UNIT – II

Management Information System

Course: MBA-II

Subject: EWIS

What Is a system?

•A group of interrelated or interacting elements forming aunified whole

OR

•A group of interrelated components working together towarda common goal by accepting inputs and producing outputs inan organized transformation process (dynamic system).

• Three basic interacting components:

1. Input2. Processing (transformation process)3. Output

MIS Framework

• TPS

• MRS

• DSS

• OIS

Transaction Processing System

• A transaction is any event that takes place either within the business

organization or between that organization and the external

environment.

• This information is not directly involved in the decision-making

process but is needed by management.

• It must be compiled and classified, perhaps calculations must be

made, and finally it must be summarized in a form in which it will

be maximally useful to management.

• A transaction is an elementary activity conducted during business

operations.

• Such regular transactions include regular ordering of raw materials,

customer billing and bank deposits etc.

Management Reporting system

• The Management Reporting system is a set of reports that

provide the information necessary to make business decisions

• The Management Reports inform you about the sales and

margin, about merchandising issues, about inventory, and

about deals.

• Management reporting systems provide routine, detailed, and

voluminous information reports specific to each manager’s

areas of responsibility

• Generally, such reports focus on past and present activities,

rather than projecting future performance

Decision Support Systems

• Decision Support Systems (DSS) are a specific class of

computerized information system that supports business and

organizational decision-making activities.

• A properly designed DSS is an interactive software-based system

intended to help decision makers compile useful information from

– raw data

– Documents

– personal knowledge

– business models to identify and solve problems and make

decisions.

• A knowledge-based system (KBS) is a system that uses artificial

intelligence techniques in problem-solving processes to support

human decision-making, learning, and action.

Office Information System

• An automated office information system (OIS)

attempts to perform the functions of the ordinary

office by means of a computer system.

• Automation in the office particularly aids the office

worker in document preparation, information

management and decision making.

Transaction Processing Functions

• Bookkeeping

– Process of keeping full, accurate, up-to-date business

records

– Proper bookkeeping can help businesses effectively

manage cash flow, with knowledge of profits and losses,

and develop plans for the future based on financial trends

– With no exceptions, every monetary amount that is paid or

received must be recorded.

• Issuance

– Production of documents such as pay checks, invoices,

periodic statements and payment reminders

– Necessary for the effective operation of the company

Transaction Processing Functions

• Control reporting

– Control report are produced as the by product of transaction

processing operation

– Serve operation control purposes

– Normally used to check the accuracy of cash flow

– Example: payroll edit report

– Error report is used to show invalid transactions that were

incomplete and must be reprocessed

– Exception report is used to flag the unusual transactions

Role of IT in Transaction Processing

• Problems with manual systems

– Error level

– Temporary and permanent loss of data

– Labor intensity

– Poor level of services

– Poor response

• MIS systems

– Converting manual systems in automatic systems

• Direct translation of manual systems (direct coding)

• Re_thought before converting

Transaction Processing Cycle

• Data entry

• Transaction processing

• File and database processing

• Document and report generation

• Inquiry processing

Data Entry

• Collecting, recording, coding and editing transaction data

• Source documents are batched and transferred to data entry specialists

• After manual audit, data from acceptable source document are converted to

machine readable form (key to tape/ key to disk systems)

• SDA (source data automation) capturing data in digital form

• EDI

– enables the computer system from one company to “talk” to the

computer system of another company and digitally exchange data.

– Because this digital exchange of data is facilitated using computers,

most, if not all of the associated business processes can be automated

so they occur with little or no manual data entry.

– This enables companies to electronically exchange business documents

like purchase orders and invoices.

– Increase in productivity without increasing staff

Transaction Processing

and File/ database Updating

• Transaction processing is done after collection of data in two ways

• Real time processing

– In a real time processing, there is a continual input, process and

output of data. Data has to be processed in a small stipulated time

period (real time), otherwise it will create problems for the system.

– For example: assembly line robots and radar system.

• Batch processing

– In a batch processing group of transactions collected over a period

of time is collected, entered, processed and then the batch results

are produced.

– Batch processing requires separate programs for input, process and

output. It is an efficient way of processing high volume of data.

– For example: Payroll system, Examination system and billing

system.

Documents and Report Generation

• Documents produced by TPS are called transaction

documents

• Categories

– Information documents

– Turn around doc

– Action doc

– Accounting statements

– Control listing

– Edit reports

Documents and Report Generation• Information documents

• Verify, confirm or prove that transactions have occurred or

were attempted

• Sales receipt

• Order confirmation

• Customer invoices

• Customer statements

• Turn around doc

• Contains perforated tear off portion that should be returned

to the sender along with the customer payments

• Usually read by magnetic/ optical scanners

• Action documents

– Initiate actions or transactions on part of recipients

– Example: paycheck, purchase order

Documents and Report Generation

• Accounting statements

– Legally document the financial performance of the business

– General ledger summaries

– Cash flow statements

– Balance sheets

– Income statement

• Control listing

– Detailed reports describe each transaction occured during a specific

time period

– Called transaction logs

– Example: payroll register

• Edit reports

– Describes error encountered during processing

– Transactions involving invalid account numbers, incorrect totals and

missing data

Inquiry Processing

• Computer processing which supports the real time

interrogation of online files and databases by end

users.

• Responses are in a pre specified format.

• End users receive responses concerning the results of

transaction activities but are not allowed to make

changes to the records retrieved.

TP Subsystems

• Payroll

– Used to produce paychecks

– Must interface with the transaction processing systems

– Usually a batch operation

– Paychecks may be generated on monthly, weekly, bi-weekly basis

• Order entry

– Process customer orders

– May be generated through variety of sources (mail, phone, fax etc)

or by Tickler (reminder)

– Stock levels are checked

– Rejected orders are sent as notifications

– Is recently used as weapon to lock in customers

– Telecommunications, fax systems are used the order entry systems

for an organization

TP Subsystems

• Inventory

– Monitors the quantity of each product available for

sale

– Proper maintenance of stock level must be satisfied

– For different types of organization, inventory may

refer to variety of goods and services

• Invoicing

– Creates invoices and packing slips (doc listing the

items)

– Customer is sent a bill called invoice or statement

from accounts receivable

– Invoicing is straight forward

TP Subsystems

• Shipping

– Addresses packages of goods are received from inventory

often with shipping instructions

– If goods are valuable, insurance is often another factor in

shipping

• Accounts receivable

– Called receivable systems

– Money owed by customers (individuals or corporations) to

another entity in exchange for goods or services that have

been delivered or used, but not yet paid for.

– Receivables usually come in the form of operating lines of

credit and are usually due within a relatively short time

period, ranging from a few days to a year.

TP Subsystems

• Purchasing

– Central purchasing dept to procure/obtain the goods they

need

– Adv are cost control, vendor control and taking advantages

of discounts

– Disadv is the inconvenience for other dept needed goods

• Receiving

– Receive, inspect, accept or reject the shipped goods

– Contents are checked against the purchase order

– Purchase dept is notified to close out the purchase order

TP Subsystems

• Accounts payable

– Accounts with their major suppliers (vendors)

– Control of payment to suppliers

– Keep track of invoices from suppliers, optimum time to pay,

production of checks and cash management

– Cash forecasting:

• Cashflow forecasting enables you to predict peaks and

troughs in your cash balance.

• It helps you to plan how much and when to borrow and

how much available cash you're likely to have at a given

time.

• Many banks require cashflow forecasts before considering

a loan.

TP Subsystems

• General ledger

– Integrates transaction data from the other major transaction

processing subsystems

– Ensures balanced records

– Used for budget planning, responsibility reporting, cost

allocation, profitability accounting

– Major outputs are balance sheets, profit and loss statement

Management Reporting System

• Used for both management planning and management control

functions

• Types of reports

– Scheduled reports

– Exception reports

– Demand reports

Types of Reports

• Scheduled reports

– Periodic reports that are issued periodically

– Used for planning and control purposes

– Daily production reports

– Monthly performance report

• Exception reports

– Issued when something unusual takes place

– Used primarily for control purposes

• Demand reports

– Someone with authority requests such a report

Structuring Report Content

• MRS reports must provide decision makers with info they need

• Relevance

– Usefulness of report contents

– Balancing completeness

– Conciseness

• Timeliness

– Info must be delivered to decision makers in timely manner

• Accuracy

– Degree to which a report info is free of error

– Assures for current and reliable info

• Verifiability

– To what extent a report’s accuracy can be substantiated by other

business data that the organization has captured and stored

– Verifiable reports are likely to be trusted by organizational decision

makers

Decision Support System (DSS)

Types of DSS

1. Status Inquiry system

2. Data Analyze system

3. Information analysis system

4. Account System

5. Model based

Characteristics of GDSS that ENHANCE DECISION

MAKING:-

Executive Support System

• EIS and DSS are combined the Features of

Management Information System and Decision

Support System.

Characteristics of MIS

• System approach

• Management oriented

• Need based

• Exception based

• Future oriented

• Integration

• Common data flow

• Easy to use

• Distributed System

Functions of MIS

• Data gathering

• Processing of a data

• Storage of information

• Retrieval of information

• Adding or deleting information

• Modifying information

• Dissemination- handed over.

References

• 1)http://powerpointpresentationon.blogspot.in/2013/08/ppt-on-transaction-

processing-system.html\

• 2) http://powerpointpresentationon.blogspot.in/2013/08/ppt-on -management

Information system.html

• 3) Management and Information System by Laudan & Laudan, Pearson

Publications

• 4) Enterprise Resource Planning – Concepts and Practice By Vinod Kumar Garg

and N K Venkitakrishnan, PHI