3. Introduction to Organizational Systems

7/31/2019 3. Introduction to Organizational Systems

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Phases of Decision Making

Decision making process involves the following three

phases:

Intelligence

- During this phase the decision maker searches forconditions calling for a decision

- The decision maker may be reacting to problems ormay recognize opportunities

- In either case a gap between the existing state and adesired state is a must for the existence of a decisionproblem


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Contd.

Design

- This is the second phase of the decisionmaking process

- During this phase the decision makerdevelops and analyzes alternative courses of

action by either searching for ready-madealternatives or developing a custom-madesolution

Choice- During this third phase, the decision maker

selects the best alternative


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Intelligence and Design Phase

These two phases constitute of the following three

aspects:

Problem finding

Problem formulation

Development of alternatives


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Problem Finding

This can conceptually be defined as finding out the

difference between some current situation and some

desired state What is desired is then compared with reality

Then differences are identified and evaluated to find out

if that is a problem


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Development of Alternatives This requires lot of creativity

Basic creativity can be enhanced upon byalternative-generation procedures and

support mechanisms. E.G being scenarios,analogies, brainstorming, checklists,templates of decision process etc

There should be enough knowledge about theproblem, its boundaries and there should beproper motivation to solve the problem


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Contd.

Programmed and nonprogrammed decisions:

- programmed decisions are the ones which can be

prespecified by a set of rules or decision procedures

- These appear in rule books, decision tables etc and aregenerally used under certainty where outputs must be

known

- On the other hand nonprogrammed decisions have no such

predefined rules which generally could be one time decisionin case of crisis or problems occurring on regular basis

with conditions changing


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Criteria for Decision Making

The models of decision making that tells the

decision makers as to how to make a class of

decisions is normative or perspective. These are

generally developed by the economists and

management experts, e.g., Linear programming,Game Theory, Capital Budgeting and Statistical

decision theory

On the other side the models that describe howdecision makers actually make decisions are

descriptive models, e.g., Satisficing, etc.


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Methods for Deciding Among Alternatives

Optimizing techniques used under certainty: e.g. Linear

programming, integer programming, dynamic

programming, queuing models, inventory models, capital

budgeting analysis, break even analysis etc.

Payoff matrices in statistical decision theory

Utility and indifference curves

Decision trees

Ranking, weighting or eliminating

Game theory

Classical statistical inferences


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Attributes of Decision Maker

The attributes of decision makers also affect

the types of decision strategy used. Some of

these attributes include:

Perceptual ability

Information capacity

Risk-taking propensity Aspiration level


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Strategies for Decision Making

The type of decision problem and the attributes of thedecision maker determine which of the followingstrategies would be used:

Maximizing

- When the outcome of the decision is clear and thealternatives are well established, the decision makerwill make the decision that maximizes the desiredoutcome

- The maximizing approach assumes that the decisionmaker is rational and is aware of the probabilities ofeach alternative


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Contd.

Satisficing

- A decision maker sets up a reasonable aspirationlevel and search for possible alternatives until

he finds one that achieves his level

- The decision maker terminates his search assoon as he finds a satisfactory alternative

Incrementalization

- The decision maker attempts to take small stepsaway from the existing state towards a desired

state


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The Tools of Decision Support

Database software: e.g., Access, paradox, approach etc

Model-based software: e.g., Excel, Lotus1-2-3 etc

Statistical software: e.g., SAS-pc, SPSS-pc etc

Display based software: e.g., Power point, Freelance

Graphics


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Decisions

StrategicManagement

TacticalManagement

OperationalManagement

Decision Characteristics

Unstructured

Semi-structured

Structured


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Transaction Processing Systems:

An Overview

These are the systems that process the detaileddata necessary to update records about the

fundamental business operations of the

organization

The input of these systems includes basic

business transactions

The result of processing business transactionsis the updation of organizations records to

reflect the status of the operation at the time of

the last processed transaction


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Transaction Processing Methods Batch processing system: it is a system whereby business

transactions are accumulated over a period of time and

prepared for processing as a single unit or batch

On-line transaction processing: in this system each

transaction is processed immediately without the delay ofaccumulating the transactions into a batch

On-line entry with delayed processing: it is a compromise

between the above two. Transactions are entered into the

system as they occur but processed later


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Objectives of TPS Process data generated by and about

transactions

Maintain a high degree of accuracy

Ensure data and information integrity and

accuracy Produce timely documents and reports

Increase labor efficiency

Help provide increased and enhanced service Help build and maintain customer loyalty

Achieve competitive advantage


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Transaction Processing ActivitiesThe business data goes through a transaction

processing cycle that consists of the following

activities:

Data collection: this is the process of capturing and

gathering all data necessary to complete

transactions Data editing: this is the process of checking data for

validity and completeness to detect any problems

with the data

Data correction: this involves the process of

reentering miskeyed data which are found during

data editing


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Contd. Data manipulation: it is the process of

performing calculations and other datatransformations related to business

transactions. This can include classifying data,

sorting data into categories, performingcalculations, summarizing results and storing

data in the database

Data storage: it is the process of updating thedatabases with new transactions

Document production: it is the process of

generating output records and reports


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Transaction Processing Applications

Common TPS support the following processes:

Order processing systems

Purchasing

Accounting business processes


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Order Processing SystemsOrder processing systems include the following:

Order entry: it is a system that is used for

capturing the basic data need to process a

customer order

Sales configuration: this system ensures that theproducts and services ordered are sufficient to

accomplish the customers objectives

Shipment planning system: it determines whichopen orders will be filled and from which

location they will be shipped


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Contd.

Shipment execution system: this system

coordinates the outflow of all products and goods

from the organization with the objective of

delivering quality products on time to the

customers

Inventory control system: it updates thecomputerized inventory records to reflect the

exact quantity on hand of each stock keeping unit

Invoicing: this application encourages follow-upon existing sales activities, increase profitability

and improves customer service


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Contd.

Customer interaction: this system monitorsand tracks each customer interaction with

the company

Routing and scheduling: routing determinethe best way to get goods and products from

one location to another. The scheduling

system determines the best time to delivergoods and services


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Purchasing Systems

Purchasing systems include the following:

Inventory control: this is used to keep track of the

finished goods as well as raw materials, packing

materials and maintenance materials

Purchase order processing: this system helps

purchasing departments complete their transactions

quickly and efficiently Receiving: this helps in keeping records of the expected

and actual receipts. Quality control by inspection is also

one of the important functions


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Contd.

Accounts payable system: it is the system that

increases an organizations control over

purchasing, improves cash flow, increases

profitability and provides more effectivemanagement of current liabilities


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Accounting SystemsAccounting systems include the following:

Budget: it is a system that automates many of

the tasks required to amass budget data,

distribute it to the users and consolidate the

prepared budgets Accounts receivables: manages the cash floe\w

of the company by keeping track of the money

owed the company on charges for goods soldand services performed


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Architecture of Transaction Processing System

As and when a business transaction takes place,

source document describing the transaction is

created

This source document serves as an input for the tpsfrom some external source

These source documents can then be processed

online or in batches

Processing then gives the desired output


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Contd.

Information can be entered into a TPS one of the following

three ways

- Manual

- Semi automated

- Fully automated

The processing that is done on the source documenthappens to be one of the following

- Recording

- Summarizing

- Sorting

- Updating

- Merging


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Contd.

The output from TPS can serve one of the

following purposes:- Counts and summary reports

- Inputs to other information system

- Feedback to system operator orcustomer

The main objective of TPS is to automate

repetitive information processing activitieswithin organizations to increase speed and

accuracy and to lower the cost of processing

each transaction

Management Information Systems


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Management Information Systems

MIS assist managers in decision making and problem

solving

They draw on data stored as a result of transaction

processing

Decisions must be made on many issues that recur

regularly and require a certain set of information tomake the decision

Provides input to be used in the managerial decision

process

It deals with supporting well structured decision

situations. Typical information requirements can well be

anticipated

Executive Information System (EIS): An


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Executive Information System (EIS): An

Overview Information systems designed to support the

highest organizational managers are calledexecutive information systems

An EIS consists of technology and the people

needed to consolidate information andsupport users to assist executive level decision

making

The information is provided in a very highlyaggregated form so that they can scan

information quickly for trends and anomalies


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Contd.

An EIS provides both soft as well as hard data

Soft data include textual news stories or other non-

analytical information whereas hard data includedata and numbers which are generally generated by

TPS and MIS


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General Features of EIS Tailored to individual executives Easy to use

Have drill down abilities

Support the need for external data

Can help with situations that have a high

degree of uncertainty

Have a futures orientation

Are linked with value-added business

processes


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Activities supported by EIS

Executive level decision making

Long-range and strategic planning Monitoring of internal and external resources

Crisis management

Staffing and labor relations


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Characteristics of EIS

Inputs: aggregate internal data from TPS, MISand other databases as well as external data

Processing: summarizing, graphical

interpreting

Outputs: summary reports, trends and

simulations

Typical users: executive level managers


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An overview of Decision Support System

It is an organized collection of people, procedures,

software, databases and devices used to used to support

problem-specific decision making

The focus of a DSS is on decisionmaking effectiveness

when faced with unstructured or semi structured

business problems

DSS offer the potential to generate higher profits, lowercosts and better products and services

Contd


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Contd.

DSS, although skewed somewhat towards the top

levels of management, are used at all levels DSS are used to bring more structure to the

problems to aid the decision making process

DSS are often linked with managerial decisionmaking regarding value-added business

processes

Overall, a DSS should assist decision makers atall levels with all aspects of decision making to

solve problems and further corporate goals


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Characteristics of a DSS

Handle large amount of data from different sources

Provide report and presentation flexibility

Offer both textual and graphical orientation Support drill down analysis

Perform complex, sophisticated analysis and

comparisons using advanced software packages Perform what-if, simulation and goal-seeking analysis


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Constituents of DSS

At the core of a DSS are a database and a

model base

In addition, a typical DSS contains adialogue manager

external database access allows the DSS to

tap into vast stores of information

contained in a corporate database


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The Model Base

The purpose of a model base in a DSS is to give decisionmakers access to a variety of models and to assist them

in the decision making process

The model base can include Model Management

Software (MMS) that coordinates the use of models in aDSS

The following are the major types of DSS models:

- Financial models- Statistical analysis models

- Graphical models

- Project management models

Contd


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Contd.

Financial models: these provide cash flow,

internal rate of return and other investmentanalysis. E.g. Spreadsheets

Statistical analysis models: these can provide

statistics, trend projections, hypothesis testing and

more.

Graphical models: these are software packages

that assist decision makers in designing, developing

and using graphic displays of data and

information. Numerous personal computer

programs that can perform these tasks are power

point, freelance graphics, CAD, CAM etc

Contd


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Contd.

Project management models- These are used to handle and coordinate large projects.

- They are also used to identify critical activities and tasks

that could delay an entire project

- Some of these programs can also determine the best way

to speed up a project by effectively using additional

resources.

- These models allow decision makers to keep tightcontrol over projects of all sizes and types


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The Dialogue Manager

This allows the users to interact with the DSS to obtaininformation

It assists with all aspects of communications between

the user and the hardware and software that constitute

the DSS

In practical sense, to most DSS users, the dialogue

manager is the DSS


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The Group Decision Support System:

(characteristics)

A GDSS also called computerized collaborative worksystem, consists of most of the elements of DSS

Special design: special procedures, devices and approachesare needed that foster creative thinking, effective

communications and good group decision-making techniques

Ease of use: it must be easy to learn and use

Flexibility: it must support the different approaches oftaking decisions and also integrate their different

perspectives


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Contd.

Decision making support: it can support differentdecision making approaches like Delphi approach,

brainstorming

Anonymous input Reduction of negative group behavior

Parallel communication

Automated record keeping

Cost, control and complexity factors


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COMPARISON OF DSS AND MIS

FACTOR DSS MIS

PROBLEM TYPE HANDLES UNSTRUCTURED

PROBLEMS THAT CAN'T BE

EASILY PROGRAMMED

NORMALLY USED WITH MORE

STRUCTURED PROBLEMS

USERS SUPPORTS INDIVIDUALS,

SMALL GROUPS AND THE

ENTIRE ORGANIZATION

SUPPORTS PRIMARILY THE

ORGANIZATION

SUPPORT SUPPORTS ALL ASPECTS AND

PHASES OF DECISION MAKING

SUPPORTS ONLY SOME PART AS

SOME ARE AUTOMATED

EMPHASIS EMPHASISES ACTUAL

DECISIONS AND DECISION-

MAKING STYLES

USUALLY EMPHASISES

INFORMATION ONLY

APPROACH IS A DIRECT SUPPORT SYSTEMTHAT PROVIDES INTERACTIVE

REPORTS ON THE SCREEN

IS AN INDIRECT SUPPORTSYSTEM THAT USES

REGULARLY PRODUCED

REPORTS

SYSTEM USUALLY ON-LINE DO NOT PROVIDE IMMEDIATE

RESUL\TS

SPEED SINCE IT IS FLEXIBLE AND

CAN BE IMPLEMENTED BYUSERS,IT TAKES LESS TIME TO

DEVELOP

RESPONSE TIME IS USUSLLY

LONGER

OUTPUT REPORTS ARE USUALLY

SCREEN ORIENTED

ORIENTED TOWARDS PRINTED

REPORTS AND DOCUMENTS

DEVELOPMENT USERS ARE MORE DIRECTLY

INVOLVED IN DEVELOPMENT

THE MIS IS RELATIVELY

OLDER DO NOT RETAIN THE

USERS FOR LONG

Artificial Intelligence


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Artificial Intelligence

Artificial intelligence systems include the people,procedures, hardware, software, data, andknowledge needed to develop computer systems

and machines that demonstrate characteristics of

intelligence

The objective in developing AI systems is not to

replace human decision making completely but to

replicate it for some well defined problems

The overall purpose of AI systems again is to

help the organization achieve its goals

Major Branches of AI


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Major Branches of AI

Expert System: the hardware and software that

stores knowledge and makes inferences, similarto human expert

Robotics: mechanical or computer devices that

perform tasks requiring a high degree ofprecision or that are tedious or hazardous for

humans

Vision Systems: the hardware and software thatpermit computers to capture, store and

manipulate visual images and pictures

Contd.


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Natural Language Processing: processing thatallows the computer to understand and react to

statements and commands made in natural

language

Learning System: a combination of software and

hardware that allows the computer to change

how it functions or reacts to situations based on

feedback it receives

Neural Network: a computer system that can act

like or simulate the functioning of a human brain


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Introduction to Expert Systems

Systems that can replace human expertsunder certain conditionsin restricted areas

Expert systems canrepresent heuristics and uncertain informationreason under uncertaintyexplain their reasoning and results


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Alternative Definitions of Expert System

An expert system uses human knowledge to

solve problems that normally requires human

intelligence. An expert system is a rule-based AI application program

that performs a task that requires expert knowledge. The problem-solving capability of a program stems from

its domain knowledge, not merely from the formalismsand reasoning strategies it uses.


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Domain Categories for Expert Systems

Interpretation (weather data) Prediction (weather forecast) Diagnosis Design Planning Debugging and repair Instruction (tutoring) Surveillance (discovery of discrepancies) Control (correction of discrepancies)

Characteristics of Expert System


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p y

Can explain their reasoning or suggested decisions Can draw conclusions from complex relationships

Can provide portable knowledge

Can deal with uncertainty

Not widely used or tested Difficult to use

Limited to relatively narrow problems

Possibility of error Difficult to maintain

May have high developmentcost


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Capabilities of Expert Systems

Strategic goal setting Planning

Design

Decision making

Quality control and monitoring

Diagnosis

omponen s o xper ys em


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p p y

The knowledge base:

Stores all relevant information, data, rules, cases andrelationships used by the expert system. A knowledge

base must be developed for each unique application

The inference engine:

The overall purpose of this engine is to seek

information and relationships from the knowledge

base and to provide answers, predictions and

suggestions the way a human expert would. It deliversthe expert advice

Contd.


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The explanation facility:

Allows a user to understand how the expert systemarrived at certain conclusions or results. Using this

facility, can indicate all the facts and rules that were

used in reaching the decision

The knowledge acquisition facility:

Through this facility, creating and updating the

knowledge base is carried out. The overall purpose is

to provide a convenient and efficient means forcapturing and storing all components of the

knowledge base

C td


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Contd.

The user interface: Used for designing, creating, updating and using expert

systems. The overall purpose is to make the development and

use of the expert system easier for the users and decision

makers

OFFICE AUTOMATION SYSTEMS


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These are telecommunications-based

information systems that collect, process,store and distribute electronic messages,documents, and other forms of

communications among individuals, workgroups and organizations

Such systems improve the collaboration and

productivity of end-users and work groups bysignificantly reducing the time and effortrequired to produce, share and distributebusiness communications


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OVERVIEW OF OFFICE AUTOMATION

SYSTEMS

Electronic Publishing Systems

Electronic Communications Systems

Electronic Collaboration Systems Image Processing Systems

Office Management Systems


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ELECTRONIC PUBLISHING SYSTEMS

Word Processing

- It is the most common office automationapplication.

- It is the use of computer systems to create,edit, revise, and print text material.

- It involves manipulating text data (characters,words, sentences and paragraphs) to produce

information products in the form of documents(letters, memos, forms and reports)

Contd.


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Desktop publishing

- Organizations can use desktop publishing toproduce their own printed materials

- They can design and print their ownnewsletters, brochures, manuals and bookswith several type styles, graphics and colors oneach page

- The minimum hardware and software requiredare: a PC with a hard disk, a printer with high-quality graphics and software that can do wordprocessing, graphics and page make-up

ELECTRONIC COMMUNICATIONS SYSTEMS


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These systems transmit and distribute text and

images in electronic form overtelecommunications networks

These enhances the communications and

coordination among workgroups andorganizations

Electronic communication systems also help

reduce the flow of paper messages, letters,memos, documents and reports that flood ourpresent interoffice and postal systems

TOOLS OF ELECTRONIC COMMUNICATIONS


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Electronic mail:

Telecommunications networks are used to transmit, storeand distribute electronic text messages among the computerworkstations of the end-users. This may also include audio,video and image media

Voice mail:

Telephone system and a voice mail computer is used totransmit, store and distribute digitized voice messages

among end-users. The analog message is digitized andstored on the magnetic disk devices of the voice mailcomputer

Contd.


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Bulletin board systems

- This is a service offered by public informationnetworks or the network of businesses and otherorganizations in which electronic messages and data,

programs, and other types of files can be stored byend-users for other end-users to read or copy.

- This serves as a central location to post and pick up

messages or upload and download data files orprograms

Contd.


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Videotex:

Is a computer-based interactive information service provided

over phone lines or cable TV channels to access andselectively view text and graphics.

Facsimile (FAX):Allows us to transmit images of important documents over

telephone or other telecommunication links and reproducethem on paper at the receiving station

ELECTRONIC COLLABORATION SYSTEMS


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Electronic meeting systems

- This involves the use of video and audiocommunications to allow conferences and meetings tobe held with participants who are separated by long

distances

- Major categories of electronic meeting systems are:

- Computer conferencing- Desktop videoconferencing

- Decision room conferencing

Contd.


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Teleconferencing

- In this case sessions are held in real time, withmajor participants being televised whileparticipants at the remote sites usually takepart with voice input of questions andresponses.

- It can also consist of using closed-circuittelevision to reach multiple small groups

- Interactive video telecommunications are usedto hold conferences among many participantsat remote sites

Contd.


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Telecommuting

- It is the use of telecommunications by workers toreplace commuting to work from their homes

- It also describes the use of telecommunications tocarry on work activities from temporary locationsother than offices and homes

- It is also referred to as the creation of virtual office

IMAGE PROCESSING SYSTEMS


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Yet another fast-growing area of office

automation Allows end-users to electronically capture,

store, process and retrieve images of

documents that may include numeric data,text, handwriting, graphics and photographs

Some of the common image processing

systems are as under:- Electronic data management: Is based onimage processing technology.

Contd.


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- It is just not an electronic image of traditionaldocument but can also take the form of

digitized voice note or electronic images for acolor graphics presentation

Presentation graphics

the goal of these graphics is to provide informationin a graphical form for better understandingand making better decisions

This includes the use of line and bar graphs,pie charts and pictorial charts with various symbols

Contd.


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Multimedia systems

- Multimedia methods of presentations giveend-users information in a variety of mediaincluding text and graphics displays, voice and

other digitized audio

- They allow the end-users to select the form

and content of the information presented andbrowse through the information in a randomway instead of going sequentially

OFFICE MANAGEMENT SYSTEMS


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These are an important category of office

automation systems. They include electronic calendars, tickler files,

electronic mail directories, schedulers and task

management systems They provide computer-based support services

to the managers to help them organize their

work activities Office management software computerizes the

manual methods of planning

Documents

3. Introduction to Organizational Systems