CHAPTER - 5 INFORMATION SYSTEMS (104)

Chapter 5 – Information Systems

Role of Information Systems Key elements of Information Types of Information Systems Levels of Information
systems Systems
 Importance of technology  Transaction processing
 Information technology VS  Data system (TPS)  Operational level
information Systems  Databases  Management information  Middle (tactical level)
 Database Management system (MIS)  Senior level (strategic
General System Concepts and  System architecture  Decision support system level)
Information Technology  Networks (DSS)  Use of information
o LAN, WAN, MAN,  Executive information systems
 Computer systems
 Input, output, and storage Intranet, VPN system (EIS)
devices  Integrated systems  Expert system (ES)
 Information technology VS  Office automation system
information systems  Order processing and
 Elements of system inventory control system
 System adaptation  Personnel system
 Control systems  ERP
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‘]1. ROLE OF INFORMATION SYSTEMS

An information system (IS) collects and processes data into information that is provided to users for
use in strategic planning, decision making, performance monitoring, and production. These systems
give both companies and consumers access to vast amounts of information and also facilitate
communication between management, and staff as well as all internal and external stakeholders.
Consequently, they can help company to increase their revenue and reduce their expenses through
optimisation of time and money. They have also enabled new companies to compete in
geographically dispersed product markets. Virtually all companies use some type of IS to store,
access and analyse information; improve communication with customers; and improve
communication among employees.
The information is used in day-to-day decision-making to perform multiple tasks such as planning,
acquiring, searching, analysing, organizing, storing, programming, producing, distributing, marketing,
or selling functions. In order to know how to gather and use information from the many resources
available to us, an understanding of information systems is critical. Broadly, it includes users,
hardware, and software that support decision-making.

2. GENERAL SYSTEM CONCEPTS OF INFORMATION TECHNOLOGY

2.1 Computer systems

A computer system comprises four key components:

Input Central processing unit (CPU) Output

Storage

Four key components of a computer system

Input devices facilitate the introduction of data and information into the system. Examples might
include a keyboard, scanner, mouse or barcode reader.
Output devices facilitate the extraction of processed information from the system. Examples would
include a printer, speaker or screen (visual display unit).
The central processing unit is the ‘brain’ of the computer that takes the inputs, processes them and
then outputs the results.

Finally, storage devices are useful to enable data to be saved for future use.

2.2 Computer hardware

Computer hardware consists of the computers themselves plus all the peripheral equipment connected
to a computer for input, output and storage of data (such as printers and stand-alone disc drives).
The computers used in IT systems range from the very large supercomputers to the very small hand-
held computers. In many organizations, different computers are connected to each other to form a
network.
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The globalisation of the business environment has resulted in much more widespread use of portable
laptop computers. Laptops can typically be connected to the organisation’s computer network or to
the Internet from remote locations via a data connection such as Wi-Fi or a phone line. This means,
for example, that a manager can access his e-mails or the organisation’s Intranet system (a system that
looks and feels like the internet but is only available to employees) from anywhere in the world.

2.3 Input devices

As we saw in section 2.1 above computer systems have four key components – input, CPU, storage
and output. In this section we take a brief look at some of the many input devices commonly used in
computer systems.

1. Keyboards
Keyboards are the most common input device and are part of virtually all computer systems.
Keyboards can be stand-alone and connected to the computer with a cable or through a
wireless connection, or they might be integrated into the computer itself, such as with a
laptop or notebook.

2. Touch-sensitive screens and touch pads

A recent trend has been towards integrating the keyboard into touch-sensitive screens and
touch pads. Both these devices involve the user touching an area of a screen, for example a
picture of a keyboard, to simulate the pressing of a physical key such as on a regular
keyboard.
Examples of touch-sensitive screens include automated payment booths used to buy train or
bus tickets and bank ATM machines.

3. Magnetic ink character recognition (MICR)

Magnetic ink character recognition (MICR) requires the input media to be formed of
specially formatted characters printed in magnetic ink. These characters are then read
automatically using a specialised reading device called MICR reader.
The most common example of MICR is in the banking industry with the use of cheques and
deposit slips.

4. Optical mark reading (OMR)

Optical mark reading (OMR) is similar to MICR in that it is an automated input method.
OMR involves marking a pre-printed form with a pen or typed line (or cross) in an
appropriate box. The card is then read by an OMR device which senses the mark in each
box.
Uses can include national lottery entry forms and ballot voting slips.

5. Scanners and optical character recognition (OCR)

Scanners read text or illustrations printed on paper and translate the information into a
format the computer can use. The resolution (number of pixels recorded for each image –
pixels are minute areas of illumination on a display screen which taken together form the
image) can normally be adjusted to reflect how sharp the users need their image on the
computer.
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6. Mice, trackballs and similar devices

Mice and trackball devices are hand-operated devices with internal sensors pick up the
motion and convert it into electronic signals which instruct the cursor (pointer) on screen to
move.
Touch sensitive pads and joysticks that similarly control the cursor are also now commonly
found in the centre of the keyboard. Most current laptops and notebooks incorporate a pad or
joystick.

7. Voice date entry (VDE)

Many computers can now accept voice input via a microphone and voice data entry (VDE)
software. One particularly useful application is found in language translation programs that
support simultaneous translation. Another example might be in a smartphone where you can
enter commands aurally rather than by typing, for example with an instruction such as “Call
Office”.

8. Barcodes and QR (quick response) codes, EPOS

Barcodes are the groups of black and white marks with variable spacing and thickness found
on product labels such as those at the supermarket. Each code is unique and can be read
automatically by an electronic barcode reader.
QR codes are matrix, or two-dimensional, barcodes. Originally popular in the automotive
industry they have seen a recent rise in popularity elsewhere given their fast readability and
greater storage capacity than standard barcodes.
EPOS stands for electronic point of sale which is normally integrated with barcode readers.
EPOS allows credit and debit cards to be read for instant payment for goods.
A recent development of EPOS has seen the growth of technology that supports mobile
phones being used in a similar way to credit and debit cards. A phone signal rather than the
magnetic strip on a credit card is used to identify the purchaser.

9. Digital cameras
Digital cameras can be found in the form of stand-alone units or they may be integrated into
other technology such as smartphones and tablet computers. Digital cameras capture images
and videos in digital form and allow easy transfer to a computer where they can be
manipulated by software.
Digital cameras are used in many situations whether it is for the development of marketing
material, recording of crime scenes by the police, or by an auditor on a year-end inventory
count.
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Benefits and limitations of input devices

The following table presents some of the benefits and limitations of each of the input
methods described above.

Input method Benefits Limitations

1. Keyboards Common, simple and cheap Labour-intensive and slow.
Prone to error.
2. Touch-sensitive Saves space. Integrated Can be difficult to grasp the
screens and graphicual user interfaces are techniques for accurate data
touch pads very user-friendly and entry. Labour intensive and
intuitive. slow. Expensive.
3. Magnetic ink Speed and accuracy MICR documents are
character expensive to produce.
recognition
(MICR)
4. Optical mark Speed and accuracy OMR documents can be
reading (OMR) expensive to produce. Also
a risk of ‘spoilt’ documents
(marks made outside the
allotted boxes).
5. Scanners and Excellent for inputting Can be slow to scan
optical character graphics and text quickly multiple images. File sizes
recognition might be large for very high
(OCR) quality scans. OCR can be
somewhat inaccurate if
input image is low quality.
6. Mice and Easy to use and very common. Slow and can be prone to
trackball devices Cheap and simple. error.
7. Voice data entry Convenient and simple. Can be inaccurate and
(VDE) affected by external
interference (noise)
8. Barcodes and Very common. Accurate. Damaged barcodes are
EPOS Quick. impossible to read.
Incompatibility issues if
different types of barcodes
are received by the
organization.
9. Digital cameras Versatile, quick, accurate. Higher quality means larger
Widevariety of high quality file size which can become
image editing software now expensive and difficult to
available. manage.
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2.4 Output devices

Output devices
An output device is the part of a computer system that receives the processed data from the computer
and presents it in some way.
Output devices are distinct from input devices which are the parts of the computer that provide data
and instructions. However, technology has advanced to the stage where some devices are a
combination of both input and output such as a touch-sensitive screen.
Output devices come in a number of forms:

Output device Description

1. Monitor (display) A monitor is a bit like a television screen – it provides visual
output from the computer for text and graphics. Note though that
monitors only offer temporary output as the image is lost when
power removed.
2. Printers A printer is a device that prints output to a page (on paper).
Printing can be in colour or ‘black and white’ depending on the
printer type.
A number of different types of printers exist
3. Speakers and Speakers are attached to computers for the output of sound. The
headsets sound output is produced by a sound card. Headsets are a
combination of speakers and microphones and are commonly
used by gamers.
4. Storage devices Output may be made to some kind of storage device such as a
DVD or CD-ROM, flash memory (USB flash disk or key), blu-
ray drive or external hard disk drive.
5. Projector A projector can be thought of as a variation of monitor in that it
translates the digital output into a visual display projected onto a
screen. Think of some of the lectures you attended and how
common it is for a computer to be connected to a projector to
output the presentation slides.

2.5 Storage devices

The different types of storage devices found within a computer system include the following:

Storage type Description

1. Primary storage (internal Internal temporary store directly accessible by the CPU that
memory) allows it to process data.
Volatile by nature as it is erased when power is turned off.
Much smaller than secondary or tertiary storage but much
quicker to access (as it has no mechanical parts).
Examples include RAM and ROM plus the CPU’s cache
memory (temporary store of instructions repeatedly required
to run programs – typically up to 2MB (megabytes) in size).
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Storage type Description

2. Secondary storage Secondary storage is used for data not currently being
(external memory) processed but which may need to be accessed at a later stage,
for example the operating system, documents, music files and
emails. Non-volatile as data remains intact even when
powered off.
Examples include:
 Flash memory (USB flash drives or keys)
 Floppy disks
 CD
 DVD
 Blu-ray drive
 Magnetic tape
 Cloud drive

3. Tertiary storage Tertiary storage typically involves a robotic mechanism that

mounts (inserts) and dismounts removable mass storage
media into a storage device.
Often used for archiving rarely accessed information as it is
much slower than secondary storage.

4. Offline storage Offline storage describes any type of data storage that is not
under the control of a processing unit. The medium is
typically recorded on a secondary or tertiary storage device
which is physically removed or disconnected. Off-line storage
therefore needs human intervention to re-connect for
subsequent access.
For example, keeping a copy of all your important files
offline in a separate building.

2.6 Information technology and information systems

Information technology
Information technology describes the application of computers and telecommunications equipment to
store, retrieve, transmit and manipulate data.
The term is typically associated with computers and computer networks. However, the full definition
includes other information distribution technology such as television, telephone and radio.

Information system
Information system describes complementary networks of software and hardware that people and
organizations use to collect, filter, process, create and distribute data and information.
Within organisations, information systems support operations, management and decision making.
The term ‘information system’ is broader than ‘information technology’ as it incorporates the way in
which people interact with the technology in support of business processes, as well as the information
and communication technology (hardware and software) itself.
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In summary:
 System – a set of interacting components that operate together to accomplish a purpose
 Business system – a collection of people, machines and methods organised to accomplish a
set of specific functions
 Information system – all systems and procedures involved in the collection, storage,
production and distribution of information
 Information technology – the equipment used to capture, store, transmit and present
information
Information management – planning, the environment, control and technology
Elements of a system
The elements of a system include:
a) Goals
b) Inputs
c) Processes
d) Outputs
e) The environment
f) Boundary (this limits the system from its environment)
Open and closed systems
Closed systems - the environment has no effect on the system and the system has no effect on the
environment. Examples in the real world are rare and business examples even rarer; one useful example is
that of a scientific experiment.
Open systems - do interact therefore the environment will affect the system and the system will affect the
environment. All businesses, social and information systems are examples of open systems.
System adaptation
Open systems will adapt to their environment with varying degrees of extremity. Examples include:
i. Deterministic systems
¯ Use predetermined rules
¯ Therefore, have predicted operations
¯ Giving predictable outputs
¯ Examples include machines and computer programs
¯ These systems will follow a standard and often have a rule book.
ii. Probabilistic systems
¯ Assign a probability to future events
¯ Their behaviour is less easy to predict
¯ Most businesses are examples of probabilistic systems
¯ When a business sales forecasts it will try to predict sales based on past evidence.
¯ In effect the business tries to change before the event has occurred.
iii. Self-organising or cybernetic systems
¯ Most complex type of system
¯ Continually changing
¯ Adapts to the environment
¯ Example trade union negotiations
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¯ These types of systems are the least likely to be computerised

¯ Rely heavily on interaction from people
Control systems
Control is important in any information system. The two main types of control are open and closed
loop control.
i. Closed loop control has inbuilt control very much like a thermostat in a heating system,
they are not responsive to changes in the environment. A business example which has
inbuilt control is a stock or a credit control system where the system automatically checks
responses.
Closed loop control is most suitable for the type of system which is stable. Systems which
exist in a relatively dynamic environment are not suitable for this type of control.
ii. Open loop control systems do not have inbuilt control as it comes from the outside the
system - no thermostat.
A business example would be the whole organisation. Open control systems are responsive
to the environment and they often involve interaction from users.
The elements of a control system include:
 input, process, output
 sensor - measures the output from the system and determines a new value
 comparator - compares the new value with that of the standard
 standard - the predetermined limit set within the system
 effector - effects the feedback into the system can be positive or negative.

2.7 Data entry, batch, online and real time processing

Data entry
Data could be entered manually by a person keying the information in. Some systems are
more advanced and support technology-based data entry such as optical character
recognition or magnetic ink character recognition.
Data entry describes any of the techniques used to initially record data into a system. A few
examples of data include:
 Sales information
 Purchase information
 New employee details
 Updates to existing employee details
There are following three ways database can be updated (i) Batch processing, and (ii)
Online, (iii) real-time processing.

i. Batch processing:
Batch processing is the collection of a group of similar transactions over a period of time, and
their processing at a single time as a batch. This is an efficient method to update the database
periodically for applications such as monthly payroll processing.
This type of processing has been associated with mainframe centralised type systems. The
method has been reduced in importance with the development of more advanced types of
processing. It still remains an important form of processing as many systems used now, are based
on batch processed systems.
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 Advantages
¯ Relatively easy to develop
¯ Less processing power is required as deals with similar updates
¯ Checks in place as part of the systems run
¯ Less hardware required, therefore cheaper.
 Disadvantages
¯ Often delays between when a transaction is made and when the master file is updated
and the output generated.
¯ Management information is often incomplete due to out of date data.
¯ Often master files kept off line therefore access may not always be available.

ii. Online processing:

Online processing refers to equipment that operates under control of the central computer but
typically from a different location through some kind of terminal.
Examples include:
 An ATM machine for a bank – the ATM is linked to the bank’s central computer
system and updates the user’s account immediately
 Flight booking system at a travel agency
If a service is no longer online (available) it is described as being offline. When a system is
offline its services are no longer available.
You may have experienced something similar when browsing the internet. For example,
when you have a Wi-Fi connection your web-browser is considered to be ‘online’ and will
update. However, if there is no Wi-Fi signal and hence no connection the browser is considered
to be ‘offline’. In this case you will not be able to download any new information to the
computer.

iii. Real-time processing:

Real time processing is the processing of individual transactions as they occur without the need
for batching them together.
This type of processing allows the user to update the master files immediately. It is an expensive
method to update the database in real-time for applications such as airline’s information system.
 Advantages
¯ Information more up to date therefore providing better management information.
¯ Increased ability for data to be online.
 Disadvantages
¯ Increase in expense as the system becomes more complex to run and to develop.
Increased hardware capacity which increases costs.
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3. KEY ELEMENTS OF INFORMATION SYSTEMS

The key elements of IS are as follows:
1. Data (raw, unorganized data processed into meaningful and useful information for specific
use)
2. Database (an electronic filing system to collect and organize data and information)
3. Database Management System – DBMS (a software to enter, store, organize, select, and
retrieve data in a database)
4. Networks
5. Integration (provides an holistic view of data and information available within an
organization under different areas and functions)
6. Security and Privacy

1. Data:
Data are a set of values of qualitative or quantitative variables about one or more persons or
objects. It can exist in various forms: as numbers or text recorded on paper, as bits or bytes
stored in electronic memory, or as facts living in a person's mind. Business data is all the
information that is related to a company, such as sales data, customer contact information,
and even website traffic statistics.
Such data is processed into meaningful and useful information, which is then used for
specific purposes, such as business analysis, control, and decision-making.

2. Database:
Database is an electronic filing system that collects and organizes data and information. It is
the core of business information systems. Key users tap into databases to access the
information they need, whether for placing inventory orders, scheduling production, or
preparing long-range forecasts.
For example, a customer database containing name, address, payment method, products
ordered, price, order history, and similar data provides information to many departments. Big
size companies use very large databases called data warehouses and data marts.

3. DBMS:
DBMS is a software called a database management system, which is used to quickly and
easily enter, store, organize, select, and retrieve data in a database. DBMS software primarily
functions as an interface between the end user and the database, simultaneously managing
the data, the database engine, and the database schema in order to facilitate the organization
and manipulation of data. There are different types of databases and DBMS available
depending upon the needs of a business organization.
The main types of DBMS are:
 Hierarchical database
 Network database
 Relational database
 Object-Oriented database
Popular DBMS examples include cloud-based database management systems, in-memory
database management systems (IMDBMS), columnar database management systems
(CDBMS), and NoSQL in DBMS.
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4. Networks:
Most businesses use networks to deliver information to employees, suppliers, and customers. A
computer network is a group of two or more computer systems linked together by communications
channels to share data and information. Today’s networks often link thousands of users and can
transmit audio and video as well as data. The best-known computer network is the internet.
Computer networks support a vast range of uses including:
 The world wide web (internet)
 Sharing software applications such as databases and Worksheets
 Email
 Sharing devices such as printers, fax machines and scanners
 Online booking systems
 Instant messaging
 Internet-based communication such as Skype

System architectures:
The term system architecture refers to the way in which the components of a computer system such as
printers, PCs and storage devices are linked together and how they interact.
A centralised architecture involves all processing being performed on a single central computer.
Decentralised architectures spread the processing power throughout the organisation at several
different locations. This is typical of the modern workplace given the significant processing power of
modern PCs.
Typical network configurations include star networks, ring networks, bus networks and tree networks.

Client-server computing:
Client-server computing describes one level of interaction found between computers in systems
architecture.
The client is the application that runs on a personal computer or workstation. It relies on a server that
manages network resources or performs special tasks such as storing files, managing one or more
printers, or processing database queries. Any user on the network can access the server’s capabilities.
A server is a machine that is dedicated to providing a particular function or service requested by a
client within a network system.
Servers can range in power from ‘top-end’ super servers, capable of driving thousands of network
users, to ‘low-end’ servers which are typically a powerful personal computer (PC). Different types of
servers might include file servers, network servers, print servers, e-mail servers and fax servers.
File servers manage the data files that are accessible to users of the network. All the shared data files
for the system are held on a file server or are accessible through a file server.
Network servers route messages from terminals and other equipment in the network to other parts of
the network. In other words, network servers manage and control the routing of messages within
computer networks.
The basic types of networks companies use to transmit data—local area networks and wide area
networks—and popular networking applications such as intranets and virtual private networks.
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 Local Area Network (LAN):

A LAN is a computer network covering a small geographic area such as a home, office,
group of buildings or school.
LAN offers a more cost-effective way to link computers than linking terminals to a
mainframe computer. The most common uses of LANs at small businesses, for example, are
office automation, accounting, and information management. LANs can be set up with wired
or wireless connections.
A LAN’s distinguishing features include:
 Due to its localised nature, the data transfer speeds are high
 Typically owned, controlled and managed by one person or a single organization
 Low-cost maintenance
 Relatively low data transmission errors
 One LAN can be connected to another LAN over any distance via telephone lines and radio
waves
Wide Area Network (WAN):
A WAN is a computer network that covers a broad area i.e., a network that communicates across
regional, metropolitan or national boundaries over a long distance.
A WAN connects computers at different sites via telecommunications media such as phone lines,
satellites, and microwaves. A modem connects the computer or a terminal to the telephone line and
transmits data almost instantly, in less than a second. The internet is essentially a worldwide WAN.
Companies also connect LANs at various locations into WANs. Several forms of WANs are intranets,
virtual private networks (VPN), and extranets. WANs can be set up with wired or wireless
connections.
A WAN’s distinguishing features include:
 Data transfer speeds are much lower than with LANs due to the greater distance that
information must travel.
 WANs exist under collective or distributed ownership and management covering long
distances.
 Setup costs are typically higher due to the need to connect to remote areas. Furthermore,
maintaining a WAN is more difficult (and expensive) than maintaining a LAN due to its
wider coverage.
 In contrast to LANs, the data transmission error rate tends to be significantly higher.
Intranet:
Like LANs, intranets are private corporate networks. Intranets operate behind a firewall that prevents
unauthorized access. They are also considerably less expensive to install and maintain than other
network types. Intranets have many applications, from human resource (HR) administration to
logistics.
Virtual Private Network (VPN):
Many companies use VPN to connect two or more private networks (such as LANs) over a public
network, such as the internet. VPNs include strong security measures to allow only authorized users
to access the network and its sensitive corporate information. Companies with widespread offices
may find that a VPN is a more cost-effective option than creating a network using purchased
networking equipment and leasing expensive private lines.
5. Integration:
Companies are discovering that they can’t operate well with a series of separate information systems
geared to solving specific departmental problems. It takes a team effort to integrate the systems
described and involves employees throughout the firm. Company-wide enterprise resource planning
(ERP) systems that bring together human resources, operations, and technology are becoming an
integral part of business strategy. So is managing the collective knowledge contained in an
organization, using data warehouses and other technology tools.
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Integrated System
An integrated IT system describes the scenario where all modules of the system are linked and
function together as a system in a coordinated fashion.
For example, an integrated finance system would link a number of underlying modules such as
 Accounts payable control
 Accounts receivable control
 Accruals and prepayments
 Bank and cash
 Inventory
 Purchases
 Sales
So, for example a new sales order would be simultaneously reflected in the accounts receivable, sales
and inventory modules.

Advantages of integrated systems

 Offers a more complete view
 Enables better informed decisions
 Should ultimately lead to a more efficient operation
 Which would lead to greater customer satisfaction and hence profitability

Disadvantages of integrated systems

 Greater risk that if one module fails the whole system could fail
 More complex and therefore prone to error
 More expensive than standalone systems
 May require a greater level of support as the system is likely to need to be bespoke (tailored)
specifically to the organisation

6. Security and Privacy:

Unauthorized access into a company’s computer systems can be expensive, and not just in monetary
terms but as a reputational risk also. The costliest categories of threats include worms, viruses, and
Trojan horses; computer theft; financial fraud; and unauthorized network access.
Computer crooks are becoming more sophisticated all the time, finding new ways to get into ultra-
secure sites. Whereas early cybercrooks were typically amateur hackers working alone, the new ones
are more professional and often work in gangs to commit large-scale internet crimes for large
financial rewards. The internet, where criminals can hide behind anonymous screen names, has
increased the stakes and expanded the realm of opportunities to commit identity theft and similar
crimes. Working remotely also increase cyber security concerns.
Firms are taking steps to prevent these costly computer crimes and problems, which fall into several
major categories:
 Unauthorized access and security breaches.
 Computer viruses, worms, and Trojan horses.
 Deliberate damage to equipment or information.
 Spam
 Software and media piracy
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Creating formal written information security policies to set standards and provide the basis for
enforcement is the first step in a company’s security strategy. Without information security strategies
in place, companies spend too much time in a reactive mode—responding to crises—and don’t focus
enough on prevention.
Another recent concern is about privacy of individuals challenged through collection of personal
information at various forums. The challenge to companies is to find a balance between collecting the
information they need while at the same time protecting individual consumer rights. Many companies
now state in their privacy policies that they will not abuse the information they collect. Regulators are
taking action against companies that fail to respect consumer privacy.

4. TYPES OF INFORMATION SYSTEMS

As discussed earlier, IS collect and store the company’s key data and produce the information users
(e.g., managers) need for analysis, control, and decision-making.
IS are used, for example, in factories to automate production processes and order and monitor
inventory. Most companies use them to process customer orders and handle billing and vendor
payments. Banks use a variety of IS to process transactions such as deposits, ATM withdrawals, and
loan payments.
There are several types of IS such as:
1. Transaction Processing System (TPS)
2. Management Support System (MSS)
3. Decision Support System (DSS)
4. Executive Information System (EIS)
5. Expert System (ES)
6. Financial reporting system (FRS)
7. Order processing and inventory control system
8. Personnel system
9. Enterprise resource planning (ERP)
Each type of information system serves a particular level of decision-making: operational, tactical,
and strategic.

1. Transaction Processing System (TPS)

TPS is the starting point of an integrated information system. The TPS receives raw data
from internal and external sources and prepares these data for storage in a database similar to
a microcomputer database but vastly larger. In fact, all the company’s key data are stored in
a single huge database that becomes the company’s central information resource. The DBMS
tracks the data and allows users to query the database for the information they need.
TPS automate routine and tedious back-office processes such as accounting, order
processing, and financial reporting. They reduce clerical expenses and provide basic
operational information quickly.
Examples of TPS:
Finance and accounting TPS
The major functions would typically include:
 Budgeting
 The nominal ledger
 Invoicing
 Management accounting
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The system might be split into a number of modules including:

 Nominal ledger
 Accounts payable
 Accounts receivable
 Budgeting
 Treasury management
Human resources TPS
The major functions would typically include:
 Personnel records
 Benefits
 Salaries
 Labour relations
 Training
The system might be split into a number of modules including:
 Payroll
 Employee records
 Employee benefits
 Career path systems (appraisal)

2. Management Support System (MSS)

MSS use the internal master database to perform high-level analyses that help managers
make better decisions. At the first level of an MSS is an information-reporting system, which
uses summary data collected by the TPS to produce both regularly scheduled and special
reports. The level of detail would depend on the user.
MSS includes other specialized tools for decision-making like centralized database such as
Data Warehouse.
Companies use data warehouses to gather, secure, and analyse data for many purposes,
including customer relationship management systems, fraud detection, product-line analysis,
and corporate asset management. Retailers might wish to identify customer demographic
characteristics and shopping patterns to improve direct-mailing responses. Banks can more
easily spot credit-card fraud, as well as analyse customer usage patterns.
A management information system digests inputted data (distinct pieces of information such
as facts, numbers and words) and processes it into useful information.
Characteristics of management information system
a) Supports structured decisions
b) Reports on existing operations
c) Little analytical capability and is relatively inflexible
d) Internal focus
e) Generate regular reports and typically would allow online access to a wide range of
users
f) Incorporate both current and historical information

3. Decision Support System (DSS)

CHAPTER - 5 INFORMATION SYSTEMS (120)

A DSS is a set of related computer programs and data required to assist with the analysis and
decision-making within an organization. DSS were initially developed to overcome the rigid
nature of management information systems.
DSS help businesses by providing quantitative data and predictive models that aid problem-
solving and decision-making. A DSS helps managers make decisions using interactive
computer models that describe real-world processes.
The DSS also uses data from the internal database but looks for specific data that relate to
the problems at hand. It is a tool for answering “what if” questions about what would happen
if the manager made certain changes. In simple cases, a manager can create a spreadsheet
and try changing some of the numbers. For instance, a manager could create a spreadsheet to
show the amount of overtime required if the number of workers increases or decreases. With
models, the manager enters into the computer the values that describe a particular situation,
and the program computes the results. Marketing executives at a furniture company could
run DSS models that use sales data and demographic assumptions to develop forecasts of the
types of furniture that would appeal to the fastest-growing population groups.
Characteristics of decision support systems
a) DSS assists managers at the tactical level when they are required to make intelligent
guesses
b) A DSS uses formula and equations to enable mathematical modelling
c) DSS are real-time systems enabling managers to solve problems through queries
and modelling
d) User inputs queries and variables for the model through a user interface
e) Contains a natural language interpreter for querying the system
f) The user interface is integrated with data management and modelling software from
the key components
g) Spreadsheet packages can become the tool for the development of a decision
support system.

4. Executive Information System (EIS)

An EIS, similar to a DSS, is customized for an individual executive. These systems provide
specific information for strategic decisions. For example, a CEO’s EIS may include special
spreadsheets that present financial data comparing the company to its principal competitors
and graphs showing current economic and industry trends.
An EIS incorporates both internal and external data and tends to be more forward-looking
rather than backword-looking.
EIS typically emphasize graphical displays and simple user interfaces with a ‘high-level’
executive summary styled dash-board. Executives can then drill-down into various
components of the dashboard to extract more detailed information if required.
Characteristics of EIS
a) Helps senior managers to make unstructured decisions with many contributing
factors such as price fixing
b) Tends to be very expensive and real-time
c) Often limited in use to a small number of senior managers within the business
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5. Expert System (ES)

An ES is a computer program that simulates the judgement and behaviour of a human or an
organization that has expert knowledge and experience in a particular field. It contains a
database of accumulated experience and scenarios as well as a set of rules for applying the
knowledge to each particular situation described by the program. Examples include legal
diagnostics, medical diagnostics, processing a loan application and on a social level,
programs that play chess!
An expert system gives managers advice similar to what they would get from a human
consultant. Artificial intelligence enables computers to reason and learn to solve problems in
much the same way humans do, using what-if reasoning. Although they are expensive and
difficult to create, expert systems are finding their way into more companies as more
applications are found.
Expert systems have also been used to help explore for oil, schedule employee work shifts,
and diagnose illnesses. Some expert systems take the place of human experts, whereas others
assist them.
Preconditions for Effective Expert systems
i. problem is reasonably well-defined
ii. expert can define some rules
iii. problem cannot be solved through conventional transaction processing systems
iv. expert can be released to focus on more difficult problems
v. investment is cost-justified
Advantages of expert system
i. Allows non-experts to make expert decisions
ii. Fast, accurate and consistent advice
iii. Ability to change input details to explore alternative solutions
iv. Reduction in staff costs - less experts required
v. Improved allocation of human resources, experts concentrate on more complex
issues
vi. Can become a competitive advantage
vii. Availability potentially 24 hours 365 days per year
viii. Multi-access can deal with many problems at one time.
Disadvantages of expert system
i. High initial capital expenditure
ii. Technical support required
iii. System does not automatically learn; it has to be constantly updated by experts
iv. User as a non-expert may give inaccurate advice without recognising
v. Down time - systems failures effect all users
vi. Reliance - probable reduction in basic skills
vii. Possible user resistance for higher level experts
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In addition to the above types of IS, there are some other specialized systems in use as
follows:
6. Financial Reporting System (FRS)
Financial accounting and reporting involves:
 Maintaining a system of accounting records for business transactions and other
items of a financial nature; and
 Reporting the financial position and the financial performance of an entity in a set
of ‘financial statements’.
Many businesses operate a system of recording their business transactions in accounting
records. This system, that is the part of all sizes of businesses, is called a book-keeping
system or ledger accounting system and forms the foundation of the financial reporting
system.
The information that is recorded in the book-keeping system (ledger records) of an entity is
also analysed and summarised periodically, typically each year, and the summarised
information is presented in financial statements.
Financial statements provide information about the financial position and performance of the
entity.
Financial reporting systems must be reliable, accurate and complete. Access to data entry
should be strictly controlled to authorised personnel only.
7. Order Processing and Inventory Control System
Order processing
The order processing system should be capable of recording all orders accurately and in a
timely fashion. For some businesses such as airlines and hotels the information needs to be
updated immediately, whereas for other businesses an end of day update may be sufficient.
The system will typically be linked to the inventory control system so that the sales person
can establish whether the organisation is capable of fulfilling the order received.
Inventory control system
The objective of the inventory control system is to ensure that the business maintains an
appropriate amount of inventory at all times. The control system should be able to indicate
accurate levels of inventory for all the lines maintained by a business and trigger the
ordering of replacement inventory when inventory levels fall to a certain level.
Characteristics of order processing and inventory control systems
i. The system can accurately report the current inventory level at any time
ii. A rule should be associated with each item that will trigger a reorder such as
minimum inventory level
iii. The age of the inventory can be tracked. This will assist sales managers in
identifying ageing stock and employing tactics to reduce it. This is particularly
important with perishable inventory (e.g., food and drink) that could have hygiene
as well as commercial considerations to monitor.
iv. The system should be able to highlight shortages
v. The system should be able to show individual and total cost of items
vi. The system should maintain supplier details
vii. Delivery dates both inwards and outwards must be maintained to enable the
warehouse manager to manage goods movement - inward and despatch
viii. The location of the inventory should be recorded to ensure it can be found easily
and efficiently
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8. Personnel System
The personnel system exists to support the human resources management function in
performing its duties of maintaining an appropriate workforce. This involves:
 Recruitment
 Selection; and
 Staff development and appraisal.
Furthermore, the system contains a significant amount of sensitive and confidential
information meaning there must be strict control around maintaining data security and access
to the system.
Components of personnel system
1. Recruitment
¯ Highlighting internal job vacancies that are available to existing staff
¯ Running external recruitment campaigns and tracking their cost effectiveness
2. Redundancy
¯ Planning and executing voluntary redundancy programs
¯ Planning and executing compulsory redundancies making sure the company
follows all the legal requirements
3. Personnel management and control
¯ Maintaining contract of employment details such as salary, holiday
entitlement and duties
¯ Family and medical contact details
¯ Employment history
¯ Training records
¯ Training plan
¯ Qualifications and skills
¯ Amount of holiday accrued and taken
¯ Sick leave accrued and taken plus authorised absences such as bereavements
¯ Unauthorized absence
¯ Time off in lieu
¯ Disciplinary record
¯ Bonus and pay history
¯ Other rewards and commendations
¯ Annual appraisal
¯ Goals and objectives
¯ Formal checks such as references
4. Personnel management reporting – management will benefit from seeing graph
trends and summary reports to help with making decisions on headcount. These
might include:
- Benefits report
- Headcount (employee numbers) report
- Pay details and total wage expense
- Gender and diversity mix information
- Age profiling
- Tenure profiling
- Absence analysis
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9. Enterprise Resource Planning (ERP)

ERP is a cross-functional system driven by an integrated suite of software modules
supporting the basic internal processes of a business.
The system incorporates a real-time view of core business processes such as:
 Order processing
 Inventory management

Productions Business resources

ERP systems track business resources such as:
 Cash
 Raw materials
 Production capacity
 Personnel

Commitments
ERP systems also track the status of commitments such as:
 Purchase orders
 Employee costs
 Customer orders
Tracking is permanently updated irrespective of the department that entered the information
– hence the term ‘enterprise’.

5. LEVELS OF INFORMATION SYSTEMS

Information systems are seen in virtually every corner of a business whether in finance, operations,
human resources, or marketing. Information systems assist employees across all levels of the
business.
The information requirements of a business organization can be grouped depending on different user
needs and levels of decision-making. A typical business organization is divided into operational,
middle, and senior level. Accordingly, the type of IS is assigned to each level of users.
The following table illustrates various levels of IS in a typical business organization.

Levels of Management Nature of Decision-making Types of IS

Senior Level Strategic management EIS
Middle Level Tactical management MIS, DSS
Operational Level Operational management TPS

Operational Level:
The operational level is concerned with performing day to day business transactions such as cashiers
at a point of sale, bank tellers, nurses in a hospital, customer care staff, etc. They have defined rules
that guides them while making structured decisions.

Middle Level:
The middle level users generally oversee the activities of the operational management. This includes
middle-level managers, heads of departments, supervisors, etc. They take tactical, unstructured
decisions partly based on set guidelines and judgmental calls.
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For example, a credit manager in a bank can check the credit limit and payments history of a
customer and decide to make an exception to raise the credit limit for a particular customer. The
decision is partly structured in the sense that the credit manager has to use existing information to
identify a payments history that benefits the organization and an allowed increase percentage.

Senior Level:
The senior level users make unstructured, strategic decisions. They are concerned with the long-term
planning of the organization. They use information from tactical managers and external data to guide
them when making strategic decisions.
 Strategic information relates to long-term decision making e.g. over a 3-5 year time horizon.
Strategic information is useful to senior management and Directors for establishing the overall
strategy of the business. It therefore incorporates both internal information as well as external
information about competitors, the market and the general business environment.
 Tactical information assists managers in making short-term tactical decisions such as:
¯ establishing a fee to quote on a particular order
¯ whether to offer discounts on a particular product to help lower excess inventory
¯ whether to switch suppliers
 Operational information relates to the day to day activities of an organisation. Examples might
include:
¯ Daily sales reports
¯ Daily production reports
¯ Latest inventory levels
¯ Details of customer complaints

Uses of information systems

Irrespective of the level of information (strategic, tactical or operational), information is generally
used in one of five ways.

Use Description
1. Planning Help establish appropriate resources, time scales and forecast alternative
outcomes
2. Controlling Ensure processes are implemented as planned
3. Recording Information systems are used to record transactions throughout a business
transactions e.g. sales, purchases, errors, returns, customer complaints and quality
control inspections, deposits and cash movements
4. Performance Compare actual versus planned (budgeted) activity to identify variances
measurement from planned activity and take corrective action as necessary
5. Decision making Information systems are used to help managers make all kinds of decisions
such as volume (e.g. purchases and production), price, whether to make a
component internally or buy it from a supplier, whether to switch suppliers,
when to replace assets and how to organize affairs to minimise a tax charge.
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MCQS
For the following questions select the best answer.
Q1. Input, CPU, output & storage are the keys components of:
(a) Computer hardware (b) Computer system
(c) Computer software (d) Computer lab
Q2. Which of the following is the brain of the computer that takes the inputs, processes them and then
outputs the results?
(a) Input devices (b) Output devices
(c) CPU (d) Storage
Q3. ___________consists of the computer themselves plus all the peripheral equipment connected to a
computer for input, output and storage of data.
(a) Computer software (b) Computer Hardware
(c) Computer drives (d) Computer Network
Q4. In many organizations, different computers are connected to each other to form a:
(a) Large system (b) Network system
(c) Super computer (d) Computer system
Q5. The computers that you might encounter as an accountant would typically include:
(a) Super computers (b) Mainframe
(c) Mini computers (d) All of the above
Q6. The most powerful computers typically formed in multinational and other large business, e.g an
airline or oil company not as powerful as a super computer, but still incredibly powerful. What are
these computer called?
(a) Mini – computers (b) Mainframe
(c) Handheld computers (d) Desktop personal computers
Q7. Which of the following computers is similar to Desktop personal computers (PCs) but much smaller?
(a) Mini-Computers
(b) Portable laptops and notebooks computers
(c) Main frame
(d) All of the above
Q8. The globalization of the business environment has resulted in much more widespread use of:
(a) Mainframe computers (b) Mini computers
(c) Portable laptop computers (d) Handheld computers
Q9. Portable laptops can typically be connected to the organization’s computer network or to the internet
form remote location via Wi-Fi or a phone line. This means, for example:-
(a) That a manager can access his e-mails or the organization’s internet system from anywhere
in the world.
(b) Different computers are connected to each other to form a network.
(c) Can be used in national defence and aerospace.
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(d) None of the above

Q10. Keyboards are the most common ____________device and a part of virtually all computer systems:
(a) Output (b) Input
(c) Hardware (d) None of the above
Q11. The basic layout of a Keyboard is consistent within a particular:
(a) Format (b) Setting
(c) System (d) Geographical location
Q12. Keyboards, touch – sensitive screens and touch pads, magnetic ink character recognition, optical work
reading, scanners and optical character recognition, are some of the many:
(a) Input devices (b) Output devices
(c) Storage devices (d) Hardware
Q13. The most common example of Magnetic ink character recognition (MICR) is in the:
(a) Schools
(b) Hospitals
(c) Banking industry with the use of cheques and deposit slips.
(d) National lottery entry forms and ballot valuing slips.
Q14. Scanners read text or illustrations printed on paper and translate the information into a format the:
(a) Receiver can use (b) Operator can use
(c) Computer can use (d) None of the above
Q15. The hand operated input devices with internal sensors which pick up the motion and convert it into
electronic signals which instruct the customer on screen to move are called:
(a) Optical mark reading (b) Barcodes and quick response cades
(c) Mice and trackball devices (d) All of the above
Q16. Many computers can now accept voice input via a microphone and voice data entry (VDE) software.
For example with an instruction such as:
(a) Call data recorder (b) Language translation progress
(c) Call office (d) All of the above
Q17. Which of the following is the benefit of touch sensitive screens and touch pads?
(a) Common, simple and cheap.
(b) Saves space, integrated graphical user interfaces are very user – friendly and intuitive.
(c) Excellent for imputing graphics and text quickly.
(d) Versatile, quick, accurate, wide variety of high quality image editing software now available.
Q18. Which of the following is the limitation of digital cameras?
(a) Labour intensive and slow, prone to error.
(b) Can be inaccurate and affected by external interference.
(c) Higher quality means larger file size which can become expensive and difficult to manage.
(d) Slow and can be prone to error.
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Q19. The part of a computer system that receives the processed data from the computer and presents in
some way is called:
(a) Input device (b) Output device
(c) Central processing unit (d) Storage
Q20. Monitor, printers, speakers & handsets and projectors are the forms of:
(a) Input devices (b) Output devices
(c) Storage devices (d) All of the above
Q21. The different types of storage devices found within a computer system include the following:
(a) External memory (b) Scanners
(c) Projector (d) Printers
Q22. Primary storage / internal memory of any computer system is:
(a) Non-volatile as data remains intact even when powered off.
(b) Volatile by nature as it is erased when power is turned off.
(c) Not directly accessible by the CPU.
(d) Located further from the CPU, therefore takes longer to access.
Q23. Secondary storage (external memory) of any computer system is:
(a) Volatile by nature as it is erased when power is turned off.
(b) Not directly accessible by the CPU.
(c) Directly accessible by the CPU that allows it to process data.
(d) Much quicker to access.
Q24. A computer’s largest secondary storage location is typically its hard disk drive, the capacity of which
would typically fall between:
(a) 20 GB to 1 TB (b) 20 GB to 2 TB
(c) 40 GB to 2 TB (d) 40 GB to 1 TB
Q25. Flash drive and CD are examples of:
(a) Primary storage (b) Secondary storage
(c) Tertiary storage (d) Offline storage
Q26. The storage which typically involves a robotic mechanism that mounts and dismounts removable
mass storage media into a storage device, is called:
(a) Primary storage (b) Secondary storage
(c) Tertiary storage (d) Offline storage
Q27. The storage which describes any type of data storage that is not under the control of processing units
is called:
(a) Primary storage (b) Secondary storage
(c) Tertiary storage (d) Offline storage
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Q28. A telecommunications infrastructure that allows computers to exchange data with each other is
known as:
(a) A computer network (b) System adaptation
(c) Cybernetic systems (d) Self – organizing
Q29. The best known computer network is the:
(a) Barcodes and EPOS (b) Optical mark reading (MIR)
(c) Internet (d) Information technology
Q30. Computer networks support a vast range of uses including:
(a) The World Wide Web (b) Online booking system
(c) Instant messaging (d) All of the above
Q31. Internet based communication such as Skype is one of the uses of:
(a) Output device (b) Storage device
(c) Computer networks (d) Online processing
Q32. The way in which the components of a computer system such as printers, PCs and storage devices are
linked together and how they interact is known as:
(a) Database (b) A server
(c) System architecture (d) The world wide web
Q33. All processing being performed on a single central computer is known as:
(a) System architecture (b) Centralized architecture
(c) Decentralized architecture (d) Typical network configurations
Q34. The system which describes the scenario where all modules of the system are linked and function
together as a system in a coordinated fashion is known as:
(a) Closed system (b) Open system
(c) Integrated IT system (d) Deterministic system
Q35. __________describes one level of interaction found between computers in system architecture:
(a) Computer network (b) Information technology
(c) Information system (d) Client server computing
Q36. A machine that is dedicated to providing a particular function or service requested by a client within a
network system is called:
(a) System architecture (b) Server
(c) Output device (d) Input device
Q37. ____________are used to manage the data files that are accessible to users of the network:
(a) System architectures (b) Computer networks
(c) File servers (d) Network servers
Q38. Servers can range in power from top-end’ super servers, capable of driving sever which is typically a
powerful:
(a) Handheld computer (b) Mainframe computer
(c) Super computer (d) Personal computer (P(C)
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Q39. A computer network covering a small geographic area such as a home, office, group of building or
school is called:
(a) Telecommunication (b) Local area network
(c) Wide area network (d) System
Q40. A local area network (LAN) includes following distinguishing feature:
(a) Relatively low data transmission errors
(b) Data transfer speeds are much low
(c) Data transmission error rate tends to be significantly higher.
(d) Setup cost are higher
Q41. The computer network that covers a broad area i.e a network that communicates across regional,
metropolitan or national boundaries over a long distance is called:
(a) Telecommunication (b) Local area network
(c) Wide area network (d) System
Q42. A WAN’s distinguishing feature include:
(a) Low cost maintenance (b) Relatively low data transmission errors
(c) Relatively high data transmission (d) The data transfer speeds are high
Q43. ___________has inbuilt control very much like a thermostat in a heating system, they are not
responsive to challenges in the environment:
(a) Open loop control (b) Closed loop control
(c) Open system (d) Closed system
Q44. The stock or a credit control system where the system automatically checks responses is business
example of:
(a) Open system (b) Closed system
(c) Open loop control (d) Closed loop control
Q45. Closed loop control is most suitable for the type of system which is:
(a) Deterministic (b) Probabilistic
(c) Stable (d) Dynamic
Q46. Which of the following does not have inbuilt control as it comes from outside the system?
(a) Open system (b) Closed system
(c) Closed loop control (d) Open loop control
Q47. Which of the following are responsive to the environment and they often involve interaction from
users?
(a) Open system (b) Closed systems
(c) Closed loop control (d) Open loop control
Q48. The elements of a control system include:
(a) Input, process, output (b) Planning, controlling, decision making
(c) Input, controlling, decision making (d) Planning, process, output
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Q49. Which of the following relates to long-term decision making?

(a) Tactical information (b) Strategic information
(c) Operational information (d) All of the above
Q50. Which of the following incorporates both internal information as well as external information about
competitors, the market and the general business environment?
(a) Strategic information (b) Tactical information
(c) Operational information (d) None of the above
Q51. Which of the following assists managers in making short – term tactical decision?
(a) Strategic information (b) Tactical information
(c) Operational information (d) Open system
Q52. Establishing a fee to quote on a particular order is an example of:
(a) Strategic information (b) Tactical information
(c) Operational information (d) Open system
Q53. Which of the following type of information system relates to the day to day activities of an
organization?
(a) Strategic information (b) Tactical information
(c) Operational information (d) Open system
Q54. Daily production reports of an organization are the example of:
(a) Strategic information (b) Tactical information
(c) Operational information (d) Open system
Q55. Which of the following is the example of tactical information?
(a) Establishing a fee to quote a particular (b) Daily sales reports
(c) Daily production reports (d) Details of customer complaints
Q56. Planning, controlling, recording transactions, performance measurement and decision making are
different roles of:
(a) Leader (b) Manager
(c) Information system (d) System architectures
Q57. Data entry describes any of the techniques used to initially record data into a system. An example of
data includes:
(a) Purchase information (b) Cybernetic systems
(c) System adaptation (d) Optical mark reading
Q58. The collection of a group of similar transactions over a period of time, and their processing at a single
time as a batch is called:
(a) Data entry (b) Batch processing
(c) Online processing (d) Real time processing
Q59. Which of the following refers to equipment that operates under control of the control computer but
typically from a different location through some kind of terminal?
(a) Data entry (b) Batch processing
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(c) Online processing (d) Real time processing

Q60. The processing of individual transactions as they occur without the need for batching them together is
known as:
(a) Data processing (b) Batch processing
(c) Online processing (d) Real time processing
Q61. Which of the following performs, records and processes routine transaction?
(a) Transaction processing systems (b) Management processing systems
(c) Decision support systems (d) Executive information systems
Q62. A_______________ system digests inputted data and processes it into useful information:
(a) Transactional processing (b) Management information
(c) Decision support (d) Expert
Q63. Which of the following is the characteristic of a managerial information system?
(a) The nominal ledger
(b) User inputs queries and variables for the model through a user interface
(c) It supports structured decisions
(d) Tends to be expensive and real time
Q64. A set of related computer programs and data required to assist with the analysis and decision making
within an organization is called:
(a) Decision support system (b) Management information system
(c) Financial reporting system (d) Executive information system
Q65. A type of management information system that facilitates and supports senior executives in their
decision making is known as:
(a) Expert system
(b) Executive information system
(c) Integrated information technology system
(d) Personnel system
Q66. A computer program that simulates the Judgment and behaviour of a human or an organization that
has expert knowledge and experience in a particular field is known as:
(a) Order processing and inventory control system
(b) An expert system
(c) Integrated information technology system
(d) Transaction processing system
Q67. Which of the following involves maintaining a system of accounting records for business transactions
and other items of a financial nature?
(a) Transactional processing system (b) Financial accounting system
(c) Personnel system (d) Inventory control system
Q68. _________________system should be capable of recording all orders accurately and in a timely
fashion:
(a) Financial reporting (b) Expert
CHAPTER - 5 INFORMATION SYSTEMS (133)

(c) Order processing (d) Personnel

Q69. Which of the following systems exists to support the human resources management function in
performing its duties of maintaining an appropriate workforce?
(a) Executive information (b) Financial reporting
(c) Expert (d) Personnel
Q70. Which of the following systems describes the scenario where all modules of the system are linked and
function together as a system in a coordinated fashion?
(a) Expert system (b) Financial reporting system
(c) Personnel system (d) Integrated IT system
Q71. A cross function system driven by an integrated suite of software modules supporting the basic
internal processes of a business is called:
(a) Expert system (b) Personnel system
(c) Enterprise resource planning (d) Integrated IT system
Q72. The _________________ system exists to support the human resources management function in
performing its duties of maintaining an appropriate workforce. Which of the following completes the
statement?
(a) Personnel (b) Integrated
(c) Management (d) All of the above
Q73. A computer system comprises four key components. Which of the following is not a key component
of a computer system?
(a) Central Processing Unit (b) Input device
(c) Output device (d) Data Analysis Unit
Q74. Printers, disc drives, monitor screens are examples of _________________?
(a) Computer hardware (b) Computer software
(c) Integrated hardware (d) None of the above
Q75. Input devices facilitate the introduction of data and information into the system. Examples might
include a keyboard, scanner, mouse or barcode reader. TRUE or FALSE?
(a) TRUE (b) FALSE
Q76. Which of the following statements is TRUE about the Central Processing Unit?
(a) The central processing unit is the ‘brain’ of the computer
(b) The central processing unit takes the inputs, processes them and then outputs the results
(c) Both A and B
(d) Neither A nor B
Q77. Output devices facilitate the extraction of processed information from the system. Examples would
include a printer, speaker or screen. TRUE or FALSE?
(a) TRUE (b) FALSE
Q78. A ______________ is a hand-operated device with internal sensors that pick up the motion and
convert it into electronic signals which instruct the cursor (pointer) on screen to move. Fill in the
blank with the correct option that completes the sentence.
(a) Mouse (b) Keyboard
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(c) Bluetooth device (d) Hand held pointer

Q79. What does MICR stand for?
(a) Magnetic instrument for character recognition
(b) Magnetic ink character recognition
(c) Master instrument for character recognition
(d) Magnetic illustrator for complex results
Q80. Which of the following is a disadvantage of MICR devices?
(a) MICR documents are not very costly to produce
(b) MICR documents take too much time to process
(c) MICR documents are expensive to produce
(d) MICR documents compromise on accuracy for speed
Q81. ________________ capture images and videos in digital form and allow easy transfer to a computer
where they can be manipulated by software. Fill in the blank.
(a) Digital Cameras (b) CTV cameras
(c) Web Cameras (d) Light cameras
Q82. What is the function of an Output device?
(a) It receives processed data from the computer and presents it in some way
(b) It facilitates the introduction of data and information into the system
(c) It is a device that processes data and provides results
(d) None of the above
Q83. QR codes and Barcodes are examples of:
(a) Input devices (b) Output devices
(c) Both a and b (d) Neither a nor b
Q84. An ___________ device is the part of a computer system that receives the processed data from the
computer and presents it in some way.
(a) Processing (b) Input
(c) CPU (d) Output
Q85. OCR can be somewhat inaccurate if input image is low quality. TRUE or FALSE?
(a) TRUE (b) FALSE

Q86. A system that is used to effectively plan the use of a manufacturer's resources. It enables
manufacturers to develop a precise production schedule for the future that minimizes costs and
maximizes the use of the resources available at their disposal.
(a) Enterprise Resource Planning (b) Manufacturing Resource Planning
(c) Human Resource Planning (d) Transaction Processing System
Q87. At the initial level of information systems is an information recording system, which generates initial
summary data collected by _______to produce both regularly scheduled and special reports.
(a) Database (b) DBMS
(c) EIS (d) TPS
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Q88. Customer support is often provided in other countries where wage rates are lower. These are example
of _______ and ________
(a) Call centers (b) Outsourcing
(c) Customer advisory centre (d) Customer profile to maintain
Q89. Which one of the following distinguishes the WAN from LAN?
(a) LAN exist under collective or distributed ownership and management covering long
distances, whereas WAN covers small area and owned by a single person.
(b) Setup costs are typically higher and maintaining a LAN is more expensive whereas WAN is
more cost effective and has low maintenance cost.
(c) There is high data transmission error in WAN, in contrast there is relatively low data
transmission errors in LAN.
(d) All of the above

Q90. Out of given, which of the following automates routine and tedious back-office processes, order
processing, and financial reporting?
(a) MSS (b) DSS
(c) TPS (d) EIS

Q91. A system does interact therefore the environment will affect the system and the system will affect the
environment. All businesses, social and information systems are examples of_________.
(a) Closed system (b) Semi-closed system
(c) Semi-open system (d) Open system

Q92. Which of the given is not the features of Deterministic System?

(a) Use predetermined rules (b) Have predicted operations
(c) Giving predictable outputs (d) Next state is unpredictable
Q93. Batch processing is the collection of a group of transactions over a period of time, and their
processing of ____ and ___jobs at any single time as
(a) Different (b) Similar
(c) Dissimilar (d) Homogeneous
Q94. In DSS, user inputs queries and variables for the model through ______
(a) Search engine (b) Search bar
(c) User interface (d) None of the above
Q95. A software which the qualifications and features of application typically source code is kept hidden,
unlike open-source systems, work and activate it from itself we can called it
(a) An open system (b) A closed system
(c) An isolated system (d) None of the above

Q96. An information system which is used analyzes large amounts of data and presents an organization
with the best possible options available.
(a) MSS (b) DSS
(c) TPS (d) EIS
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Q97. Which is not correct related with probabilistic system?

(a) Assign a probability to future events
(b) Their behavior is less easy to predict. Most businesses are examples of probabilistic systems
(c) When business sales forecast, it will try to predict sales based on past evidence.
(d) In effect the business tries to change after the event has occurred
Q98. Batch processing is the method computers use to periodically complete high-volume, repetitive data
jobs. this type of processing is associated with the _____ centralized type systems.
(a) Super (b) Mainframe
(c) Database (d) None of the above
Q99. Which of the following is the disadvantage of batch processing?
(a) Often delays between when a transaction is made and when the master file is updated and the
output generated.
(b) Management information is often incomplete due to out-of-date data.
(c) Often master files always kept offline therefore access may not always be available
(d) All of the above
Q100. Online processing refers to equipment that operates under control of the ___________through some
kind of terminal.
(a) Distributed computing but typically from a different location
(b) Central computer but typically from a different location
(c) Central computer but typically from a same location
(d) Stand along computer but typically from the same location
Q101. Real time processing is the processing of _________as they occur without the need for batching them
together.
(a) Class of transactions (b) Similar transactions
(c) Dissimilar transactions (d) Individual transactions
Q102. Which of the following is the disadvantages of real time processing?
(a) Information is more upto date therefore providing better management information
(b) Increase ability for data to be online
(c) Increased hardware capacity which increases costs
(d) Require potential hardware capacity
Q103. Among the given information systems, which of the following uses the internal master database to
conduct high-level analyses that help managers make timely and better decisions?
(a) TPS (b) DSS
(c) MSS (d) EIS
Q104. If dealing with following cases
1) Weekly/monthly billing.
2) Payroll.
3) Inventory processing.
Which processing method you will prefer?
A Real time processing B Batch processing
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C Online processing D Centralized processing

Q105. The human brain, biological populations, as well as human society are the example of ____
(a) Probabilistic system (b) Cybernetic system
(c) Deterministic system (d) High tech system
Q106. Which of the following is a reasonable drawback of using a database?
(a) Any system failures may cause widespread disruption and loss of information
(b) It is difficult for two people to use it at the same time
(c) The quantity of information is limited to just a few thousand records
(d) Costs of setting it up often outweigh the benefits of using it
Q107. In some cases, where immediate processing is crucial to make the system work properly, say if you
are dealing with
1) Data streaming,
2) Radar systems,
3) Customer service systems,
4) Bank ATMs,
Which processing method you prefer?
(a) Real time processing (b) Batch processing
(c) Distributed processing (d) Centralized processing
Q108. The _________________ exists to support the human resources management function in performing
its duties of maintaining an appropriate workforce. Which two can fill in the blank in equal
meanings?
(a) Personnel Information System (b) Employee Database
(c) Human Resource Information System (d) Time in – Time out Sheet
Q109. ___________is the integrated management of main business processes, often in real-time and
mediated by software and technology.
(a) Entrepreneurial Resource Planning (b) Enterprise Reliable Planning
(c) Enterprise Resource Planning (d) Enterprise Resource Processing
Q110. The objective of the _________ is to ensure that the business maintains an appropriate amount of
inventory at all times. The control system should be able to indicate accurate levels of inventory for
all the lines maintained by a business and trigger the ordering of replacement inventory when
inventory levels fall to a certain level.
(a) Stock Management System (b) Inventory Optimizing System
(c) Inventory Control System (d) None of the above
Q111. The system will typically be linked to the inventory control system so that the sales person can
establish whether the organization is capable of fulfilling the order received.
Which two are correct.
(a) Order Processing System (b) Procurement System
(c) Trade Order Management System. (d) None of the above
Q112. This information system may include special spreadsheets that present financial data comparing the
company to its principal competitors and graphs showing current economic and industry trends.
(a) TPS (b) MSS
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(c) DSS (d) EIS

Q113. This system helps businesses by providing quantitative data and predictive models that aid problem-
solving and decision making. This system is developed to help managers make decisions using
interactive computer models that describe real-world processes.
Which two terms are relevant to express its name.
(a) Expert System (b) Management Support System
(c) Intelligent Decision Support System (d) Decision Support System
Q114. After reading following characteristics which information system come into your mind
1) Supports structured decisions
2) Reports on existing operations
3) Little analytical capability and is relatively inflexible
4) More Internal focus
(a) TPS (b) MSS
(c) DSS (d) EIS
Q115. By reading fallowing functions which are the systems come into your mind.
The system might be split into a number of modules including:
1) Nominal ledger
2) Accounts payable
3) Accounts receivable
(a) Transaction Processing System (b) Financial Accounting System
(c) Financial Reporting System (d) All of the above
Q116. The information system involves:
1) Maintaining a system of accounting records for business transactions and other items of a
financial nature; and
2) Reporting the financial position and the financial performance of an entity in a set of
‘financial statements.
Which of the two terms can define above system?
(a) Financial Accounting System (b) Financial Reporting System
(c) Economic Reporting System (d) Book Keeping System
Q117. An _________is a computer program that uses artificial intelligence (AI) technologies to simulate the
judgment and behavior of a human or an organization that has expertise and experience in a particular
field. Choose most common term used.
(a) Natural language processing (b) Knowledge Engineering
(c) Expert System (d) Neural network
Q118. If you need to plan by your own but with the help of an information system which tells you to the
plan the fastest and best routes between two points by analyzing the available options. These systems
often include the capability to monitor traffic in real-time to route around congestion.
Which system is in your mind
(a) MIS (b) TPS
(c) DSS (d) None of the above
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Q119. CaDet (Cancer Decision Support Tool) is used to identify cancer in its earliest stages.
(a) TPS (b) MSS
(c) DSS (d) ES
Q120. The personnel system exists to support the function in performing its duties of maintaining
appropriate workforce.
(a) IT management (b) Human resources management
(c) Customer management (d) Order management
Q121. Which of the following assists management by providing graph trends and summary reports for
making decisions on head count?
(a) TPS (b) MSS
(c) DSS (d) EIS
Q122. ERP is a _______ system driven by an integrated suite of software modules supporting the basic
internal processes of a business.
(a) Cross country (b) Cross technology
(c) Cross functional (d) Cross cultural
Q123. The _____ level users of information system make unstructured, strategic decisions and use
information from tactical managers and external data to guide them when making strategic decisions
with the help of ______ information system
(a) Middle management (b) Top management
(c) MSS (d) EIS
Q124. This information system typically emphasizes graphical displays and simple user interfaces with a
‘high-level’ executive summary styled dash-board. Directors can then drill-down into various
components of the dashboard to extract more detailed information if required.
(a) TPS (b) MSS
(c) DSS (d) EIS
Q125. A software integrates with your core business operations, like your inventory tracking system,
ecommerce payment gateway, and shipping and handling. You no longer need to bounce through
multiple software programs when you have the answers you need in one place. This is a cross-
functional system driven by an integrated suite of software modules supporting the basic internal
processes of a business.
(a) Manufacturing Resource Planning (b) Enterprise Resource Planning
(c) Organizational Resource Planning (d) Strategic Resource Planning
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ANSWERS OF MCQS
1. (b) 2. (c) 3. (b)

4. (b) 5. (d) 6. (b)

7. (b) 8. (c) 9. (a)

10. (b) 11. (d) 12. (a)

13. (c) 14. (c) 15. (c)

16. (c) 17. (b) 18. (c)

19. (b) 20. (b) 21. (a)

22. (b) 23. (b) 24. (c)

25. (b) 26. (c) 27. (d)

28. (a) 29. (c) 30. (d)

31. (c) 32. (c) 33. (b)

34. (c) 35. (d) 36. (b)

37. (c) 38. (d) 39. (b)

40. (a) 41. (c) 42. (c)

43. (b) 44. (d) 45. (c)

46. (d) 47. (d) 48. (a)

49. (b) 50. (a) 51. (b)

52. (b) 53. (c) 54. (c)

55. (a) 56. (c) 57. (a)

58. (b) 59. (c) 60. (d)

61. (a) 62. (b) 63. (c)

64. (a) 65. (b) 66. (b)

67. (b) 68. (c) 69. (d)

70. (d) 71. (c) 72. (a)

73. (d) 74. (a) 75. (a)

76. (c) 77. (a) 78. (a)

79. (b) 80. (c) 81. (a)

82. (a) 83. (a) 84. (d)

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85. (a) 86. (a) 87. (d)

88. (a&b) 89. (c) 90. (c)

91. (d) 92. (d) 93. (b)&(d)

94. (c) 95. (b) 96. (b)

97. (d) 98. (b) 99. (d)

100. (b) 101. (d) 102. (c&d)

103. (c) 104. (b) 105. (b)

106. (a) 107. (a) 108. (a&c)

109. (c) 110. (c) 111. (a&c)

112. (d) 113. (c&d) 114. (b)

115. (a) 116. (a&b) 117. (c)

118. (c) 119. (d) 120. (b)

121. (d) 122. (c) 123. (b&d)

124. (d) 125. (b)