Information Systems in Business:

Production / Manufacturing systems:

Manufacturing IS support production functions concerned with planning and control of the processes producing goods or services. Eg, Transportation companies, wholesalers, retailers, financial institutions use manufacturing IS to plan and control their operations.
CIM (Computer-Integrated Manufacturing): Manufacturing IS is used to support computer based manufacturing or production process. Their main objectives are;
a)          To simplify the production processes, product designs and factory organization.
b)          To automate production processes and business functions with the help of computers, machines and robots.
c)          To integrate all production processes using computers, telecommunication networks and other information technologies. The overall goal of CIM is to create flexible manufacturing processes that produce products of high quality.
  A company can quickly respond to and fulfill customer requirements with high quality products and services.
MRP (Materials requirement planning): They help to plan the types of materials needed in the production process.
CAM : These are systems that automate the production process. They monitor and control the production process, a machine tool or machines with some humanlike work capabilities (robots).
MES (Manufacturing Execution Systems): They monitor, track and control the essential components involved in a production process;
-          Materials
-          Equipment
-          Personnel
-          Instructions
-          Production facilities.
They are used to monitor, report and adjust the status and performance of the above components.

Collaborative Manufacturing Networks:

CAE and CAD involve using the Internet, intranets and extranets and other networks to link the workstations of engineers and other specialists
-          With their colleagues at other sites,
-           Link employees within the company
-          Link employees or representatives between companies.
-          Link the company with its customers.
Process control:
It refers to the use of computers to control a physical process.
Eg, Applied in petroleum refineries, cement plants, steel mills, food product manufacturing plants, pulp and paper mills, and electric power plants.
Process control computers use special-purpose minicomputer systems. They use mathematical models to analyze the ongoing process and adjust the devices to control and direct the process.
Machine control:
It refers to the use of a computer to control the actions of a machine.
These machine control systems use special-purpose microcomputers called Programmable Logic controllers (PLCs).

Robotics:

An important development in the field of technology is the creation of smart machines and robots. They directly control their own activities with the aid of computers. Robotics is the technology of building and using machines with computer intelligence and computer controlled human physical capabilities. They are used as ‘Steel- collar workers’ to increase productivity and to cut costs. They follow programs distributed by servers to microcomputers.

Financial Information Systems:

Computer-based financial systems support financial managers in decisions concerning,
-          Financing of a business
-          Allocation and control of financial resources within a business.
- Forecast and manage
                        Cash position
-          Manage short-term and other securities
-          Evaluate risk and return of capital expenditure
-          Forecast financial performance and financial needs
a)          Cash management:
these systems collect information on cash receipts and payments on regular or on periodical basis. They allow managers to invest the excess funds quickly and profitably to increase the income. These systems produce daily, weekly, or monthly forecasts of cash receipts and payments. It shows future cash deficit or surplus. Mathematical models and other programs can be used to find alternative ways to deal with the surplus or deficit.
b)          Online Investment management:
Portfolio of securities (investment of cash in short-term/ low-risk securities or in high-return/ high-risk securities) can be managed with the help of management software packages. Investment information is available online from various sources on the internet and other networks.
c)          Capital Budgeting:
This process involves evaluating the profitability and impact of a capital expenditure. Long-term expenses for plants and equipments can be analyzed using a variety of techniques such as spreadsheet models.
d)          Financial forecasting and Planning:
financial analysts to evaluate the present and future financial performance of a business use Electronic spreadsheets and other financial planning software. They help in determining the financial needs of a business and to analyze alternative methods of financing, considering the economic situation, business operations, types of financing available, interest rates,etc. Web based groupware can be used to build and evaluate the investment alternatives.

Accounting IS:

This is the oldest and widely used IS in business. They are used to record and report business transactions. They are based on double-entry bookkeeping concept. Computer-based accounting systems record and report the flow of funds in an organization and produce important financial statements (balance sheets, income statements, financial budgets).
Operational accounting systems:
They include TPS of order processing, inventory control, accounts receivable, accounts payable, payroll and general ledger systems.
Commonly used accounting IS:

a)          Online accounting systems:
They are affected by Internet and client / server technology. These systems track business activity using Internet, intranets and extranets. They are suitable for online order processing, inventory control,etc. they directly process transactions between business and its customers or suppliers.
b)          Order processing:
It captures and processes customer orders and produces data needed for sales analysis and inventory control and accounts receivable. They automatically display reports on the number of orders processed or available for further clarifications.
c)          Inventory control:
They make the necessary changes to items in inventory based on a transaction. After receiving customer orders from order processing system, a computer based inventory control system records changes to inventory levels and prepares the necessary documents or reports needed. They help business provide high-quality service to customers while minimizing investment in inventory.
d)          Accounts receivable:
these systems keep records of amounts owed by customers (amount to be received from customers) from data generated by customer purchases and payments. They produce invoices to customers, monthly customer statements (credit) and credit management reports. They help managers with reports to control the amount of credit extended and minimize losses from bad debts.
e)          Accounts payable:
These systems keep track of records of purchases from and payments made to suppliers. They ensure accurate payment to suppliers to maintain good relationship and make use of discounts. They help the management to analyze payments, expenses, and purchases and cash requirements for day-to-day business works.
f)          Payroll:
These systems receive and maintain data from employee time cards and other work record. Computer- based payroll systems help businesses make accurate payments to employees, generate reports to management, to government agencies on employee earnings, taxes and deductions. They are also used to generate reports on labor costs and productivity.
g)          General Ledger systems:
They consolidate data received from accounts receivable, accounts payable, payroll and other accounting IS. At the end of each accounting period, these systems help to close the books of a business and produce general ledger trial balance, income statements, balance sheet and other expense reports. They provide better financial controls, management reports, involve fewer personnel, at low costs than manual accounting methods.



Accounting IS
       
•          Online accounting systems
•          Order processing systems
•          Inventory control systems
•          Accounts receivable systems
•          Accounts payable systems
•          Payroll systems
•          General ledger systems

Human Resource IS:
HRM function in an organization involves,
-          Recruitment
-          Placement
-          Evaluation
-          Compensation
-          Training and development of employees
The goal of an HRM department in an organization is to make an effective and efficient use of the human resources available. Computer-based IS help them to do this job. Human Resource IS is designed to traditionally support,
•          Business plans to meet the personnel needs of the business.
•          To develop and motivate the employees.
•          To control the personnel policies and programs.
•          To produce paychecks and payroll reports.
•          To maintain personnel records.
•          To analyze the use of personnel in business operations.
IS is now designed for modern support like,
•          Recruitment, selection and hiring
•          Job placement
•          Performance evaluation
•          Employee benefits analysis.
•          Training and development
•          Health, safety and security
•          Grievance (problem) handling.

HRM and the Internet:

Companies recruit employees through the Internet directly or through recruitment web sites. Contact is kept with job applicants by e-mail. The applicants can get full details about the concerned company. The company can also make a quick analysis and test the applicant’s capability. Various web sites for job hunters and employers are available. Eg, America’s Job Bank, Job Smart and Naukri.com.
HRM and Corporate intranet:

Intranets allow the HRM department to provide full time services to their employees. Employee-self-service (ESS) intranet application allows employees to view benefits, verify salary information, exchange opinions and ideas, make complaints and have better correspondence with their employers. Employees can easily download instructions, training videos or get information on education.

HRM activities:

a)          Staffing the organization: IS can record the employee’s responsibilities of a concern. Personnel databases can be used to update and locate employees with skills suitable for a particular assignment or project.
b)          Training and development: IS helps managers plan employee recruitment, training and development programs. Computer-based multimedia training programs can be developed and implemented with the help of IS.
c)          Payment analysis: IS helps analyze distribution of wages, salary, incentive payments and fringe benefits and compensation payments. They help managers to make comparisons with other firms and maintain its competitive position.
d)          Government reporting: Reporting to governmental agencies is a major responsibility of HRM. IS is used to keep track of statistics regarding employee salary payments, workplace conditions, safety procedures, accidents, etc. Reports relating to employee attendance record, tax forms, list of job types (trainees, permanent or temporary workers), Provident Funds, etc.
 
Marketing IS:

Marketing activity refers to the planning, promotion and sale of products in the, market and development of new products and new markets to serve and maintain customers. A business firm makes use of IT to perform marketing functions in today’s environment. MIS help marketing managers in,
•          Product pricing
•          Product sales with respect to area, quantity and time
•          Advertising activities
•          Sales promotion activities
•          Market research.
a)          IS in interactive marketing:
It relates to marketing activity based on using Internet, intranet and extranet to have a two-way interaction between business and its customers. IS helps to attract and maintain customers in creating, purchasing and improving products and services. Usenet discussion groups, web forms and questionnaires and e-mail facilities are used to interact with the customers. This enables the company to get ideas on product style, sales volume,etc.
b)          Sales force automation:
It refers to assisting the work of salesmen with the help of computers for better and quick results with quality services provided. Salesmen are provided with notebook PCs or other forms of portable computers, web browsers and sales contact management software that connect them to marketing web sites on the internet, intranet and extranet. This increases the performance of salesmen, quick capture and analysis of sales data Up-to-date information can be easily and quickly delivered on a wider basis to the salespeople on latest products available, price details, product details, market conditions and tips on sales promotion activities.
c)          Sales and product management:
Computer-based IS produce sales analysis reports on,
•          Brand and product sales
•          Profit growth by product sales
•          Improvement or growth in sales.
    IS helps to analyze sales to the type of customers, salesperson and sales territory. Based on this, sales support programs can be developed to improve sales results.
d)          Advertising and Promotion:
MIS use market research information and promotion models to help managers to,
•          Select the media and promotional methods.
•          Allocate financial resources for advertisement and promotion activities.
•          Control and evaluate results of advertising and promotion campaigns.
e)          Targeted marketing:
IS are used to develop advertisement and promotion methods for a company’s electronic commerce web sites.
1)          Community: Companies can enable their web advertising messages and promotion methods to appeal or reach the people in specific communities. Community may be, - people interested in a particular field (sports, arts, music, etc.)
-          Community on the basis of a geographical area.
2)          Content: Advertisement messages on electronic billboards or banners can be placed on various web site pages in addition to company home page to reach targeted audience. Eg, An advertisement for a movie on an Internet search engine.
3)          Context: Advertisement appears only in web pages relating to a context or service. Advertisement is targeted to people looking for information about a subject matter. Eg, In an area where a person is accessing a subject matter relating to vacation travel, a company can display advertising messages of car rental services, resorts, etc.
If the subject matter is entertainment, advertisement messages relating to games and movie cd’s can be displayed.
4)          Demographic behavior: Advertisement and promotion efforts can be                                                              loaded on web sites viewed each time an individual visits a site.
Web Cookie files are used to track a person’s online behavior at a web site, so marketing can be instantly developed and targeted to that individual at each visit to their web site.
5)          Market research and forecasting: Market Research IS help marketing managers make better marketing forecasts and develop more effective marketing strategies capturing data on day-to-day market changes, economic changes, etc. Data gathered from company databases, data warehouses, World Wide Web sites and telemarketing service companies.
Applications of IS in service sector:

      IS are used for basic accounting of business operations, payroll, personnel, inventory,etc.

1)          IS in Airlines:

The basic function of an airline service sector is to;
•          Move people and goods from one location to another safely on time. This involves time keeping, convenience, prices, seat comfort, meal quality, and medical facilities including facilities at the airport.
•          Provide assistance in travel arrangements and arranging hotel accommodation.
•          Serving or solving passenger’s problems immediately without moving from counter to counter.
MIS is used in airlines industry to serve and make decisions relating to the above items. The passenger information recorded are,
1)          The type, class and purpose of travel.
2)          The duration of stay at the destination
3)          The food and eating habits
4)          Language and communication needs, and
5)          Their expectations on the service before and after the journey.
An MIS in the airlines industry should focus on collecting this information to build service package depending on the needs of the passengers (tourists, non-tourists, a domestic traveler, international traveler, a family and an individual).
Information on decisions relating to
–          New purchases,
–          Planned replacements
–          Spare parts in inventory, and
–          Man power training, can be obtained.
IS relay on business and operations research models to plan and implement the various services.

2)          IS in Hotels:

A hotel provides a room to stay with basic and luxury facilities and style. An IS are used in hotels to keep track of various happenings in and around it.
a) MIS is used to record and provide information on,
•          The type of customer.
•          The nature or purpose of visit.
•          The duration of stay.
•          The service demanded.
•          The customer’s religion, language and culture.
b) These systems provide information based on which the hotel management can take decisions regarding investments to be made in;
•          Building swimming pools and shopping centers.
•          Establishing different restaurants.
•          Set up travel relating information counters.
•          Provide transport facilities.
•          Locating and offering guide facilities.
•          To project future needs: IS help hotel managers to reserve places for unexpected business meetings, conferences, exhibitions, marriage parties and entertainment shows.
d)          Handle customer database: This database is used to update information on customer room choice, food habits, etc.
Front end systems: These systems are used to handle customer interaction, for enquires, answers and verification purpose.
Back end systems: These systems handle processing of commercial data in billing, accounting, inventory updating and general administration.

IS in Hospitals:

These are service organizations established to provide health care services to the needy (to wide range of customers).
Application of IS in hospitals:
1)          Patient database maintenance: IS are used to handle queries on existing patients, treated and discharged. Queries might be from visitors, doctors and hospital staff.
2)          Medical database maintenance: It consists of names, address, telephone numbers, etc. of doctors, nurses and technicians). IS are installed at laboratories, blood banks, medical shops, etc.
3)          Medical case history database: IS are used to record and maintain knowledge database on case history for guidance and research. Computer-based systems are also used to compare and analyze the health care demand.
4)          It is used for manpower and personnel planning.
5)          It is used for payroll analysis.
6)          It is used for hospital billing.
7)          It is used for inventory control.
8)          It is used for accounting financial transactions.
9)          It is used to record and analyze data on patient’s waiting time, recovery time, delays and extraordinary cases.

IS in Banking:

A bank is a place where financial services are offered. There may be different range of customers visiting a bank like individuals, institutions, trusts, business organizations, government and local bodies. MIS helps to provide detailed information to customers, employees and the general public.
Information provided may relate to;
•          Their account status for withdrawal and deposit.
•          Sanction of loan or avail credit facility.
•          Up-to-date interest rates prevailing.
•          Information at the counter providing service on payment of bills on behalf of customers like, electricity bills, telephone bills, taxes and duties.
•          Transfer of funds.
•          Quick withdrawal of funds (Information on ATM).
•          Upgrade the skills and knowledge of bank employees to offer quality service.

Focus of IS on key factors:

1)          People: IS should focus on understanding the expectations and doubts of customers and employees or persons who access the system.
2)          Process: IS should focus on evaluating and selecting the right software, communication networks, time saving quality models and to design forms of statement reports.

Transaction Processing Systems (TPS):

Transactions are events as part of business (sales, purchases, deposits, withdrawals, refunds and payments). Transaction processing is a fundamental organization activity. TPS are computer-based IS that process data resulting from business transactions. Previously transactions were recorded manually. With improvements in speed, accuracy, better presentation, OLTP (Online Transaction Processing) was developed by firms with the help of Internet, intranet and extranet.

Transaction Processing Cycle:

TPS capture and process data relating to business transactions. They update organization files and databases to produce a variety of information products for internal and external use. This takes place in a cycle of activities.
Eg, A company sells to a customer on credit. Data relating to customer, product quantity sold, product price, salesman, store, etc. are recorded. These data are processed and in turn result in additional transactions like, customer billing, inventory changes, product updating, generation reports, etc. This is transaction processing activity.
•          It helps in gaining competitive advantage for a business.
•          Firms use Internet / Intranet / extranet to keep in touch with customers or suppliers for real-time or online transaction processing.
•          Such systems capture and process transaction data immediately providing immediate service to customers.
•          They add value to products and services and win the competition.
      Five stage cycle:
1)          Data entry activities.
2)          TP activities.
3)          File and database processing activities.
4)          Document and report generation.
5)          Inquiry processing activities.

(1)          Data Entry Process:
                -The input activity in TPS consists of data entry process.
- Data is captured or collected by recording, coding and editing activities.
- They are then converted into a form that can be entered into a computer system.
      Methods or ways:
b)          Traditional Data entry:
They relay on end-users to capture data on source documents such as purchase order forms, sales order forms and payroll sheets. Source documents are accumulated into batches and periodically entered into a computer system. This is done by data entry specialists with the help of keyboards of data entry terminals.
Demerits:
-          Requires too many activities
-          People
-          Data media
-          High costs
-          Increase in error
c)          Source data automation:
This refers to the use of automated methods of data entry.
Merits:
-          Reduce the number of activities
-          People
-          Data media
-          Minimize and eliminate error
Steps involved:  a. Capture data of a transaction using POS (Point of Sales) terminals, OCR devices, ATMs and other input / output devices like, pen-based tablet PCs, touch screens and voice recognition systems.
  b. They capture data using machine-readable media or scanners to directly record bar codes.

Transaction processing:

TPS process data in two ways.
a)          Batch processing
b)          Real-time processing (Online processing)

Batch processing:

In this, transaction data are accumulated over a period of time and processed periodically.
The steps involved are;
•          Gathering source documents such as sales orders and invoices and grouping them in groups called batches.
•          Recording transaction data on an input medium (magnetic disk or tape).
•          Arranging the transactions sequentially on a transaction file.
•          Updating the master files and creating a variety of documents (customer invoices and paychecks) receipts and reports.
•          Capturing data at remote sites, transmitting them periodically to a central computer for processing – this is known as Remote Job Entry (RJE).
This process is followed for daily, weekly or monthly data processing.
Eg, In a banking industry, checks deposited are accumulated during the day into batches for processing every evening. Customer bank balances are updated on a daily basis and reports are produced data.


Advantages:
•          Economical method where large volumes of transaction data can be processed.
•          Can be applied in fields where documents and reports are required only at scheduled intervals. Eg customer statements prepared on a monthly basis.
Disadvantages:
•          Immediate updated responses to inquires cannot be made.

Real-time processing:

•          Allows transaction data to be processed immediately after they have been entered.
•          Provides immediate output to end-users (also called OLTP systems). Transaction data are processed as soon as they are entered or recorded without waiting to accumulate batches of data.
•          Data from online transaction terminals are processed immediately and the files and database are always updated in time.
•          The files are stored online for direct access.
•          Responses to end-user’s inquiries are made immediately.
•          RTP depends on Internet, extranets and other networks to provide tele-communication links between transaction terminals and client PCs and servers. Eg, OLTP (order processing and inventory management) by a manufacturing company.
Fault Tolerant Processing:

Airlines, banks and telephone companies to protect themselves against failure of OLTP applications, use them. Eg.,Airline reservation systems, bank electronic funds transfer systems, internet e-commerce applications use fault tolerant computers that provide nonstop real-time transaction processing capability that allows them to continue operating even if the parts of the system fail.
Advantages of OLTP:
1.          Provides immediate updating of databases.
2.          Provides immediate response to end user inquiries.
3.          Suitable in places where high frequency of changes must be made during a very short time.
Disadvantages:
1.          Because of online, direct access nature, special precautions must be taken to protect the contents of databases.
2.          More controls, software and network procedures have to be built to protect the contents against unauthorized users.
3.          The fault tolerant security system’s costs are very high.

(3)Database maintenance:
        This is a major activity of TPS. An organization’s database must be maintained by its TPS so that they are always correct and up-to-date. The database are updated to reflect the changes resulting from day-to-day business transactions.
Eg, when a credit sales is made to a customer, his account balance will increase and the inventory balance will decrease. Such changes must be updated or reflected in the company’s database. These databases provide the data resources that can be used by MIS, DSS and EIS.

(4)Document and Report generation:
This is the final stage in a transaction processing cycle. It relates to the generation of information in the form of documents and reports. The documents produced by TPS are called transaction documents.
Types:
a)          Action documents: Documents that makes the recipient act on receiving it are called action documents. Eg, A purchase order shows that there will be a purchase from a supplier in the near future.
A paycheck shows that a bank must pay an employee, his salary.
b)          Information documents: These documents act as a proof or confirm that the transactions have occurred (taken place or completed). Eg, Sales receipts, sales order confirmation, customer invoices and a credit information notice.
c)          Turnaround documents: These documents designed to be read by magnetic or optical scanning equipment. These forms are produced to be returned to the sender. Eg, Computer-printed invoices are returned by a customer along with the payment mentioned in the invoice (2 sections, one for bill preparation and the other for scanning the bill while payment is made by the customer).
TPS also produce several types of reports and displays to monitor or check the results of business transactions. Managers use these reports.
Eg, Control Listings: A paycheck printed on a particular day or after a month by a payroll system.
Edit programs: Reports describing errors detected during processing. Eg, Invalid account numbers, missing data and incorrect information details.

(5)Inquiry Processing:

Batch or real-time processing can provide inquiry-processing capability. End-users at client PCs and NCs can use the Internet, intranets and extranets and web browsers or database management query languages to make inquiries and receive responses. Responses can be displayed in a variety of formats or screens. Eg; Inquiries on balance in an inventory account, reports concerning the performance of their employees, workgroups or departments.
Examples of TPS:

•          Order entry system
•          Cheque processing system
•          Accounts receivable system
•          Accounts payable system
•          Payroll system
•          Ticket reservation system.

TPS are used to perform one or more of the following operations:
•          Storing transaction data
•          Sorting, sequencing or arranging records
•          Merging the contents of two or more files
•          Performance calculations on the file data
•          Storing data for future use
•          Retrieving stored data
•          Displaying or printing out data or reports from files to be used by employees and managers.

                                Executive Information system (EIS)
         
EIS is also known as Executive Support system (ESS) and Enterprise Information system (EIS).
Executives are managers at the top level. Executives have the job of planning, negotiating, improving the concern in the long run and deciding about the work environment. Most of the information for an executive comes in written or oral form like, letters, memos, periodicals, meetings and telephone calls.

Executives receive all information from functional subsystems. Data or information has to be converted into a form that would be meaningful to the top-level managers. Computer-based information systems or EIS help in providing executives with such understandable information. EIS sits atop the functional systems. It makes information (internal and external) available to executives.
Information needs of executives:
Executives are in need of information relating to;
-          Finance
-          Sales and marketing
-          Operations
-          Personnel data
-          External news
CBIS are used;
•          To record and get information on industries, customers, competitors and units on history, present and future.
•          For personalized analysis of data.
•          Provide immediate and quick information to top executives with graphical uses or graphical displays.
EIS Coach: They are members of executive’s staff or an outside consulting organization who provide help to set up an EIS.

EIS Chauffeur: They are members of executive staff who operates the system for executives.
                                                     
EIS Model:

EIS is a system that provides information to the executive on the overall performance of the firm. Information can be easily retrieved and can provide varying levels of detail. This usually includes a PC networked to a central computer or a mainframe system. The PC is also called as executive workstation. Mainframe system contains information collected from various subsystems and explanations, current news, through the WWW.

The system permits use of e-mail system to access environment data and information. Executives select items from menus and produce outputs in tabular, graphic and narrative form

ES is a CBIS in which knowledge is represented in data and the processing of the knowledge is directed by computer program. Development of system that processes the knowledge of a human expert has become difficult and expensive.
ES is a knowledge-based IS. It adds a knowledge base in addition to other components. ES as a knowledge base uses its knowledge about a specific, complex application area to act as an expert consultant to end-users.

Features:
a)          Make human like inferences about knowledge in a knowledge base.
b)          It reasons process and conclusions to a user.
c)          Used by non-experts to increase their problem solving abilities
d)          Used by professionals like financial analysts, lawyers, tax advisers, doctors and engineers.

Structure of an Expert system:

ES has two major environments;
•          The development environment: The ES builder to build the components and introduce expert knowledge into the ES knowledge base uses the expert system development environment.
•          The consultation environment: non-expert to obtain the expert knowledge and advice uses Consultation environment.

Components of an Expert system:

1.          Knowledge acquisition: It requires a knowledge engineer to interact with experts in building a knowledge base. Engineers are required to create, add to and change knowledge base. Knowledge information can be obtained from human experts, notebooks, databases, and research reports and from personal experience.
2.          Knowledge Base: It contains rules, facts, descriptions of objects and basic elements. Facts might relate to a problem situation or a problem area. Rules include cases, methods and statements that direct the use of knowledge to solve problems.
3.          Inference Engine: It is the brain of ES. It is a rule interpreter that applies rules, statements, and forms to make sequences or logical conclusions to solve a problem. It provides a methodology of reasoning to formulate conclusions. It is used for bilateral conversation.
4.          Blackboard (workplace): It is an area of working memory set aside for description of a current problem and to record its immediate results.
5.          User interface: ES contains a language processor for friendly problem oriented communication between the user and ES. It uses fourth generation language (Natural language) with graphics and tabular columns to communicate and produce better results to the user.
6.          Explanation (justifier): It is feature of an ES With the ability to trace how a particular solution is being attained for a problem. It gives explanations as to,
•          How a conclusion was reached?
•          Why certain alternative was rejected?
•          What is the plan to reach a solution?
7.          Knowledge refinement: Knowledge information from experts have to be updated in ES which results in better knowledge base and better reasoning.
Benefits or uses or advantages of expert systems:
•          Cost reduction: Expert’s knowledge is costly when it has to be acquired at regular intervals. Recording and storing the expert’s knowledge can reduce costs reduced in the long run.
•           Increased output: Computer systems can work faster than humans. It gives maximum information consuming less time and is faster.
•          Improved quality: Expert systems provide consistent advice and reduce the error rate.
•          Reliability: ES are never tired, bored or sick, never go on strike or talk back.
•          Response time: They work faster than human beings.
•          Capturing scarce expertise: They help in capturing knowledge information from experts who are rare to be approached and from all those who retire.
•          Equipment operation: ES make complex equipment to work. Eg, STEAMER is an ES used to train people to operate complex ship engines. ES are also used to train people operate flight engine, machines, etc.
•          Capable of working with incomplete or uncertain information: Eg, for system questions, answers like ‘don’t know’ are given. Still the system provides maximum information with the incomplete or uncertain answers or clues received.
•          Educational benefits: ES gives training, provides experience, explanation facility and used as a teaching device.
•          Solving complex problems: ES have the capability to solve problems whose complexity exceeds human ability, diagnosing malfunctions and prescribing repairs.

Limitations of Expert systems:
a.          The cost and time of development is high.
b.          There are no independent means of checking whether the conclusions or logical reasoning is correct.
c.          The vocabulary used for expressing facts and relations is limited.
d.          The approach of each expert to situation assessment may be different though correct. Hence, there is a difficulty in selecting the right option to the problem.
e.          Expertise is hard to extract from humans.
f.          It is subject to maintenance problems.
g.          Systems can’t learn by themselves. Knowledge engineers must update knowledge information.

ES Applications:

ES are being used for many different types of applications. The expert system accepts questions from users, searches its knowledge base for knowledge information, gives answers, explains its reasoning process and gives expert advice to user in the subject area.
ES are used in many fields like,
•          Medicine
•          Engineering
•          Science and business
  They help diagnose illness, search for minerals, repair machines and do financial planning.
Major applications:

1)          Decision management: ES are used to analyze the situation, consider alternatives and make recommendations. They are used in loan portfolio analysis, employee performance evaluation and insurance underwriting.
2)          Diagnostic purpose: Systems are used to analyze the symptoms and give causes in medical diagnosis.
3)          Maintenance scheduling: They help in employee work time scheduling, product process scheduling and product management.
4)          Selection and classification: systems help users choose products or processes among large sets of alternatives. They are used in material selection, information classification and suspect identification.
5)          Process monitoring and control: IS are used to monitor and control procedures and processes. They help in machine control, inventory control, production control and chemical testing.

Business examples of using ES:

a.          ADCAD (Advertising Communications Approach Designer) is an ES which assists advertising agencies in setting up,
•          Marketing and communications objectives
•          Selecting creative strategies.
•          Selecting communications approaches and techniques.
  It consists of a knowledge base, which contains rules from various sources and expert consultants, Question and answer format on advertising problems. It searches the knowledge base and draws inferences and gives recommendations. It follows what if? Analysis.
b.          ES are used by credit-card companies and banks to detect consumer credit-card fraud, during credit-card transactions, check signature frauds, personnel number security, etc;
c.          Intelligent help-desk ES: MS, IBM and many other companies use them. CBR (Case- Based Reasoning) involves storing historical problems and solutions as cases, uses intelligence to find relevant cases to match a problem situation. Natural language is used for communication purpose. It is used mainly for diagnosis and repair purpose.

Decision Support System (DSS)

Various computer-based IS like AIS, MIS, Arithmetic and Logical systems are used to give general information that is used by organization as a whole. They might not be adequate for making specific decisions to solve specific problems.
DSS refers to a class of system, which support the process of decision-making. They support and do not always give a decision itself. They do not automate decisions.
They allow the decision maker to retrieve data and test alternative solutions during the process of problem solving. DSS provide problem-solving information and communications capability. They provide special reports, forms, models, graphics, etc. They enable group members to communicate with each other to make decisions (provide a communication environment).
DSS is based on the concept of Herbert Simon Model. They were developed in the year 1971. G.A Anthony Gorry and Michael S. Scott Morton named the DSS.

Simon’s decision-making cycle (steps):
1)          Intelligence activity: It refers to searching the environment for conditions calling for a solution (identify the problem).
2)          Design activity: It refers to inventing, developing and analyzing the various alternative courses of action.
3)          Choice activity: It refers to selecting a particular course of action from the various alternatives available.

Three types of problem decisions:
a)          Structured (Programmed) problem decisions:
They are;
•          Rule based decisions
•          Computerized
•           Contains a processing methodology, analysis and choice of decision-making.
•          They are predetermined.
Eg, A decision to be made to retain an employee based on his performance, which can be measured.
b)          Unstructured (Non-programmed) problem decisions:
Here, rules are not fixed or predetermined. It requires anytime for the user to go through the decision making cycle (Herbert Simon’s cycle).

c)          Semi structured problem decisions:
  It is partly programmed and partly non-programmed. Here, decisions can be based on rules to a certain extent. The final judgment lies in the hands of the decision-maker or the end-user.

Decisions can also be made by the,
•          Top level management
•          Middle level management
•          Lower level management.
Decisions are also taken at the,
•          Operational level
•          Planning level
•          Management control level
DSS are used to solve or support decision-making of structured, unstructured or semi-structured problems. Information is viewed and judgments are made.

Features of DSS:

1.          System users and system analysts develop DSS jointly.
2.          DSS use the principles of economics, science and engineering and also the tools and techniques of management.
3.          Data used in DSS is obtained from other IS developed in the company and other internal and external sources.
4.          DSS tests the decision alternatives.
5.          DSS is flexible. It can be used to solve structured, unstructured or semi-structured problems with ease and speed.
6.          The information in DSS is stored in database form.
7.          The system uses simple models to help decision-making.
8.          DSS are quick response systems.

    Types of DSS:

1)          Inquiry systems:
These systems obtain information from organization database and manual files. They are also called ‘Query systems’. Clerks and assistants who look out for information to decide on simple matters use them. It involves no complications, computations and analysis. They are used for structured decision making.

2)          Data analysis systems:
They obtain information from database and other secondary files. Operations managers use them. These systems are used for comparative analysis and use of formula. Eg, preparation of financial statements, personnel details and transaction processing.

3)          Information analysis systems:
They obtain information from processed data files. Middle level managers use them. These systems provide information reports, used by managers for decision-making. Eg, sales analysis, personnel analysis and market research analysis.

4)          Model based systems:
They provide general guidelines for operation or management purpose. Middle and top-level managers use them. These systems obtain information from internal and external environment. They help in product-mix decision, material mix, job scheduling and to decide on other non-structured decisions.

DSS objectives:
•          They assist managers in decision-making to solve structured, semi-structured and un-structured decisions.
•          Support the manager’s judgment rather than to replace them.
•          They help managers to select among alternatives and decide on the appropriate one.

DSS Model:

DSS use data from the general MIS and hence support the decision-maker in framing appropriate answers. Models or techniques are used to read, measure, monitor, evaluate and analyze the alternative actions as per the guidance built into the system.

Decisions like a new product launch, price revision, appointing new dealers, change of product design, require analysis and hence managers make good use of DSS.

Data and information are entered into the database of DSS from firm’s environment (from other systems, other internal and external sources). The contents of database are used by three software subsystems. Report writing software and mathematical models are the main ingredients of DSS.

•          Report-writing software:

They produce periodic and special reports. Periodic reports are prepared according to schedule. Special reports are prepared in response to unanticipated information needs. Users through query languages and fourth generation languages can view information in the form of reports.

•          Mathematical models:

These models are written in any procedural programming languages. Quantitative or mathematical calculations are done. These include ratio analysis models, budgetary models (to access current cash status), models for project planning and operations research models. With this, organization can assign jobs to workers, minimize cost of raw material, design an aircraft and select a site for an industry.

•          Groupware:

The term GDSS is used where multiple problem solvers work together as a group to reach solutions. Group members (committees, project teams) communicate with each other by this means.
GDSS concept: Group Decision support System is a computer-based support system, which provides an interface to a shared environment. They are also called as GSS (Group support systems), CSCW (Computer-Supported Co-operative Work) or EMS (Electronic Meeting Systems). The software used for this is groupware. Group members meet at the same time (audio video conferences, committee meetings) or at different times (by electronic mails).


Applications of DSS:

DSS is mainly used for analysis purpose.

## What-if-analysis:
DSS helps in observing how changes to selected items affect other items (what will be the overall effect). Eg, If advertisement is cut by 10%, what would happen to sales?
## Sensitivity analysis:
DSS helps in observing how repeated changes to selected items will affect the other items.
## Goal-seeking analysis: DSS helps to make repeated changes in advertising until sales reaches the target level.
## Selection analysis: Eg, DSS helps in deciding on the best advertising message (media) with the given cost and subject.
Egs, American Airlines uses a DSS system known as AAIMS (American Analytical Information Management System). Aircraft manufacturers and other airlines also use it. It supports a variety of airline decisions by analyzing data collected on passenger travel time, seating capacity and weather conditions. Decisions are made on pricing, passenger additional facility, investments, personnel recruitments and benefit analysis. DSS helped them to fix the appropriate price for seats and hence help in maximizing the profits.