UNIT -5

What is a Decision Support System (DSS)?

DSS, Decision Support System, is a tool that helps in decision-making. It uses
communication technologies, data, and documents to identify problems and to
finalize decisions.

DSS is a class of digital data systems that provides business and organizational
decision-making actions. It is basically a computer-based software that collects,
organizes, and analyses the business data and information to simplify the
business decision-making process for administration, services, and planning.

Today, DSS software are being used in different fields such as medical
diagnosis, credit loan verification, agricultural production at the farm and policy
methods, business administration, calculating bids on engineering projects,
forest management, computation of defective rails in railways, etc.

Example #1

Consider a retail company called ABC, aiming to optimize its inventory

management. Using a Decision Support System (DSS), the company can
analyse historical sales data, current market trends, and supplier information.
The DSS employs predictive analytics to forecast demand for different products
in various seasons. It also considers lead times, production costs

With this information, the company’s decision-makers can model different

scenarios, such as adjusting order quantities, reorder points, and safety stock
levels. By simulating these scenarios and their potential outcomes, the DSS aids
the company in making informed decisions about inventory levels, minimizing
stockouts, reducing excess inventory costs, and ultimately improving overall
operational efficiency and customer satisfaction.
Purpose of a Decision Support System
A decision support system produces detailed information reports by gathering
and analysing data. Hence, a DSS is different from a normal operations
application, whose goal is to collect data and analyse it.

In an organization, a DSS is used by the planning departments – such as the

operations department – which collects data and creates a report that can be
used by managers for decision-making. Mainly, a DSS is used in sales
projection, operations-related data, and to present information to customers in
an easy-to-understand manner.

Theoretically, a DSS can be employed in various knowledge domains from an

organization to forest management and the medical field. One of the main
applications of a DSS in an organization is real-time reporting. It can be very
helpful for organizations that take part in inventory management.

In a JIT inventory system, the organization requires real-time data of their

inventory levels to place orders “just in time” to prevent delays in production
and cause a negative domino effect. Therefore, a DSS is more tailored to the
individual or organization making the decision than a traditional system.

Components of a Decision Support System

1. Data Management: This involves gathering, storing, and organizing

relevant data from various sources. It may include historical data, real-
time information, external databases, etc.
2. Modelling and Analysis Tools: DSSs use various models, algorithms,
and analytical techniques to process data and generate insights. These
tools can include optimization algorithms, forecasting models, and
simulation methods.
3. User Interface: The user interface allows decision-makers to interact
with the DSS. It presents data, visualizations, and results in a user-
friendly manner, enabling users to input parameters, run analyses, and
interpret outcomes.
4. Database Management System (DBMS): A DBMS manages the storage
and retrieval of data for the DSS. It ensures data integrity, security, and
efficient access to the required information.
5. Knowledge Base: This component stores domain-specific knowledge,
rules, and guidelines for decision-making. It helps the DSS understand
the context and constraints of the problem.
 6. Communication and Collaboration Tools: DSSs often support
communication and collaboration among team members. They enable
sharing of information, analysis results, and scenarios, facilitating group
decision-making.

Characteristics

1. Interactive: DSSs provide an interactive interface that allows users to

manipulate data, adjust parameters, and explore different scenarios. Users
can engage with the system in real-time and receive instant feedback.
2. Support for Decision-Making: The primary purpose of a DSS is to
assist decision-makers in making informed choices. DSSs provide
relevant data, analyses, and insights to facilitate decision-making.
3. Modelling and Analysis: DSSs incorporate various models, algorithms,
and analytical tools to process data and generate insights. These tools aid
in predicting outcomes, identifying trends, and evaluating alternatives.
4. User-Friendly Interface: DSSs offer user-friendly interfaces that make it
accessible to non-technical users. These interfaces often
includevisualizations and easy-to-understand reports.
5. Support for decision-makers in semi-structured and unstructured
problems.
6. Support for managers at various managerial levels, ranging from top
executive to line managers.
7. Support for individuals and groups. Less structured problems often
requires the involvement of several individuals from different
departments and organization level.
8. Support for interdependent or sequential decisions.
9. Support for intelligence, design, choice, and implementation.
10.Support for variety of decision processes and styles.
11.DSSs are adaptive over time.

Types of Decision Support Systems

1. Model-Driven DSS: These systems use mathematical and analytical

models to support decision-making. They rely on data inputs and
algorithms to generate predictions, simulations, and optimization
solutions. Examples include inventory management tools.
 2. Data-Driven DSS: These DSSs focus on data analysis and visualization
to aid decisions. They help users explore patterns, trends, and
relationships in data through charts, graphs, and reports. Business
intelligence and data visualization tools fall into this category.
3. Document-Driven DSS: These DSSs manage and provide access to
textual information relevant to decision-making. They can organize
documents, reports, and research papers, making them easily accessible to
users.
4. Status Inquiry System − It helps in taking operational, management
level, or middle level management decisions, for example daily schedules
of jobs to machines or machines to operators.
5. Data Analysis System − It needs comparative analysis and makes use of
formula or an algorithm, for example cash flow analysis, inventory
analysis etc.
6. Information Analysis System − In this system data is analysed and the
information report is generated. For example, sales analysis, accounts
receivable systems, market analysis etc.
7. Accounting System − It keeps track of accounting and finance related
information, for example, final account, accounts receivables, accounts
payables, etc. that keep track of the major aspects of the business.
8. Model Based System − Simulation models or optimization models used
for decision-making are used infrequently and creates general guidelines
for operation or management.
9. Knowledge-Driven DSS: These systems incorporate expert knowledge
and rules to support decisions. They can answer queries, provide advice,
and offer recommendations based on predefined rules and expertise.
Medical diagnosis systems and legal advisory systems are examples.

Advantages of a Decision Support System

 A decision support system increases the speed and efficiency of decision-
making activities. It is possible, as a DSS can collect and analyze real-
time data.
 It promotes training within the organization, as specific skills must be
developed to implement and run a DSS within an organization.
 It automates monotonous managerial processes, which means more of the
manager’s time can be spent on decision-making.
 It improves interpersonal communication within the organization.
Disadvantages of a Decision Support System
 The cost to develop and implement a DSS is a huge capital investment,
which makes it less accessible to smaller organizations.
 A company can develop a dependence on a DSS, as it is integrated into
daily decision-making processes to improve efficiency and speed.
However, managers tend to rely on the system too much, which takes
away the subjectivity aspect of decision-making.
 A DSS may lead to information overload because an information system
tends to consider all aspects of a problem. It creates a dilemma for end-
users, as they are left with multiple choices.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies
DSS as follows −

 Text Oriented DSS − It contains textually represented information that

could have a bearing on decision. It allows documents to be electronically
created, revised and viewed as needed.
 Database Oriented DSS − Database plays a major role here; it contains
organized and highly structured data.
 Spreadsheet Oriented DSS − It contains information in spread sheets
that allows create, view, modify procedural knowledge and also instructs
the system to execute self-contained instructions. The most popular tool
is Excel and Lotus 1-2-3.
 Solver Oriented DSS − It is based on a solver, which is an algorithm or
procedure written for performing certain calculations and particular
program type.
 Rules Oriented DSS − It follows certain procedures adopted as rules.

Applications of DSS or How DSS can enhance decision

making?
1. Business Management: DSS aids in strategic planning, resource
allocation, and performance analysis for businesses. It assists in setting
goals, evaluating alternatives, and optimizing operational processes.
2. Healthcare: DSS supports medical professionals in diagnosis, treatment
planning, and patient management. It helps doctors make informed
 decisions by providing access to patient records, medical literature, and
clinical guidelines.
3. Finance: DSS is used for financial forecasting, risk assessment, and
investment analysis. It helps financial analysts make informed decisions
about investment opportunities and market trends.

Limitations of DSS
Following are the limitation of DSS –
 Difficulty in Quantifying All the Data: A decision support system majorly
relies on quantifiable data. Consequently, it’s difficult to analyze intangible or
indefinable data. In reality, some values cannot be very specific and defined in
numbers. Even though a DSS may quantify some of these aspects, the end result
must be duly considered by the decision makers. They must use their own
judgment when making the final decision.
 Unaware of Assumptions: As a decision maker, you may not be fully aware
of the assumptions that a decision support system has considered when
analyzing data for a specific problem. Making decision without considering
uncontrollable factors may prove to be dangerous. A decision maker must
realize that a computerized DSS is only a supporting tool. You must consider an
unstructured or partially structured situation indepth and analyze the limitations
and assumptions.
 System Design Failure: Decision support systems are designed to the specific
needs of a decision maker. If you don’t know what you want a DSS to do or
how it should help you, it will be difficult to design a system that fits your
needs. And when you use a vague DSS, the results generated are not what
you’re looking for. Such situations may arise because of system design failure.
 Difficulty in Collecting All the Required Data: As a decision maker, you must
realize that it’s not possible to capture all of the related data mechanically.
While some data is difficult to record, some cannot be recorded at all.
Therefore, the value presented by a DSS may not be 100% true.
 Lack of Technology Knowledge in Users: Although decision support systems
have become much simpler over the years, many decision makers still find it
difficult to use. Lack of technological knowledge remains an issue.
Deterministic system

The word deterministic means that the outcome or the result is predictable
beforehand, that could not change, that means some future events or results of
some calculation can always be predicted and is same, there is no randomness
in deterministic. For example – Calculation from meter to the centimeter or
gram to kilogram, etc. i.e the formula for solving remains the same and does not
change randomly. Something is called deterministic when all the needs are
provided and one knows the outcome of it.

It is a type of system where the output and behavior can be precisely predicted
based on the initial conditions and set of rules governing the system. In such
systems, the same input will always produce the same output, with no variation or
randomness. Deterministic systems allow for reliable and consistent outcomes,
making them widely used in computing, engineering, and scientific modeling.

DSS MODEL

1.Behavioral model: these models are useful in understanding the behavior

amongst the business variables. The decision maker can then make decisions
giving due regard to such behavioral relationships

2.Management science models: these models are developed on the principles of

business management, accounting, and economies. In many areas of
management, the proven methods of management control are available which can
be used for the management decisions. There are also several management
systems, which can be converted into DSS models.

3.Operation research models: the operation research models are mathematical

models. These models represent a real-life problem situation in terms of the
variables, constants, and parameters expressed in algorithm equation. Since the
models are mathematical; there are solutions to these problems. In arriving the
solution methodology calculus, matrix algebra, probability, and set theory are
used. These models have the clarity to the extent that each of them has a set of
assumptions which must be true in real life. Further, if the assumptions are valid,
the solutions offered are realistic and practical. The model represents the real-life
problem solutions.

Artificial Intelligence (AI)

It can be defined as the simulation of human cognitive abilities by a computer
system, such as learning, reasoning, problem solving and self-correction.
Through self-training, AI machines first model, then go beyond the capabilities
of, a human mind to interpret situations and arrive at rational conclusions.
Artificial intelligence (AI) is the intelligence of a machine or computer that
enables it to imitate or mimic human capabilities.
AI uses multiple technologies that equip machines to sense, comprehend, plan,
act, and learn with human-like levels of intelligence. Fundamentally, AI
systems perceive environments, recognize objects, contribute to decision
making, solve complex problems, learn from past experiences, and imitate
patterns. These abilities are combined to accomplish tasks like driving a car or
recognizing faces to unlock device screens.
The AI landscape spreads across a constellation of technologies such as
machine learning, natural language processing, computer vision, and others.
Such cutting-edge technologies allow computer
systems to understand human language, learn from examples, and make
predictions.
Although each technology is evolving independently, when applied in
combination with other technologies, data, analytics, and automation, it can
revolutionize businesses and help them achieve their goals, be it optimizing
supply chains or enhancing customer service.

Key Components of AI
1. Machine learning: Machine learning is an AI application that
automatically learns and improves from previous sets of experiences
without the requirement for explicit programming.
2. Deep learning: Deep learning is a subset of ML that learns by
processing data with the help of artificial neural networks.
3. Neural network: It is computer systems that are loosely modeled
on neural connections in the human brain and enable deep learning.
 4. Cognitive computing: Cognitive computing aims to recreate the
human thought process in a computer model. It seeks to imitate and
improve the interaction between humans and machines by
understanding human language and the meaning of images.
5. Natural language processing (NLP): NLP is a tool that allows
computers to comprehend, recognize, interpret, and produce human
language and speech.
6. Computer vision: Computer vision employs deep learning and
pattern identification to interpret image content (graphs, tables, PDF
pictures, and videos).

TYPE OF AI

Narrow AI
Narrow AI is a goal-oriented. AI trained to perform a specific task. The
machine intelligence that we witness all around us today is a form of narrow AI.
Examples of narrow AI include Apple’s Siri and IBM’s Watson supercomputer.
Narrow AI is also referred to as weak AI as it operates within a limited and pre-
defined set of parameters, constraints, and contexts. For example, use cases
such as Netflix recommendations, purchase suggestions on ecommerce sites,
autonomous cars, and speech & image recognition fall under the narrow AI
category.

2. General AI
General AI is an AI version that performs any intellectual task with a human-
like efficiency. The objective of general AI is to design a system capable of
thinking for itself just like humans do. Currently, general AI is still under
research, and efforts are being made to develop machines that have enhanced
cognitive capabilities.
3. Super AI- is the AI version that surpasses human intelligence and can

perform any task better than a human. Capabilities of a machine with super AI

include thinking, reasoning, solving a puzzle, making judgments, learning, and

communicating on its own. Today, super AI is a hypothetical concept but

represents the future of AI.

Types of AI based on functionality.

4. Reactive machines
Reactive machines are basic AI types that do not store past experiences or
memories for future actions. Such systems zero in on current scenarios and react
to them based on the best possible action. Popular examples of reactive
machines include IBM’s Deep Blue system and Google’s AlphaGo.

5. Limited memory machines

Limited memory machines can store and use past experiences or data for a short
period of time. For example, a self-driving car can store the speeds of vehicles
in its vicinity, their respective distances, speed limits, and other relevant
information for it to navigate through the traffic.

6. Theory of mind
Theory of mind refers to the type of AI that can understand human emotions
and beliefs and socially interact like humans. This AI type has not yet been
developed but is in contention for the future.

7. Self-aware AI
Self-aware AI deals with super-intelligent machines with their consciousness,
sentiments, emotions, and beliefs. Such systems are expected to be smarter than
a human mind and may outperform us in assigned tasks. Self-aware AI is still a
distant reality, but efforts are being made in this direction.
IMPORTANCE OF AI

1.Develop problem-solving ability

AI research is focused on developing efficient problem-solving algorithms that
can make logical deductions and simulate human reasoning while solving
complex puzzles. AI systems offer methods to deal with uncertain situations or
handle the incomplete information conundrum by employing probability theory,
such as a stock market prediction system.
The problem-solving ability of AI makes our lives easier as complex tasks can
be assigned to reliable AI systems that can aid in simplifying critical jobs.

2. Incorporate knowledge representation

AI research revolves around the idea of knowledge representation and
knowledge engineering. It relates to the representation of ‘what is known’ to
machines with the ontology for a set of objects, relations, and concepts.
The representation reveals real-world information that a computer uses to solve
complex real-life problems, such as diagnosing a medical ailment or interacting
with humans in natural language. Researchers can use the represented
information to expand the AI knowledge base and fine-tune and optimize their
AI models to meet the desired goals.

3. Facilitate planning
Intelligent agents provide a way to envision the future. AI-driven planning
determines a procedural course of action for a system to achieve its goals and
optimizes overall performance through predictive analytics, data analysis,
forecasting, and optimization models.
With the help of AI, we can make future predictions and ascertain the
consequences of our actions. Planning is relevant across robotics, autonomous
systems, cognitive assistants, and cybersecurity.
4. Allow continuous learning
Learning is fundamental to AI solutions. Conceptually, learning implies the
ability of computer algorithms to improve the knowledge of an AI program
through observations and past experiences. Technically, AI programs process a
collection of input-output pairs for a defined function and use the results to
predict outcomes for new inputs.
AI primarily uses two learning models–supervised and unsupervised–where the
main distinction lies in using labeled datasets. As AI systems learn
independently, they require minimal or no human intervention. For example,
ML defines an automated learning process.

5. Encourage social Intelligence

Affective computing, also called ’emotion AI,’ is the branch of AI that
recognizes, interprets, and simulates human experiences, feelings, and
emotions. With affective computing, computers can read facial expressions,
body language, and voice tones to allow AI systems to interact and socialize at
the human level. Thus, research efforts are inclined toward amplifying the
social intelligence of machines.

6. Promote creativity
AI promotes creativity and artificial thinking that can help humans accomplish
tasks better. AI can churn through vast volumes of data, consider options and
alternatives, and develop creative paths or opportunities for us to progress.
It also offers a platform to augment and strengthen creativity, as AI can develop
many novel ideas and concepts that can inspire and boost the overall creative
process. For example, an AI system can provide multiple interior design options
for a 3D-rendered apartment layout.

7. Achieve general intelligence

AI researchers aim to develop machines with general AI capabilities that
combine all the cognitive skills of humans and perform tasks with better
proficiency than us. This can boost overall productivity as tasks would be
performed with greater efficiency and free humans from risky tasks such as
defusing bombs.

8. Promote synergy between humans and AI

One of the critical goals of AI is to develop a synergy between AI and humans
to enable them to work together and enhance each other’s capabilities rather
than depend on just one system.

Knowledge-based expert system (KBES)

It is a type of computer system that analyses knowledge, data and other
information from sources to generate new knowledge. It uses AI concepts to
solve problems, which may be useful for assisting with human learning and
making decisions. These systems often have built-in problem-solving
capabilities that allow them to understand the context of the data that they
review and process and make informed decisions based on the knowledge that
they store. An expert system is a computer program that is designed to solve
complex problems and to provide decision-making ability like a human expert.
It performs this by extracting knowledge from its knowledge base using the
reasoning and inference rules according to the user queries.

The expert system is a part of AI, and the first ES was developed in the year
1970, which was the first successful approach of artificial intelligence. It solves
the most complex issue as an expert by extracting the knowledge stored in its
knowledge base. The system helps in decision making for complex problems
using both facts and heuristics like a human expert. It is called so because it
contains the expert knowledge of a specific domain and can solve any complex
problem of that particular domain. These systems are designed for a specific
domain, such as medicine, science, etc.

The performance of an expert system is based on the expert's knowledge stored

in its knowledge base. The more knowledge stored in the KB, the more that
system improves its performance. One of the common examples of an ES is a
suggestion of spelling errors while typing in the Google search box.
Characteristics/ Role of Expert System/Role of KBES
o High Performance: The expert system provides high performance for
solving any type of complex problem of a specific domain with high
efficiency and accuracy.
o Understandable: It responds in a way that can be easily understandable
by the user. It can take input in human language and provides the output
in the same way.
o Reliable: It is much reliable for generating an efficient and accurate
output.
o Highly responsive: ES provides the result for any complex query within
a very short period of time.
o It can deal with uncertainty
o These system are domain expert
o It focus on how top design and manipulate complex engineering project
over their life cycle
o User will be consulting with the system to get advice which would be
provided by the expert.

COMPONENTS
1.User Interface

With the help of a user interface, the expert system interacts with the user, takes
queries as an input in a readable format, and passes it to the inference engine.
After getting the response from the inference engine, it displays the output to
the user. In other words, it is an interface that helps a non-expert user to
communicate with the expert system to find a solution.

2. Inference Engine(Rules of Engine)

o The inference engine is known as the brain of the expert system as it is
the main processing unit of the system. It applies inference rules to the
knowledge base to derive a conclusion or deduce new information. It
helps in deriving an error-free solution of queries asked by the user.
o With the help of an inference engine, the system extracts the knowledge
from the knowledge base.
o There are two types of inference engine:
 o Deterministic Inference engine: The conclusions drawn from this type
of inference engine are assumed to be true. It is based on facts and rules.
o Probabilistic Inference engine: This type of inference engine contains
uncertainty in conclusions, and based on the probability.

Inference engine uses the below modes to derive the solutions:

o Forward Chaining: It starts from the known facts and rules, and applies
the inference rules to add their conclusion to the known facts.
o Backward Chaining: It is a backward reasoning method that starts from
the goal and works backward to prove the known facts.

3. Knowledge Base
o The knowledgebase is a type of storage that stores knowledge acquired
from the different experts of the particular domain. It is considered as big
storage of knowledge. The more the knowledge base, the more precise
will be the Expert System.
o It is similar to a database that contains information and rules of a
particular domain or subject.

Component of Knowledge base

o Factual Knowledge: The knowledge which is based on facts and
accepted by knowledge engineers comes under factual knowledge.
o Heuristic Knowledge: This knowledge is based on practice, the ability to
guess, evaluation, and experiences.

TYPES OF KNOWLEDGE BASED SYSTEM

Case-based systems – it use case-based reasoning. This involves reviewing past

knowledge of similar situations. Based on what it finds, the knowledge-based
system provides solutions that were effective in those given situations.

Expert systems -are one of the most common types of knowledge-based

systems. These systems mimic human experts' decision-making processes,
making them helpful for complex analyses, calculations and predictions. In
addition to presenting solutions, they provide specific explanations for the
problems they're solving.
Hypertext manipulation systems -store knowledge by linking text to other texts
and by using hypertext. Hypertext refers to a network of discrete blocks of
information interconnected as a way to store data. This type of system allows
you to access many types of data easily.

Rule-based systems- rely on human-made, hard-coded rules. It uses these rules

to analyse and manipulate data to achieve specific outcomes. This may involve
using IF-THEN rules, which establish that if a user makes a certain request,
then the system delivers a certain outcome.

Intelligence tutoring system are knowledge-based systems specifically designed

to support learning. These systems provide users with personalized feedback
and instructions based on their performance and inquiries. As such, they're often
used in education, allowing students to learn more and have a personalized
learning experience without direct intervention from a teacher.

Uses of knowledge based expertise system

It is useful for providing expertise to people who require it, especially when
they're attempting to make decisions quickly.
They can be helpful for providing recommendations for various industries, and
their potential may continue to grow as technology evolves. Some examples of
current uses for knowledge-based systems include:

Classification system – It analyze data and assign it to appropriate groups. This

type of knowledge-based system allows you to determine what the classification
status is for a section of data. It may be particularly useful for scientists, such as
analyzing chemical components to determine the classification of particular
chemical compounds.

Eligibility analysis systems may include guided questions for a user. These are
often rule-based systems because they typically allow users to continue to
answer questions until one of their responses indicates they're not eligible for
the service. This type of system may be useful for those looking to make their
screening processes more efficient, such as government organizations or hiring
professionals.
Medical diagnosis system – It help diagnose patients based on their symptoms
in medical history. They may answer a series of questions or a medical
professional may enter the information for them, and, based on their responses,
the knowledge-based system identifies what condition they may be
experiencing, Many of these systems also recommend treatment methods the
patient may consider based on their responses and potential diagnosis. It's
important to note the system alone is not an appropriate replacement for
professional medical care.

Participants in the development of Expert System

There are three primary participants in the building of Expert System:

1. Expert: The success of an ES much depends on the knowledge provided

by human experts. These experts are those persons who are specialized in
that specific domain.
2. Knowledge Engineer: Knowledge engineer is the person who gathers
the knowledge from the domain experts and then codifies that knowledge
to the system according to the formalism.
3. End-User: This is a particular person or a group of people who may not
be experts, and working on the expert system needs the solution or advice
for his queries, which are complex.

Need of the ES:

1. No memory Limitations: It can store as much data as required and can
memorize it at the time of its application. But for human experts, there
are some limitations to memorize all things at every time.
2. High Efficiency: If the knowledge base is updated with the correct
knowledge, then it provides a highly efficient output, which may not be
possible for a human.
3. Expertise in a domain: There are lots of human experts in each domain,
and they all have different skills, different experiences, so it is not easy to
 get a final output for the query. But if we put the knowledge gained from
human experts into the expert system, then it provides an efficient output
by mixing all the facts and knowledge
4. Not affected by emotions: These systems are not affected by human
emotions such as fatigue, anger, depression, anxiety, etc.. Hence the
performance remains constant.
5. High security: These systems provide high security to resolve any query.
6. Considers all the facts: To respond to any query, it checks and considers
all the available facts and provides the result accordingly. But it is
possible that a human expert may not consider some facts due to any
reason.
7. Regular updates improve the performance: If there is an issue in the
result provided by the expert systems, we can improve the performance of
the system by updating the knowledge base.

Capabilities of the Expert System

o Advising: It is capable of advising the human being for the query of any
domain from the particular ES.
o Provide decision-making capabilities: It provides the capability of
decision making in any domain, such as for making any financial
decision, decisions in medical science, etc.
o Demonstrate a device: It is capable of demonstrating any new products
such as its features, specifications, how to use that product, etc.
o Problem-solving: It has problem-solving capabilities.
o Explaining a problem: It is also capable of providing a detailed
description of an input problem.
o Interpreting the input: It is capable of interpreting the input given by
the user.
o Predicting results: It can be used for the prediction of a result.
 o Diagnosis: An ES designed for the medical field is capable of diagnosing
a disease without using multiple components as it already contains
various inbuilt medical tools.

Advantages of Expert System

o These systems are highly reproducible.
o They can be used for risky places where the human presence is not safe.
o Error possibilities are less if the KB contains correct knowledge.
o The performance of these systems remains steady as it is not affected by
emotions, tension, or fatigue.
o They provide a very high speed to respond to a particular query.

Limitations of Expert System

o The response of the expert system may get wrong if the knowledge base
contains the wrong information.
o Like a human being, it cannot produce a creative output for different
scenarios.
o Its maintenance and development costs are very high.
o Knowledge acquisition for designing is much difficult.
o For each domain, we require a specific ES, which is one of the big
limitations.
o It cannot learn from itself and hence requires manual updates.

Applications of Expert System

In designing and manufacturing domain

It can be broadly used for designing and manufacturing physical devices such as
camera lenses and automobiles.
o In the knowledge domain
These systems are primarily used for publishing the relevant knowledge
to the users. The two popular ES used for this domain is an advisor and a
tax advisor.
o In the finance domain
In the finance industries, it is used to detect any type of possible fraud,
 suspicious activity, and advise bankers that if they should provide loans
for business or not.
o In the diagnosis and troubleshooting of devices
In medical diagnosis, the ES system is used, and it was the first area
where these systems were used.
o Planning and Scheduling
The expert systems can also be used for planning and scheduling some
particular tasks for achieving the goal of that task.

Transaction processing system

It refers to an information processing system that processes all transactions
taking place within the business. Such transactions include modification,
collection, and retrieval of transaction data. A TPS is highly consistent,
efficient, and dependable. It is the same system that online businesses utilize for
e-commerce.

A TPS has the following four components. One must understand them to know
how the system works.

1. Inputs: Inputs are original requests for payments or products outside

parties send to an organization’s TPS. Typically, inputs include bills,
coupons, custom order.
2. Output: Outputs are the documents a TPS generates after it processes all
inputs, for example, the receipts stored by companies in their records.
Such documents help validate transactions and offer crucial reference
details for tax and multiple official purposes.
3. Storage: A TPS’s storage component is where organizations keep their
output and input data. Some businesses store the documents in a database.
This component ensures the security, accessibility, and organization of all
documents for late use.
4. Processing System: The processing system goes through every input and
establishes a useful output, for example, a receipt. It helps outline the
input data and defines what the outputs must be. One must remember
that the processing time varies depending on the type of TPS an
organization uses.
Features/ What is the role of TPS in MIS?
The following are some crucial features of a TPS:

 Controlled Access: TPSs are powerful business tools. Hence, only

authorized employees can access it. In other words, it allows only certain
employees to control and process transactions.
 Connection With The External Environment: TPS establishes a
relationship with the external environment by distributing information to
suppliers and customers.
 Fast Response: This feature is crucial for a TPS as organizations cannot
afford to keep their customers waiting long before completing a
transaction.
 Inflexibility: A TPS processes all transactions in the same way,
irrespective of the time of day, user, or customer, to maximize efficiency.
 Reliability: A TPS must be reliable as customers do not tolerate errors; it
must have adequate security and safety measures.
 Distribution Of Details To Other Systems: A TPS produces and
distributes information to different systems. For instance, sales
processingsystems provide information to general ledger systems.
 Real-Time Processing: TPS systems are designed to process
transactions in real-time or near real-time, ensuring immediate
processing of transactions as they occur. This enables timely decision-
making and responsiveness to customer needs.
 Concurrency Control: To prevent data inconsistencies, TPS must
effectively manage multiple transactions occurring simultaneously.
Concurrency control mechanisms are implemented to ensure that
concurrent transactions are processed correctly and do not interfere with
each other.

Types of Transaction Processing Systems

1. Batch Processing: In batch processing, transactions are gathered and

processed together at scheduled intervals, notably in groups or
batches. This method involves accumulating transactions over some
time and then processing them collectively as a single unit. Due to this
accumulation, there’s a time delay between when the transaction takes
place and when it’s processed. While batch processing is efficient for
handling large volumes of transactions, it tends to have slower response
times compared to real-time processing.
Eg:A customer pays for a subscription service at the end of the month, The TPS
system processes the transactions as a batch because they occur at the same
time. In this case, a delay in processing transactions is acceptable because the
system only interprets batches once per month.

2. Real-Time Processing: Real-time processing involves the immediate

processing of each transaction as it happens, without any delay. This
means that transactions are processed instantly, and the results are
available immediately. Real-time processing is essential for applications
where immediate feedback is pivotal, such as online banking, e-
commerce platforms, inventory management systems. Real-time
systems prioritize providing quick responses to each transaction

Eg:An e-commerce website might use a TPS to process credit card transactions
in real-time to ensure payment before the company starts its fulfillment process.
Processing transactions in real-time also helps the company identify and
address errors quickly, as well as increase its overall response times. or
request, ensuring smooth and timely operations.

Benefits of Transaction Processing System

1. Increased Efficiency and Productivity: Transaction Processing Systems
(TPS) automate manual tasks, freeing up employees to focus on more critical
areas, thus enhancing overall efficiency. Additionally, they can effortlessly
manage increasing transaction volumes, making them adaptable to
accommodate business growth.
2. Improved Accuracy and Reduced Errors: Through automated data
capture and validation, TPS limits human errors, leading to more reliable
financial records. They prioritize data accuracy by implementing validation
and processing checks, ensuring the integrity of transactions.
3. Cost Savings: Automating tasks and streamlining processes with TPS
results in significant cost savings over time. By reducing the time and effort
required for transaction processing, TPS boosts cost efficiency and contributes
to overall financial savings.
4. Improved Reliability: TPS maintains data consistency throughout the
system, ensuring that transactions adhere to predefined rules and constraints.
Through consistent processing, they prioritize data reliability, providing firms
with trustworthy and dependable information.
5. Real-Time Processing: Operating in real-time, TPS offers instant updates
and feedback, enabling timely decision making and responsiveness to changing
circumstances. This real-time processing capability enhances operational
agility and efficiency.
6. Scalability: TPS can easily scale to handle growing transaction volumes,
allowing firms to manage increased workloads without sacrificing
performance. This scalability ensures that TPS can support business expansion
and evolving needs.
7. Audit Trails and Durability: TPS maintains detailed audit trails for
transactions, offering a comprehensive record of transaction history for
accountability and analysis purposes. Additionally, they ensure the durability
of processed transactions, meaning that completed transactions persist even in
the event of system failures, providing data resilience and reliability.

Drawbacks of Transaction Processing System

1. Susceptibility to System Failures: Transaction Processing Systems (TPS)

are vulnerable to system failures and downtime due to their reliance on
intricate hardware and software infrastructure. Any malfunction or technical
glitch can disrupt the entire transactional process, potentially resulting in
financial losses and operational setbacks.
2. Limited Scalability and Flexibility: Traditional TPS may struggle to adapt
to increasing transaction volume and complexity as businesses grow.
Incorporating new transaction types or modifying existing processes can be
challenging and time-consuming, limiting organizational agility and
responsiveness to market changes.
3. Security Vulnerabilities: As TPS handles sensitive data, they are attractive
targets for cyberattacks and data breaches. Despite implementing security
measures like encryption and access controls, TPS remains vulnerable to
sophisticated hacking techniques and insider threats, posing significant risks to
data integrity and confidentiality.
4. Cost and Maintenance Challenges: The setup and installation of TPS can
be costly, and maintenance may require specialized personnel. Regular updates
and system maintenance can present challenges, potentially causing
disruptions or downtime that affect operational continuity.
5. Lack of Standardization and Compatibility: TPS may lack
standardization and be affected by hardware and software incompatibility.
This can limit the seamless integration of TPS with existing systems and
processes, leading to operational inefficiencies.
6. User Dependency and Training: Effective operation of TPS may
necessitate specialized user training. The system’s complexity and user
dependency can pose challenges, particularly for smaller firms that may not
have the resources to fully utilize the system.
7. Third-Party Interference and Security Risks: TPS operating in real-time
are vulnerable to third-party interference, such as hackers and identity theft,
due to their online nature. Failure to upgrade firewalls and security measures
can erode customer trust and compromise data security.

Examples of Transaction Processing Systems

1. Banking ATMs: Automated Teller Machines (ATMs) are responsible for
handling various bank transactions, including cash withdrawals and balance
inquiries. Utilizing a Transaction Processing System (TPS), an ATM verifies
the user’s identity, retrieves account information, updates the account balance,
and dispenses cash, all in real time. This seamless process ensures efficient
and secure banking transactions for customers.
2. Stock Exchanges: Complex Transaction Processing Systems are integral to
the functioning of stock exchanges like the New York Stock Exchange
(NYSE). These systems facilitate trades by ensuring order matching between
buyers and sellers, updating stock prices based on transactions, and
electronically settling trades in real time. The TPS employed by stock
exchanges plays a crucial role in maintaining the integrity
3. Airline Reservation Systems: The process of booking a flight online relies
on a Transaction Processing System (TPS) within an airline reservation
system. This TPS checks seat availability, verifies payment information, and
generates tickets and confirmation emails in real time. By efficiently managing
these tasks, the TPS enables seamless booking experiences for passengers
while ensuring accurate and timely processing of reservations.
Enterprise Management Systems

Every business needs sound management to run seamlessly. Enterprise

management systems (EMS) have come into play in recent years. An EMS is
a software package that supports the different needs of complex
organizations. This software enables personnel to manage multifaceted
businesses whose infrastructures and applications are often dispersed
geographically.

EMS solutions typically support core business functions such as HR

management, financial processing, budgeting, customer relationship
management, sales activity, and supply chain management.

Types of Enterprise Management Systems

Customer Relationship Management (CRM) System
The software manages business interactions with current and potential
customers. The core target of the Customer Relationship Management system is
to connect customers with your company, strengthen customer communication,
and improve profitability.
The basic functions of CRMs include:

 Human resource management

 Contact center automation
 Automating Salesforce
 Automating workflow
 Marketing communication
 Managing leads

Many businesses use CRM to collect customer data and forecast sales and
market opportunities.
Supply Chain Management (SCM) System
The software integrates business applications to control the flow of goods, data,
and finances related to a product. The software’s task starts with purchasing raw
materials and ends with the final delivery of products.
At its core, an SCM helps with:

 Planning inventory
 Maintaining business assets and production lines
 Managing product lifecycle
 Managing logistics
 Global supplier management
 Order management

The SCM helps businesses predict and meet customer demand because it
eliminates inefficient processes.

Advantages of Enterprise Management Systems for

businesses:
1. Easier Business Planning
Enterprise Management System allows companies to create business plans
easily and track progress.
A company can check the production, look at customer satisfaction statistics, or
keep an eye on expenses. You just have to view the dashboard that compiles the
information into tables and charts.
Most Enterprise Management Systems can alert a business of potential issues
such as low inventory or an increase in defects.
2. Improved Productivity
The significance of the Enterprise Management System is that it automates
some process that boosts productivity among your team. For example, an EMS
can execute payroll, replenish inventory, and send out sales emails
automatically.
3. Increases Flexibility
An EMS organizes information in one place for easy access, irrespective of the
location. As a result, your business can set up a hybrid and remote work
environment where employees can access business files and work on them off-
site.
3. Improved Record-Keeping and Compliance
4. An EMS has an integrated security system that mitigate the risk of data
loss and theft At the same time, the system makes data readily available
when you need proof of the business’s performance for any body of
authority.

Feature of EMS

Flexible design

State-of-the-art modeling and collaboration fasten the design of processes, risk,

policies and IT and help to design operations and quickly respond to change.
With an enterprise management system powered by ARIS, organizations can
design their business in a rich modeling environment and choose freely from
numerous notations or standards such as BPMN 2.0, EPC, DMN, and others.

Efficient roll-out
With an enterprise management system, operating procedures and policies can
be rolled out organization-wide in a shared, single source and digital
confirmation management. It enables you to manage and govern daily
operations while including all relevant stakeholders in the automated processes.
Engaged people

An enterprise management system provides quick, convenient access to

information with role-based views for different users. This enables you to roll-
out organizational and business-critical information to employees, and to
manage and share process-relevant content directly, for optimal transparency
and communication that keeps everyone on the same page. Unlock the power of
collaborative process improvement by empowering anyone, anytime, anywhere
to collaborate.

Continuous improvement

An enterprise management system enables you to discover, measure and

analyze your business to continuously improve your process performance. You
can create powerful visualizations of reliable data analytics to improve
transparency.

End-to-end insights

With an enterprise management system, you can align your organization end-to-
end to gain greater visibility into your operations—and enable impactful, future-
proof business decisions.

Integrate risk management and secure compliance

An enterprise management system enables a process-focused approach to
building, implementing, and operating an enterprise-wide compliance . Identify
and document risk, meet core regulations, manage incidents and loss, conduct
enterprise audits, and confirm new procedures to protect and preserve your
company integrity.
Continuous monitoring and analysis

Get a 360-degree view of your operations (e.g., supply chain, customer service,
IoT, or any other business area) and gain in-depth business insights to find
patterns, anomalies and opportunities for improvement. Easy-to-understand
dashboards allow stakeholders to visualize process information and key
performance indicators in no time.

Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) is a platform companies use to manage and
integrate the essential parts of their businesses. Many ERP software
applications are critical to companies because they help them implement
resource planning by integrating all the processes needed to run their
companies with a single system.

An ERP software system can also integrate planning, purchasing inventory,

sales, marketing, finance, human resources, and more.

Core ERP Modules

1. Financial Management: the foundation of every ERP system, manages
the general ledger and all financial data. It tracks every transaction,
including accounts payable (AP) and accounts receivable (AR), and
handles reconciliations and financial reporting.
2. Human Resource Management (HRM): A human capital management
(HCM) module is like a workforce management module. It keeps
employee records with detailed information, like available PTO and
performance reviews, and can tease workforce trends in various
departments or demographics.
3. Supply Chain Management: It enable companies to oversee the flow of
goods from suppliers through manufacturing and into customers' hands.
Keep production running smoothly by ensuring all materials are available
and in the correct locations and accurately schedule machinery and labor
resources.
4. Customer Relationship Management (CRM): It is a popular module
for businesses in various industries. It tracks all client communications,
assists with lead management, and can enhance customer service and
boost sales.

Additional ERP Modules

5. Manufacturing- this module helps companies coordinate all the steps to
make products. The module can ensure production meets demand and
monitor the number of in-progress and finished items.
6. Inventory Management: This module shows current inventory levels
down to the SKU level and updates those numbers in real time. It also
measures key inventory-related metrics. Any products-based company
needs this module to optimize stock on hand based on current and
forecasted demand.
7. Project Management: Services businesses often utilize a project
management module to plan and track projects, including the time and
resources spent on them. It can simplify client billing and encourage
collaboration among staff members working on a project.
 8. Ecommerce: It allows retailers and brands to manage their online stores'
back and front ends. With this application, they can change the site's look
and feel and add and update product pages.
9. Marketing Automation: This module manages marketing efforts across
all digital channels — email, web, and social — and enables
organizations to optimize and personalize their messaging.It tool can
boost leads, sales, and customer loyalty.
10.Procurement: manages raw materials or finished goods purchasing. It
can automate requests for quotes and purchase orders and minimize
overbuying and underbuying when linked to demand planning.
11.Order Management: This application monitors and prioritizes customer
orders from all channels as they come in and tracks their progress through
delivery. It can speed up fulfillment and delivery times and improve the
customer experience.
12.Warehouse Management: It directs activities like receiving, picking,
packing and shipping. It can save time and cost in the warehouse by
identifying more efficient ways to execute these tasks.
13.Workforce Management: A module keeps track of attendance and
hours worked; some can also manage payroll. This tool can record
absenteeism and productivity by department, team, and individual
employees.

3 types of ERP software systems:

onsite systems, cloud-based systems and hybrid systems.

Onsite ERP: This software, also referred to as on-premises ERP, is deployed

onsite and is mostly controlled in-house, or by the company’s enterprise. A
business would choose this option if the business wanted to be in total control of
the ERP software and security. If you are to choose this ERP software option, it
would require a dedicated IT resource on-premises to handle the technical and
application maintenance.
Cloud-based ERP: The cloud-based ERP system, often referred to as software-
as-a-service or SaaS, means that a third party is managing the ERP software in
the cloud. Using technologies such as (AI) and machine learning this flexible
option system can provide greater automation efficiencies and allow employees
to search through organizational data on any device through the internet. IBM®,
Infor, microsoft, SAP offer new ERP solutions.
This is a popular model for ERP software due to its scalability, agility and lower
cost. The main disadvantage is the security risk that you take when trusting an
ERP vendor. The data for your business is sensitive and requires careful
handling.

Hybrid ERP: This system is for companies looking for characteristics of both
an onsite and SaaS model to meet their business requirements. In this model,
some of the ERP applications and data will be on the cloud and some are on
premises. This can sometimes be referred to as a two-tier ERP.

How Does an ERP System Work?

The main purpose of an ERP system is to increase organizational efficiency of

an organization by managing and improving how company resources are
utilized. Improving and/or reducing the number of resources necessary without
sacrificing quality and performance are keys to effectively improving business
growth and profitability.

ERP systems typically cover all aspects of business operations and commonly
provide:

 An integrated system
 Common database
 Real-time operation
 Support for all applications/components
 Common user interface across application/components
 On-premise, cloud hosted, or SaaS deployment

ERP software has the ability to collect and compare metrics across departments
and provide a number of different reports based on roles or specific user
preferences. The data collected makes finding and reporting on data faster and
gives a complete view of business performance with complete insights on how
resources are being spent.

ERP synchronizes reporting and automation by reducing the need to maintain

separate databases and spreadsheets that would have to be manually merged to
generate reports. This combined data collection and reporting offers valuable
insight, such as where to cut costs and streamline processes, providing the
information to make real-time business decisions.

BENEFITS OF ERP

1. Information Integration :
The most important benefit is promotion of integration. It is because
it has the ability to update data between related business functions
and components. Also the people involved in a project are interlinked
to each other, thus it help in improvement of productivity.
2. Reduction of Lead-Time :
Lead-Time is the elapsed time between placing an order and
receiving it. By reducing Lead-Time organization should have an
efficient inventory management system, which is integrated with the
purchasing, production planning and production departments.
3. On Time Shipment :
ERP system are designed to help your company to reduce data
transfer time, reduce errors and increase design productivity. By
using steps of ECO i.e. Engineering Change Order, ERP system
automatically implements change in production database. Thus by
using these, an ERP system ensures on time delivery of goods to
customers.
4. Reduction in Cycle Time :
It is time between the placement of order and delivery of product.
There are two types of situations; one is make-to-order and second
one is make-to-stock. In both cases cycle time can be reduced but
more time is saved in make-to-order case because in this ERP system
save time by integrating with CAD/CAM systems.
5. Better Customer Satisfaction :
ERP system is capable of producing goods in a flexible way with
consideration of time and cost management. It means will get
individual attention and get services without spending more money
or waiting for long period.
6. Increased Flexibility :
Product flexibility is type of ability of the operation to efficiently
produce highly customized and unique products. ERP system not
only improve flexibility of manufacturing operations, but is also
improve flexibility of organization.