5.

14 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS

Chapter 2 — Management Information System

(i )

Distinguish between ‘Data Processing’ and ‘Data Processing System’

i.
Data processing is the reconstruction or reordering of data by people or machine to increase their usefulness and
value for some particular purpose. Data processing refers to those operations, which are required for processing
data to produce information.
Data processing System refers to the system that accepts data as input, processes them into useful information as
output. Some data processing systems are serial processing, multiprogramming, multi processing, etc. Each data
processing system accepts input in different ways and processes them in different manners to produce output.
However, the output in each data processing system may be same, but the time and efficiency factors may vary.

(ii )

Distinguish between Master file and Transaction file

ii.
Master file is a relatively permanent file of records for identification and summarizing statistical information. It
contains current or nearly current data which is updated regularly. It rarely contains detailed transaction data.
Master files are used by all information system. A product file, customer file and employee file are the examples of
master file. The descriptive information in a master file may include such items as product core, description,
specifications, etc. Statistical information, in a customer master file, contains amount outstanding, age of
outstanding, etc.
Transaction file is created from source documents used for recording events or transactions. It is also known as a
detail file and contains information for updating master files. In case of a batch processing, the transactions are
accumulated for a period and at the end, a transaction file is created. The typical source documents, from which
transaction files are created, are purchase order, job cards, invoices, etc.

(iii )

Distinguish between File accesses method and File organisation method

iii.
File access method refers to the ways in which the stored data on a secondary storage data is retrieved or accessed.
For sequential files, files are stored on sequential medium like magnetic tape and the accessing method is quite
straight forward because each record has to be read in turn from the beginning until the required one is found.
File organisation method refers the way by which records are physically organised. The physical organisation of
data on backing storage can be defined as the relationship between the value of the key fields on consecutive
records and the position on the storage device which they occupy. There are several ways in which files can be
organised. Records may be sorted serially in location adjacent to one another in the same order as they are to be
processed.
 5.15 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS
(iv )

Distinguish between Data Definition Language (DDL) and Data Manipulation Language (DML).

iv.
Data Definition Language (DDL) is the part of DBMS that provides link between the logical and physical
structures of the databases. It is used to define the physical characteristics of each record. It provides for physical
and logical data independence. It describes the schema and sub-schemas. It takes care as to how the data is
maintained in physical storage.
Data Manipulation Language (DML) is the part of DBMS that provides techniques for processing database. It is
used to perform operations related to retrieval, sorting and display. It provides for interdependence of programming
languages. It enables the user and application programs to process data on symbolic logical bases rather than on
physical location bases. It separates the user from physical storage.

(v )

What is an Expert System? Explain the various elements of an expert system. Also write its advantages.

v.
An Expert System (ES) is a knowledge-based information system that uses its knowledge about a specific,
complex application area to act as an expert consultant to end users. Expert systems provide answers to questions in
a very specific problem area by making human-like inferences about knowledge contained in a specialised
knowledge base. They must also be able to explain their reasoning processes and conclusions to a user. So expert
systems can provide decision support to end users in the form of advice from an expert consultant in specific
problem areas.
Components of ES
1. Knowledge base — the knowledge base of an ES contains the facts about a specific subject, heuristics that
express the reasoning procedures of an expert on the subject
2. Inference engine — used to refine knowledge and communicating with users. The inference engine program
processes the knowledge (such as rules and facts) related to a specific problem. It then makes associations
and inferences resulting in recommended courses of action for a user.
3. User interface — this is a program for communicating with end users
4. Explanation program — required to explain the reasoning process to a user if required
5. Knowledge acquisition program — part of an expert system but are software tools for knowledge base
development, as expert system shells, which are used for developing ES
Benefits of ES
i. ES is a cost-effective alternative to human experts.
ii. IT can outperform a single human expert in many problem situations, because it is faster and more
consistent and can have the knowledge of several experts and does not get stressed due to overwork.
ES also helps to preserve and reproduce the knowledge of experts. They allow a company to preserve the expertise
of an expert before he/she leaves the organisation.

(vi )

How can you establish the information needs in management process?

 Chapter 5 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS 5.16
vi.
Managerial functions include planning, organising, initiating and controlling. Information needs depend upon the
type of functions performed by that level of management.
1. Information required for planning. In general, the planning information requirements of executives can be
categorized into three broad categories —
a. Environmental Information comprises of
i. Governmental policies, in respect of taxation, regulatory framework, etc.
ii. Information related with source, cost, location, availability, accessibility and productivity of the
major factors of production (viz. labour, material and capital)
iii. Economic trends, including information relating to economic indicators like consumer disposal
income, employment, productivity, capital investment, etc. Such information is valuable for those
firms especially whose output is a function of these important variables.
b. Competitor Information includes the following:
i. Industry demand. Forecasting of industry in respect of the product manufactured and in the area in
which firm would be operating.
ii. Firm demand. Assessment of the firm’s product demand in the specified market. It also includes an
assessment of firm’s product demand in the specified market. It also includes an assessment of
firm’s capability to meet firm’s demand.
iii. Competitive data. Data of competing firms for forecasting demand and marketing decisions and
plans to achieve the forecast.
c. Internal Information includes information concerning
i. Sales forecast
ii. Financial plan/budget
iii. Supply factor
iv. Policies, which are vital for subsidiary planning at all levels in the organisation
2. Information required for organising function. The function of organising requires information for
determining structure of work groups and for coordinating their activities. Specifically the information should
be suitable for identifying, classifying and grouping activities before assigning them to different work groups.
Other information required for the purpose of organising includes: future plans or action, order, budgets,
operations, instructions, specifications, etc. The information required for organising the activities of the
concern may be met mainly from internal sources. Some external information may also be required like
sources of availability of skilled manpower, etc.
3. Information requirements for initiating function. This function requires information in terms of delegating
the responsibility to the organised workgroup as per their competency and experiences, etc. So, the
competency of different work groups and competency required is needed to be analysed at this level.
4. Information required for control function. Information required to exercise control function usually
concerns the functional area e.g., manufacturing, marketing, finance, personnel, etc. Such information can
also be made available from the internal sources.

(vii )

What is Programmed Decision System?

 5.17 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS
vii.
Systems that aims to replace human decision making, rather than to support it — are called programmed decision
system. These systems are used to make routing, structured decision such as approving loans or credits, reordering
inventory, triggering reminder notices, selecting audit samples. In programmed decision systems, the focus is on
doing something more efficiently.

(viii )

Mention the goals and applicability of DSS.

viii.
DSS assists managers in solving semi-structured and unstructured problems. However, DSS does not aim at
replacing human decision making, but aims to support humans in decision making, such that decision makers can
take effective decisions.
DSS should at least be characterised by at least three of the following properties:
1. Semi-structured and unstructured decisions.
2. Flexibility or the ability to adapt to changing needs. Semi or Un-structured decisions often do not
conform to a predefined set of decision-making rules. Thus, rather than locking the system into rigid
information producing requirements, capabilities and tools are provided by DSS to enable users to meet
their own output needs. Flexibility in a DSS is of paramount importance.
3. Ease of learning and use by using GUI, user-interactive sessions, 4GLs, etc.

(ix )

What role executives play in decision making? What type of information is required for executive decision making
and what are the characteristics of such information?

ix.
Information flows to the executives from the external and internal environment. This information is extremely
valuable and it is an important organisational resource needed for successful competition and survival.
Environment scanning is needed in this process to find the relevant pieces of information. Scanning can be done by
executives themselves, by staff or by machines. Then the information is evaluated and channeled to qualitative and
quantitative analysis, then a decision is taken by the executive or team on whether a problem or opportunity exists.
Most executive decisions fall into three classes: strategic, tactical and operational activities. Study § 6.3.1 (Chapter
2) for further details.
Executives need a certain degree of control to ensure that these activities are carried out properly.
Following types of information are required by executives for decision making —
i. Lack of structure — many of the decisions made by executives are relatively unstructured
ii. High degree of uncertainty — Executives work in a decision space that is often uncertain
iii. Future orientation — Strategic-planning decisions are made in order to shape future events.
iv. Informal source — Executives, more than other types of managers, rely heavily on information source
for key information.
v. Low level of detail — most important executive decisions are made by observing broad trends. This
require the executives to be more aware of the large overview than the tiny items.
 Chapter 5 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS 5.18

(x )

Expert Information System (EIS) serves certain purposes. What are they?

x.
The main purposes of EIS are:
1. Support managerial learning about an organisation, its work process and its interaction with the external
environment.
2. Allow timely access to information
3. Direct management attention to specific area of the organisation or specific business problems.
The powerful focus of an EIS is due to the saying ‘what gets measured, gets done’. Managers are particularly
attentive to concrete information about their performance when it is available to their superiors. This focus is very
valuable to the organisation if the information reported is actually important and represents a balanced view of
organisation’s objectives.
Misaligned reporting systems can result in inordinate management attention to things which are important but to the
exclusion to the other equally important things.

(xi )

What do you understand by the term ‘CASE tools’? Briefly describe various Computer Aided Software
Engineering (CASE) tools.

xi.
CASE tools are a set of software tools which can be used to automate the various steps of system development
during SDLC.
These are a set of softwares by which software engineers automate manual activities very easily and quickly, which
would otherwise be performed with much efforts and cost. They support virtually all phases of SDLC and work in
four dimensions: System analysis, Development, Project Management and System Support. All these together
provide a software engineer, an Integrated Project Support Environment.
The data flow diagram and system flow chart that users review are commonly generated by systems developers
using the on-screen drawing modules found in CASE (Computer Aided Software Engineering) software packages.
CASE refers to the automation of any thing that humans do to develop systems. In 1980s, these tools enable system
analysts and programmers to create flow charts and data flow diagrams on a mini computer or a micro computer
workstation. Today, CASE products can support virtually all phases of traditional system development process. For
example, these packages can be used to create, complete and internally consistent requirements specification with
graphic generators and specification languages.
CASE tools can also be classified as:
1. Analysis and Design —
a. Program Structure Charts (allowing programmers to create graphic representation of the program)
b. Code Generators (allowing programmers to automatically generate the code for design of a screen,
report, file, etc.)
2. Programming code generators, such as C, COBOL, etc. which are high level languages generating
computer-codes.
 5.19 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS

(xii )

Comment on evaluation of ‘Management Information System’.

xii.
An effective MIS should be capable of meeting the information needs of its executives in future as well. To
maintain this capability, evaluation of MIS and timely action thereof is required. The evaluation of MIS should take
into account the following:
 Flexibility in-built with the system to meet any expected and unexpected information requirement in
future.
 Ascertaining the views of the users and the designers about the capabilities and deficiencies of the system.
 Guiding the appropriate authority about the steps to be taken to keep the effectiveness of MIS alive.

(xiii )

Examine the role of computers at the different levels of MIS in relation to — forecasting, planning, control,
modeling, systems analysis and database facility.

xiii.
Role of computers at the different levels of MIS, with reference to the stated activities, may be summarised below:
• Forecasting. It is highly beneficial and cost-effective in terms of accessing, handling and processing
speedily, huge historical data to draw the sketch of future (i.e. to forecast).
• Planning. Computers enable use of sophisticated data models like linear programming, dynamic
programming, CPM/PERT, etc. for generating highly accurate data which is necessary for planning function.
• Control. Computer processes data and provides comprehensive, varied, accurate and frequent reports to
executives to facilitate the task of decision-making. It also monitors various control ratios by applying
controlling techniques. Computers are also used for carrying out variance analysis plus other analysis which
are useful in understanding both the reasons for variance and also the course of action that may be suitable
for corrective measures.
• Modeling. Each forecast, each plan and each control is derived for a model. Control models are mostly
analogue in nature but forecasting and planning models are usually symbolic. Models bring out the
information requirements most explicitly.
• Systems analysis. Computers help in analysing systems, in many ways, by providing processed data,
helping to evaluate models by simulation experience, etc.
• Database facility. Database is a super-file, which maintains and provides data to different departments. It is
highly useful to planners, forecasters, supervisors, system analysts and modelers. It helps them to discharge
their functions much better.

(xiv )

What is a knowledge-based system? How does it differ from an Expert System?

xiv.
 Chapter 5 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS 5.20
Knowledge-based system is software developed around facts and generally accepted rules for performing
specialized tasks. Human intelligence duplicated in such systems are of surface type and are not of very complex in
nature.
An expert system, on the other hand, is also a knowledge -based system. But, it is developed around Artificial
Intelligence to capture deep knowledge and expertise in particular field.

(x v )

Distinguish between structured and unstructured decision.

xv.
A structured decision is a random one and is made on the basis of certain pre-planned actions.
An unstructured decision is non-routine in nature and is infrequent.
Structured decisions follow certain predetermined logical steps and are programmable. But, unstructured decisions
are not amenable to programming.

(x vi)

Give a definition of MIS. Why are information systems for managers difficult to design and build?

xvi.
Management Information System: Management Information System (MIS) can be defined as a network of
computer based data processing procedures developed in an organisation and integrated as necessary with manual
and other procedures for the purpose of providing timely and effective information to support decision making and
other necessary management functions. It is created to help management of all levels in making carrying out, and
controlling information based decisions.
Reasons why information systems are difficult to design and built for managers —
The main reasons why information systems are difficult to design/built for managers are —
• Managers and computer professionals often fail to understand each other.
• Managers may not have sufficient computer knowledge which leads to lack of trust in MIS.
• Computer professionals may not have sufficient knowledge about management process on accounting
system. Hence, MIS designed and built by them often fail to satisfy the managers or end user.
• There used to be large communication gap between the user department and the computer personnel, who
had a false sense of superiority and so was very much unco-operative.
• Managers receive much of their information from discussions with people rather than from reports and
statements.
• Much of the information needed by the managers are future oriented.

(x vii )

What is a Transaction Processing System? Describe the conceptual structure of a transaction processing system.

xvii.
 5.21 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS
Transaction Possessing System: It deals with sales orders, material receipts and issues, remuneration payment etc.
all the routine operations. Each deal between two persons or organisations constitute a transaction, be it buying or
selling, receiving or giving materials or services.
Conceptual structure of a transaction processing system: The conceptual structure of transaction processing system
may be described as follows —
i. Operation Control — deals with planning and controlling of day to day operations, which generate the data
which is processed under the sub-system known as Operational Control.
ii. Management Control — this is synonymous with tactical planning, which uses more information than it
generates.
iii. Strategic Planning — this is concerned with both internal and external information for the specific purpose
of long time survival.

(x viii)

Give a chart showing the characteristics of different Information Systems, such as TPS, MIS, DSS, EIS, ES, OAS.

xviii.
Characteristics of Information Systems.
System Input Processing Output Users Applications
type
TPS • Transaction- • Users, • Summaries of • Lower-level • Sales
related data procedures, transactions managers transaction
and rules • Credit and
• Repetitive payment
tasks • Insurance
• Control- claims
oriented
MIS • Output from • Measures and • Summary and • Middle level • Monthly
TSP monitors exception managers production
• Other internal operational reports Reports
performance
data
ISS • Internal and • Interactive, • Alternatives • Top • Investment
(DSS, external data ad-hoc managers portfolios
EIS, ES) • Analysis
and models reporting • ES for • Enterprise-
reports
• Knowledge • Generates knowleddge wide
and alternatives workers performance
experience • Plant
expansion
OAS • Data and • Formatting • Documents • Knowledge • Fax
Information • Summarising • Graphics and clerical • Multimedia
workers
• Displaying • Multimedia • Video
conferencing
Chapter 5 MANAGEMENT INFORMATION SYSTEMS IN MODERN BUSINESS 5.22