SEMESTER - 4 Course: 401: Information System

Unit 1. Introduction

1.1. Data & Information

1.2. Information need and benefits
1.3. Input, Processing, Output, and feedback

Unit 2. Concepts of Systems

2.1. Definition of the system in an organization

2.2. Types of systems
2.2.1. Deterministic probabilistic systems
2.2.2. Open and closed systems

Unit 3. Introduction to various Information Systems

3.1. Business Information Systems

3.1.1. Principal Function System in Business
3.1.2. Product flow and Information Flow
3.1.3. Principal Document Associated with Information Flow
3.2. ERP
3.3. Management Information Systems
3.3.1. Characteristics of MIS
3.3.2. The development process of MIS
3.4. Decision support systems

Unit 4. Transaction Processing Systems

4.1. Overview of Transaction Processing System

4.2. Transaction Processing methods & objectives
4.3. Transaction Processing Activities
4.3.1. Data Collection
4.3.2. Data Editing
4.3.3. Data correction
4.3.4. Data Manipulation
4.3.5. Data Storage
4.3.6. Document Production and Reports
4.4. Traditional transaction processing Applications
4.4.1. Order Processing Systems
4.4.2. Purchase Systems
4.4.3. Accounting Systems

Unit 5. Case Studies Based on TPS

5.1. Online Admission Process

5.2. Hospital Management and
5.3. Hotel Management.
 UNIT - 1 - INTRODUCTION

1.1. Data & Information

Data consists of raw or basic facts such as an employee's name and number of hours
worked in a week, inventory part numbers, and sales orders.
Data consists of raw facts which have value beyond their existence. Data are facts,
events, and transactions that have been recorded. They are the input raw materials from
which information is produced.
Data are facts obtained by reading, observation, counting, measuring, weighting, etc.
which are then recorded Several types of data can be used to
represent these facts.

Data can be of the following types:

Data Represented by
Alphanumeric data Numbers, letters, and other characters
Image data Graphic images, and pictures
Audio data Sound, noise, or tones
Video data Moving images or pictures

When these facts are organized or arranged meaningfully, they become information.
Information is a collection of facts organized in such a way that they have additional values
beyond the value of the facts themselves. Information is data that have been processed in
such a way as to be helpful to the recipient.

Example:
The principal of the school is interested in the total number of students who passed
particular standards rather than the marks obtained by each student.

The terms data and information are frequently used interchangeably. However, data
usually refers to unorganized facts, while information is the knowledge derived from the
manipulation of data. Data represent real-world things. It has little value beyond its existence.

Rules and relationships can be set up to organize data into useful, valuable information.
So the type of information created depends on the relationships defined. among existing data.

Process of converting data into information

The process is a set of logically related tasks performed to achieve a defined outcome
There are some logically related steps that turn data into information, this is called process.
The process of defining relationships among data to create information requires knowledge.
 Knowledge is an awareness and understanding of a set of information and ways that
information can be made useful to support a specific task or reach a decision.

Example:

knowledge required for building railroad layout

-how large an area is available for the layout?
-how many trains will run on the track?
If we want to generate the merit list, then we must have knowledge about
-what are the percentage ranges for different classes.

In some cases, data is organized or processed manually. In other cases, a computer is

used. The following figure shows the process of transforming data into information.

1.2. Information need and benefits

● Information need is an individual or group's desire to locate and obtain information to

satisfy a conscious or unconscious need.
● Information needs are related to, but distinct from information requirements. An
example is that a need is hunger, and the requirement is Food.
● Information needs are related to problems and an important issue is how problems
are understood, delimited, and formulated.
● When we go to real-life problems, there are usually different opinions about how they
should be understood and how they should be addressed, including different
opinions about what information is relevant to solve the problem. Collecting only the
information that can be used effectively for management decisions is important.
● People within an organization who have timely, reliable information are better able to
conduct, manage, and control the organization's operations.
● How important the information is, depends on the information itself.
 ● Understand that information is a commodity and it can have a monetary value, the
level of which depends on its accuracy, its potential use, and its particular intended
use.
● We need to ensure that information is up-to-date and of use to an
organization/individual.
● Information has become a valuable resource, just as much as capital, infrastructure,
and people.
● Information is collected on any amount of different items and used by managers to
make strategic decisions concerning the Organization.
● The information that is collected and/or assembled in any business is as valuable a
resource as capital or people

Information may cover:

● Market trends
● Buying preferences
● Customer profiles
● It may be processed, summarized, and analyzed by computers before being used. by
managers as the basis for decision-making.
● The values of information are directly linked to how it helps decision-makers achieve
their organization's goal

1.3. Input, Processing, Output, and feedback

inputs are anything that you put into a system for a computer the input can be from the
user via keyboard a keyboard or gaming controller you can also get input from USB sticks or
cd’s as essentially anything that goes into your computer or system

the process is what the system does with this inputs again with the computer example
it takes in what you press on the keyboard or joystick to say control and action in the game

output is anything that kinda like goes out of the system, for example, your computer
monitor is an output device and so is stuff like speakers printer or USB stick can also be an
output device if you put something on it essentially anything that course out of the system
Input is anything we wish to embed in a system for some type of use. A variety of sources are
used to input: keyboard, scanner, microphone, mouse, and even another computer. What we
input has a purpose - but until it is processed and generated in some form of output, it doesn't
do us much good.

Processing takes place in the internal parts of the computer. It is the act of taking inputted
data and converting it into something usable. What we typically see on the screen in today's
computer world (known as what you see is what you get or WYSIWYG) is the result of our
input being processed by some program so we can have usable output: an English paper, an
edited photograph, this video you're watching.

Output, or processing information in a usable format, comes in many different forms: monitor
or printer for visual work, a speaker for audio. Sometimes our output is short-term, such as
printing a photo, and sometimes what we work on needs to be kept around for a while. That's
where storage comes in.

Feedback output that is used to make changes to input or processing activities

 Unit - 2 - Concepts of Systems
2.1. Definition of the system in an organization

● A system is an organized collection of parts that are highly integrated in order to

accomplish an overall goal
● The system has various inputs which are processed to produce certain outputs
together, accomplishing the overall goal decided by the organization.
● There is ongoing fit back among these various parts to ensure they remain aligned to
accomplish the overall goal of the organization. There are several classes of
systems, ranging from very simple frameworks all the way to social systems which
are the most complex. organizations are, of course, social systems.
● system has inputs, processes, outputs, and outcomes
● to explain, input to the system includes resources such as raw materials, money,
technology, and people.
● These inputs go through a process where they’re aligned, moved along, and carefully
coordinated ultimately to achieve the goals set for the system.
● outputs are tangible results produced by processes in the system, such as products
or services for customers
● another kind of results outcomes, or benefits for customers, for example, jobs for
workers, enhanced quality of life for customers, etc system can be the entire
organization or department groups process, etc
● Feedback comes from example employees who carry out processes in the
organization, customers/clients using the products and services, etc feedback also
comes from the larger environment of the organization example influences from
government, society, economics, and Technology

2.2. Types of systems

System is defined as a set of elements arranged in an orderly manual to accomplish

the objective or a system is a group of interrelated components working together towards by
aspecting input & processing outputs in an organized transformation process

system is arranged with some logic governed by rules, regulations, principle, and
policies. such an arrangement is also influenced by the objective of the system's desire to
achieve

2.2.1. Deterministic probabilistic systems

A Deterministic system has a single result or set of results given a set of input
parameters, while a probabilistic system will have results that vary. The often probabilistic
system is solved with the Monte Carlo method. in this case, a computer program uses a
pseudo Random numbers generator to provide values of the attributes in the systems that
vary. the program provides an assessment of the uncertainty of results.
typically a large number of runs are made. a summary statistic may include the value
that occurs most frequently, the means value, and the low and high range, for instance, the
10% and 90% percentile. the standard deviation and histogram of results may also be part of
the summary information there is no single standard please will depend on the application to
solve the problem using the mathematics of probability this can be very complicated do in
some cases

2.2.2. Open and Close systems

a system is commonly defined as a group of interacting units of elements that have a

common purpose. the units of elements of a system can be cogs, wires, people, computers,
and so on. systems are generally classified as open systems and closed systems and they
can take the form of mechanical, biological, and social systems

open systems are computer systems that provide some combination of

interoperability, portability, and open software standards. a system with Input and an entity
that changes its behavior in a response to conditions outside its boundaries. a system without
outputs is non-knowable by an external observer example black hole in the visible Universe
systems without inputs are not controllable
An open system is a system that continuously interacts with its environment; the
interaction can take the form of information, energy, or material transfer into or out of the
system boundary, depending on the discipline which defines the concept.
The open system refers to systems that interact with other systems or the outside
environment, whereas closed systems refers to systems having relatively little interaction
with other systems or the outside environment. For example living organisms are considered
open systems because they take in substances from their environment such as food and air
and return other substances to their environment. Humans for example inhale oxygen out of
the environment and exhale carbon dioxide into the environment similarly, some organizations
consume raw materials in the production of products and emit finished goods and pollution
as a result.

close system in that it is a relatively self-contained, self-maintaining unit that has little
interaction or exchange with its environments it is a system marked by clear boundaries which
admit of no movement of energy across them the entropy of any closed system never
decreases. a closed system is something we cannot externally add anything new to.
all systems have boundaries, a fact that is immediately apparent in a mechanical
system such as the watch, but much less apparent in a social system such as an organization
the boundaries of open systems, because they interact with other systems or environments,
are more flexible than those of closed system, which are rigid and largely impenetrable. A
closed system perspective views the organization as relatively independent of environmental
influences. closed system approach conceives of the organization as a system of
Management, Technology, personnel, equipment, and materials but tends to exclude
competitors, suppliers, distributors, and governmental regulators. this approach allows
managers and organizational theorists to analyze problems by examining the internal
structure of a business with little consideration of the external environment, the closed system
perspective basically views an Organisation much as a thermostat limited environmental input
outside of changes in temperature is required for the effective operation
 Unit - 3 - Introduction to various Information Systems

3.1. Business Information Systems

Following are the various type of information systems used in business
organizations
● ERP(Enterprise resource planning)
● TPS(Transaction processing system)
● MIS(Management information system)
● DSS(Decision support system)
● GDSS(Group D Season support system)
● ESS(Executive support system)
● E-Commerce( Electronic Commerce)
● Work Flow system
● Special Purpose system
Artificial intelligence
➔ Robotics
➔ Vision system
➔ Natural Language Processing
➔ Learning system
➔ Neural networks
➔ Expert system
Virtual reality

E-Commerce
E-Commerce involves conducting business activities using electronic data
transmission involving computers, telecommunication networks and work process business
and individual use E-Commerce to reduced cost, speed up the flow of goods and information
improve the level of customer service and enable coordination of action among manufacturers
suppliers and customers

Work flow system

it is rule based management software that directs co-ordinates and monitor execution
of inter-related set of task organized to form a business process the primary purpose of work
flow system is the provide employee be to tracking and routing of documents to improve
business processes it can handle multiple user and distribution business processes

Special Purpose System

a) Artificial intelligence
AI is field in which the computer system takes on the characteristic of
human intelligence
 1) Robotics:- A mechanical all-computer device that performs Complex routine
or tedious task such as welding or assembly computer system

2) Vision System:- It includes the hardware and software that permits

computers to capture, store and manipulate visual images and pictures it is also
used to perform figure print analysis and it is also effective for identifying
people based on their facial feature

3) Natural Language Processing:- it allows computers to understand and act

on variable commands in natural languages. with some natural language
processor, you can speak a word the computer matches it, and type it into the
computer it can also be used to retrieve information without typing a command

4) Learning system:- A combination of hardware and software that allows the

computer to change how it functions or react to a situation based on feedback it
receives it gives the computer an ability to learn from a past mistake and
experience such as games.

5) Neural Network:- A computer system that can similar to the functioning of

the human brain it allows computers to recognize and act on patterns or trends
for example Diseases Diagnostic system

6) Expert system:- it gives the computer the ability to make a suggestion and
act like an expert in the particular field. the collection of data, rules,
procedures, and relationships that must be followed to achieve value or the
proper outcome is Stored in the knowledge base of the expert system it can be
applied to almost any field or discipline.

b) Virtual Reality:-
With this system user becomes fully immersed in an artificial, three-dimensional
world completely generated by the computer it enables the user to move and react in a
computer Simulated environment its simulation requires a special interface device that
transmits the view, sounds, and sensation of the simulated word to the user
this device can also record and send the speech and Movements of a participant
to the simulation program so users can sense and manipulate virtual objects as they
are real objects.

3.1.1. Principal Function System in Business

● With most product-oriented enterprises principal functional systems are 9 in number:
purchasing, receiving, inventory, Sales, distribution, billing, collection, paying, and
production
 ● Some of the authors account for the same 7 major organizational functions they are
order processing, purchasing, payroll, Personal Administration, logistics, production,
and accounting
● Many of the other systems come under the above as substance, for example, inventory
control, material requirement planning, general ledger, financial planning, financial
control

Purchasing:- procuring from the vendor the goods and materials required for the
business
Receiving:- inspecting and accepting delivered goods and materials
Inventory:- storing the received good and plans
production:- Production of goods as per the plans
Sales:- marketings the goods produced
Distribution:- supplying the customer with the goods sold from a produced goods
inventory
Billing:- sending statements of the account owed to customers
Collection:- receiving payment from customers.
Paying:- making payments home to those for whom the business owed money such as
vendors and employees

● Each of the above functional systems produces one or more outputs in the form of
products or documents.
● These outputs are an indication of the relationship of each system to other systems and
to the business as a whole.
● Since systems are assigned their own necessary resources, they are to a degree
relatively independent elements of a business
● A system is a combination of resources(Men, materials, facilities, and equipment)
working together to convert the input to output
● A system produced outputs
● A business integrates the outputs of its components systems to accomplish objectives
and to achieve goals.
● A system is through in terms of its mechanics viz. methods techniques and procedures
by which it achieves its purpose.
● this definition of a system by interface includes such mechanics example a distribution
system is defined to include not only its functions but the Associate's Written methods
and procedures for processing shipping orders more systems may be considered to be
composed of subsystems
3.1.2. Product flow and Information Flow

Material(Product) Flow:
This is the flow of the physical product from the supplier all the way down to the
customer. this flow is usually uni-directional, that is it only flows one direction from the
supplier to the customer however, in certain instances when the customer returns the
products the flow Occasionally goes in the other direction.
A Typical flow of materials usually begins with the raw materials suppliers to
manufacturers to warehouse and distribution to the final customer the product flow is a
representation of the order by which a sequence of products is created according to
product-based planning principles.
the product flow diagram is typically created iteratively with product description
and the product breakdown structure because as project manager works through the
logic and they will identify missing products and additional information about products

Information Flow:
Information flow is the flow of information from supplier to customer and from
customer back to supplier this flow is bi-directional that is it goes both directions in the
supply chain the type of information that flows between customers and suppliers
includes quotation purchase order delivery status invoice and customer component
complaints and so on.
For supply chain to be successful there has to be constant interaction between
supplier and customer. in many cases, other partners like distributors, dealers, retailers,
logistics service providers are involved in the Information Network An information flow
indicates how Information is communicated from a source to a receiver or target
through some medium.
An if can be used to model the information flow throughout an organization An if
shows the relationship between Internal information flows within an organization and
external information flows between organizations it also shows the relationship between
the internal department and subsystem
3.1.3. Principal Document Associated with Information Flow

1. Purchase order:- prepared by purchasing original sent to the vendor, retains a

copy, second copy to receiving
2. Receiving report:- when materials ordered arrive, receiving verifies the order
against the purchase order copy, inspects material, informs purchase department
of its arrival, and accounts through a receiving report.
3. Inventory transfer:- prepared by receiving Department transfers the inventory a
accompanied by an inventory transfer.
4. Purchase requisition:- prepared by inventory departments request purchasing
to order those materials not on hand and of insufficient quantity.
5. Production documents:- designs and develops the product. the components
that are in house baits are combined with the components of sub assemblies that
are procured from outside sources.
6. Material requisition:- prepared by Production department. material requisition is
to request needed materials from inventory. Inventory notifies the availability of
the requisitioned materials by retaining a copy of the requisitioned material
requirement.
7. Sales Order:- sales contact the customers, sells the product, prepare the sales
order. A copy of sales order is sent to billing and to production.An additional copy
is sent to distribution.
8. Warehouse transfer notice:- prepared by distribution. it receives the finished
goods from the production accompanied by warehouse transfer notice.
9. Shipping notice:- distribution ships the product to the customer and informs
sales by means of a shipping notice.
10. Customer invoice:- billing prepares and mails customers invoice.
11. Collection:- receives customer payments from the customer.
12. Customer payment notice:- collection sends updated information to billing,
by means of customer payment notice.
13. Vendor Cheque:- paying makes payment to vendors through this. cheque is
prepared after the vendor submits vendor’s invoice, after invoice verification and
forwarded by purchasing.
14. Pay cheque:- paying department distributes pay cheques to employees.
15. Time tickets:- the amount of pay cheques are based upon time tickets
submitted by employees.

3.2. ERP
Enterprise system: a system central to the organization that ensures
information can be shared across all business functions and all levels of management
to support the running and managing of a business. Enterprise systems employ a
database of key operational and planning data that can be shared
Examples of enterprise systems
– Transaction processing system (TPS)
– Enterprise resource planning system (ERP)

Enterprise resource planning (ERP):

ERP is an integrated Computer Based system used to manage internal or

external resources including tangible assets financial resources materials and human
resources its purpose is to facilitate the flow of information between all business
functions inside the boundaries of the organization and manage the connection to
outside stakeholders. build on a centralized database and normally utilizing a common
computing platform ERP system consolidates all business operations into a uniform
and Enterprise-wide system environment
ERP system can either reside on a centralized server or be distributed across
modular hardware and software units that provide service and communicate on a local
area network the distributed design allows a business to assemble modules from
different vendors without the need for the placement of multiple copies of complex and
expensive computer system in areas which will not use their full capacity.
A collection of software packages, which ties all of an enterprise's various
functions into a cohesive database. These packages affect everything from order
capture to accounting and procurement (verification) to warehousing. Employees enter
information only once and that information is then available to all systems
company-wide
.
Commercial applications:

● Manufacturing:- Engineering, bills of material, work orders, scheduling, capacity,

workflow management, quality controls, Cost Management, manufacturing process,
manufacturing projects, manufacturing flow,
● Supply chain management:- Order to cash, inventory, order entry, purchasing,
product configuration, supply chain planning, suppliers scheduling, and inspection of
goods, claim processing, and commission calculation.
● Financial:- general ledger, cash management, accounts payable, accounts receivable,
fixed assets.
● Project management:- costing, billing, time and expense, performance units, and
activity management.
● Human resources:- human resources, payroll, training, time and attendance,
rostering, benefits.
● Customer relationship management:- Sales and marketing, Commission, service,
customer contact, Call Centre support.
● Data service:- Various self-service interfaces for customers, suppliers, and employees.
● Access control:- Management of user privileges for various processes.
Advantages of ERP
● Improved access to data for operational decision-making
● Enhanced tracking and forecasting
● Improved efficiency performance and productivity levels
● Reduce the risk of loss of sensitive data by consolidating multiple permissions and
security models into a single structure
● Shorten production Lead time and delivery time
● Facilitating Business learning, empowering, and building common visions
● Elimination of costly, inflexible legacy systems
● Improvement of work processes based on best practices
● Upgrade of technology infrastructure

Disadvantages of ERP
● Expense and time in implementation
● The scope of customization is limited in several circumstances
● ERP systems can be extremely expensive to implement
● There could be lack of continuous technical support
● Customisation of the ERP software is limited
● The blurring of company boundaries can cause problems in accountability, lines of
responsibility, and employee morale.
● Difficulty implementing change
● Difficulty integrating with other systems
● Risks in using one vendor
● Risk of implementation failure

Tips for avoiding failed ERP implementations

● Assign a full-time project manager
● Appoint an experienced, independent resource to oversee a project and validate
system performance
● Allow sufficient time for transition
● Spend substantial time and money for training
● Define metrics to assess progress and identify risks
● Keep project scope well defined
● Be cautious of modifying ERP software to conform to firm’s business practices

3.3. Management Information Systems

MIS is an organized collection of people, procedure, software, databases and device

used to provide routine information to the manager and decision maker MIS can often give a
competitive advantage to companies by providing the right information to right people in the
right format at the right time.
 MIS is used to transform data into Useful information as needed to support managerial
decision-making with a structured decision is that based on predictable patterns of activities.

typical MIS is based on four major components:

● Data Gathering:- Data relevant to the operations of the organization are
gathered from external and internal sources.
● Data Entry:- The data gathered is inputted and stored in the database so that it
can be processed.
● Data Transformation:- Data is transform into Useful information through the
application of computer software programs and by technical support of staff and
other system users.
● Information utilization:- The Useful information is retrieve as needed by the
management and applied to wide variety of decision related to the organizational
operation.

The primary purpose of MIS is to help an organization to achieve its goals by

providing manager with various types of information on the regular operation of an
organization. so that, they can control, organize and plan more effective decision
making and provides feedback on daily operation.

For Example, A manufacturing MIS is a set of integrated system that can help
managers to monitor a manufacturing process, the value of raw materials as they are
assembled into a finish product. the monitoring is accomplished through various types
of reports produced by MIS These reports can be obtained by filtering and analyzing
 the detail data contain in transaction processing databases and presenting the result to
manager in a meaningful way.

GIS(Geographic information system)

A geographic information system is a computer system capable of assembling,

storing, manipulating & displaying geographically referenced information that is data
identified according to their location. A GIS enables to user to pair predawn maps or
map outlines with tabular data to describe aspects of a particular Geographic region.
For example. The sales manager may want to plot total sales for each country in the
states they serve. using GIS they can specify that each country is drawn with a degree
of shading that indicates the relative amount of sales.

3.3.1. Characteristics of MIS

1. Provide reports with fixed & standard formats:- For example,

scheduled reports for inventory control may contain the same types of
information placed in the same location on the reports. different managers
may use the same reports for different purposes.

2. 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 display on computer screen.
soft copy output is typically formatted in a report like fashion

3. 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 system use
external sources of data about competitors, the market place & so on. the
internet is frequently you source for external data.

4. Allow end users to develop their own custom reports:- 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
program to Query dbase & produce basic reports.

5. 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 format request for the
reports is often require.

3.3.2. The development process of MIS

The proces of establishing an MIS involves 4 stages:

1. Planning for The MIS
2. Designing The MIS
3. Implementing the MIS
4. Improving the MIS

1. Planning for The MIS

The MIS should be developed considering some factors to be affected:

● long periods of time needed to acquire MIS related data processing
qwuipment
● To integrate it ithin the operation of the organization
● The difficulty of hiring component Operators of the equipment.
● The major amount of financial and managerial resources needed to
operate an MIS.

Specific plans should be contain information like…

● Hardware projection
● Human resource projection
● Financial project by time period

2. Designing The MIS

Designing MIS involves strategic decision making. the design of MIS

should not begin with the comparative analysis of the types of such equipment
available. The MIS should begin with and analysis of the types of decisions the
manager actually make in a particular organization.

The design of MIS should consist of four step:

➔ Defining various decisions that must be made to run an Organization.

➔ Determining the types of Management policies that may influence the ways in
which these decisions should be made.
➔ Pinpointing the types of data to make these decisions.
➔ Establishing a mechanism for gathering and appropriately processing the data to
obtain needed information.
 Design of MIS is an important factor which makes demarcation between a
success or a failure. if there is a design defect in the MIS, there is a possibility
that the defect will surface only after a couple of years.

The designer famous ladies inputs like…..

● Result of
● Long term information system master plan
● Status reports on existing modules and systems
● Corporate goals as reflected through MIS Goals and objectives.
● Corporate policy guidelines for implementation of MIS
● Review of existing resources and their utilization

3. Implementing the MIS

The third stage in the process of establishing an MIS within the

organization is implementation. it is the act of putting the planned and designed
MIS into operation or action. In this stage, the equipment is acquired and
integrated into organization.
Designed data are gathered, analyzed as planned, and distributed to
managers within the organization.

4. Improving the MIS

Once MIS is operating, MIS manager should continuously attempt to

maximize it's value. managers must evaluate the symptoms of an adequate MIS
to determine MIS Weakness

Typical improvements to MIS are:

➢ Build cooperation
➢ Stresstill decision making
➢ Use cost benefit-analysis
➢ Consider people
Benifits of MIS

3.4. Decision support systems

A decision support system (DSS) is a computer program application used to

improve a company's decision-making capabilities. It analyzes large amounts of data
and presents an organization with the best possible options available. Decision support
systems bring together data and knowledge from different areas and sources to provide
 users with information beyond the usual reports and summaries. This is intended to
help people make informed decisions.

Typical information a decision support application might gather and present

include the following:

● comparative sales figures between one week and the next;

● projected revenue figures based on new product sales assumptions;
● the consequences of different decisions.

A decision support system is an informational application as opposed to an

operational application. Informational applications provide users with relevant
information based on a variety of data sources to support better-informed
decision-making. Operational applications, by contrast, record the details of business
transactions, including the data required for the decision-support needs of a business.

Components of DSS

Knowledge base:-. A knowledge base is an integral part of a decision support system

database, containing information from both internal and external sources. It is a library
of information related to particular subjects and is the part of a DSS that stores
information used by the system's reasoning engine to determine a course of action.

Software system:- The software system is composed of model management systems.

A model is a simulation of a real-world system with the goal of understanding how the
system works and how it can be improved. Organizations use models to predict how
outcomes will change with different adjustments to the system. For example, models
can be helpful for understanding systems that are too complicated, too expensive or too
dangerous to fully explore in real life. That's the idea behind computer simulations used
for scientific research, engineering tests, weather forecasting and many other
applications.

Models can also be used to represent and explore systems that don't yet exist,
like a proposed new technology, a planned factory or a business's supply chain.
Businesses also use models to predict the outcomes of different changes to a system --
such as policies, risks and regulations -- to help make business decisions.

User interface:- The user interface enables easy system navigation. The primary goal
of the decision support system's user interface is to make it easy for the user to
manipulate the data that is stored on it. Businesses can use the interface to evaluate
the effectiveness of DSS transactions for the end users. DSS interfaces include simple
windows, complex menu-driven interfaces and command-line interfaces.
Types of DSS

Decision support systems can be broken down into categories, each based on
their primary sources of information.

Data-driven DSS

A data-driven DSS is a computer program that makes decisions based on data

from internal databases or external databases. Typically, a data-driven DSS uses data
mining techniques to discern trends and patterns, enabling it to predict future events.
Businesses often use data-driven DSSes to help make decisions about inventory, sales
and other business processes. Some are used to help make decisions in the public
sector, such as predicting the likelihood of future criminal behavior.

Model-driven DSS

Built on an underlying decision model, model-driven decision support systems

are customized according to a predefined set of user requirements to help analyze
different scenarios that meet these requirements. For example, a model-driven DSS
may assist with scheduling or developing financial statements.

Communication-driven and group DSS

A communication-driven and group decision support system uses a variety of

communication tools -- such as email, instant messaging or voice chat -- to allow more
than one person to work on the same task. The goal behind this type of DSS is to
increase collaboration between the users and the system and to improve the overall
efficiency and effectiveness of the system.

Knowledge-driven DSS

In this type of decision support system, the data that drives the system resides in
a knowledge base that is continuously updated and maintained by a knowledge
management system. A knowledge-driven DSS provides information to users that is
consistent with a company's business processes and knowledge.

Document-driven DSS

A document-driven DSS is a type of information management system that uses

documents to retrieve data. Document-driven DSSes enable users to search webpages
or databases, or find specific search terms. Examples of documents accessed by a
document-driven DSS include policies and procedures, meeting minutes and corporate
records.
 Unit - 4 - Transaction Processing Systems
4.1. Overview of Transaction Processing System

Transaction processing was one of the first business processes to be computerized &
without an information system. recording and processing business transactions would
consume a huge amount of an organization's resources the transaction processing system
also provides employees involved in other business processes the management information
system and special purpose information system to achieve their goals
A transaction processing system serves as the foundation for the other system.
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 complex
processing
every organization has a manual and automated transaction processing system,
which processes the detailed data necessary to update records about the fundamental
business operations of the organization

This system includes:-

● 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:-

● Database
● Telecommunication people
● Procedure
● Software
● Hardware device used to process transactions
The processing activities include:-
● Data Collection
● Data Collection
● Data manipulation
● Data storage
● Document production

4.2. Transaction Processing methods & objectives

Methods/Types of TPS
when the computerized transaction processing system first evolved, all transactions
were collected in groups, called batches & processed together

1) Batch processing system

Batch processing system is the method of computerized processing in which business
transaction are accumulated over a period of time & for processing as a single unit or batch.
For example, it may be important to process an invoice and customer payment 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 characteristics 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 system is a more appropriate and
cost-effective payroll transaction and billing are typically done via batch processing system

2) Online Real-time OR Online Transaction Processing System

with this form of data processing is transaction is processed immediately without delay
of accumulating transaction into a batch as soon as the input is available a computer program
performs the necessary processing and update record effected by that single transaction at
any time the data in the on the online system always the current status
for example when you make an airline reservation the transaction is processed and all
database are updated immediately this type of processing is essential for a business that
requires data quickly and updates it frequently such as airline ticket Agencies
OLTP is faster and provide more efficient service internet is required to perform OLTP
functions

3) online entry with delayed processing

It is the combination of batch and online processing with this system transactions are
entered into the system when they occur, but they are not processed immediately for
example when you call a toll free number and order a product, your order is entered into the
system when you called, but not be processed until the business hours are completed
 even though Technology exists to run TPS applications using online processing it is not
done for all applications for many application batch processing is more appropriate and
cost-effective example payroll and billing, according to goal of an organization the best-suited
method is selected.

Objectives of TPS

● Process data generated by and about transactions: The primary objective of TPS is to
capture, gather, process, and store transactions and to produce useful documents
related to routine business activities for managers.

● Maintain a high degree of accuracy: One of the objectives of TPS is error-free data
input and processing. In manual TPS, the resulting transactions were often inaccurate
because humans are fallible, resulting in wasted time, and effort and required resources
to correct them. In contrast, with computerized TPS, transaction processing appeared
to be accurate or errors were minimized because accuracy checks were done by both
humans and computer systems.

● Ensure data and information integrity: TPS ensures that all the data and information
stored in databases are always accurate, current, appropriate, and up to date.

● Produce timely documents and reports: Manual TPS take longer time than
computerized TPS to produce routine documents. Computerized TPS and the
improvements in information technology (IT) allow transactions to be processed in a
very short period of time.

● Increase labor efficiency: Manual TPS was labor intensive in which the process of a
business transaction is done by hand. With computerized TPS, firms can reduce the
need for many laborers as computers can replace human laborers, thus saving costs.

● Help provide increased and enhanced services: TPS assist organization in providing
superior customer service. For example, computerized TPS enables customers to place
orders for raw materials electronically and helps firms to track customer orders through
all stages from order to delivery to receipt of payment. Thus, this allows firms to be
more responsive to customer needs and queries.

Characteristics of Transaction Process System

There are 4 characteristics in every single transaction processing system.

 1. Rapid response: In order to shorten the waiting time of the users, TPSs are modified
to process transactions instantly to ensure the data will be available in the shortest
waiting time.

2. Reliability: Due to the involvement of cash, the reliability of TPS has to be in place.
TPSs have to be designed in a way to avoid the transactions slip past the net at the
same time remain themselves operating permanently. Also, the failure rate has to
remain within tolerance levels. With that comprehensive safeguards and disaster
recovery systems have to be incorporated by the designed TPSs.

3. Inflexibility: Mistakes or errors can occur once the steps alter. To maximize the
efficiency of the TPS, transactions have to be processed in the same order. With that,
TPS interfaces have to be designed so that identical data for each transaction can be
acquired.

4. Controlled Processing: A transaction processing monitor is found at every end of the

computer to ensure that the transactions are correctly inputted. Still, it requires human
control on it. TPSs can be used even to modify data and fraudulent transactions. With
that, the user of the system has to be restricted only to people who have authority.

4.3. Transaction Processing Activities

Processing business transactions was the first application of computers of most

firms. TPS, a cross-functional information system was among the earliest computerized
systems developed to record, process, validate, and store business for future use or
retrieval. Transactions are economic events or exchanges between two or more
business entities. Basically, TPS is an organized collection of people, procedures,
databases, and devices used to record completed business transactions and store data
about these transaction

4.3.1. Data Collection

The process of capturing and gathering the needed data to complete

transactions. Data collection can be a manual process or an automated process.
The usage of automated data collection devices has made data collection faster,
more efficient, and reliable and allows firms to use the collected data in much
more flexible ways. For example, retail stores use scanners to read the bar code
from product packages and automatically enter the price item to TPS. Once the
price data is entered, the computer will determine the customer’s bill.
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 document 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 universal product codes automatically. The universal
product code reading is more accurate and faster than having a cash register
clerk enter code manually. another example of automation is industrial Data
Collection device. these devices allow employees to scan their magnetized ID
cards to enter data and payroll transaction system when they start the job.

4.3.2. Data Editing

It is process of checking data for validity & competence to detect any

problems with the data. example 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
a valid codes. if any code entered is not present in the database, the transaction
is rejected

4.3.3. 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 a correction can be
made.
Data corrections is the process of reentering miss keyed or miss scanned
data that was found during data editing example universal product code must be
in a master table of valid universal product codes. it doesn't have it then the
appropriate action can be taken.

4.3.4. Data Manipulation

The process of performing calculations and other data transformations

related to business transactions and storing data and information in
organization’s database for further processing. For example, in a payroll TPS,
managers multiply employees’ hours worked times the hourly pay rate.
data manipulation is the process of performing Calculation and other data
transmission retailed related to business transactions
➔ Classifying data
➔ Storing data into categories
➔ Performing calculations
➔ Summarizing results
➔ Storing data in the organization databases.
In Payroll transaction processing system data manipulation include:
➔ Multiplying employee’s hours worked by his pay rate.
 ➔ Overtime calculation.
➔ Deductiontions are also performed

4.3.5. Data Storage

Data storage involves placing transaction data or information in database.

The stored data can be further processed and manipulated by other information
system.In other words, the data appears to be the source of data for other
information systems
It involves updating one or more databases with new transactions. this
data can be further processed and manipulated by other system so that is
available for management decision making. Thus although transaction database
can be considered by product of transaction processing, they have pronounced
effect on other information system & decision making process in an organization.

4.3.6. Document Production and Reports

The process of outputting records and reports. The documents may be in

the form of hard copy paper reports or soft copy where documents are displayed
on computer screens.
It involves generating output records & reports. These document may be
hard copy paper reports or displayed on computer screens. example paychecks
are hard copy document produced by payroll transaction processing system
while and 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
it by an account receivable transaction processing.
Often results from transaction processing system as input to other system
where the results of updating the inventory database are used to create the stock
expansion report of items whose inventory level is less 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 state of tax with holding & quarterly invoice
statement.