INFSY540
Information Resources in Management
Lesson 3
Chapter 4
Operations and Transactions
Copyright © 1998 by Jerry Post
Introduction to MIS
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Classes of Information Systems
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Transaction processing systems
Management information systems
Decision support systems
Expert systems
Office automation systems
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Transaction Processing
Transaction processing systems are information
system applications that capture and process data about
business transactions.
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Includes data maintenance, which provides for custodial
updates to stored data.
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Business process redesign (BPR) is the study, analysis,
and redesign of fundamental business (transaction) processes
to reduce costs and/or improve value added to the business.
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Management Information Systems
A management information system (MIS) is an
information system application that provides for
management-oriented reporting. These reports are
usually generated on a predetermined schedule and
appear in a prearranged format.
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Decision Support Systems
A decision support system (DSS) is an information system
application that provides its users with decision-oriented information
whenever a decision-making situation arises. When applied to
executive managers, these systems are sometimes called executive
information systems (EIS).
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A data warehouse is a read-only, informational database that is
populated with detailed, summary, and exception data and
information generated by other transaction and management
information systems. The data warehouse can then be accessed by
end-users and managers with DSS tools that generate a virtually
limitless variety of information in support of unstructured decisions.
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Expert Systems
An expert system is a programmed decision-making
information system that captures and reproduces the
knowledge and expertise of an expert problem solver or
decision maker and then simulates the “thinking” or
“actions” of that expert.
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Expert systems are implemented with artificial intelligence
technology that captures, stores, and provides access to the
reasoning of the experts.
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Office Automation Systems
Office automation (OA) systems support the wide range
of business office activities that provide for improved
work flow and communications between workers,
regardless of whether or not those workers are located in
the same office.
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Personal information systems are those designed to meet
the needs of a single user. They are designed to boost an
individual’s productivity.
Work group information systems are those designed to
meet the needs of a work group. They are designed to boost
the group’s productivity.
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Introduction to MIS
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Decision Levels
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Data Capture
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Operations
Tactical Management
Strategic Management
Point of Sale
Process Control
Electronic Data Interchange (EDI)
Data Quality
The Role of Accounting
Human Resource Transactions
Introduction to MIS
Strategic
Mgt.
Tactical
Management
Business Operations
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Traditional Transaction Processing
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Batch
On-line
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Real-time
Online transaction processing (OLTP)
On-line entry with delayed processing
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Transaction Processing System Objectives
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Process data generated for and about transactions.
Maintain a high degree of accuracy and integrity.
Produce timely documents & reports
Increase labor efficiency
Help provide improved service
Help build and maintain customer loyalty
Achieve competitive advantage
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Control & Management Issues
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Business resumption planning
Disaster recovery
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Backups
Hot sites
Cold sites
Backups
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Transaction Processing Audit
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Does the system meet its business requirements?
Are there procedures and controls?
Are the procedures & controls properly used?
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Information in Decisions
Decisions are based on uncertainty
and statistics
Information reduces uncertainty
Type I error: Reject when true
Type II error: Accept when false
Changing critical value decreases
one error but increases the other.
Added information
Tighter distribution
Reduce both errors
It costs money to get more
information
Introduction to MIS
Click image to start/stop video.
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Decision Levels
Decision Level
Description
Example
Type of Information
Strategies
Competitive advantage
Market leader
Long term
New products
that change
the industry
External events,
rivals, sales, costs
quality, trends.
Tactics
Improve operations
without restructuring
Operations
Day-to-day actions
keep company running
Introduction to MIS
New tools to
Expenses,
cut costs or impschedules, sales
rove efficiency
models, forecast
Scheduling
employees,
placing orders.
Transactions,
accounting,
HRM, inventory
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Point of Sale
Process Control
Electronic Data Interchange
Additional
Stores
Data Capture
CEO Information
Strategy
Bank
Tactics
Warehouse
Inventory
Management
Supplier
Operations
POS
Cash
Registers
Sales Reports
EDI
Process Control
Customers
Central Computer
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Electronic Data Interchange: Proprietary
Everyone must
support multiple
data formats!
Customer 1
Supplier 2
Convert data
Different format
Order
Database
& Accounts
Queries &
Orders
Supplier 1
Production
Database
& Accounts
Invoices &
confirmation
Customer 2
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Electronic Data Interchange : Standards
Bank/EDI consolidator
Route
Messages
Customer 1
Order
Database
& Accounts
Messages
to/from
any customer
Production
Database
& Accounts
Customer 2
Supplier
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EDI Standards
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UN Edifact
http://www.edi-tie.com/edifact/index.htm
US ANSI X12
http://net.gap.net/content.htm
Segments for each area
Message
Detail data formats
Segment
Composite Data Element
Data Element
Code Lists
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ANSI X12 Segments
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Partial List of
segments
Detailed
specifications for
each segment
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Data needed
Format
Introduction to MIS
104 - Air Shipment Information
110 - Air Freight Details and Invoice
125 - Multilevel Railcar Load Details
126 - Vehicle Application Advice
127 - Vehicle Buying Order
128 - Dealer Information
129 - Vehicle Carrier Rate Update
130 - Student Educational Record (Transcript)
131 - Student Educational Record (Transcript) Acknowledgment
135 - Student Loan Application
139 - Student Loan Guarantee Result
140 - Product Registration
141 - Product Service Claim Response
142 - Product Service Claim
143 - Product Service Notification
144 - Student Loan Transfer and Status Verification
146 - Request for Student Educational Record (Transcript)
147 - Response to Request for Student Ed. Record (Transcript)
148 - Report of Injury or Illness
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EDI On The Internet
The Internet
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Advantages
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Low cost.
Anyone can connect.
Worldwide reach.
Many tools and standards.
Designed to be robust,
minimizes impact of network
failures.
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Drawbacks
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No service guarantee.
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Delays might be
unacceptable.
Questionable reliability.
Security is challenging.
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Transaction Objects
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Example Attributes
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Date & time
Price
Quantity
Item Number
Buyer
Seller
Example Methods
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Store
Print
Verify
Introduction to MIS
Transactions
Date & Time
Value
Item
Items
Item_Id
Description
Location
...
Buyer
Buyers
Seller
Sellers
Buyer_Id
Address
Phone
Seller_Id
Address
Phone
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Data Quality
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Integrity
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Multitasking/Concurrency
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Errors in data entry.
Missing data.
Failure to make updates.
Changes by two people at
same time gives bad data.
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Summaries
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Time
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Volume
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Cost
Errors harder to spot.
Transmission costs.
Difficulty of searching.
System overload.
Introduction to MIS
Too much detail.
Hard to get detail.
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Report and decision
deadlines.
Departments get data at
different times.
Sequencing problems.
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Multitasking and Concurrency
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Data Integrity
Multitasking & concurrency
Data volume
Data summaries
Time
Concurrency and Data Integrity
Customer Accounts
Transaction A
Transaction B
1) receive 300 payment
2) read balance (500)
Sanchez 500
3) new purchase (350)
4) read balance (500)
5) subtract payment
6) store new result (200)
Sanchez 200
7) add purchase
8) store new result (850)
Sanchez 850
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Traditional Transaction Processing Applications
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Accounting
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Financial data and reports
What do things really cost?
The accounting cycle
Inventory
Checks and balances
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Double-entry
Separation of duties
Audit trails
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Accounting Software
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General Ledger
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Sample chart of accounts
Automatic posting
Automatic entry of vendors
Fiscal years
Keep past data books open
Post to prior years
Allocate department expenses
Accounts Receivable
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Automatic early discounts
Interest on late payments
Multiple shipping addresses
Sales tax
Automatic reminder notices
Automatic monthly fees
Keep monthly details
Introduction to MIS
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Accounts payable
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Check reconciliation
Automatic recurring entries
Monitor payment discounts
Select bills from screen
Pay by item, not just total bill
General Features
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Printer support
Use of preprinted forms
Custom reports
Custom queries
Security controls
Technical support costs
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Banks
and
Creditors
Departments
& Employees
Expenses
Accounting
Management
Loans & Notes
Management
Cash
Reports
Management,
Investments,
Foreign
Capital Acct
Exchange
Shareholder
Reports
Strategic
& Tactical
Planning
Produce
Shareholder
Reports
Planning
Data
Payroll &
Employee
Benefits
Shareholders
Planning Reports
Payroll
Produce
Management
Accounting
Reports
Governments
Tax Filings
Equity
Tax data
Tax
Filing &
Planning
Receivables
Orders &
Accounts
Payable
Purchases &
Payables
Suppliers
Introduction to MIS
Inventory &
Assets
Payables
Inventory Changes
Supply &
In-process
Inventory
Sales Tax
Inventory
Management,
& Fixed Asset
& Cost Acct.
Sales &
Accounts
Receivable
Sales & Receivables
Customers
Inventory Changes
Product
Inventory
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HRM
Management
Compile
Merit
Evaluations
& Salary
Changes
Managers
Evaluations
Salary
Process
Payroll
Benefits
Vacation
Employee
Data
Employees
Management
Reports
Merit
Merit &
Salary
Employee
Data
Produce
Management
Employee
Reports
Produce
Government
Reports
Employee
Summaries
Government
Reports
EEO
Data
Employee Data
Files
Job &
Applicant
Data
Sales Data &
Commission
Customers
Introduction to MIS
Government
Screen
Jobs &
Applications
Applicant
Data
Job
Applicants
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Questions?
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