a telephone
(input) and have the voice message digitized
(processing), temporarily placed on a
magnetic disk (storage), then transmitted to
another end user's telephone as a voice mail
message when requested (output), under the
direction of a voice mail program (control).
 Major office automation systems are
discussed below:

(1) Electronic publishing systems
a)Word processing
 Involves manipulating text data (characters, words,
sentences and paragraphs) to produce information
products in the form of documents (letters, memos, forms,
and reports).
 Word processing depends on the use of a word processing
software package. This package has helpful features such
as spelling checker, thesaurus, and style checker.

(b)Desktop Publishing
 Organizations can use desktop publishing systems to produce
their own printed materials. They can design and print their
own newsletters, brochures, manuals, and books with several
type styles, graphics, and colors on each page.
 What constitutes a desktop publishing system?
 Minimum hardware & software requirements include:
 A pc computer with a hard disk
 A laser printer or other capable of high-quality graphics
 Software that can do word processing, graphics, and page make up.
 Page composition packages and word processing packages
are typically used to do word processing, graphics, and page-
makeup functions.

(2)Image Processing Systems
(a) Image Processing
 Is another fast-growing area of office automation.
 It allows end users to electronically capture,
process, store, and retrieve images of documents
that may include numeric data, text, handwriting,
graphics, and photographs.
 Examples include: Electronic document
management /EDM/ and Interactive Video.

(3)Electronic Communications systems
 This concept covers a variety of telecommunication
services, such as electronic mail, voice mail, and
facsimile.
 They allow organizations to send messages in text,
video, or voice form or transmit copies of documents
and do it in seconds.
 This practice drastically reduces the flow of paper
messages, letters, memos, documents, and reports
that flood our present interoffice and postal systems.

Benefits of Electronic Office Communications
 Electronic communications systems have been
developed to meet two basic objectives:
 more cost-effective communications and
 more time-effective communications than traditional
written and telephone communications methods.
 Electronic telecommunications systems are designed
to minimize information float and telephone tag.

 Information float is the time (at least several days) when a
written letter or other document is in transit between the sender
and the receiver and thus unavailable for any action or
response.
 Telephone tag is the process of repeatedly calling people,
finding them unavailable, leaving messages, and finding out
later you were unavailable when they finally returned your
calls.
 Electronic communications systems can also eliminate the
effects of mail that is lost in transit, or phone lines that are
frequently busy.
 They can also reduce the costs of labor, materials, and
postage for office communications.

(4)Electronic meeting systems (EMS)
 involve the use of video and audio communications
to allow conferences and meetings to be held with
participants who may be scattered across a room, a
building, a country, or the globe.
 Reducing the need to travel to and from meetings:
 saves employee time
 increases productivity
 reduces travel expenses and energy consumption

There are several variations of electronic meeting systems:
 Teleconferencing
 Is the most widely publicized form of EMS
 Sessions are held in real-time, with major participants being televised
while participants at remote sites take part with voice input of
questions and responses.
 Telecommuting
 Is the use of telecommunications by workers to replace commuting to
work from their homes or from other temporary locations.
 Workers use a computer terminal or microcomputers with
telecommunications capability to access their company's computer
network and databases.

MIS CHAPTER FOUR.ppt

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