Information System

PPT1: Introduction
Data
Raw facts such as an employee’s name and number of hours worked in a week, inventory part numbers or
sales orders.
Information
A collection of facts organized in such a way that they have additional value beyond the value of the facts
themselves.
Information Systems
An information system (IS) is typically considered to be a set of interrelated elements or components that
collect(input), manipulate(processes), and disseminate (output) data and information and provide a feedback
mechanism to meet an objective.
Open System
Close System
Types of Information Systems
Informal systems do not follow any formal or pre-established rules for collecting, processing, storing, or
disseminating data.
Formal system is a system that is designed and developed using a set of well-established organizational
policies, procedures, and principles, guidelines to coordinate and facilitate communication between different
functional units and the processes they support, and to meet the overall information needs of the business.
Computer-based Information System
An Information System is an organized combination of people, hardware, software, communication
networks and the data resources that collects, transforms and disseminates information in an organization.
IS vs IT

Expanding Roles of IS
1. Data Processing: 1950s-1960s
 2. Management Reporting: 1960s-1970s
3. Decision support: 1970s-1980s
4. Strategic and End User Support: 1980s-1990s
5. Global Internetworking: 1990s-2000s
6. Artificial Intelligence and Robotics: 2000s-Present
Classification of IS

1. Operations Support Systems process data generated by business operations

Major categories are:
i) Transaction processing systems

 Process business exchanges

 Maintain records about the exchanges
 Handle routine, yet critical, tasks
 Perform simple calculations

ii) Process control systems – monitor and control industrial processes.

iii) Office automation systems – automate office procedures and enhance office communications and
productivity.
2. Management Support Systems provide information and support needed for effective decision making by
managers
Major categories are
1. Management Information System
 Routine information for routine decisions
 Operational efficiency
 Use transaction data as main input
 Databases integrate MIS in different functional areas
2. Decision Support Systems
 Interactive support for non-routine decisions or problems
 End-users are more involved in creating a DSS than an MIS
 3. Executive information systems – provide critical information tailored to the information needs of
executives
Other categories:

 Expert systems - are knowledge-based systems that provides expert advice and act as expert
consultants to the users
 End user computing systems - support the direct, hands-on use of computers by end users for
operational and managerial applications
 Business information systems - support the operational and managerial applications of the basic
business functions of a firm
 Strategic information systems - provide a firm which strategic products, services, and capabilities
for competitive advantage
Enterprise Resource Planning (ERP)
• Integrated programs that can manage a company’s entire set of business operations
• Often coordinate planning, inventory control, production and ordering

Challenges 3. Employee mistrust

1. Workforce downsizing 4. Difficult to built
2. Information overload 5. Security breaches
Opportunities 3. Support corporate strategy
1. Enhanced global competitiveness 4. Enhance worker productivity
2. Capture market opportunities 5. Improve quality of goods and services

PPT2: INVENTORY MANAGEMENT

Inventory
 One of the most expensive assets of many companies representing as much as 50% of total invested
capital
 Operations managers must balance inventory investment and customer service
Functions of Inventory
1. To decouple or separate various parts of the production process
2. To decouple the firm from fluctuations in demand and provide a stock of goods that will provide a
selection for customers
3. To take advantage of quantity discounts
4. To hedge against inflation
Types of Inventories
1. Raw material – Purchased but not processed
2. Work-in-process – Undergone some change but not completed
– A function of cycle time for a product
3. Maintenance/repair/operating (MRO) – Necessary to keep machinery and processes productive
4. Finished goods – Completed product awaiting shipment
ABC Analysis
 Divides inventory into three classes based on annual dollar volume
 Class A - high annual dollar volume
 Class B - medium annual dollar volume
 Class C - low annual dollar volume
 Used to establish policies that focus on the few critical parts and not the many trivial ones
ANNUAL DOLLAR VOLUME = annual volume per unit x unit cost
 Other criteria than annual dollar volume may be used
 Anticipated engineering changes
 Delivery problems
 Quality problems
 High unit cost
 Policies employed may include
 More emphasis on supplier development for A items
 Tighter physical inventory control for A items
 More care in forecasting A items

Record Accuracy
 Accurate records are a critical ingredient in production and inventory systems
 Allows organization to focus on what is needed
 Necessary to make precise decisions about ordering, scheduling, and shipping
 Incoming and outgoing record keeping must be accurate
 Stockrooms should be secure

Cycle Counting

 Items are counted and records updated on a periodic basis

 Often used with ABC analysis to determine cycle
 Has several advantages
 Eliminates shutdowns and interruptions
 Eliminates annual inventory adjustment
 Trained personnel audit inventory accuracy
 Allows causes of errors to be identified and corrected
 Maintains accurate inventory records
NOTE !!! Policy is to count A items every month (20 working days), B items every quarter (60 days), and C items
every six months (120 days)

Control of Service Inventories

 Can be a critical component of profitability

 Losses may come from shrinkage or pilferage
 Applicable techniques include
 Good personnel selection, training, and discipline
 Tight control on incoming shipments
 Effective control on all goods leaving facility

Independent Versus Dependent Demand

Independent demand - the demand for item is independent of the demand for any other item in inventory
Dependent demand - the demand for item is dependent upon the demand for some other item in the
inventory