UNIT-2

• Transaction Processing System

• Management Information System
• Executive Support System
• Decision Support System
• Expert Systems
 Levels of IS

• There are three major levels of IS

• They are:
• TPS: Transaction Processing System
• MIS: Management Information System
• ESS: Executive Support System
• There are others:
• Knowledge Works System
• Decision Support System (See figure-1 &2)
 Transaction Processing System

• Transaction Processing System (TPS)

• is a type of information system
• that collects, stores, modifies & retrieves(re checks)
the data transactions of an enterprise
• TPS can be said to be:
• a set of information which process
• the data transaction in database system
• that monitors transaction programs
 TPS (cont)

• Used by lower most level in an organisation

• Eg Store personnel for inventory control, customer
billing in retail center (salesmen for sales order entry)
• Deal with pre-defined & structured decisions
• Eg: Discount given based on value of sales
• Decisions are of routine nature
• Deal with day to day affairs of a business
 TPS (cont)

• Must be online and current

• Must be updated instantaneously to reveal actual
status at any point of time
• Eg: Hotel or airline reservation system to show seat
availability to enable future booking
• Eg: Sales order entry to show stock position to
enable fulfilling another order
• Link with external environment
 TPS (cont)

• Must be detailed and accurate

• Eg: when a loan is sanctioned, TPS details the
category of loan
• Is it vehicle loan, education loan, house building loan,
or personal loan
• Detail like amount, time period, rate of interest, EMI
etc are all generated for each category of loan
 Management Information System

• An MIS provides managers with information

and support for effective decision making, and
provides feedback on daily operations
• Output reports are generated by accumulating
data from TPS
• Each MIS is an integrated collection of
subsystems, which are organized along
functional lines within an organization
 MIS(CONT)

• Used for generating reports

• Reports are essential for analyzing different
aspects of business
• Eg: inventory status reports, financial
statements, performance reports
• Help to answer 'what-if' questions
• Eg: what would be the effect on cash flows if
the credit term is changed for its customers
 Output Reports

• These are the output reports generated by MIS:

• Scheduled reports
• Produced periodically, or on a schedule (daily, weekly,
monthly)
• Key-indicator report
• Summarizes the previous day’s critical activities
• Typically available at the beginning of each day
• Demand report
• Gives certain information at a manager’s request
• Exception report
• Automatically produced when a situation is unusual or
requires management action
 MIS (cont)

• Each MIS is an integrated collection of subsystems, which

are organized along functional lines within an
organization
• They are functional information systems
• As each support particular functional areas
• Functional MIS are:
• Human Resources MIS
• Operational MIS
• Marketing MIS
• Financial MIS
 MIS (cont)

• These are by middle level of managers

• For the functional heads
• Used for monitoring & controlling activities
• The relate to the past events
• They are generated (activated) periodically
 MIS (cont)

• Eg: last quarter or last month

• They are “batched” in months or quarter
• Eg How sales have been for the last three quarters
• This helps us ascertain whether sales has increased
or decreased
 MIS (cont)

• They are in the form of summary reports

• Eg: In case of loan sanctioned
• Summary detail of (in a quarter)
• ‘Total vehicle loan’
• ‘Total personal loan’
• ‘Total educational loan’
• ‘Total house building loan’
 Difference b/t TPS & MIS

TPS MIS
• Current • Past
• Detailed • Summary
• Structured • Less structured
• Daily • Monthly/Quarterly
• External • Internal
• Online • Not so
• Predefined • Not so
• Instantaneous • Not so (batched)
 Executive Support System

• Used by senior management: CEO,BOD, MD

• Deals with long term & strategic issues
• Helps answer queries like:
• What business are we in?
• Where would we like to go?
• Deals with non-programmed & unstructured
decisions
 Executive Support System

• Match with changes in business environment

• Eg: Subsidy for setting plant in a state (HP)
• Eg: Air India & Indian Airlines merger? What should
Sahara-Jet do?
• Or a Monster.com taking over Jobsahead.com
• What should Naukri.com do?
• Information are presented using graphs (trends)
 Decision Support System

• Any system that supports a decision is a DSS

• It is an organised collection of people, procedure,
software, databases, and devices that support
problem-specific decision making
• The focus is on making effective decisions
• They are custom built for specific applications
• Deal with non routine & adhoc decisions
• Highly interactive & highly analytical in nature
•
 DSS (cont)

• Uses models
• “What if” analysis
• Eg: If sales is doubled; what would be the impact
• On production schedule
• On raw material supply
• On labour working hours
• Only three parameters; therefore cannot answer
anything beyond these three relationships
 DSS (cont)

• Eg: If supplier base is reduced

• What would be the impact on:
• Quality of raw material
• Vendor performance
• Delivery time
• Price offered
• Reliability
 DSS (cont)

• Components of DSS are:

• Database, model base & interactive software
• DSS can be defines as:
• An integrated system that combine data, models, and
interactive user friendly software into a single powerful
system under user control from inception to implementation
and use
 DSS & ESS

• Similarity
• Both deal with unstructured & non programmed
decisions
• Differences:
• DSS has specific objectives & specific solution
• For ESS the objectives are different in different
periods of time
• And solutions are also different
 Difference: MIS & DSS

DSS MIS
• Top mgt decision making • Middle level
• Unstructured decisions • Less structured
• Decision focus • Information focus
• Flexible, adaptive & quick • Fixed pattern
response • ---------------------
• Future needs • Past oriented
• Action oriented • Batch oriented
• Instantaneous • Periodic
• Custom built, high analytical skill, • Not so
interactive
 DIAGRAM

• Relationship: TPS, MIS, ESS,DSS

 Expert System

• These are computer programs that mimic the behavior of

human expertise
• Wide usage in scientific fields:
• Geological survey, oil exploration, medical science but limited
use in management
• Eg: MYCIN-bacterial infection in blood & meningitis
• Stanford University in early 70s
 History

• Development in expert systems have grown from researches in

Artificial Intelligence which provide information on how to
analyse problems and develop search strategy in solving them
• AI-in which computer systems take on the characteristics of
human intelligence
• The stages of development were:
• 1. Natural Language Processing
• 2. Robotics
• 3. Expert Systems
 Natural Language Processing

• They refer to design and development of computer

programs
• That understand & respond in languages used by
humans
• They respond to commands using these languages
• High level languages:
• COBOL-common business oriented language
• FORTRAN-formula translation
 Robotics

• They refer to visual (sight) and tactile (touch) programs that

allow robots to note changes in the environment and take
appropriate action
• They do the complex, dangerous, boring, routine tasks
• They do the manual work
• They do the three ‘Ds’-dull, dirty, dangerous
• Eg: welding car frames, assembling computer systems
 Expert Systems

• Refer to design of computer systems that use symbolic

knowledge to simulate behavior of human experts
• Expert System: knowledge intensive program (s/w) that solve
a problem that require human expertise
• They capture & use wisdom of human expert
• Years of experience, specific skills is not lost
• If human expert dies, retires, or leaves orgn
• Critical feature: It can replace a human being
 Examples

• Eg: MYCIN develop by Stanford Univ in 70s

• Bacterial infection in blood or meningitis
• KnIFE-Knowledge &Information Fusion Exchange
• Helps soldiers in US make better military decision
• DENDRAL-Used to identify the structure of chemical
compounds (First used in 1965)
• PROSPECTOR-Used by geologists to identify sites for
drilling or mining
 Features

• Incomplete or Uncertain Information: It works with uncertain

information
• Inference Strategy: Use an inference strategy in a given
problem situation that a human expert working in a similar
problem would use
• Consultation: Human experts consult others to solve a
problem
• It is designed to ask questions
• And also explain reasoning why
 Components

• It has three components:

1. The Knowledge base-which consists of
• Facts, Procedural Rules, & Heuristics
2. Inference Engine
3. User Interface
• It stores all relevant information, data, rules, cases, &
relationship that an expert system uses
• Eg: A medical expert would contain facts about symptom and
diseases
 Knowledge Base

• Facts: Statements that associate elements of subject domain

with truth values
• Eg: for MYCIN facts are age, sex
• For loan sanction for a company, EPS, dividend
• Procedural Rules: Well defined sequence of action or rules
pertaining to an event in a specific domain
• Heuristics: Private rules of judgement (hunch)
 Inference Engine

• This accesses the knowledge base and uses the knowledge

stored therein and also uses the search and reasoning strategy
stored within itself to arrive at a solution
• User Interface: A program for communicating with the user
• This has also an ‘explanation subsystem’ that explains the
reasoning process (if requested)
• Also used for ‘updation’ of Knowledge Base
 Types

• Assistant
• This is the Lowest level
• Helps decision maker by doing routine analysis
• And pointing out those portion of work where human
expertise is required
• Eg Robotics doing the tedious work while the human thinks
 Components (cont)

• Colleague
• This is the Second level
• User discuss problem till joint decision is made
• Works in consultation
• True Expert
• This is the Third level
• Advices user without questions (consultation)
 Methods Used

•The methods used to develop Experts Systems:

1. Decision Trees
2. Forward Chaining
3. Backward Chaining
4. Case Based Reasoning

Decision trees :
•A tree is formed with the series of questions & responses
•Where the answer is taken from the responses generated
•According to the scenario as end point

Forward chaining :
•This is said to be data-driven
•A method of reasoning that starts with the facts
•And works forward to the conclusions
 Methods Used

Back ward chaining:

• This is said to be goal-driven
• A method of reasoning that starts with conclusions and works
backward to the supporting facts
Case based reasoning :
• Cases or instances of the problem, with solution that was
found in a result that took place earlier
• Rather than creating a set of rules, one can write an inference
Engine
 Participants

• Participants in developing & using expert system are:

• 1. Domain Expert: Person or group with the expertise or
knowledge the expert system is trying to capture
• 2. Knowledge Engineer: Person who is trained (experienced)
in design, development, implementation & maintenance of an
expert system
• 3. Knowledge User: Person or group who uses or benefits
from an expert system
• They do not need any previous experience or training in
computers or expert system
 Application in Mgt

• Application in Management Science:

There is scanty use in management
1.Scepticism: Mgrs can do better than machines or s/w
2.Wait & See Attitude
3.Success stories not publicised
4.Frequent changes in management
5.Updation Cost very high
LANGUAGES USED
• LISP: List Processing
• PROLOG: Programming in Logic