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Such systems are designed to support decision making by the people associated with the
enterprise in the process of attainment of its objectives.
2. Information System
Many organizations work with large amounts of data. Data are basic values or facts and are
organized in a database. Many people think of data as synonymous with information;
however, information actually consists of data that has been organized to help answers
questions and to solve problems. An information system is defined as the software that helps
organize and analyse data. So, the purpose of an information system is to turn raw data into
useful information that can be used for decision making in an organization.
Alliance Strategies Establish new business linkages and alliances with customers,
suppliers, competitors, consultants and other companies (mergers,
acquisitions, joint ventures, forming virtual companies, etc.).
Knowledge Management Systems
Knowledge management has become one of the major strategic uses of information
technology. Many companies are building knowledge management systems to manage
organizational learning and business know-how. The goal of KMS’s is to help knowledge
workers create, organize, and make available important business knowledge, wherever and
whenever it’s needed in an organization. This includes processes, procedures, patents,
reference works, formulas, “best practices,” forecasts, and fixes. Internet and intranet web
sites, groupware, data mining, knowledge bases, discussion forums, and videoconferencing
are some of the key information technologies for gathering, storing, and distributing this
knowledge.
5. Inventory Control
Objectives:
(ii) To ensure availability of needed inventory for uninterrupted production and for meeting
consumer demand;
(iv)To tiding over the demand fluctuations by maintaining reasonable safety stock;
(vi)To maintain necessary records for protecting against thefts, wastes leakages of inventories
and to decide timely replenishment of stocks.
1. It improves the liquidity position of the firm by reducing unnecessary tying up of capital in
excess inventories.
3. It facilitates regular and timely supply to customers through adequate stocks of finished
products.
(i) Efficient inventory control methods can reduce but cannot eliminate business risk.
(ii) The objectives of better sales through improved service to customer; reduction in
inventories to reduce size of investment and reducing cost of production by smoother
production operations are conflicting with each other.
(iii) The control of inventories is complex because of the many functions it performs. It
should be viewed as shared responsibilities.
Just as different functions in the human body are performed and regulated by different
organs, different functions within a business are performed and controlled by different parts
of the business. One of the reasons for separating business operations into functional areas is
to allow each to operate within its area of expertise, thus building efficiency and
effectiveness across the business as a whole. The key functional areas of a business are the
following:
Management
Operations
Marketing
Accounting
Finance
Management
The primary role of managers in business is to supervise other people’s performance. Most
management activities fall into the following categories:
Planning: Managers plan by setting long-term goals for the business, as well short-
term strategies needed to execute against those goals.
Organizing: Managers are responsible for organizing the operations of a business in
the most efficient way, enabling the business to use its resources effectively.
Controlling: A large percentage of a manager’s time is spent controlling the activities
within the business to ensure that it’s on track to achieve its goals. When people or
processes stray from the path, managers are often the first ones to notice and take
corrective action.
Leading: Managers serve as leaders for the organization, in practical as well as
symbolic ways. The manager may lead work teams or groups through a new process
or the development of a new product. The manager may also be seen as the leader of
the organization when it interacts with the community, customers, and suppliers.
Operations
Operations is where inputs (factors of production) are converted to outputs (goods and
services). Operations is like the heart of a business, pumping out goods and services in a
quantity and of a quality that meets the needs of the customers. The operations manager is
responsible for overseeing the day-to-day business operations, which can
encompass everything from ordering raw materials to scheduling workers to produce tangible
goods.
Marketing
Marketing consists of all that a company does to identify customers’ needs and design
products and services that meet those needs. The marketing function also includes promoting
goods and services, determining how the goods and services will be delivered, and
developing a pricing strategy to capture market share while remaining competitive. In
day’s technology-driven business environment, marketing is also responsible for building
and overseeing a company’s Internet presence (e.g., the company Web site, blogs, social
media campaigns, etc.). Today, social media marketing is one of the fastest growing sectors
within the marketing function.
Accounting
Accountants provide managers with information needed to make decisions about the
allocation of company resources. This area is ultimately responsible for accurately
representing the financial transactions of a business to internal and external parties,
government agencies, and owners/investors. Financial Accountants are primarily
responsible for the preparation of financial statements to help entities both inside and outside
the organization assess the financial strength of the company. Managerial
accountants provide information regarding costs, budgets, asset allocation, and performance
appraisal for internal use by management for the purpose of decision-making.
Finance
Although related to accounting, the finance function involves planning for, obtaining, and
managing a company’s funds. Finance managers plan for both short- and long-term
financial capital needs and analyse the impact that borrowing will have on the financial well-
being of the business. A company’s finance department answers questions about how funds
should be raised (loans vs. stocks), the long-term cost of borrowing funds, and the
implications of financing decisions for the long-term health of the business.
Use this quiz to check your understanding and decide whether to (1) study the previous
section further or (2) move on to the next section.
8. Human Resource Management
Human resource management determines how the organization should move from its
current manpower position to its desired manpower position through planning
management strikes to have the right number and the right kind of people at the right
places, at the right time, doing things which result in the organization and the individual
receiving maximum long run benefit.
(iii) Controlling and reviewing the cost of work in valued through manpower.
9. OLAP
Stands for "Online Analytical Processing." OLAP allows users to analyse database
information from multiple database systems at one time. While relational databases are
considered to be two-dimensional, OLAP data is multidimensional, meaning the information
can be compared in many different ways. For example, a company might compare their
computer sales in June with sales in July, then compare those results with the sales from
another location, which might be stored in a different database.
10. Artificial Intelligence System
Artificial Intelligence System (AIS) was a distributed computing project undertaken by
Intelligence Realm, Inc. with the long-term goal of simulating the human brain in real time,
complete with artificial consciousness and artificial general intelligence.
Expert System
An Expert System is defined as an interactive and reliable computer-based decision-making
system which uses both facts and heuristics to solve complex decision-making problems. It is
considered at the highest level of human intelligence and expertise. It is a computer
application which solves the most complex issues in a specific domain.
System analysis is conducted for the purpose of studying a system or its parts in order to
identify its objectives. It is a problem solving technique that improves the system and ensures
that all the components of the system work efficiently to accomplish their purpose.
Programmed decisions are basically automated processes, general routine work, where −
14.DSS
Decision support systems (DSS) are interactive software-based systems intended to help managers
in decision-making by accessing large volumes of information generated from various related
information systems involved in organizational business processes, such as office automation
system, transaction processing system, etc.
Decision support systems generally involve non-programmed decisions. Therefore, there will
be no exact report, content, or format for these systems. Reports are generated on the fly.
Attributes of a DSS
Adaptability and flexibility
High level of Interactivity
Ease of use
Efficiency and effectiveness
Complete control by decision-makers
Ease of development
Extendibility
Support for modeling and analysis
Support for data access
Standalone, integrated, and Web-based
Characteristics of a DSS
Support for decision-makers in semi-structured and unstructured problems.
Support for managers at various managerial levels, ranging from top executive to line
managers.
Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization level.
Support for interdependent or sequential decisions.
Support for intelligence, design, choice, and implementation.
Support for variety of decision processes and styles.
DSSs are adaptive over time.
Benefits of DSS
Improves efficiency and speed of decision-making activities.
Increases the control, competitiveness and capability of futuristic decision-making of
the organization.
Facilitates interpersonal communication.
Encourages learning or training.
Since it is mostly used in non-programmed decisions, it reveals new approaches and
sets up new evidences for an unusual decision.
Helps automate managerial processes.
Components of a DSS
Following are the components of the Decision Support System −
Support Tools − Support tools like online help; pulls down menus, user interfaces,
graphical analysis, error correction mechanism, facilitates the user interactions with the
system.
Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows
Text Oriented DSS − It contains textually represented information that could have a
bearing on decision. It allows documents to be electronically created, revised and
viewed as needed.
Database Oriented DSS − Database plays a major role here; it contains organized
and highly structured data.
Spreadsheet Oriented DSS − It contains information in spread sheets that allows
create, view, modify procedural knowledge and also instructs the system to execute
self-contained instructions. The most popular tool is Excel and Lotus 1-2-3.
Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure
written for performing certain calculations and particular program type.
Rules Oriented DSS − It follows certain procedures adopted as rules.
Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system
is the example.
Compound DSS − It is built by using two or more of the five structures explained
above.
Types of DSS
Following are some typical DSSs −