CHAPTER-1|Management Information Systems: An Overview

CHAPTER-1
MANAGEMENT INFORMATION SYSTEMS: AN
OVERVIEW

1.1. INTRODUCTION
 Today the need for updated information has become inevitable to arrive at an effective
decision in all walks of life. Whether it is industry, commerce, defence, banking, education,
economics or politics, information is needed everywhere.
 Information is live as it is required to be updated all the time and is renewable.
 The exponential growth of information makes it necessary that information is collected,
stored and retrieved in various fields when needed.
 For example
(a) In setting of a new industry, information regarding the choice of technology, skill, money
and material becomes an important requirement for its growth and smooth functioning.
(b) In a competitive market, before deciding about the price of an item, the producer needs
information about the pricing police of the competitors, specially of competitive products,
sales techniques etc.

1.2. MANAGEMENT INFORMATION SYSYEM

The MIS is an integrated man machine system that provides information to support the
planning and control functions of managers in an organisation.

MIS

Management Information System

1.2.1. Management
 Management has been viewed as be function, a process, a profession and a class of people. It
refers to the kind of task and activities that are perform by managers. The specific nature of
the activities is determined by such managerial functions as planning, organising, directing,
leadership and controlling.
1. Planning: It is the process of deciding in advance the courses of action to be followed
and when and how to undertake these. Its objectives in the best possible manner and for
anticipating future opportunities and problems.

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2. Organising: It is formal grouping of people and activities to facilitate achievement of the

farm’s objectives. It is need for assigning responsibilities, jobs and hierarchy among
personnel.
3. Controlling: It is the checking the progress of plans and correcting any deviations that
may occur along the way.
4. Directing: It is the process of activating the plans, structure and group efforts desired
direction. It is needed for implementation of plans by providing desired leadership
motivation and proper communication.
 The management can be group into 3 hierarchical levels –
• Top or Strategic management
• Middle or Tactical management
• Junior or Operational management
Top Management: - It is establishes the policies, plans, objectives and budget framework
under which various departments will operate of the organisation.
Middle Management: - It has the responsibility of implementing the policies and overall
plans of the top management.
Junior Management:-It has the responsibility of implementing day to day operations and
decisions of the middle management to produce goods and services to meet the revenue,
profit and other goals.

1.2.2. Information
 Information is the result or product of processing data. Information can be defined as the data
which is organised and presented at a time and place so that the decision-maker may take
necessary act.

Data Process Information Decision

Action

Fig: Conversion of Data into Decision

 Information consists of data that has been retrieved, processed or otherwise used, for
informative or inferential purposes, arguments or as a basis for forecasting.
 For example, some supporting documents, ledgers and so on, which comprise source material
for profit and loss statements may be used by the decision maker for profit planning and
control.

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1.2.3. System
 A system is a group of elements or components joined together to fulfil certain functions.
 A system is made up of sub-system. The systems are either natural or man-made.
 A sub-system which may be composed of further sub-systems. A subsystem itself is part of a
super system.
 The given example is that of an industrial (or factory) system. It has various subsystems such
as production subsystem, marketing sub-system, personnel sub-system and financial sub-
system.
 These sub systems in turn are composed of further subsystem.
 For example a production subsystem could consist of sub-sub-system of production control,
material control, quality control etc.
 The material sub-sub-system can be further broken down into ‘black boxes’ such as
purchasing, stores, transportation, inspection etc.
 This industrial system is a part of the large economic system of the country which may be
called as the super system.
 This relationship is shown in fig

Super system

The system under Other system

consideration

Sub system-1 Sub system-2 Sub-system-N

Sub-sub system-1 Sub-Sub system-2 Sub-sub system-M

Black Box-1 Black Box-2 Black Box-J

Fig: System and its Components

1.3. DEFINITIONS OF MIS.

1. According to Schwartz, ‘MIS is a system of people, equipment, procedure, documents and
communication that collects, validates, operates on transformers, stores, retrieves and present
data for use in planning, budgeting, accounting, controlling and other management process’.
2. According to Jerome Kanter, ‘MIS is a system that aids management in making, carrying out
and controlling decisions’.

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3. According to Davis and Olson, ’MIS is an integrated user machine system designed for
providing information to support operational control, management control and decision making
functions in an organisation. The information systems make use of resources such as hardware,
software, man, procedures as well as suppliers’.

1.4. FRAMEWORK FOR MIS ORGANISATION AND MANAGEMENT

TRIANGLE
Robert Anthony in 1965 suggested that the area of management planning and control can be
divided into 3 categories. These are:
1. Strategic planning.
2. Operational control.
3. Management control.
 Strategic planning: It develops the strategy for deciding objectives of the organisation and
introducing changes in those objectives, formulating policies to govern procurement, use and
disposition of those resources.
 Management control: It is needed by managers of a various departments to measure the
performance, decide on control action, formulate new decision rules and allocate resources.
 Operational control: It is the processes of operational activities are carried out to achieve
optimum use of resources. It makes use of pre-established procedures and decision rules.

1.4.1. Levels of Management

Each organisation is made up of several levels. These could be classified into three categories:
top, middle and junior (TMJ) levels.
 The top management performs strategic planning and the other two levels provide support in
the form of processed information.
 The middle management level performs tactical planning and control, and needs information
to discharge these managerial functions.
 The junior level is involved in day to day operational control and needs information for its
working.

1.5. INFORMATION NEEDS AND ITS ECONOMICS

The availability of information to management at various levels has improved due to three
reasons. These are
1. Development of telecommunications: The information flow has been accelerated with
developments in communication technology like radio telephony, microwave communication,
laser communication and satellite communication.
2. Processing of data with computer: The accessibility of information has been considerably
improved as a computer can readily scan the available stored data to provide the required
information.
3. Video technology: Video technology permits the recording of activities on video cassettes and
video discs.

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1.5.1. Information Classification

The information obtained and used in the organisations can be classified into five categories:
1. Action vs. non-action information: The information lying unnoticed is called non action
information but the same information when processed and used in some context by the
recipient is called action information.
2. Recurring vs. non recurring information: Information which is generated at regular
intervals of time is called recurring information. A particular type of information which is
arrived at through some special kind of study and which helps in management decision is
called non recurring information.
3. Documentary vs. non documentary information: Information which is available in some
document form that is either in some written form or on microfilms, magnetic tapes, floppy
discs etc is called documentary information. All other information is categorised as non
documentary
4. Internal vs. external information: The distinction is obvious. Managers at different
hierarchies in the organisation require different combinations of internal and external
information.
5. Historical information vs. future projections: Here again the distinction is obvious because
historical information would be futile unless it can be used for future projection.

1.6. SYSTEMS APPROACH

 The system approach to a business organization implies a wholistic approach to the study of
inter-relationships of sub-systems of an organization in view of the objectives set by the
organisation.
 Thus, this requires an integrated approach which could reduce the conflict among different
sub-systems and modify the objectives of these sub-systems in order to arrive at an optimum
solution to the problems which may arise in the achievement of the main objectives or in the
working of the whole system.
 A systems view of business in shown fig.

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1.6.1. Classification of systems

The various types of systems are:
Conceptual and empirical systems:
 The conceptual system is concerned with theoretical structures which may or may not
have any counterpart in the real world. Examples of such systems are economic theory,
organization theory, general system of relativity etc.
 Empirical systems are concrete operational systems made up of people, materials,
machines, energy, and other physical things. Other systems such as electrical, thermal and
chemical are also fall into this category.
1. Natural and man-made systems:
The examples of natural systems are: human body, solar system, etc.
Examples of man-made systems are: Transportation system, communication system,
education system, business organisation etc.
2. Social system:
A system made up of people may be taken as a social system, such as business organisations,
government agencies, political parties, social clubs, professional societies etc.
3. Man-machine system:

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Most empirical systems fall into the category of man-machine systems. One of the examples
of this system is aeroplane.
4. Open and closed systems:
 An open system continually interacts with its environment. This type of system can adapt
to changing internal and environmental conditions. Every social and business
organization is open because it reacts with its unpredictable environment
 A closed systems one of that does not interact with its environment. This system does not
change or if it does then a barrier exists between the system and the environment to
prevent the system from being affected.

1.6.2. System life cycle

A management information system business has the following four phases in its life cycle:
1. Study phase:
This phase is concerned with
1. Identification of the problems
2. Study of the present system and its effectiveness
3. Identification and evaluation of various alternative courses of action
4. Selection of the most appropriate course of action as per the objective.
2. Design phase:
This phase is concerned with
1. Identification of the function to be performed
2. Study of the input/output and life cycle design
3. Defining basic parameters of system design.
3. Development phase:
At this stage, the decision about the selection and use of hardware and software is taken.
4. Implementation phase
The system designed is given practical shape and is adopted for use.

1.7. MEANING AND OBJECTIVES OF MIS

 Meaning
 MIS is an integrated man-machine system which collects, maintains, correlates and
selectively displays information in the proper time frame consistently, to meet the specific
needs of various levels of management in order that decisions could be made and action taken
for fulfilling the objectives of an organisation.
 In other words it is a system which:
i. Provides information to support managerial function. (Planning, control, organising,
operating)
ii. Collects information systematically and routinely in accordance with a well defined
set of rules.
iii. Includes files, hardware, software and operations research models of processing,
storing, retrieving and transmitting information to the users.
 Objectives

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1. Facilitate: The decision making process by furnishing information in the proper time frame.
2. Provide: It requisite information at each level of management to carry out their functions.
3. Help: In highlighting the critical factors to the closely monitored for success
4. Support: Support decision making in both structured and unstructured problem
environments.
5. Provide: Provide a system of people, computers, and procedures, interactive query facilities
documents for collecting, storing, retrieving and transmitting information to the users.

1.7.1. Categories of MIS:

The MIS can be subdivided into following four categories:
1. Transaction processing system (TSP):
The system designed for processing day to day transaction in an organisation is called TPS.
This system deals with collecting and processing a large volume of data which mainly helps
junior level management in discharging their responsibilities.
2. Information providing system (IPS):
This system is meant for processing information, making a summary of information, and
providing exception reports. The summary reports help in giving at a glance the information
available, while exception reports indicate deviations and the reasons for shortfalls in
performance.
3. Decision support system (DSS):
It is sometimes described as the next evolutionary step after MIS.
It helps in improving the analytical capability of the decision maker by creating interactive
model of the real life situation.
4. Programmed decision-making system:
It is defined as a plan for the automatic solution of a problem. Programs are simply a string of
instruction as to accomplish a job or a task. In this information age the systems for
programmed decisions are created so that decisions are made by the system rather than a
person.

1.7.2. MIS and Organisation Structure:

 Organisation structure and information needs are inseparably linked like the human anatomy
and the nervous system.
 The knowledge of organisation structure and proper record of delegating of authority within
the organisation are prerequisites of MIS.
 This actually helps in defining authority and responsibility, demarcating decision making and
measuring objectives of each sub system.
 The outline of MIS for any organisation is shown in fig

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1.7.3. Classification of MIS

The MIS can be divided into four categories:
1.Data bank information system:
In this system, the link between the information system and the user is assumed to be weak.
This type system is more useful for unstructured decisions. The information system collects,
classifies and stores data which may be useful to the user. The user maker request for data as
per his need and determines the cause and effect in view of the actions and make s judgement
as to which outcome is suitable. The data doesn’t help the user in making predictions or
decisions, however, the nature and availability of data itself tend suggest certain desirable
certain desirable alternatives to the user. The data bank information system is shown in fig.

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2. Predictive information system

This class of system is an extension of the databank information system. In this system
prediction and inference making occurs when processing by the information system passes
from basis data to conclusion about the source.

3. Decision making information system

In this system an organizations value system and criteria for choice are incorporated. This
level of MIS is useful for structured decisions.
4. Decision taking information system
In this system the information system the user are assumed to be one For example a purchase
order is released automatically when an inventory level reaches or goes below the reorder or
send s remainders to vendors to supply goods when supply is overdue.

1.7.4. Implementation of MIS

The implementation plan involves the following steps:
1. Preparing organisational plans.
2. Planning of work flow.
3. Training of personnel.
4. Development of software.
5. Acquiring computer hardware.
6. Designing the format for data collection.
7. Construction of data files.

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8. Operation of old and new systems in parallel.

9. Phasing out the old and inducting the new system.
10. Evaluation, maintenance and control of the new system.

1.8. DISADVANTAGES OF INFORMATION SYSTEM

Following disadvantages are likely to be there from information systems:
1. ‘Deskilling’ of workers:-Introduction of new technologies, especially for automation,
sometimes render obsolete the existing skill of some workers. Many industries such as the
automobile, steel, insurance industries, banks, have gone through periods of massive layoffs
because of intense automation efforts. Therefore, while computerisation can increase
operational efficiency and improve profits, sometimes it is also the root cause of workforce
reduction.
2. Information overload: Generation of excessive amounts of information can overwhelm
managers who must digit it and used it to make decisions. At times, this improvement also
has its downside.
3. Employee mistrust: Employees sometimes fear that computers eventually replace them.
They may view information system with scepticism; unless they are assured that their jobs
are not in danger.
4. Increased competitive pressure: There is increased pressure on small and medium-scale
industries, failing which they are steadily being pushed out of the marketplace by larger
companies.
5. Disenchantment with IS: Many organisations are unable to value the information systems
and technologies to their organisations vis-à-vis the return on investment. In coming years,
the MIS will experience close scrutiny of its abilities to the delivery on its promises.
6. Security breaches: when organisation introduce new and sophisticated technologies, they
most also find new ways to protected these assets from theft, pilferage, and security breaches.
Therefore computers and information system actually increase the operating costs of an
organisation.

1.9. APPROACHES OF MIS DEVELOPMENT

There are seven types of approaches used for developing MIS
1. Top down approaches:
This approach developed a corporate plan as a guide for designing the information system.
Here top management takes the lead in formulating objectives, policies and plans and
communicates them down the line to middle and supervisory management for translating
them into reality.
2. Bottom up approaches:
It consists of following five steps:
a. Individual functional applications are planned separately consisting of transition
processing, updating of files and simple reports.
b. Files of various functional applications are integrated by means of indexing and
changing into a database.
c. Various functions are added to operate on the database and management control level.

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d. Integration of models into a model base having a wide verity of analysis, decision and
planning models.
e. Strategic planning data planning models are added to the information system.
3. Integrative approaches:
This approach permits managers at all levels to influence the design of MIS. Here evaluation,
modification and approval of top management continue till a final design is acceptable to all
levels.
4. Traditional approaches:
In this case activities are performed in sequence. Each activity is undertaken only when the
previous activity is completed. Managers and users consider and review the work performed
the MIS professionals during each stage of processing, in order to ensure accuracy and
completeness.
5. Prototyping approaches:
In order to avoid any possible delay, prototyping approach is used. It is to developed a small
or pilot version is called a prototype, which is built quickly and at lesser cost with the
intention of modifying it when need arises.
6. End-user development approaches:
In this approach the increasing availability of low cost technology, end user development is
popular in many organisations. Here the end user is responsible for system development.
7. Systematic approach for development in small organisations:
Since fewer MIS professionals shall be working having with variety of responsibilities that
they have little time to develop new system for users. In a very small organisation, no MIS
professional will exit. This does not mean that they cannot develop management information
systems. They develop systems using the following steps:
 Identify requirements
 Locate, evaluate and secure software development.
 Locate, evaluate and secure hardware.
 Implement the systems.

1.10. CONSTRAINTS IN DEVELOPING AN MIS

Following are the constraints in developing an effective MIS:
1. No management system to build upon.
2. No clear definition of mission and purpose.
3. No objectives for the company.
4. Misorganisation.
5. Communication gap.
6. Lack of management participation.

1.11. MIS AND USE OF COMPUTER

Following are the main advantages of using computer technology in MIS:
1 .Expanding scope for using system
2. Enhancing speed of processing and retrieval of data
3. Widening the scope of analysis.
4. Increasing complexity of system design and operation.

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5. Integrating different information sub systems.

6. Increasing the effectiveness of information system.
7. Extending more comprehensive information to business managers.

1.12. LIMITATIONS OF MIS

The limitations of MIS
1. MIS cannot replace managerial judgment in decision making. It is merely effective tool for
the managers in decision making problem solving.
2. The quality of output of MIS is directly proportional to the quality of input and processes.
3. MIS cannot provide tailor made information packages. It is required to analyse the available
information before decision making.
4. In a fast changing and complex environments, MIS may not have enough flexibility to update
itself quickly.
5. MIS takes only quantitative factors into account.
6. MIS is less useful for making non programmed decisions.
7. MIS is less effective in organizations where information is not being shared with others.
8. MIS is less effective due to frequent changes in top management, organizational structure and
operational staff.

1.13. COMPUTER BASED INFORMATION SYSTEMS

 Mangers make decisions to solve problems and information is used in making the
decisions.
 Information is presented in both oral and written forms by an information processor.
 It contains each of the computer based application areas:-Accounting Information System
(AIS), Management Information System (MIS), Decision Support System (DSS), Office
Automation (OA) and Expert System (ES).
 The term computer based information system (CBIS) is used to describe the five
subsystems that utilize the computer.
 All of the CBIS sub-system provides information for problem solving.
 Each CBIS subsystem can support quality management. These are external customers that
exist outside the firm. Information services interfaces with these external customers by means
of the AIS. Much of the external customer’s perception of the firm is based on the
capabilities of the AIS to execute orders promptly and accurately. Hence, information system
has a direct influence on the firm’s product and service quality. IS also provides an indirect
influence by providing information to users inside the firm.
 These are internal customers and they exist on all organizational levels and in all functional
areas. The information enables these internal customers to do their jobs better, resulting in
better products and services. In addition, the standard financial reports produced by AIS, such
as the income statement and cost analyses, serve as a scorecard of the quality effort, reporting
cost of rework, scarp customer returns, warranty claims and so on. Fig. shows each of these
subsystems which provide information to be used in quality management.

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CBIS Financial
Quality Reports
Database AIS
Mathematical Model
Mathematical Outputs
MIS
Model Reports Special
Reports

Periodic DSS Periodic

Reports Reports

Communica- OA
tion

ES Consultations

Fig. CBIS sub-systems support-quality management

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 CHAPTER-2| Information Systems For Decision Making

CHAPTER-2
INFORMATION SYSTEMS FOR DECISION MAKING

2.1. INTRODUCTION
The natures and scopes of information required by managers and different levels in an
organisation vary considerably. Organisation required different types of information system to
meet their needs. The fields of information system have come a long way in last few decades. An
increasing no of managerial personnel rely on computers and information systems to make
decisions. Managers at different levels in an organisation make different kind of decision
(Operational, tactical and strategic). So, that the types of information necessary to support their
decision are also different. Accordingly different types of information systems are designed to
meet various information needs of managers.
There are four types of information systems exist:
1. Transaction processing system(TPS)
2. Management information system(MIS)
3. Intelligent support systems(ISS) consisting of decisions support systems (DSS), executive
information systems(EIS)and expert systems(ES)
4. Office automation system(OAS)

2.2. TRANSACTION PROCESSING SYSTEM

The main purpose of transition processing system is to records, process validates & store
transition death takes place in various function area of a business for future retrieval of use.
• Transaction can be internal or external. When a department order office supplies from the
purchasing department an internal transaction occurs.
• When a customer places an order for a product an external transition occurs.
• This processing system is various used in this organisation such as finance accounting,
manufacturing, production human resources, marketing, Engineer quality control and
resource and development.
2.2.1. Steps in Processing a Transaction
Data must be processed to become use full information .There are following 6 steps in processing
a transaction.
1. Data entry
2. Data validation
3. Processing & revalidation
4. Storage
5. Output generation
6. Query support
 Data entry: Transaction data must first be enter in to the system .A number of input devices
exist for entering data including the key board & the mouse. The document generated at the

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source where the transaction occurs are called source document & becomes input data for the
system.
Example: when a customer returns an item at a stored the sales receipt becomes the source
document for the transaction return item for returned for replacement.
 Data validation:
 Data validation is essential in transaction processing. It ensures the accuracy & reliability of
data by comparing actual data with predetermine standard or known results.
 There are 2 steps in validation. (1)Error detection. (2) Error correction.
 Error detection- Checking the data for appropriate format, checking for missing data, invalid
data & inconsistence data.
 Error correction- Error correction procedures are design to ensure that all have been corrected
& that no errors have been introduced during the process. The technique used for correcting
the error depends on the type of errors and the nature of the application.
 Data Processing and revaluation:
After the validation of accuracy & reliability of data, the data are processed in following 2
modes
 Online transition processing.
 Batch processing.
 Online transition processing:
Online means that the data input device directly linked to the TPS. The data are directly
process as soon as it is entered to the system. In this system the information is always no time
lag between data creation &data processing. Ex- ATM
 Batch processing :
 In batch processing, transactions are accumulated over time & Processed periodically.
 Processing may be done in a daily, weekly, monthly basis or any other time period
appropriate to the given application.
 e.g.-an organisation may process its sale proceeds on daily basis at the end of each day, and
its daily expenses on a monthly basis.
 Data storage.
 Data storage is another important function because the values of usefulness of data diminish
if data are not properly stored.
 E.g. magnetic tap is obtain use to store data i.e. batch processed. However, online transaction.
Processing release on other type of storage media, such as magnetic disk. It is to be noted that
storage in output not always occurs in the same order. One can output the result of the
transaction to the decision maker and then store them, or store the result and then output then
to the decision maker.
 Output generation.
 The output can be communicated to the decision maker, after the data are input, validated,
processed, revalidated, & stored, in the following 2 ways:
• Documents and reports
• Forms (screens and panels)
 Documents are popular output method. Some Examples: Invoices, pay checks, purchase
invoices, sales receipts & job orders.

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 A document is usually a record of one transaction, where as a report is a summary of two or

more transactions. Nevertheless, these terms are obtained interchangeable.
 Computer o/p can also appear or computer screens & panels. Such soft-copy presentations are
known as forms.
 Query support. (asking questions)
 It is facilities allow users to access data and information that may otherwise not be readily
available.

2.3. MANAGEMENT INFORMATION SYSTEMS

 Management information systems are designed for providing information to the key
functionaries in an organisation. These systems make use of the already processed of the
already processed transaction data which is outputted from TPS and generate information
reports after processing data. The output of an MIS takes the form of summary reports and
exception reports. A summary report accumulates data from several transactions and presents
the results in condensed form. For example a bank manager may get a summary report listing
the total amount of deposits and withdrawals made the previous day. An exception report
outlines any deviations from expected output. Its main purpose is to draw the attention of
middle managers to any significant differences between actual performance and expected
performance. For example a sales manager may study an exception report that lists all sales
personnel who sold less then RS. 10000 or more then RS 50000 in the preceding month.

Fig shows the relationship between TPS and MIS:

Summary
reports

Transaction TPS MIS

data

Exception
reports

Fig: Interaction between TPS and MIS for Information Needs of an Organisation.

2.3.1. Decision Making In MIS

 Decision making is an essential part of an management. Some have even suggested that
management is synonymous with decision making are complex activities that involve many
decisions of human behavior .Early classical models of management stressed the functions of
managers , namely ,planning, organizing, staffing, coordinating, reporting, budgeting.
Depending on the level at which managerial decision makers are they performing a different
mix of managerial functions? There are primarily three levels of management and decision

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making termed as strategic, technical/tactical and operational decision making. These three
levels of decision making relate to one another closely. In essence management the functions
that a manager performs the levels at which the decision maker is and on the type of
decisions.

STRATEGIC DECISION MAKING

sets policies and defines overall objectives

TACTICAL DECISION MAKING

Interprets policy and objectives and provides guidelines for
operational decision making

OPERATIONAL DECISION MAKING

Implements guidelines set down during the tactical decision making
process

Fig: Decision making process

 Types of Decisions:
There are two types of decision making used in MIS. They are
1. Structured decisions.
2. Unstructured decisions.
 Structured decisions
Structured decisions are those that can be programmed. These decisions can be taken
objectively. They are essentially repetitive, routine and involve a definite procedure for
handling them. Herbert A. Simon termed structured decisions as programmed decisions
.Programmed decisions are in fact those that are made in accordance with some policy, rule
or procedure so that they do not have to be handled de novo each time they occur. It is for
these reasons that such managerial problems are relegated to the supervisory level.
 Unstructured decisions
Unstructured decisions are those in which the decision maker must provide judgment,
evaluation and insights into the problem definition. These decisions must be taken
subjectively. Unstructured decisions are more respectively in nature, usually one-sort
occurrences for which standard responses are usually not available. Hence, they require a
creative process of problem-solving which is specially tailored to meet the requirement of
situation on hand. In fact manager at higher level in an organisation are usually faced with
more such unstructured decision making situation. Some have aptly descried the situation as
some what strategic in nature as compare to the tactical orientation of the structured decision
at lower level of management. Strategic decisions are non-respective, vital and important and
aim at determining or changing the ends or means of enterprise.

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2.4. INTELLIGENT SUPPORT SYSTEMS

 Systems which facilitate decision requiring the use of knowledge, intuition, experience, and
expertise, are called intelligent support system (ISS). Decision support systems (DSS),
executive information systems (EIS) and artificial intelligence (AI) and expert systems (ES)
fall into this category. These systems are explained in brief and their role in organisational
decision making.

2.4.1. Decision support system:

 Decision support systems are interactive, well integrated systems that provide managers with
data, tools and models to facilitate semi-structured decisions or tactical decisions. It
automates the routine and repetitive elements in a problem while simultaneously supporting
the use of intuition and judgement. DSS are ideally suited for problem like location selection,
identifying new products to be marketed, scheduling personnel, and analysing the effect that
price increases for resources have on profits.
 DSS are man/machine systems and are suitable of semi structured problems. The problem
must be important to the manager and the decision required must be an important one. In
addition, If an interactive computers based system is to be used then some of the following
criteria must be met:
 There should be a large data base,
 Large amount of computation or data manipulation,
 Complex interrelationships,
 Analysis by stages,
 Judgment required and
 Communication
 It follows form the above criteria that DSS are inappropriate for unstructured problems and
unnecessary for completely structured problems because they can be dealt with wholly by the
computer. In outline, DSS require a database, the software to handle the database and
decision support programs including eg. Modelling, spreadsheet and analysis packages,
expert system etc.
 A DSS allows managers to perform goal seeking, which specifies the action a manager
should take in order to accomplish a certain goal. Another important feature of DSS is that an
individual or a group of individuals can use them. DSS that support group decision making
are called Group Decision Support Systems (GDSS).In most organizations, decision of any
significance are made collectively by a group, not by a single person .GDSS are a set of
interactive, well integrated systems that facilitate and support group decision making.

2.4.2. Executive information systems:

 EIS are forms of data retrieval systems that provide selected and summarised information for
senior executive engaged in long range planning. Crisis management and other strategic
decisions. It is a user friendly interactive system. It has excellent menus graphic capabilities.
A typical way that an EIS works is by exception reporting and drilling down to investigate

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the causes. For example a director of an organisation may be altered that a particular
department is well over budget. The manager would then drill down the data by pursuing
lower and lower levels of detail.

2.4.3. Artificial intelligence and Expert systems:

 AI is a branch of computer science whose goals is to design and develop machines that
emulate human intelligence. It attempts to endow machines will capabilities and
characteristics that would indicate intelligence in human being.
 Expert systems (ES) also known as knowledge based system is a software designed to capture
the knowledge and problem solving skills of human expert. It has three main components: a
knowledge base, an inference engine, and a user interface.
Main characteristics of expert systems are:
 An expert system is a program designed to capture the knowledge and problem solving of
human expert. Expert system is a branch of artificial intelligence.
 Expert systems handle problem that require knowledge, intuition, and judgment.
 Expert systems, unlike DSS and EIS, can replace decision makers.
 It has three main components: the knowledge base which stores the knowledge, the
inference engine, which stores the reasoning principles used by the expert, and the user
interface, which allows the user to interact with the system.
 Expert systems are not designed for any one level of management, their primary function is
to disseminate expertise throughout the organisation

2.5. OFFICE AUTOMATION SYSTEM

OAS refers to the user mechanical, electrical, & electronic devices to enhance communication
in the work place & increase the efficiency & productivity of knowledge workers or clerical
workers. OAS includes:
 Word processing
 Electronic mail
 Voice mail
 Audio conferencing
 Video conferencing
 Computer conferencing
 Tele conferencing
 Facsimile transmission
 Desktop publishing
 Video task
 Imaging
 Multimedia system
 Word processing:
It is use of an electronic device that automatically performs many of the tasks necessary to
create written document such as letters, memo, & report that are directed to the manager.
 Electronic mail:

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Electronic mail known as E-mail. It is the use of a network computer that allows users to send,
store, and receive messages using the computers terminals & storage devices. It sends mail
electronically from one computer to other.
 Voice mail:
Voice mail is just like electronic mail & performs storing, accessing, retrieving, and distributing
messages using the telephone.
 Audio conferencing:
Audio conferencing is the use of voice communication equipment to establish an audio link
between geographically dispersed persons for conducting a conference. The conference call,
which allows more than 2 people to participate in a telephone conversation, was the first form of
audio conferencing & is still in use.
 Video conferencing:
It is the use of television equipment to link geographically dispersed conference participants to
engage in face to face communication. The equipment provides for audio as well as video
linkage.
 Computer conferencing:
Computer conferencing is the use of a network computer to all members of a problem solving
team to exchange information concerning the problem that is being solved.
 Tele conferencing:
It is includes all three forms of electronically aided conferencing audio, video & computer.
 Facsimile transmission:
Facsimile transmission popularly known as fax is the transfer of written or pictorial information
by the use of special equipment that can read a document image at one end of a communication
channel & make a copy at the other end.
 Desktop publishing:
Desktop publishing is the use of a computer to prepare printed output, using software with
sophisticated publishing capability.
 Video task:
It is the use of the computer for displaying a stored narrative & graphic material on a CRT
screen.
 Imaging:
Imaging is the use of optical character recognises to convert paper or microfilm records to a
digital format for storage in a secondary storage device for easy retrieval & processing.
 Multimedia system:
Multimedia system are well integrated systems that store, retrieve, & process different types of
data such as test, graphics, image, full motion video, audio, & animation.
It helps users to create, process, share, & display information in a broad variety of formats.
2.6. CHARACTERISTICS OF INFORMATION SYSTEM
 Transaction Processing System (TPS)
 Input: Transaction related data.
 Processing: Use procedure & rules.
 Output: Summaries of transaction.
 Users: Lower-level managers.
 Application: Sales transaction applications, Credit & payment, Insurance claims.

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 Management Information System (MIS)

 Input: Output from TPS & other internal data.
 Processing: Measures & monitors operational performance.
 Output: Summary & exception reports.
 Users: Middle level managers.
 Application: Monthly production report.
 Intelligent Support System (ISS)
 Input: Internal & external data & models.
 Processing: Interactive ad-hoc reporting.
 Output: Alternatives & Analysis reports.
 Users: Top managers.
 Application: Investment portfolios.
 Office Automation System (OAS)
 Input: Data & information.
 Processing: Formatting, Summarizing & Displaying.
 Output: Document, Graphics, Multimedia.
 Users: Knowledge & Clerical workers.
 Application: Fax, Multimedia, Video conferencing.

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