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Types of decisions
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Executive Support Systems (ESS)Executive Support Systems (ESS)
Decision Support Systems (DSS)Decision Support Systems (DSS)
Management Information Systems (MIS)Management Information Systems (MIS)
Knowledge Work Systems (KWS)Knowledge Work Systems (KWS)
Office Automation Systems (OAS)Office Automation Systems (OAS)Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)
Major Types of Systems/ Evolution of information systems
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Information System - Classification By Support Function
Operational Managers
Data Workers
Middle Managers
Senior Mgr Executive Support SystemExecutive Support System
Management Information SystemManagement Information SystemDecision Support SystemDecision Support SystemIntelligent Support SystemsIntelligent Support Systems
Knowledge Management SystemKnowledge Management System
Office Automation SystemOffice Automation System
Transaction Processing SystemTransaction Processing System
5-year sales trendProfit Planning5-year budget forecastingProduct development
Sales Management
Inventory ControlAnnual budgetProduction SchedulingCost AnalysisPricing Analysis
SimulationPgm codingSystem supportWord ProcessingDesktop Publishing
Order ProcessingFulfillmentMaterial MovementA/R, A/P, GLPayrollPOS
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O ffice Automation Systems ( O AS)
Electronic communication of data and infoword processing systems
document management systems
Ex: Fax machine, video conference, word processor
Input : Letters, documentsProcessing : Communication, sophistication (not much processing)O utput : Documents and reports
User : Clerical worker (Data worker)
Focus : communication
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Transaction Processing System (TPS) / EDP
Day to transactions are recorded and processed.
Batch Mode : files are updated periodically
O nline mode : transaction is recorded as it occurs
Input: Day to day transactions
Processing : sorting, listing, merging, updating
O utput : Detailed reports
User : O perational level managers
Focus : Data
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Figure 2-3
Payroll TPS
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Figure 2-4
Types of TPS Systems
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Management Information Systems (M IS)
Purpose : To provide routine reports required to facilitate managerialdecision making, planning, controlling.
Use simple analytical models.
reports such as:
(1) a daily list of employees and
(2) the hours they worked in a month
(3) or a monthly report of expenses as compared to a budgetInput : High volume data
Processing : Analysis, interpretation
O utput : Reports such as summary reportUser : O perational and Middle level managers
Focus : Information
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Figure 2-5
Management Information System (MIS)
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Decision Support Systems (DSS)
Provides managers the necessary info for making informed decisions.
A bit high end systems than M ISO ffer greater computing and higher capabilities.
These systems support complex non-routine decisions .(semistructured)
This information system not only presents the results but alsoexpands the information with alternatives.
Some DSS methodologies Mathematical Modeling Simulation Queries What- If (O LAP-Cubes) Data mining
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Data Analysis / Mining
Decision TreesDecision Trees ClusteringClustering Time SeriesTime Series
SequenceSequenceClusteringClustering
AssociationAssociation Nave BayesNave Bayes
Neural NetNeural Net
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Decision Support System (DSS):
Input : Analytical dataProcessing: Interactive processingO utput: Special reports with best possible
alternatives
User : Middle level managersFocus : O n a decision support
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Product
Process
Cost
Competitors
Promotion
Analytical modelcomprises of-
Graphics &ReportsOR Model
ManagementScience Model
Behavioral Model
Database DSS softwareModel Base
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Figure 2-6
Decision Support System (DSS)
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Difference between M IS and DSS
MI S DSS
Focus is on Information Focus is on decision support
Structured decision making Semi to unstructured decision making
O perational decision making Tactical decision making
Data or TPS output is given as input M IS info or analytical data is given as input
For junior and middle level management For middle level management
Focus is on operational efficiency Focus is on effective decision making
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GDSS(Group Decision Support System)
Targeted to a team of decision makers.Extension/ expansion of DSS.
Three Main Components of GDSS :Three Main Components of GDSS :
1.1. HardwareHardware
1.1. SoftwareSoftware
1.1. PeoplePeople
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GDSS Meeting
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Figure 13-7
Group System Tools
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Features of GDSS
Inputs given by participants are anonymous
Parallel communication
Quiet people can participate equally
Noisy people can t strongly drive meeting
Automated record keeping
No of participants can be 40 or even 50
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US Air Force
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Hardware : Conferencing infrastructure
Electronic display Board ScreensNetwork system connecting participants with each other
Software tools : Electronic questionnaires
electronic brainstorming toolsidea organizers
Tools for voting or setting priorities
This software is referred to as Groupware or Workgroup Software
People : Participants, Trained facilitator, Support staff
Three Main Components of Three Main Components of GDSSGDSS
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Databases
Model base GDSS processor GDSS software
Dialoguemanager
External databaseaccess
Users
Access to the internet
and corporate intranet,networks, and other
computer system
Externaldatabases
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Disadvantages of GDSS
Cost infrastructure costs to provide the hardware andsoftware/room/network connectivity can be veryexpensive
Technical Failure power loss, loss of connectivity, reliesheavily on bandwidth and LAN/WAN infrastructure properly setup system should minimize this risk
Perception of messages lack of verbal communicationcould lead to misinterpretation
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Executive Support Systems (ESS)
Targeted for Top level management.Information should be crossfunctional.In the form of summary and precise.
Input : Ext + Int DataProcessing : Graphics, SimulationsO utput : Projections
Ex: 5 Yr operating plan
Focus : Decision support for top management
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Executive Support System
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Knowledge Management Systems (KMS)
An additional level of staff support now exists between top and middlemanagement called knowledge worker.
Financial and marketing analysts Acts as advisors and assistants to both top and middle management.
KMS that support these knowledge workers range from(1) Internet search engines(2) expert systems,
User : Knowledge workersFocus : Providing required information to knowledge workers
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ES (Expert Systems)
These are Knowledge based systems
An information system that captures knowledge or expertise of a specialistand then simulates the thinking of that expert for those with less or noexpertise.
Provides expert advice and acts as expert consultant to users.
Input : Limited dataProcessing : If then kind of analysisO utput : Diagnostic reportsUser : Top managementFocus : O n consultation
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Loan Evaluation System
Works on If CONDITION Then ACTION
If purpose is car, then maximum loan will be X.If tenure of loan is 5 years
If interest rate is 10%
Then EM I will be XXIf borrower s annual income is Y
If his monthly payments are YYIf YY + XX is greater than 40% of Y
then loan request rejectedElse loan request approved.
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Artificial Intelligence
Intelligence : Ability to acquire, understand and apply knowledge.O R Ability to exercise thought and reason.
How does a thief/criminal escape from the cops? What are you doing while playing chess?
AI is an effort to develop computer based system that behaves as
human.AI is putting human intelligence in to a machine.
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Attributes of Natural ( Human) and Artificial (Machine)Intelligence
Attributes NaturalIntelligence
ArtificialIntelligence
Ability to use sensors (eyes,ears,touch,smell) H igh Low
Ability to be creative and imaginitive H igh Low
Ability to be adaptive H igh Low
Ability to use variety of information sources H igh H igh
Ability to acquire large amount of external information H igh H igh
Ability to make complex calculations Low H igh
Ability to make series of calculations rapidly andaccurately
Low H igh
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Artificialintelligence
Robotics
Visionsystems
Learningsystems
Natural languageprocessing
Neural networks
Expert systems
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AI Applications
Banks use artificial intelligence systems to organize operations,invest in stocks, and manage properties.
Deep Blue defeated the reigning world chess champion GarryKasparov in 1997 Game playing
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Example: DARPA Grand ChallengeGrand Challenge
Cash prizes ($1 to $2 million) offered to first robots to complete a longcourse completely unassisted
Stimulates research in vision, robotics, planning, machine learning,reasoning, etc
2004 Grand Challenge: 150 mile route in Nevada desert Furthest any robot went was about 7 miles but hardest terrain was at the beginning of the course
2005 Grand Challenge: 132 mile race Narrow tunnels, winding mountain passes, etc Stanford 1 st, CMU 2nd, both finished in about 6 hours
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2004: Barstow, CA, to Primm, NV
150 mile off-road robot raceacross the M ojave desertNatural and manmade hazardsNo driver, no remote controlNo dynamic passingFastest vehicle wins the race(and 2 million dollar prize)
150 mile off-road robot raceacross the M ojave desertNatural and manmade hazardsNo driver, no remote controlNo dynamic passingFastest vehicle wins the race(and 2 million dollar prize)
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Stanley RobotStanford Racing Team www.stanfordracing.org
Next few slides courtesy of Prof.Sebastian Thrun, Stanford University
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Figure 2-9
INTERRELATIONSHIPS AMONG SYSTEMS
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Type of InformationSystem
Input Processing Output User
OAS - OfficeAutomation System
Letters &Documents
Communication,Sophistication
Documents Clerical
TPS/O LTP -
Transaction Processingsystem
Day-to-DayTransactions
Sorting, Listing,Merging, Updating Detailed Reports Operations Staff
MISSummary
InformationAnalysis,
InterpretationSummary Report
Middle Managers and jrmanagers
DSS Analytical Data Interactive Processing Special Reports Middle Managers
ESSExceptionalInternal +
External Data
Graphics,Simulations,Interactiv
eProjections Senior Management
KS/ES - Knowledgebased/Expert Systems
Limited DataRule Based: If .Then
kind of AnalysisDiagnostics Reports
Top Management, TopProfessional (Drs)
Types of Information Systems
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Functional Subsystems of M IS
MarketingManufacturing
LogisticsPersonnelFinance and Accounting
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SYSTEMSFROM A FUNCTIONAL PERSPECTIVE
Figure 2-1
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TYPES OF SYSTEMS
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Cross- Functional Business Processes
All the departments in the organization are interlinked.
Employees of these different departments work together to
complete a piece off work
Example: O rder Fulfillment Process
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Figure 2-12
The Order Fulfillment Process
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Information
Information is acquired from data .
Data Processing Information
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Information Processing Operations
Operations:
1. Capturing
2. Verifying
3. Classifying
4. Sorting
5. Calculating
6. Storing
7. Dissemination/Communication
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TYPES OF INFORMATION
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TYPES OF INFORMATION
1. Strategic Level Information
Used by top level managementRequired for long term planningDraws heavily from external environment
Unstructured
Example :
Futuristic information such as
1. Emerging technologies2. Competition3. Consumer preferences4. Socio political changes
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TYPES OF INFORMATION
2. Tactical Level Information
Used by middle Level management.For medium or short term planning.Drawn mostly from int. environment & partly from ext environment.
Semistructured
Example :
Last quarters sales + Customer perceptions about the product/Competitor s strategy/ Competitor s pricing
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TYPES OF INFORMATION
3. Operational Level Information
Used by operational level managersFor short term planningDrawn heavily from internal environmentStructured
Example :
No of orders in hand, stock in hand for daily production
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Characteristics Strategic Level Tactical level Operational level
Source Largely ExternalInternet and
External Largely Internal
TimelinessH istorical and
forecastRecent Very recent
Frequency of use InfrequentRegular
(monthly/weekly)Frequently
(daily/hourly)
Required Not urgent Fairly up - to - dateurgent and up - to -
date
Accuracy low Fairly accurate H igh accurate
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Internal Information
Information generated within and about the organization.
Type of Internal Information:
1. Marketing and Sales Information:O n performance, revenues, market shares, distribution channels etc.
2. Production and Operational information:O n assets, capacities, lead time, quality, standard, etc.
3. Financial Information:O n profits, costs, margins, cash flow, investments, etc.
4. Research and Development Information:on new products and development copyrights, knowledge base, etc.
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External Information
Information generated through agencies outside the organization
Types of External Information:
1. Market Competition:
What is the pricing structure of competitors?What are our competitors doing? Etc
2. Technological Changes:
Can the organization adapt to take advantage of new technology?How will it affect the organization?
3. Industrial Structure:How many new firms are entering in the industry? Etc.
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Q uantitative Information
Quantitative information provides numerical information
This numerical information is very important for the information
user .
Example: Sales Report Cash flow statement
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Q ualitative Information
Such type of information does not contain any numerical data.
Example :
How happy are you to be employed by XYZ company?
Customer satisfaction survey reportAdvertisement effectiveness
1 2 3 4 5
Very happy Fairlyhappy
Neither happynor unhappy
FairlyUnhappy
Very Unhappy
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Recurring Vs Non Recurring Information
Recurring Information :Collected and reported on regular basis.
Example : Daily, weekly sales report
Non Recurring Information :Collected and reported on selective or exceptional basis.
Example : Market Research ReportFinancial analysis report on new product or new strategy
Pl i g C t l d O ti g I f ti
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Planning, Control and Operating Information:( On Basis of use of Info)
Planning Information :Used for planning activity.Usually be forward looking and subject to some degree of uncertainty.
May include qualitative information as well as quantitativeinformation .
Example :
ForecastingCorporate planning
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Control Information
Used for controlling activity.
Compares actual results and the objectives that have beenpreviously set.
Example:
Quarterly/Annual Sales report
Operating Information:Needed for day to day running of organization
Example :Daily details of products delivered are necessary for invoice.
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TYPES OF INFO
Proprietary/Owne d Public
ProtectedEx:
Trade SecretsCustomer s data
Sales data
Shared
FreeEx:
Population StatisticsEconomic Forecasts
Fee BasedEx:
Govt Publications
Fee BasedEx
Market ResearchO nline Database
FreeEx:
Co s website
Co s publication
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Characteristics / Attributes of Information
Accuracy
Understandability
Timeliness
ReliabilityComplete
Conciseness/ Volume : O nly required info should be given
Value of Information
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Value of Information
Information should have some values, otherwise it would not beworth the cost of gathering processing, and filling it.
The benefits obtainable from the information must alsoexceed the cost of acquiring it.
Benefits : reducing costs, eliminating losses, increasing sales,better utilization of resources
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Value of Information
Appropriateness/Relevance of Information for
ProblemUnderstanding by User Value of Information
None None None (Still Data)
H igh None None (Still Data)
None Some None
Some Good ModerateH igh Good H igh
Critical Good Maximum
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Model of Human as Information Processor
Input fromsensory
receptors
NervousSystem
as Channel
Processingby Brain
NervousSystem
As Channel
Response asOutput
Memory
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The decision Making Process Identify and define
problem
Develop Alternative Solutions
Evaluate alternative solutions
Selectalternative
Implement decision
Evaluate and Control
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The Herbert Simon Model
Three interrelated phases:
1. The intellegence phase
2. The Design Phase
3. The Choice Phase
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1. Intelligence Phase:Identify and define the problem
2. Design phase:Develop diff alternativesEvaluate diff alternatives
3. Intelligence Phase:Selection of one alternative
Does not include the steps :
Evaluating the decision takenControling the decision taken