3. introduction to organizational systems
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Phases of Decision Making
Decision making process involves the following three
phases:
Intelligence
- During this phase the decision maker searches forconditions calling for a decision
- The decision maker may be reacting to problems ormay recognize opportunities
- In either case a gap between the existing state and adesired state is a must for the existence of a decisionproblem
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Contd.
Design
- This is the second phase of the decisionmaking process
- During this phase the decision makerdevelops and analyzes alternative courses of
action by either searching for ready-madealternatives or developing a custom-madesolution
Choice- During this third phase, the decision maker
selects the best alternative
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Intelligence and Design Phase
These two phases constitute of the following three
aspects:
Problem finding
Problem formulation
Development of alternatives
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Problem Finding
This can conceptually be defined as finding out the
difference between some current situation and some
desired state What is desired is then compared with reality
Then differences are identified and evaluated to find out
if that is a problem
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Development of Alternatives This requires lot of creativity
Basic creativity can be enhanced upon byalternative-generation procedures and
support mechanisms. E.G being scenarios,analogies, brainstorming, checklists,templates of decision process etc
There should be enough knowledge about theproblem, its boundaries and there should beproper motivation to solve the problem
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Contd.
Programmed and nonprogrammed decisions:
- programmed decisions are the ones which can be
prespecified by a set of rules or decision procedures
- These appear in rule books, decision tables etc and aregenerally used under certainty where outputs must be
known
- On the other hand nonprogrammed decisions have no such
predefined rules which generally could be one time decisionin case of crisis or problems occurring on regular basis
with conditions changing
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Criteria for Decision Making
The models of decision making that tells the
decision makers as to how to make a class of
decisions is normative or perspective. These are
generally developed by the economists and
management experts, e.g., Linear programming,Game Theory, Capital Budgeting and Statistical
decision theory
On the other side the models that describe howdecision makers actually make decisions are
descriptive models, e.g., Satisficing, etc.
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Methods for Deciding Among Alternatives
Optimizing techniques used under certainty: e.g. Linear
programming, integer programming, dynamic
programming, queuing models, inventory models, capital
budgeting analysis, break even analysis etc.
Payoff matrices in statistical decision theory
Utility and indifference curves
Decision trees
Ranking, weighting or eliminating
Game theory
Classical statistical inferences
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Attributes of Decision Maker
The attributes of decision makers also affect
the types of decision strategy used. Some of
these attributes include:
Perceptual ability
Information capacity
Risk-taking propensity Aspiration level
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Strategies for Decision Making
The type of decision problem and the attributes of thedecision maker determine which of the followingstrategies would be used:
Maximizing
- When the outcome of the decision is clear and thealternatives are well established, the decision makerwill make the decision that maximizes the desiredoutcome
- The maximizing approach assumes that the decisionmaker is rational and is aware of the probabilities ofeach alternative
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Contd.
Satisficing
- A decision maker sets up a reasonable aspirationlevel and search for possible alternatives until
he finds one that achieves his level
- The decision maker terminates his search assoon as he finds a satisfactory alternative
Incrementalization
- The decision maker attempts to take small stepsaway from the existing state towards a desired
state
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The Tools of Decision Support
Database software: e.g., Access, paradox, approach etc
Model-based software: e.g., Excel, Lotus1-2-3 etc
Statistical software: e.g., SAS-pc, SPSS-pc etc
Display based software: e.g., Power point, Freelance
Graphics
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Decisions
StrategicManagement
TacticalManagement
OperationalManagement
Decision Characteristics
Unstructured
Semi-structured
Structured
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Transaction Processing Systems:
An Overview
These are the systems that process the detaileddata necessary to update records about the
fundamental business operations of the
organization
The input of these systems includes basic
business transactions
The result of processing business transactionsis the updation of organizations records to
reflect the status of the operation at the time of
the last processed transaction
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Transaction Processing Methods Batch processing system: it is a system whereby business
transactions are accumulated over a period of time and
prepared for processing as a single unit or batch
On-line transaction processing: in this system each
transaction is processed immediately without the delay ofaccumulating the transactions into a batch
On-line entry with delayed processing: it is a compromise
between the above two. Transactions are entered into the
system as they occur but processed later
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Objectives of TPS Process data generated by and about
transactions
Maintain a high degree of accuracy
Ensure data and information integrity and
accuracy Produce timely documents and reports
Increase labor efficiency
Help provide increased and enhanced service Help build and maintain customer loyalty
Achieve competitive advantage
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Transaction Processing ActivitiesThe business data goes through a transaction
processing cycle that consists of the following
activities:
Data collection: this is the process of capturing and
gathering all data necessary to complete
transactions Data editing: this is the process of checking data for
validity and completeness to detect any problems
with the data
Data correction: this involves the process of
reentering miskeyed data which are found during
data editing
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Contd. Data manipulation: it is the process of
performing calculations and other datatransformations related to business
transactions. This can include classifying data,
sorting data into categories, performingcalculations, summarizing results and storing
data in the database
Data storage: it is the process of updating thedatabases with new transactions
Document production: it is the process of
generating output records and reports
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Transaction Processing Applications
Common TPS support the following processes:
Order processing systems
Purchasing
Accounting business processes
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Order Processing SystemsOrder processing systems include the following:
Order entry: it is a system that is used for
capturing the basic data need to process a
customer order
Sales configuration: this system ensures that theproducts and services ordered are sufficient to
accomplish the customers objectives
Shipment planning system: it determines whichopen orders will be filled and from which
location they will be shipped
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Contd.
Shipment execution system: this system
coordinates the outflow of all products and goods
from the organization with the objective of
delivering quality products on time to the
customers
Inventory control system: it updates thecomputerized inventory records to reflect the
exact quantity on hand of each stock keeping unit
Invoicing: this application encourages follow-upon existing sales activities, increase profitability
and improves customer service
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Contd.
Customer interaction: this system monitorsand tracks each customer interaction with
the company
Routing and scheduling: routing determinethe best way to get goods and products from
one location to another. The scheduling
system determines the best time to delivergoods and services
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Purchasing Systems
Purchasing systems include the following:
Inventory control: this is used to keep track of the
finished goods as well as raw materials, packing
materials and maintenance materials
Purchase order processing: this system helps
purchasing departments complete their transactions
quickly and efficiently Receiving: this helps in keeping records of the expected
and actual receipts. Quality control by inspection is also
one of the important functions
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Contd.
Accounts payable system: it is the system that
increases an organizations control over
purchasing, improves cash flow, increases
profitability and provides more effectivemanagement of current liabilities
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Accounting SystemsAccounting systems include the following:
Budget: it is a system that automates many of
the tasks required to amass budget data,
distribute it to the users and consolidate the
prepared budgets Accounts receivables: manages the cash floe\w
of the company by keeping track of the money
owed the company on charges for goods soldand services performed
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Architecture of Transaction Processing System
As and when a business transaction takes place,
source document describing the transaction is
created
This source document serves as an input for the tpsfrom some external source
These source documents can then be processed
online or in batches
Processing then gives the desired output
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Contd.
Information can be entered into a TPS one of the following
three ways
- Manual
- Semi automated
- Fully automated
The processing that is done on the source documenthappens to be one of the following
- Recording
- Summarizing
- Sorting
- Updating
- Merging
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Contd.
The output from TPS can serve one of the
following purposes:- Counts and summary reports
- Inputs to other information system
- Feedback to system operator orcustomer
The main objective of TPS is to automate
repetitive information processing activitieswithin organizations to increase speed and
accuracy and to lower the cost of processing
each transaction
Management Information Systems
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Management Information Systems
MIS assist managers in decision making and problem
solving
They draw on data stored as a result of transaction
processing
Decisions must be made on many issues that recur
regularly and require a certain set of information tomake the decision
Provides input to be used in the managerial decision
process
It deals with supporting well structured decision
situations. Typical information requirements can well be
anticipated
Executive Information System (EIS): An
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Executive Information System (EIS): An
Overview Information systems designed to support the
highest organizational managers are calledexecutive information systems
An EIS consists of technology and the people
needed to consolidate information andsupport users to assist executive level decision
making
The information is provided in a very highlyaggregated form so that they can scan
information quickly for trends and anomalies
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Contd.
An EIS provides both soft as well as hard data
Soft data include textual news stories or other non-
analytical information whereas hard data includedata and numbers which are generally generated by
TPS and MIS
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General Features of EIS Tailored to individual executives Easy to use
Have drill down abilities
Support the need for external data
Can help with situations that have a high
degree of uncertainty
Have a futures orientation
Are linked with value-added business
processes
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Activities supported by EIS
Executive level decision making
Long-range and strategic planning Monitoring of internal and external resources
Crisis management
Staffing and labor relations
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Characteristics of EIS
Inputs: aggregate internal data from TPS, MISand other databases as well as external data
Processing: summarizing, graphical
interpreting
Outputs: summary reports, trends and
simulations
Typical users: executive level managers
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An overview of Decision Support System
It is an organized collection of people, procedures,
software, databases and devices used to used to support
problem-specific decision making
The focus of a DSS is on decision- making effectiveness
when faced with unstructured or semi structured
business problems
DSS offer the potential to generate higher profits, lowercosts and better products and services
Contd
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Contd.
DSS, although skewed somewhat towards the top
levels of management, are used at all levels DSS are used to bring more structure to the
problems to aid the decision making process
DSS are often linked with managerial decisionmaking regarding value-added business
processes
Overall, a DSS should assist decision makers atall levels with all aspects of decision making to
solve problems and further corporate goals
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Characteristics of a DSS
Handle large amount of data from different sources
Provide report and presentation flexibility
Offer both textual and graphical orientation Support drill down analysis
Perform complex, sophisticated analysis and
comparisons using advanced software packages Perform what-if, simulation and goal-seeking analysis
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Constituents of DSS
At the core of a DSS are a database and a
model base
In addition, a typical DSS contains adialogue manager
external database access allows the DSS to
tap into vast stores of information
contained in a corporate database
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The Model Base
The purpose of a model base in a DSS is to give decisionmakers access to a variety of models and to assist them
in the decision making process
The model base can include Model Management
Software (MMS) that coordinates the use of models in aDSS
The following are the major types of DSS models:
- Financial models- Statistical analysis models
- Graphical models
- Project management models
Contd
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Contd.
Financial models: these provide cash flow,
internal rate of return and other investmentanalysis. E.g. Spreadsheets
Statistical analysis models: these can provide
statistics, trend projections, hypothesis testing and
more.
Graphical models: these are software packages
that assist decision makers in designing, developing
and using graphic displays of data and
information. Numerous personal computer
programs that can perform these tasks are power
point, freelance graphics, CAD, CAM etc
Contd
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Contd.
Project management models- These are used to handle and coordinate large projects.
- They are also used to identify critical activities and tasks
that could delay an entire project
- Some of these programs can also determine the best way
to speed up a project by effectively using additional
resources.
- These models allow decision makers to keep tightcontrol over projects of all sizes and types
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The Dialogue Manager
This allows the users to interact with the DSS to obtaininformation
It assists with all aspects of communications between
the user and the hardware and software that constitute
the DSS
In practical sense, to most DSS users, the dialogue
manager is the DSS
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The Group Decision Support System:
(characteristics)
A GDSS also called computerized collaborative worksystem, consists of most of the elements of DSS
Special design: special procedures, devices and approachesare needed that foster creative thinking, effective
communications and good group decision-making techniques
Ease of use: it must be easy to learn and use
Flexibility: it must support the different approaches oftaking decisions and also integrate their different
perspectives
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Contd.
Decision making support: it can support differentdecision making approaches like Delphi approach,
brainstorming
Anonymous input Reduction of negative group behavior
Parallel communication
Automated record keeping
Cost, control and complexity factors
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COMPARISON OF DSS AND MIS
FACTOR DSS MIS
PROBLEM TYPE HANDLES UNSTRUCTURED
PROBLEMS THAT CAN'T BE
EASILY PROGRAMMED
NORMALLY USED WITH MORE
STRUCTURED PROBLEMS
USERS SUPPORTS INDIVIDUALS,
SMALL GROUPS AND THE
ENTIRE ORGANIZATION
SUPPORTS PRIMARILY THE
ORGANIZATION
SUPPORT SUPPORTS ALL ASPECTS AND
PHASES OF DECISION MAKING
SUPPORTS ONLY SOME PART AS
SOME ARE AUTOMATED
EMPHASIS EMPHASISES ACTUAL
DECISIONS AND DECISION-
MAKING STYLES
USUALLY EMPHASISES
INFORMATION ONLY
APPROACH IS A DIRECT SUPPORT SYSTEMTHAT PROVIDES INTERACTIVE
REPORTS ON THE SCREEN
IS AN INDIRECT SUPPORTSYSTEM THAT USES
REGULARLY PRODUCED
REPORTS
SYSTEM USUALLY ON-LINE DO NOT PROVIDE IMMEDIATE
RESUL\TS
SPEED SINCE IT IS FLEXIBLE AND
CAN BE IMPLEMENTED BYUSERS,IT TAKES LESS TIME TO
DEVELOP
RESPONSE TIME IS USUSLLY
LONGER
OUTPUT REPORTS ARE USUALLY
SCREEN ORIENTED
ORIENTED TOWARDS PRINTED
REPORTS AND DOCUMENTS
DEVELOPMENT USERS ARE MORE DIRECTLY
INVOLVED IN DEVELOPMENT
THE MIS IS RELATIVELY
OLDER DO NOT RETAIN THE
USERS FOR LONG
Artificial Intelligence
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Artificial Intelligence
Artificial intelligence systems include the people,procedures, hardware, software, data, andknowledge needed to develop computer systems
and machines that demonstrate characteristics of
intelligence
The objective in developing AI systems is not to
replace human decision making completely but to
replicate it for some well defined problems
The overall purpose of AI systems again is to
help the organization achieve its goals
Major Branches of AI
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Major Branches of AI
Expert System: the hardware and software that
stores knowledge and makes inferences, similarto human expert
Robotics: mechanical or computer devices that
perform tasks requiring a high degree ofprecision or that are tedious or hazardous for
humans
Vision Systems: the hardware and software thatpermit computers to capture, store and
manipulate visual images and pictures
Contd.
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Natural Language Processing: processing thatallows the computer to understand and react to
statements and commands made in natural
language
Learning System: a combination of software and
hardware that allows the computer to change
how it functions or reacts to situations based on
feedback it receives
Neural Network: a computer system that can act
like or simulate the functioning of a human brain
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Introduction to Expert Systems
Systems that can replace human expertsunder certain conditionsin restricted areas
Expert systems canrepresent heuristics and uncertain informationreason under uncertaintyexplain their reasoning and results
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Alternative Definitions of Expert System
An expert system uses human knowledge to
solve problems that normally requires human
intelligence. An expert system is a rule-based AI application program
that performs a task that requires expert knowledge. The problem-solving capability of a program stems from
its domain knowledge, not merely from the formalismsand reasoning strategies it uses.
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Domain Categories for Expert Systems
Interpretation (weather data) Prediction (weather forecast) Diagnosis Design Planning Debugging and repair Instruction (tutoring) Surveillance (discovery of discrepancies) Control (correction of discrepancies)
Characteristics of Expert System
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p y
Can explain their reasoning or suggested decisions Can draw conclusions from complex relationships
Can provide portable knowledge
Can deal with uncertainty
Not widely used or tested Difficult to use
Limited to relatively narrow problems
Possibility of error Difficult to maintain
May have high developmentcost
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Capabilities of Expert Systems
Strategic goal setting Planning
Design
Decision making
Quality control and monitoring
Diagnosis
omponen s o xper ys em
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p p y
The knowledge base:
Stores all relevant information, data, rules, cases andrelationships used by the expert system. A knowledge
base must be developed for each unique application
The inference engine:
The overall purpose of this engine is to seek
information and relationships from the knowledge
base and to provide answers, predictions and
suggestions the way a human expert would. It deliversthe expert advice
Contd.
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The explanation facility:
Allows a user to understand how the expert systemarrived at certain conclusions or results. Using this
facility, can indicate all the facts and rules that were
used in reaching the decision
The knowledge acquisition facility:
Through this facility, creating and updating the
knowledge base is carried out. The overall purpose is
to provide a convenient and efficient means forcapturing and storing all components of the
knowledge base
C td
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Contd.
The user interface: Used for designing, creating, updating and using expert
systems. The overall purpose is to make the development and
use of the expert system easier for the users and decision
makers
OFFICE AUTOMATION SYSTEMS
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These are telecommunications-based
information systems that collect, process,store and distribute electronic messages,documents, and other forms of
communications among individuals, workgroups and organizations
Such systems improve the collaboration and
productivity of end-users and work groups bysignificantly reducing the time and effortrequired to produce, share and distributebusiness communications
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OVERVIEW OF OFFICE AUTOMATION
SYSTEMS
Electronic Publishing Systems
Electronic Communications Systems
Electronic Collaboration Systems Image Processing Systems
Office Management Systems
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ELECTRONIC PUBLISHING SYSTEMS
Word Processing
- It is the most common office automationapplication.
- It is the use of computer systems to create,edit, revise, and print text material.
- It involves manipulating text data (characters,words, sentences and paragraphs) to produce
information products in the form of documents(letters, memos, forms and reports)
Contd.
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Desktop publishing
- Organizations can use desktop publishing toproduce their own printed materials
- They can design and print their ownnewsletters, brochures, manuals and bookswith several type styles, graphics and colors oneach page
- The minimum hardware and software requiredare: a PC with a hard disk, a printer with high-quality graphics and software that can do wordprocessing, graphics and page make-up
ELECTRONIC COMMUNICATIONS SYSTEMS
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These systems transmit and distribute text and
images in electronic form overtelecommunications networks
These enhances the communications and
coordination among workgroups andorganizations
Electronic communication systems also help
reduce the flow of paper messages, letters,memos, documents and reports that flood ourpresent interoffice and postal systems
TOOLS OF ELECTRONIC COMMUNICATIONS
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Electronic mail:
Telecommunications networks are used to transmit, storeand distribute electronic text messages among the computerworkstations of the end-users. This may also include audio,video and image media
Voice mail:
Telephone system and a voice mail computer is used totransmit, store and distribute digitized voice messages
among end-users. The analog message is digitized andstored on the magnetic disk devices of the voice mailcomputer
Contd.
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Bulletin board systems
- This is a service offered by public informationnetworks or the network of businesses and otherorganizations in which electronic messages and data,
programs, and other types of files can be stored byend-users for other end-users to read or copy.
- This serves as a central location to post and pick up
messages or upload and download data files orprograms
Contd.
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Videotex:
Is a computer-based interactive information service provided
over phone lines or cable TV channels to access andselectively view text and graphics.
Facsimile (FAX):Allows us to transmit images of important documents over
telephone or other telecommunication links and reproducethem on paper at the receiving station
ELECTRONIC COLLABORATION SYSTEMS
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Electronic meeting systems
- This involves the use of video and audiocommunications to allow conferences and meetings tobe held with participants who are separated by long
distances
- Major categories of electronic meeting systems are:
- Computer conferencing- Desktop videoconferencing
- Decision room conferencing
Contd.
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Teleconferencing
- In this case sessions are held in real time, withmajor participants being televised whileparticipants at the remote sites usually takepart with voice input of questions andresponses.
- It can also consist of using closed-circuittelevision to reach multiple small groups
- Interactive video telecommunications are usedto hold conferences among many participantsat remote sites
Contd.
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Telecommuting
- It is the use of telecommunications by workers toreplace commuting to work from their homes
- It also describes the use of telecommunications tocarry on work activities from temporary locationsother than offices and homes
- It is also referred to as the creation of virtual office
IMAGE PROCESSING SYSTEMS
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Yet another fast-growing area of office
automation Allows end-users to electronically capture,
store, process and retrieve images of
documents that may include numeric data,text, handwriting, graphics and photographs
Some of the common image processing
systems are as under:- Electronic data management: Is based onimage processing technology.
Contd.
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- It is just not an electronic image of traditionaldocument but can also take the form of
digitized voice note or electronic images for acolor graphics presentation
Presentation graphics
the goal of these graphics is to provide informationin a graphical form for better understandingand making better decisions
This includes the use of line and bar graphs,pie charts and pictorial charts with various symbols
Contd.
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Multimedia systems
- Multimedia methods of presentations giveend-users information in a variety of mediaincluding text and graphics displays, voice and
other digitized audio
- They allow the end-users to select the form
and content of the information presented andbrowse through the information in a randomway instead of going sequentially
OFFICE MANAGEMENT SYSTEMS
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These are an important category of office
automation systems. They include electronic calendars, tickler files,
electronic mail directories, schedulers and task
management systems They provide computer-based support services
to the managers to help them organize their
work activities Office management software computerizes the
manual methods of planning