1. Information System Concepts
2. Definition of System
3. Types Of System - 1. Abstract 2. Physical
- System Environment - 1.Sub-System 2. Supra System
- Types of Systems
- Deterministic and Probabilistic system:
- Open & Closed Systems :
- Decomposition
- System Entropy
- System Stress & System Change
- Two basic forms of stress:
- Consequences of stress:
- Process of Adaptation:
- Information
- Characteristics of information: -
10. Business Information System
v Types of Information Systems
v Transaction Processing System
v Management Information System
v Decision Support System
v Executive Information System
v Expert System (Artificial Intelligence)
11. Categories of Information System :
12. Four common cycles of Business Activity:
13. TPS
- Components of the Transaction Processing System :
- Types of codes used in transaction processing system
14. MIS
- Characteristics of an effective MIS
- Misconceptions / Myths about MIS [and their clarifications]
- Pre-requisites of MIS
- Constraints in operating MIS
- Effects of using computer MIS
- Limitations of MIS
15. Types of information
16. Factors on which information requirements of executive depends are
a. Operational Function(OF)
b. Type of Decision Making - Programmed & Non Programmed Decisions
c. Level of mgt. Activity
i. Strategic Level
ii. Tactical Level
iii. Supervisory Level
17. System Approach to Management
18. Decision Making - Steps involved in decision making
19. Role of computer in decision making:
20. Classification of decisions
21. Major functional information areas & their sub systems :
22. PRODUCTION SYSTEM
Major Areas:
1. Production Planning
2. Production Control
3. Production Scheduling – Objectives
4. Material requirement Planning – Benefits
23. Personnel System
24. Basic Information requirement of production planning & control system :
26. Systems Approach
27. DSS – Components , Tools , DSS in accounting , steps involved in solving a problem with DSS
28. EIS – Purpose , Differs from Traditional system , Content , characteristics
29. Types of planning by top level management
30. Executive Decision Making Environment :
v Environmental Information
v Competitive Information
v Internal Information
System: Concept provides a framework for many organizational Phenomena’s including feature of Information system.
Exp:
1. Human body-sets of system.
2. Computer based information system.
System can be:
A) Abstract: is an orderly arrangement of interdependent ideas or constructs.
B) Physical: ( Simple System Model )
consists of physical elements rather than ideas.
is a “set of elements” which operates together to accomplish an objective.
Input----------------Process---------------Output
System Environment
· is a part of a larger system.
· Each system is composed of Sub-system, which in turn is made up of other sub-system, each sub-system being delineated by its boundaries.
· The interconnection and interactions between the sub-systems are termed Interfaces.
· Interface occurs at the boundary and takes the form of Inputs and Outputs.
B) Supra System: is an entity formed by a system / sub-system and its related systems / sub-system
1) Deterministic and Probabilistic system:
2) Open & Closed Systems :
· Operates in a Predictable manner.
· The interaction among the part is known as certainty.
An example: - A correct computer program, which performs exactly according to a set of instruction.
· Can be described in term of Probable behaviors.
· But a certain degree of error is always attached.
· To the prediction of what the system will do.
An example:
1) Inventory system.
2) Set of instruction given to a human who, for a Variety of reasons, may not follow the instructions exactly as given.
Closed System:
1) Self contained.
2) Doesn’t interacts or make exchange across its boundaries with its environment.
3) Don’t get feedback, they need from external environment.
4) And tend to deteriorate
5) .Closed system means- Relative closed system.( RCS )
a. It is closed but not completely closed system in the physics sense
b. RCS is one that has only controlled and well-defined input and output.
c. It is not subject to disturbances from outside the system.
Open System:
1) Actively interact with other systems.
2) Establish exchange relationship.
3) Tend to change to survive and grow due to change in external environment
4) They exchange-information, material or energy with the environment including random and undefined inputs.
- A complex system is difficult to comprehend when considered as a whole.
- Therefore the system is decomposed or factored into subsystems.
- The process of decomposition is continued with subsystem divided into smaller Subsystems until the smallest subsystems are of manageable size.
- “Decomposition is the factoring of an information processing system into Subsystem.”
Example
Information system divided into the subsystems:
1. Inventory
2. Marketing
3. Sales
5. Planning
6. Production
System Entropy
Ø System Entropy means decay, disorder or dis-organisation of a system.
Ø Negative entropy is the process of preventing entropy by input of matter, repair, replenish & maintenance.
System Stress & System Change
-Living or artificial system.
-Organizational system.
-Information system or system of control,
Change because they undergo stress.
A stress is a force transmitted by a system’s supra- system that causes a system to change, so that the supra-system can achieve its goals.
In trying to accommodate the stress, the system may impose stress on its subsystem and so on.
Two basic forms of stress:
1) A change in the goal set of the system.
New Goal-----created and old goals-------eliminated
2) A change in the achievement levels desired for existing goals, it might be Increased or decreased.
Consequences of stress:
When a supra-system exerts stress on a system.
Process of Adaptation:
System accommodates stress, through a change in form.
1) Structural changes
2) Process changes
Information
Information is the data that have been put into a meaningful and useful context.
1) Timeliness
2) Purpose
3) Mode and format(visual, verbal or written)
4) Redundancy
5) Rate of transmission(bits per minute)
6) Frequency(daily, weekly, or monthly)
7) Completeness
8) Reliability
9) Cost benefit analysis
10) Validity
11) Quality
Business Information System
A system is simply a set of components that interact to accomplish some purpose.
For exp: A business is also a system.
Types of Information Systems
v Transaction Processing System
v Management Information System
v Decision Support System
v Executive Information System
v Expert System (Artificial Intelligence) – It replace the need for human expertise. It is useful for a specific area e.g. taxation problem, refinery, etc.
Categories of Information System :
1) Transaction Processing System (TPS):
v Operation oriented system.
v Computer based system.
v Processing of business transaction.
v Improving the routine business activities.
v Provides speed and accuracy.
2) Management Information System (MIS):
v Assist managers in decision-making and problem solving.
v They use results produced by TPS.
v And also used other information.
3) Decision Support System (DSS): NOV-2002
v Not all decision is of a recurring nature.
v Some occur only once or recur in frequently.
v DSS: - are aimed at assisting managers who are faced with unique non-recurring decision problems.
v DSS must have greater flexibility.
4) Executive Information system (EIS):
v EIS are designed primarily for the strategic level of mgt.
v They enable executive to extract summary data from the database and model complex query languages.
5) Expert System (ES): May 2004
v ES are designed to replace the need for a human expert.
v They are particularly important, where expertise is scare and expensive.
Transaction Processing System:
- The term of Accounting Information System includes the variety of activities associated with an organizations transaction processing cycles.
- A transaction processing cycle organizes transaction by an organization business processes.
- Captures data and information technology .
Four common cycles of Business Activity:
1) Revenue Cycle: Event related to the distribution of goods and service to the other entities and the collection of related payment.
2) Expenditure Cycle: Event related to the acquisition of goods and services from other entities and the settlement of related obligations.
3) Production Cycle: Event related to the transformation of resources into the goods and services.
4) Finance Cycle: Event related to the acquisition and mgt of capital funds including Cash.
Components of the Transaction Processing System :
1) Input
2) Processing(on-line processing, batch processing)
3) Storage
4) Computer storage
5) Computer Processing
6) Output
Types of codes used in transaction processing system
1) Mnemonic Codes
2) Sequence Codes
3) Block Codes
4) Group Codes
|
Management |
Information |
System |
|
à Determining the objectives
à Developing plans
à Securing & organizing various resources
à Exercising adequate controls
à Monitoring the results |
à Reprocessing of data & putting them into a meaningful & useful context |
à Consisting of a no. of elements operating together for accomplishment of an objective. |
Þ MIS is a network of information that supports management decision making.
Þ It uses the information resource for effective & better achievement of organizational objectives.
Þ Canith defines “MIS as an approach that visualize the organisation as a single entity composed of various inter-related and inter-dependent sub-systems to provide timely & accurate information for management decision making.
Management Perform Management Factions.
Information Meaningful data in form of information.
System Set of interrelated element that operates collectively to accomplish common objective.
Characteristics of an effective MIS
1. Management oriented - Development of MIS starts from the need of the management
2. Management directed - management actively directs the MIS development
3. Integrated - 1. All system & sub systems
2. all the information sub-system works as a single entity.
4. Common Data Flow - common input, processing & output procedures & media
5. Heavy planning element- must be present for MIS development
6. Sub-system concept - breaking the MIS into sub-systems
7. Common Database – defines as super file
8. Computerized – increase effectiveness
Misconceptions / Myths about MIS [and their clarifications]
- Use of computer : The study of MIS is about use of computer. it may or may not involve computers
- More data : More data in reports means more information for managers. quality of data and not the quantity of data is relevant
3. Accuracy : Accuracy in reporting is of vital importance. Information may be approximate. Accurate information involves higher cost
Pre-requisites of MIS
- Date Base:
a. Super file
b. User Oriented
c. Common data base
d. Available authorized person
e. Control by DBMS.
- Qualified system and management staff:
a) Computer & System expert
b) Management expert
- Support of top management:
a) Help from top mgt.
- Control and maintenance of MIS:
a) Control of MIS
b) Maintenance of MIS
- Evaluation of MIS:
Meeting the information needed in future as well as.
a) Flexibility - to copes with any future requirement.
b) View of user - about deficiencies in the system.
c) Guiding –the authority about step to be taken to maintain effectiveness.
Constraints in operating MIS
1. Non availability of experts
2. Non Co-operation from staff
3. Varies objectives of the concern
4. Difficulty in dividing MIS into sub-systems
5. MIS is non standardized
6. Difficult to quantify the benefits of MIS
7. High turnover of experts in MIS.
Effects of using computer MIS
1. Speed in information processing & retrieval
2. Increases the usefulness of information system
3. Scope of analysis widened
4. Complexity of system design & operation
5. Integrates the working of sub-system
6. More comprehensive information
Limitations of MIS
- Quality of output depends on quality of input.
- MIS is not a substitute of effective mgt.
3. MIS lacks flexibility
- Can’t provide tailor made information.
5. Ignores the non quantitative factors (attitude & morale)
6. Difficult to maintain privacy & secrecy
- Effectiveness of MIS is reduced-Information not shared in the Organization or due to frequent changes in top mgt.
Types of information
|
Environmental Information |
Competitive Information |
Internal Information |
|
à Govt. policies
à Factors of production
à Technological information
à Economic trend
|
à Industry demand
à Firm demand
à Competitive data
|
à Sales forecast
à Financial budget
à Supplier factors
à Internal policies
|
Factors on which information requirements of executive depends are
1) Operational Function(OF)
2) Type of Decision Making
3) Level of mgt. Activity
a) Grouping of several factional units on the basis of related activities into subsystem.
b) Information required depends upon the OF.
c) The content of information depends on activity performed.
2) Type of Decision Making:
a) Programmed Decision
b) Non-Programmed Decision
Programmed & Non Programmed Decisions
Programmed Decisions
A) Refer to:
v Decision made on problems and
v Situation by reference
v To a Pre determined set of: -
-Procedure
-Precedent
-Techniques
In many ORZ there is a set of:
1) Procedure for receipts of material.
2) Procedure for Payment of bills.
3) Procedure for release of Budgeted fund.
D) Not much judgments and discretions is needed.
Non Programmed Decisions
A) Refer to those decisions: -
-Which are made on Situation and Problems.
-Which are novel and Non-Repetitive.
-Not much knowledge and information are available.
B) They are made not by reference to any pre-determined guidelines.
C) Which is not “Programmed Decision”
3) Level of Management Activity: 
a) Strategic Level
b) Tactical Level
c) Supervisory Level
Level of Management Activity
Supervisory Level Strategic Level Tactical Level
Strategic Level is concerned with
-Developing of organization mission.
-Objective and
-Strategies.
v Handle the critical problems.
v Vital impact on direction and functioning of ORZ.
v information requirement
à Determining the overall goals & objectives
à Economic / political /social information
à Competitive information
Tactical Level lies in Middle of management hierarchy
-Lead and Control
The activities of other managers.
FEATURES:
1) More specific and functional.
2) Information is easily available.
3) Less complexity.
4) Decision variable can be forecast.
“Tactical decisions are made with a strategic focus”.
information requirement
à Sales Manager, Purchase Manager, Finance Manager
à Most of the information is internal
à Demand & supply information
Supervisory Level (Lowest Level of Management)
-Manager at this level coordinates the work of other employees.
-Ensure that specific task is carried out.
information requirement
à Section officers, Foreman
à Instruct and supervise employees
à Make routine & day today decisions.
Database
It is a super-file that consolidates & integrates the data that was previously stored in different files.
System Approach to Management
Þ It’s a way of thinking about management problems.
Þ Each problem should be examined in its entirety and effect of the proposed changes to each part of the organization e.g. changing from batch production to continuous production will affect finance, warehousing, purchase department, etc.
Decision-Making
Þ It is a never-ending process of choosing a particular course of action out of several alternative courses for achievement of desired goals.
Þ Pre-decisional, decisional & post-decisional functions are performed by management.
Steps involved in decision making
1. Defining the problem
2. Analyzing the reasons
3. Identifying the alternative solutions
4. Evaluation of the same
5. Selection of the best alternative
6. Implementation of the solution
Role of computer in decision making:
1) Fairly & accurately forecast.
2) Prepare short term Profit plan.
3) Prepare long range Projection.
4) Provide preplanning Information.
5) Calculate Variances.
6) Assist in Planning.
Classification of decisions
1. Programmed & non-programmed decisions
2. Strategic & tactical decisions
3. Individual & group decisions
Major functional information areas & their sub systems :
1. Finance & Accounts
2. Production
3. Marketing
4. Personnel
2. Effective utilization of fund
1) Estimation and requirement of fund.
2) Capital structure decision
MARKETING SYSTEM
Major Areas:
1. Sales:-
-Sales Support
-Sales Analysis
2. Market Research and Intelligence
3. Advertisement and Promotion
4. Product Development and Planning
5. Product Pricing System
6. Customer Service
PRODUCTION SYSTEM
Major Areas:
1. Production Planning
2. Production Control
3. Production Scheduling
4. Material requirement Planning
Production Planning = What to produce + When to produce + How to produce.
Basic Information requirement of production planning & control system :
Firm Policy-regarding various products.
1) Sales Order, Forecast, Stock Positions-order backlog
2) Available Hours-force with capabilities.
3) Standard of labour time
4) Schedule of meeting the sales orders
5) Quality Norms-for material to be used.
6) Break up the jobs and their resource requirement.
“Planning the specific time at which product item should be manufactured.”
M- To minimize the idle time.
A- To access the need of subcontracting.
D- To determine the stage of Production.
E- To ensure the target dates for completion the Production.
S- To studies the alternative source of Production.
Material Requirement Planning ( MRP )
1) One approach to improve “Production Efficiency”.
2) Integrates several Production related information system.
3) Improves inventory management and production scheduling.
1) Decreased inventory level and carrying cost
2) Fewer stock shortage
3) Increased effectiveness of production supervisor.
4) Better customer service
5) Greater responsive to change
6) Closer coordination-Mgt, Engg.and Finance
Disadvantages of Group Decision Making :
3. Responsibility among the group members
4. Dilution of quality of decision by compromise
5. Conformity among member of the group
“Deals with the flow of information about people working in the ORZ as well as future personnel needs”.
1) Recruitment-recruit the person
2) Placement- task of matching person with requirement.
3) Training and Development- due to technological changes.
4) Compensation- determines pay and benefits.
5) Maintenance-Personnel procedure and policies.
6) Health and safety- Health of Personnel and Safety of Job.
Systems Approach:
1) Process of System Approach:
2) Defining of Problem or opportunity
3) Gathering & Analyzing data
4) Identify alternative solutions
5) Evaluation of various alternatives
6) Selecting the best alternative
7) Implement & solution
Decision Support System
DSS can be defined as:
v A system
v That provide tools
v to managers to assist them
v in solving semi-structured and
v in their own way
Programmed Decision System replace human decision making (no management is involved).
Characteristics or Properties of DSS
1) They support in Decision-Making.
-Support semi-structured decision-making.
2) They are flexible. – Ability to adapt the changing needs.
3) They are easy to use.
Components of DSS
1. Users (Managers)
2. Databases
3. Planning Languages (1. General purpose Language, 2. special purpose Language)
4. Model Base is called as brain
Tools of DSS
1.
|
Data based software
2. Model based software
3. Statistical software
4. Display based software
DSS in Accounting
1) Cost Accounting System (Generally used in Health Care industry)
2) Capital Budgeting System (Calculates NPV, IRR of various projects)
3) Budget Variance Analysis System (Forecasting budget & analyzing variances)
4) General Decision Support System, etc.
1) Define and formulate problem
2) Frame problem into DSS Model
3) Use model to obtain results
4) Reformulate problems
Executive Information System
EIS:
Relevant Information means:
v Timely
v Accurate
v Actionable information
Useful and Navigable format means:
v Specially designed to be used by individual.
- Support managerial learning about the organization.
- EIS allow timely access of information.
- EIS is commonly misperceived-specified the problem areas to management.
EIS differ from traditional information systems in the following ways
1) Specially tailored
2) Access data about specific issue
3) Extensive online analysis tool
4) Access internal & external data
5) Easy to use
6) Used without assistance
7) Screen based
8) Presented information in graphical form
9) Presented report in summary format
10) Ability to manipulate data.
A Practical set of principles to guide the design EIS Measures/Content of EIS:
- Easy to understand and collect.
- EIS must be based on a balance view of organization objective.
- Performance indicators in an EIS must reflect.
- Encourage management and staff to share ownership of objective.
- EIS information must be available to everyone in the ORZ.
- EIS measure must evolve to meet the changing need of ORZ.
Types of planning by top level management
(i) Strategic Planning (CEO level)
(ii) Tactical Planning (Planning to carry out Strategic Planning)
(iii) Fire Fighting (Major damage, new competitor, strike)
(iv) Control (General controls)
Executive Decision Making Environment :
1.Environmental Information
2. Competitive Information
Five characterstics of the types of information used in executive decision making: or characteristics of eis
1) Lack of structure-Semi structured and Unstructured
2) High degree of uncertainty
3) Future orientation-for shape of future events
4) Informal Source-for key of information
5) Low levels of detail-decisions are made by observing broad trend.
Points: SUFIL – Structure / Uncertainty / Future / Informal / Low Level
Expert Systems
1. artificial intelligence
2. ES r designed to replace the need for human expert
3. it is useful for specific area
Eg. Taxation problem, refinery etc
4. They are particularly important where expertise is scare & expensive
5. ES r not general
6. these would be of greater use in tactical n strategic level
What are the variables that the top management should consider during negotiations with the labour unions? (Final Nov. 2004)
Answer
Many types of labour today are unionized. Unionized organisations usually have strict regulations regarding such items as pay scales, hiring and firing, promotions and working conditions. Management has the choice of trade – offs on the following variables during negotiations with the labour unions
(iii) Contribution to employees, insurance and pension plan
Cost accountants/payroll accountants would be in the best position to make various estimates for the cost implication of trade off.
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