ca final gr. ii...q&a-6.2 oooo solved scanner ca final gr. ii paper - 6 answer : organisational...

Q&A-6.1

Q&A-6.1

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1 Information System Concepts

This Chapter Includes : Introduction; Definition of a System; System Environment;

Types of Systems; Sub-systems; Information; Business Information Systems.

Marks of Short Notes, Distinguish Between, Descriptive & Practical Questions

CA Final Gr. II

SHORT NOTES

2001 - Nov [7] Write short notes on the following :

(i) Programmed and non-programmed decisions. (5 marks)

Q&A-6.2 OOOO Solved ScannerSolved ScannerSolved ScannerSolved Scanner CA Final Gr. II Paper - 6

Answer :

Organisational decisions can be categorised as programmed decision & non

programmed decision.

Programmed decisions: Decisions which are of repetitive and routine nature are

known as programmed decisions. It is also known as structured decisions. It refers to

decisions made on problems and situations by reference to as predetermined. Set of

precedents, procedures, techniques and rules.

e.g. preparation of creditor’s due list and disbursement of its payments through

bank account. For such type of decision making. Guidelines and rules required are

provided in the form of a procedure manual.

Non-programmed decisions : Decisions which are unstructured involve high

consequence, complex or a major commitment are known as non-programmed

decisions, Non programmed decision are those decision, which are made on situations

and problems that are novel and non-repetitive. For example, new product line; capital

budgeting etc. Non-programmed decisions making has no pre-established decision

procedure. Also, it is difficult to completely specify the information requirements for

taking these decisions.

Information requirement depends upon type of decision making. In the case of

programmed decision, the decision is pre-specified. Such a decision clearly specifies

the information requirements, for example, in the case of an inventory item, the reorder

level is fixed. For placing a fresh order for inventory replenishment, one requires

information about its present level.


(c) Decision Support systems (5 marks)

Answer :

Decision support system (DSS) : Decision support system aims at assisting

managers, who are faced with unique and non-recurring decision problems. In such

cases, it is not possible to pre-design system report format and contents. Hence, a DSS

has greater flexibility than other information system.

DSS is of more use when the decision are of an unstructured (i.e. for strategic

decision) or semi-structured nature (i.e. for tactical decision) .

The problem area is modeled and various alternatives are explored, e.g. an ExcelSpreadsheet is a form of DSS.C All Information Systems support decision-making, however, indirectly, but DSS are

expressly designed for this purpose.C DSS provides its users with decision oriented information whenever a decision-

making situation arises.

[Chapter #### 1] Information System Concepts OOOO Q&A-6.3

C It is a computer-based Information System specifically designed to assistmanagers in making semi-structured/unstructured decisions, (i.e. thosedecision-making situations that cannot be predicted in advance).

C It offers interactive display technology, micro- computing easy-to-use software thatprovides support during the decision-making process.

C A DSS does not typically make decisions or solve problems - people do, DSSs areconcerned with providing useful information to support the decision process.

C It is typically used by top level management.Characteristics of DSSThe DSS are characterised by at least three properties namely;1. Ability to support semi-structured and unstructured decision-making-structured and

semi-structured are those that are easily made from a given set of inputs. They areof the routine nature. But some semi-structured and all unstructured decisionsrequire information from many sources to sum up the data and to take a decision.The DSS is particularly well adopted to help with semi-structured and unstructureddecisions.

2. Offer users flexibility, adaptability and a quick response - DSS are more suitablefor semi-structured/unstructured decisions which are not pre-planned or pre-specified and tend to be non-routine. Here, DSS must offer enough flexibility toenable users to model their own info needs.

3. Ease of learning and use -Since DSS are often built and operated by managers(i.e. the users) rather than by computer professional. Therefore, the accompanyingtools/models should be easy to learn and use. If requires the use of 1. Graphical User Interfaces (GUI); and2. Interactive display devices - user of interactive display devices are not

compulsory to run a DSS, their use makes the system user-friendly andeffective.

2003 - May [7] Write short notes on the following :(d) Materials Requirement Planning (MRP) (5 marks)Answer :Material Requirement Planning (MRP) System : Scope : When the Company is following a fixed period production programming tomaximise the use of production capacity, the Material Requirement Planning systemsare used to minimise the inventory and simultaneously ensure the availability of thematerial.Applicability : The MRP system is feasible only when the company produces standard

products for which the bill of Material or the Part List enumerating the items which go

into the products, is available.

The bill of material is exploded and summarised for the items disregarding where

it is used. Then it is compared with the stock available, the order placed and due for


delivery in the production period. The comparison will show the shortage which would

be faced in the execution of the production programme.

MRP system is also used when the production requirement is fluctuating from

period to period and also where the changes in the production programme are frequent

use as

Use as a tool : It provides an excellent tool for planning, procurement, monitoring and

control of the inventory as well as the production programme.


(a) Executive Information Systems. (5 marks)

Answer

Executive Information System is an information system that serves the information

need of top executives. EIS enables its users to extract summary data and model

complex problems without the need to learn complex query languages, statistical

formulas or high computing skills.

EIS is considered as highly user friendly system because it provides a user friendly

graphical reporting system with drill down capabilities. EIS is mainly an advancement

of MIS but it can include the decision support system (DSS) capabilities to solve

complex problems.

Executive Information System (EIS) Vs Executive Support System (ESS): An

executive information system (EIS) is sometimes referred to as an executive support

system (ESS)- is a DSS that is designed to meet the special needs of top-level

managers. Some people use the terms “EIS” and “ESS” inter changeably, but others do

not. Any distinction between the two usually is because executive support systems are

likely to incorporate additional capabilities such as electronic mail.

Advantage of an EIS :


1. Easy Access: Executives can have easy access to corporate data. DSS provides

executives with access to Financial data Marketing and Sales information, Human

Resources information, Manufacturing data and Competitive / Strategic

information. Electronic mail, access to external news and databases, word

processing, Spreadsheet and automated filing capabilities are also common in

business EIS.

2. Easy Navigation : An EIS is easy to navigate since Managers can identify broad

strategic issues, and then explore the information to find the root causes of those

issues.

3. Report Generation : Reports can be generated by the Executives directly, who

can now examine departments without interfering with the operations of the

Company. Graphs can be created automatically.

4. Simulation Facility : Executives can set up different scenarios or simulations. The

ability to manipulate data, to project ‘what if outcomes and to work with modeling

tools within the system are available in EIS.

5. Cost vs. Benefits : EIS is expensive to develop and maintain. But enhanced top-

level decision making is the benefit that balances out the system’s associated

costs.

2004 - May [7] Write short notes on the following :

(d) Expert systems. (5 marks)

Answer :

Expert System (ES) : An expert system, also called a knowledge-based system, is an

artificial intelligence system that applies reasoning capabilities to reach a conclusion.

Expert systems are excellent for diagnostic and prescriptive problems. Diagnostic

problems are those requiring an answer to the question, "What’s wrong?" and

correspond to the intelligence phase of decision making. Prescriptive problems are

those that require an answer to the question, "What to do?" and correspond to the

choice phase of decision making.

An expert system is usually built for a specific application area called a domain.

• Expert Systems are an extension of DSS/EIS.

• It is a computer program that uses artificial intelligence to solve problems withina specialized domain that ordinarily requires human expertise.

• They mimic the process of human expert for those who has less expertise.

• These are rule-based and pre-programmed on certain assumptions and

criteria.• They use static logic to solve problems.

• Typical tasks for expert systems involve classification, diagnosis, monitoring,design, scheduling, and planning for specialized endeavours


• Areas covered by expert systems include; Audit, Tax, Financial Services,Manufacturing, Retailing, and Logistics etc.

• Nevertheless, Expert Systems remain supplements rather than replacementsfor human experts.

Need for Expert Systems : Expert labor is expensive and scarce, moreover, no matterhow bright or knowledgeable certain people are, they often can handle only a fewfactors at a time.

Benefits of Expert Systems :1. Expert Systems are not subject to such human fallings as fatigue, being too busy,

or being emotional. 2. Expert Systems assist novices in thinking the way experienced professional do.3. Expert Systems preserve knowledge that might be lost through retirement/

resignation/ death.4. Expert Systems put information into an active-form so it can be summoned almost

as a real- life expert might be summoned.5. Expert Systems can be effectively used as a strategic tool is the areas of marketing

products, cutting costs and improving products.

Some of the properties to qualify for Expert System development are as under :

(i) Availability : One or more experts are capable of communicating how they goabout solving the problems to which the Expert System will be applied.

(ii) Complexity : Solution of the problems requires logical inference processing,which would not be easily handled by conventional information processing.

(iii) Domain : The domain or subject area, of the problem is relatively small andlimited to a relatively well- defined problem area.

(iv) Expertise : Solutions to the problem require the efforts of experts.

(v) Structure : The solution process must be able to cope with ill-structured,uncertain, missing, it conflicting data, and a dynamic problem-solving situation.

Components of Experts Systems :

An Expert System provides tools, information and methods for decision making in

specific areas such as generating competitive bids, loan approved and so on.

An Expert System is typically composed of following elements:

• Knowledge Base is an organized collection of facts about the system’s domain.

• Inference Engine interprets and evaluates the facts in the knowledge base in

order to provide an answer the Knowledge Base, Inference Engine, the knowledge

Acquisition subsystem and the user interface.

• Knowledge Acquisition Subsystem (KAS) is the software component of an

Expert System that enables the Knowledge Engineer (KE) to build and refine an

expert systems knowledge base. The KE works with the knowledge acquisition

subsystem to model decision logic.


• User Interface is the method by which an expert system interacts with a user.

These can be through dialog boxes, command prompts forms, or other input

methods. The user interface for an Expert System is highly interactive.

2004 - Nov [7] Write short note on the following :

(a) Strategic and Tactical decisions (5 marks)

Answer :

Strategic Decisions :

• Strategic Decisions are the decisions made at the strategic level of the organization

to handle problems critical to its survival and success

• They have a vital impact on the direction and functioning of the organization.

• Such decisions are taken by Top management / Board of Directors

• Strategic decisions are made under conditions of partial knowledge and generally

un-structured and can not be programmed . It requires qualitative & quantitative

information.

• Typical responsibilities under strategic level decision making are : Defining

objectives, policies for whole organisation, long term planning, Large scale

investment decisions, Appointment of middle management etc.

• Strategic decision requires external information like market and economic

forecasts, political and social trends legislative technological constrains and

opportunities.

• Strategic decision are taken by top level management

• For which they uses Decision Support System (DSS) and Executive Information

System (EIS).

• Under strategic decision human involvement is essential and application of

computer is required for storage and analysis of various data.

Tactical Decision :

Tactical level decisions are to be taken by middle level of managerial hierarchy. At this

level, managers plan, organize, lead and control the activities of other managers. A

single strategic decisions calls for a series of tactical decisions, which are of a relatively

structured nature.

• Tactical decisions are relatively short, step-like spot solutions to breakdown

strategic decisions into implementable packages.

• Such decisions are semi-structured. The other features of tactical decisions are;

they are more specific and functional they are made in a relatively closed setting;

information for tactical decisions is more easily available and digestible; they are

less surrounded by uncertainty and complexity; decisions variables can be


forecasted and quantified without much difficulty and their impact is relatively

localized and short-range.

• Tactical decisions are made with a strategic focus.

• Typical responsibilities of tactical decisions are establishment and monitoring of

budgets, Acquisition of resources, developing operational policies and objectives,

appointment of staff etc.

• Tactical decisions requires external informations like cost and sales analysis,

performance measurement, summaries of operations / production, actual and

budgeted comparison etc.

• Tactical decisions are taken by middle level management for which they use

management information system (MIS).

• Some examples of such decisions are taken by middle level management for which

they use management information system (MIS).

• Some examples of such decisions are pricing, capacity planning, budget

preparation, purchasing contracts etc.

Thin line Distinction :- As in the case of programmed and non-programmed decisions,

the dividing line between strategic and tactical decision is thin. e.g. Product pricing is

tactical decision in relation to the strategic decision of design and introduction of a new

product in the market. But product pricing appears to be a strategic decision to down-

line tactical decisions on dealer discounts.

2006 - May [7] (a) Write short notes on the following :

(iii) Material requirement planning. (5 marks)

Answer :

Please refer 2003 - May [7] (d) on page no. 17


(a) Closed and open systems (5 marks)

(b) Programmed decisions (5 marks)

Answer :

Closed system :

• A closed system is one which does not interact with its environment. Such systems

in business World, are rare, but relatively closed systems are common. Thus, the

systems that are relatively isolated from the environment but not completely closed,

are termed closed systems (which actually means a relatively closed system).


Example of close system : A computer program is a relatively closed systems

because it accepts and processes previously defined inputs and provides outputs too

in a previously defined way. In other words, we may say that a relatively closed system

is one which controls its inputs. And outputs and is protected from the environmental

disturbances.

• In organisations and in information processing, there are systems that re relatively

isolated from the environment but not completely closed in the physics sense.

These will be termed closed systems, meaning relatively closed.

• Example of relatively closed system : Systems in manufacturing are often

designed to minimize unwanted exchanges with the environment outside the

system. Such systems are designed to be as closed as possible, so the

manufacturing process can operate without disturbances from suppliers,

customers, etc. A computer program is a relatively closed system because it

accepts only previously defined inputs, processes them, and provides previously

defined outputs.

• In summary, the relatively closed system one that has only controlled and well

defined inputs and outputs. It is not subject to disturbances from outside the

system.

Open System :

• Open Systems actively interact with other systems and establish excange

relationship. They exchange information, material or energy with the environment

including random and undefined inputs.

• Open systems tend to have form and structure to allow them to adapt to changes

in their external environment for survival and growth.


• Organisations are considered to be relatively open systems. They continuouslyinteract with the external environment, by processes or transformation of inputs intouseful output.

• However, organisation behave as a relatively closed system in certain respects soas to preserve their identity and autonomy, They may ignore many opportunitiesso as to maintain their core-competence.

• Organisations are open systems, because they are input-output systems. The inputconsists of finance, physical & mental labour and raw material.

• Open systems are adaptive in nature as they tend to react with the environment insuch a way, so as to favour their continued existence. Such systems are ‘self-organising’, in the sense that they change their organisation in response tochanging conditions. All living systems (e.g) humans, plants, cells, etc.) are opensystems.

• They attempt to maintain equilibrium by homeostasis, the process of adjusting tokeep the system operating within prescribed limits.

• An organisation which is sensitive to changes in customer tastes, preferences,likings, dislikings, demands, etc., and in consequence adjusts its prices, changesits product mix or looks for new markets, is an open organisation.

• All organisations essentially are open systems as they cannot work in isolation.• Thus, the systems analyst usually deals with adaptive, open systems.(b) Programmed Decisions :

Meaning - If refers to decision-making situations that can be predicted in advance.These are well-defined decisions. As a problem or issue for decision-makingemerges, the decision is made by reference to pre-decided; Guidelines,Precedents, Rules, Standard Operating Procedures.These are time-tested for their validity.Example :Resource Scheduling, Inventory Control Decision, Machine Loading andso on.• Advance knowledge of decision-making situations - These are known in

advance.• Characteristics- Routine, repetitive, often automated.• Involvement of thing /people-usually involve thing (i.e. Computer resources)

rather than people.• Delegation to low-level management- it is possible.


DISTINGUISH BETWEEN

2007 - May [6] (c) Differentiate between open and closed systems. (5 marks)

Answer :

An open system is one that interacts with its environment and thus exchange

information, material or energy with the environment, including random and undefined

inputs. Open systems are adaptive in nature as they tend to react with the environment

in such a way, so as to favour their continued existence. Such systems are ‘self-

organising’, in the sense that they change their organisation in response to changing

conditions. All living systems such as humans, plants cells, etc. are open system.

Whereas, a closed system in one which does not interact with its environment.

Such systems in business world, are rare, but relatively closed systems are common.

Thus, the systems that are relatively isolated from the environment but not completely

closed, are termed closed system (which actually means a relatively closed system).

No system can be regarded as completely closed, since it will have certain properties

of open systems also. One has to view systems in terms of the degree to which it is

open or close. The difference between open system and close systems are :

Particulars Closed Systems Open System

1. Meaning A Closed System is self-

contained and isolated from its

environment.

Open Systems actively interact

with other systems and establish

exchange relationship with the

environment.

2. Exchange It does not interact or make any

exchange with its environment.

A relatively closed system may

accept defined inputs, but does

not react to disturbances, i.e.

undefined inputs.

They exchange resources,

information, material or energy with

the environment including random

and undefined inputs.

3. Feedback They do not get the feedback

from the environment required

to sustain them.

Open Systems adapt to changes

based on feedback from their

external environment for their

survival and growth.


4. Continuity They tend to deteriorate or

vanish over time. Life Cycle of a

Closed System is shorter,

because it does not have any

input/ interaction from enviro-

nment, and decays faster.

They sustain themselves over a

period of time, by generating

surplus out of its processes.

DESCRIPTIVE QUESTIONS

1999 - May [1] {C} (a) Discuss the characteristics of an effective Management

Information System. (10 marks)

Answer :

Management Information System (MIS) :

Meaning & Concept :

• Management Information System (MIS) has been defined by Davis and Olson as’

an integrated user-machine system designed for providing information to support

operational control, management control and decision making functions in an

organization’.

• MIS produces prescribed reports, displays, and responses on a periodic,

exception, or demand basis to managers at all levels in all functions in an

organization.

• MIS is typically used by Middle Level Managers.

• MIS analyses the data in predetermined manner.

• MIS is a network of information that supports management decision - making. It

recognises information as a resource, and than uses it for achievement of

organisational objectives.

Characteristics of an effective MIS :

1. Heavy planning element

• Making MIS is not a 1 or 2 day exercise. It Usually takes 3 to 5 years and

sometimes a much longer period hence future objectives have to be kept in

mind, so that MIS will not be obsolete before it gets into action.

2. System Approach

• The information system follows a System’s approach. The system’s approach

implies a holistic approach to the study of system and its performance in the

light of the objective for which it has been constituted.

• This approach is anti- piecemeal in nature.


• In other words, system’s approach, in the sense intended here, means taking

a comprehensive view or a complete look at the interlocking sub-systems that

operate within an organisation.

3. Sub System Concept

• Although MIS is viewed as single entity, but for its effective use it should be

broken down in small parts or subsystems, so that more insight and attention

is paid to each

• Sub system

4. Management Oriented

• A good MIS must furnish information to the managers to expand their

knowledge base.

• For designing of MIS, top-down approach should be followed. Top-down

approach suggests that the system development starts from the determination

of management needs and overall business objectives.

• The MIS development plan should be derived from the overall business plan.

• Management-oriented characteristic of MIS also implies that the management

actively directs the system development efforts.

• In MIS development, a manager should spend a good amount of his/her time

in system design.

• To ensure that the implemented system meets the specifications of the

system, continued review and participation of the manager is necessary.

5. Need Based

• MIS design and development should be as per the information needs of

managers at different levels,

• In other words, MIS should cater to the specific needs of managers in an

organisation’s hierarchy.

6. Management directed MIS is meant for managerial decisions hence manager

should guide the MIS professionals about their information needs.

• User-friendly MIS should be such that can be used by the end-user so that

they do not depend on the experts.

7. Integrated

• Integration is a necessary characteristic of a management information system.

Integration is significant because of its ability to produce more meaningful

information.

• MIS integrates various subsystem to provide for meaningful information. For

example, in order to develop an effective production scheduling system, it is

necessary to balance such factors as:

(i) set-up costs,

(ii) workforce,


(iii) overtime rates,

(iv) production capacity,

(v) inventory level,

(vi) capital requirements,

(vii) customer services, etc.

8. Exception Based

• MIS should be developed on the exception-based reporting principle, which

means an abnormal situation, i.e. the maximum, minimum or expected values

vary beyond tolerance limits.

• In such situations, there should be exception reporting to the decision-maker

at the required level.

9. Future Oriented

• Besides exception-based reporting, MIS should also look at the future.

• MIS should not merely provide past or historical. Information; rather it should

provide information, on the basis of projections based on which actions may

be initiated.

10. Flexibility There should be room for further modification.

11. Information as a resource Information is the major ingredient of MIS, so it should

be treated as a source and managed properly.

12. Computerized We can use MIS without computer. But the use of computers

increases the effectiveness and efficiency of the system. The other benefits are

accuracy, storage capacity and timely information.

13. Common data base

• To be cost-effective, MIS should avoid duplication of files and must have

common database.

• It seems logical to gather data once, to properly validate it and to place it on

a central storage medium, that can be accessed by any other sub-system.

14. Common data flow

• By common data flows, we mean to use common input, processing and output

procedures.

• The common data flow concept supports several of the basic tenets of system

analysis.

• These include avoiding duplication, combining similar functions and

simplifying operations wherever possible. The development of common data,

flow is an economically sound and logical concept, but it must be viewed in a

practical light.

15. Long-Term Planning

• MIS is developed over relatively long periods. Such systems do not develop

overnight. A heavy element of planning is involved.


• The MIS designer must have the future objectives and needs of the company

in mind. The designer must avoid the possibility of the system going obsolete

before its time.

16. Information relevance: To prevent information overload MIS should aim at

providing only relevant information.

1999 - Nov [1] {C} (a) What are the main pre-requisites of an effective MIS? Explain

them briefly. (10 marks)

Answer :

The main pre-requisites of an effective MIS are as follows :

1. Qualified system and management staff

• In a MIS, we have two types of experts: one computer and system expert

and other managements staffs who direct the system experts about their

needs and requirements from a MIS. Both of them should have expertise in

their respective fields.

• But they must possess certain knowledge of other fields also. E.g. system

expert must know management consents. Same is the case with management

experts.

• They must have some basic knowledge of computers so that they can help in

system designing and independently use the system.

2. Active participation of operating management

After implementation of MIS operative staff may show some behavioural problem,

which can be handled by educating the operative management about the benefit

of MIS.

3. Top management support

• To be effective, MIS requires full support of top management if it is absent

then subordinates become lethargic and disinterested.

• To gain the support from top management, it should be provided with cost

benefit analysis of having MIS.

• This action of subordinates will lead to change in the attitude of top

management towards MIS and they’ll give their full support.

4. Database

C It is a super file which has all records or data to a particular organisation at

one place.

C It can be subdivided into various subsets namely; employee file, inventory file,

General Ledger accounting file, supplier file, customers file etc. Database

should be user oriented.

C It should be controlled by separate authority that is the DBA (database

administrator).


5. Control and Maintenance of MIS

• Control refers to the process of ensuring that MIS is operating as it was

designed to operate. Sometimes users develop their own procedures or

shortcuts to use the system that may reduce its effectiveness.

• To check such practices, the management at each level should devise check

mechanism for information system control.

• Maintenance means alterations and modifications according to the need and

requirements of the user. So there must be some scope of improvement in the

system.

6. Evaluation of MIS : To meet the future needs MIS should be evaluated at regular

time intervals. Evaluation process must have following steps:

• Evaluate whether system is flexible enough to cope with any expected or

unseen information requirements in future.

• Take the feedback from users as well as designers about capabilities and

shortcomings in the system.

• Guide the proper authority to maintain the effectiveness of MIS.

1999 - Nov [2] (a) What are main objectives of a production scheduling department?

(5 marks)

Answer :

Objectives of a production scheduling department

The main objectives of production scheduling departments are :-

(i) To determine the stages of production in sequential and rational order.

(ii) To assess the extent of need of sub-contracting to outside parties.

(iii) To minimize the idle time on the part of the operators and equipments.

(iv) To ensure that completion dates or targets dates of completing the production

plans are met fully.

(v) To study alternative methods of performing the activities so that time taken to

perform can be further reduced.

2000 - Nov [1] {C} (a) Define Personnel Information system. What sub-systems are

generally responsible to control the operational efficiency of the Personnel

Management? Explain each one of them. (10 marks)

Answer :

Personnel Information System

• The personnel information system deals with the flow of information about people

working in the organisation as well as future personnel needs.

• In most of the organisations, the system is concerned primarily with the six basic

sub-systems of the personnel function; recruitment, placement, training and

development compensation, maintenance and health and safety.


• It is generally accepted that the personnel function is one of the least computerised

of all the functions.

• Automated system may not be necessary for small, but large business firms are

realising that computer based personnel information systems are necessary for

increasing the operational efficiency of personnel management.

• Basically, many organisations used computer-based information systems to

produce pay cheques and payroll reports, maintain personnel records and analyse

the use of personnel in business operations.

• Many organisations have gone beyond these traditional functions and have

developed personnel information systems, which also support (i) recruitment,

selection and hiring (ii) job placement, (iii) performance appraisals, (iv) employee

benefit analysis, (v) training and development and (vi) health, safety and security.

Such information system support the concept of human resource management

(HRM). The effective and efficient use of the human resources of a company.

• The personnel system should be organised on functional basis. It should have the

following information sub-systems to increase the operational efficiency of

personnel management.

1. Recruitment :

C Properly managed recruitment sub-system may forecast personnel needs

and skills required for recruiting personnel at the proper time to meet

organisational manpower needs.

C Such a sub-system may not only furnish information concerning skills

required for company programmes and processes but also maintains the

inventory of skills available within the organisation.

2. Placement :

C This sub-system is concerned with the task of matching the available

persons with the requirements.

C A good placement sub-system makes use of latest behavioral tools and

techniques.

C It ensures that the capabilities of people are identified before being

matched with properly organised work requirements.

3. Training and development :

• As technological changes and demands for new skills accelerate, many

companies find that they must develop much of their requirements from

internal sources.

• In addition, a large part of the workforce must constantly be updated in

new techniques and developments. This task is the function of the

training and development sub-system.


4. Compensation :

• This sub-system is concerned with the task of determining pay and other

benefits for the workers of the concern.

• It makes use of traditional payroll and other financial records, government

reports and unions expectation before arriving at the final figures of pay

and other benefits for each category of workers.

5. Maintenance :

• This sub-system is designed to ensure that personnel policies and

procedures are achieved.

• It may be extended to the operation of systems of control work standards

which are required to measure performance against financial plans or

other programmes, and the many subsidiary records normally associated

with the collection, maintenance and dissemination of personnel data.

6. Health & Safety :

• This sub-system is concerned with the health of personnel and the safety

of jobs in the organisation.

2001 - May [1] {C} (a) Discuss the various factors on which the information requirement

of executives depend. (10 marks)

Answer :

System analysts develop different categories of information system to meet the various

business need

1. Transaction Processing System (TPS)

2. Management Information System (MIS)

3. Decision Information System (DSS)

4. Executive Information System (EIS)

5. Expert System (ES)

Brief discussion of these systems are :-

1. Transaction Processing Systems :

• Transaction Processing systems are aimed at expediting and improving the

routine business activities that all organizations engage.

• Standard operating procedures, which facilitate handling of transactions are

often embedded in computer programs that control the entry of data,

processing of details and presentation of data and information.


• The high volume of well-understood transactions associated with the operativelevel of an organisation as well as the ability of the managers to developspecific procedures for handling them often trigger the need for computerassistance.

• Transaction processing systems, if computerized, provide speed and accuracyand can be programmed to follow routines without any variance.

2. Management Information System :• Management Information Systems assist managers in decision-making and

problem solving.• MIS use results produced by the transaction processing systems, but they

may also use other information. In any organization, decisions must be madeon many issues that recur regularly and require a certain amount ofinformation.

• The manager can identify the information that will be needed for decision-making. In turn, the information systems can be developed so that reports canbe prepared regularly to support these recurring decisions.

3. Decision Support Systems :• DSS aim at assisting managers who are faced with unique(non-recurring)

decision problems.• They are of much more use when the decisions are of an unstructured or

semi-structured nature. In this situation, the problem area is modeled andvarious alternatives are explored. In its simplest form, the spreadsheet couldbe considered as a decision-support system.

• Models can also be built using formulae and variables can be changed to seewhat would be the outcome. Purpose-built decision support systems usuallyincorporate more sophisticated modeling using statistical techniques such aslinear programming, regression analysis, time series analysis etc.

• These decision-support systems are an integrated piece of softwareincorporating database, model base, and user interface. While the decision-support system can be of use at the tactical level, it is the strategic level thatcould make best use of it.

4. Executive Information Systems :• EIS are designed primarily for the strategic level of management. They enable

executives to extract summary data from the database and model complexproblems without the need to learn complex query languages, enter formulae,use complex statistics, or have high computing skills.

• These systems are easy to use, incorporating touch screens in someinstances, and being graphic based. High level summary data and trendanalysis is provided at the touch of a button, using graphics as a way ofpresenting the information.

• There are standard templates for doing these, the executives need notconstruct the query or model.


5. Expert Systems :

• Expert systems are designed to replace the need for a human expert. They

are particularly important where expertise is scarce and therefore expensive.

• This is a software that expresses knowledge in terms of facts and rules.

• This knowledge will be in a specific area, and therefore expert systems are not

general as are most decision support systems that can be applied to most

scenarios.

• Expert systems have arisen largely from academic research into artificial

intelligence.

• The expert systems are developed using very different programming

languages such as PROLOG. These systems are of greater use in the tactical

and strategic level.

2001 - May [2] (b) What is an Executive Information System (EIS)? Discuss its various

characteristics. (5 marks)

Answer :

Executive Information System :

• EIS is a tool that is designed to meet the special needs of top-level managers.

• EIS provides direct on-line access to relevant information in a useful and navigable

format. Relevant information is timely, accurate, and actionable about aspects of

a business that are of particular interest to the senior manager.

• The useful and navigable format of the system means that it is specifically

designed to be used by individuals with limited time, limited keyboarding skills, and

little direct experience with computers.

• An EIS is easy to navigate so that managers can identify broad strategic issues,

and then explore the information to find the root causes of those issues.

• EIS is mainly an advancement of MIS but it can include the Decision Support

System (DSS).

Characteristics of EIS :

1. An Executive Information System (EIS) is a tool that provides direct on-line access

to relevant information in a useful and navigable format.

2. EIS is a computer based information system that serves the information need of top

executives.


3. EIS enables users to extract summary data and model complex problems without

the need to learn query languages, statistical formulas or high computing skills.

4. EIS is very user friendly, supported by graphics and exception reporting and drill

down capabilities.

5. EIS provides rapid access to timely information and direct access to management

reports.

6. EIS is capable of accessing both internal data and external data.

7. EIS is easily connected to Internet (with online information services and e-mail)

8. EIS provides extensive online analysis tool like trend analysis, market conditions

etc.

9. EIS can easily be given a DSS support for decision making.

EIS is easy to navigate so that managers can identify broad strategic issues, and

then explore the information to find the root causes of those issues.

2001 - Nov [1] {C} (a) What are different categories of Information Systems? Explain

each one of them briefly. (10 marks)

Answer :

Please refer 2001 - May [2] (b) on page no. 34

2002 - May [1] {C} (a) Discuss various constraints that come in the way of operating an

effective M.I.S. How these constraints could be avoided? (10 marks)

Answer :

Major constraints which come in the way of operating an information system are the

following. The measure to overcome them are also mentioned.

Constraint Remedy

1. Lack of awareness : Middle level

managers may not be aware of the

benefits and advantages of using the

MIS. They are continue to complain

about the luck of information rather

then using the MIS

Management staff should be properly

educated about the advantages of using

the MIS.

2. Non-availability of experts : Non-

availability of experts, who can

diagnose the objectives of the

organisation and provide a desired

direction for installing and operating

system.

This problem may be overcome by

grooming internal staff. The grooming of

staff should be preceded by proper

selection and training.


3. Selection of Sub-system : Experts

usually face the problem of selecting

the sub-system of MIS to be installed

and operated upon.

Install proper criteria, which should guide

the experts here, may be the need and

importance of a function for which MIS

can be installed first.

4. High Turnover of Experts : Such

problems generally arises due to

factors like. Salary, possibilities of

promotion, future growth, Top

management’s behaviour.

It can be reduced by establishing better

working conditions and providing

appropriate benefit and paying at least at

par with other similar concerns.

5. Non- standard approach : Due to

varied objectives of business

concerns, the approach adopted by

experts for designing and implemen-

ting MIS is a non-standardised one.

Though in this regard nothing can be done

at the initial stage but by and by

standardisation may be arrived at, for the

organisation in the same industry.

6. Non-cooperation of staff : Non-

availability of cooperation from staff

in fact is a crucial problem in the

operation of an effective MIS.

It should be handled tactfully. Educating

the staff may solve this problem. This task

should be carried out by organising

lectures, showing films and also exp-

laining to them the utility of the system.

Besides this, some persons should also

be involved in the development and

implementation of the system.

7. Quantification of benefits: Difficulty

in quantifying the benefits of MIS, so

that it can be easily comparable with

cost this raises questions by

departmental managers about the

utility of MIS. They forget that MIS is

a tool, which is essential to fight out

competition and the state of uncer-

tainty that surrounds business today.

Manager should be educated that MIS is

a tool, which is essential to fight out

competi t ion and the state of

environmental.

2002 - Nov [2] (a) Differentiate among Strategic, Tactical and Operational categories

of Information required for different levels of Managerial decision-making. (8 marks)

(b) In what ways does an Executive Information system differ from the Traditional

Information system? (12 marks)

Answer :


(a) Different level of information required for different level of managerial decision-

making are :

1. Strategic-level information :

• Strategic-level information systems help senior management to tackle

and address strategic issues and long-term trends, both within the firm

and external environment.

• Their principal concern is matching changes in the external environment

with existing organisational capability - What will be the cost-trends,

where will our firm fit in, what products should be made etc?

• In other words, these systems are designed to provide top-management

with information that assists them in making long-range planning

decisions for the organizastion.

2. Tactical - level information :

• Tactical -level information systems serve middle level managers and help

in taking decisions for a period of 2-3 years.

• The managers are typically concerned with planning, controlling and use

summaries of transactions to aid their decision-making. In other words,

these systems provide middle-level managers with the information they

need to monitor and control operations and to allocate resources more

effectively.

• In tactical systems, transactions data are summarized, aggregated, or

analysed.

• Their purpose is not to support the execution of operational tasks but to

help the manager control these operations.

3. Operational-level information :

• Operational-level information systems are typically transaction processing

systems and help in the operational level managers to keep track of

elementary activities and transactions of the organisations such as sales,

receipts, cash deposits, flow of materials etc.

• Their purpose is to answer routine questions and to track flow of

transactions.

• Thus, the primary concern of these systems is to collect, validate, and

record transactional data describing the acquisition or disbursement of

corporate resources.

Thus, each type of information system serves the requirements of a

particular level in the organisation, providing the needed basis for decision

making.


DECISION TYPES

Unstructured

(Strategic Planning

Decision)

Semi-structured

(Management

Control

Decision)

Structured

(Operational Control

Decision)

INFORMATION

NEEDS

External,

Summarized,

Wide Scope,

Unstructured,

Ad hoc.

Internal

Detailed,

Narrow Focus,

Scheduled,

Routine

Above diagram comprehensively shows, various aspects of Information System and

Management’s information needs.

Difference between Strategic, Tactical and Operational categories of information

required for different level of managerial decision making :

Levels of

Management

Strategic Level Tactical Level Operating Level

Decision

makers

Top Management/

Board of Directors

Middle Level

management

Supervisors, foremen,

operating manage-

ment

Responsibilities Defining objectives,

Policies for whole

o r g , l o n g - t e r m

planning, Large scale

investment decisions,

Appointment of middle

management

Establ ishment and

monitoring of budgets,

Acquisition of resources,

developing operational

policies, and objectives,

Appointing staff

E f fect ive use o f

existing facilities and

re s o u rc e s w i t h i n

budget constraints and

prescribed objectives,

and Making routine

day-to-day decisions

Decision

Types

Un-Structured Using

Qu a n t i ta t i v e a n d

Qualitative Information

Decision Flow between

top management and

low level management

S t ruc tu red Us ing

Largely Quantitative

Data

Planning Range Extensive Planning Flow between

top management and


Narrow

Breadth

of Control

Extensive Control Flow between

top management and


Narrow


Type of External

Information

Required

• Market and

economic

forecasts, political

and social trends,

legislative,

technological

constrains and

opportunities.

• Exceptional reports,

Ratio Analysis,

Cash/ Fund Flows

Project status

report.

• Costs and sales

analyses,

performance

measures,

• Summaries of

operations/Productio

n, budget/ actual

comparisons etc.

• Not much

information

required from

external source

• Sales orders, prod

uction

requirements,

customer credit

status, deliveries,

dispatches etc.

Decision

Examples

Mergers and

acquisitions, New

product planning,

Capital investments,

Financial structuring.

Pricing, capacity

planning, Budget

preparation,

Purchasing contracts.

Production scheduling

Maintenance,

Reordering Credit

approval.

(b) An Executive Information System is a tool that provides direct on-line access to

relevant information in a timely manner, accurate, and actionable information about

aspects of a business that are of particular interest to the senior manager. Where

as Traditional Information System can be considered as a set of elements (people,

procedures and resources) that provides effective information for decision making

and/or control of some functionalities of an organisation.

Distinction between Executive Information Systems and traditional information

systems

Basis Executive Information

System

Traditional systems

Purpose Tailored to meet executive’s

information needs

General purpose systems

Assessment of

data

Issue/problem specific data

access and aggregation

Aggregation and data access is

open

Tool On-line analysis tools including

trends analysis and exception

reporting

Basic query processing tools

Scope of data

analysis

Access to both internal and

external data

Access to only internal data


User Interface User interface is either mouse

or touch-screen driven

User interface was keyboard driven

Complexity Ease of use by executives

without assistance

Executives need IT department

assistance

Presentation (i) Information presented by

pictorial or graphical means

(ii) Information is presented in

summary format, e.g sales

for the whole company.

There is facility to ‘drill

down’ to other levels of

information to see how the

sale figure were arrived at -

by geographical location, by

product group etc. (although

individual transactions are

not usually available). T the

ability to manipulate data, to

project what data, to project

what if outcomes and to

work with modeling tools

within the system are also

evident in EIS

(i) Information presented as two-

dimension tables

(ii) Data aggregation on predeter-

mined level of detail, change

requires programming skills

and design by a separate IT

department.

2002 - Nov [4] (c) What systems interfaces are involved in Production Planning?

(4 marks)

Answer :

In order to understand the system interfaces in Production Planning, we study it in

various steps.


1. Production Planning :

• Under “Cost Estimation System”, a customer order is received by a firm after

a customer has accepted an estimate of the cost of a job.

• The cost estimation system provides with manufacturing cost estimates based

on enquiries received from potential customers.

• Cost estimates are primary input when determining a price that will be quoted

to a customer.

• When an order is received, the cost estimation system forwards the budgeted

costs to the production scheduling system.

• Interfaces between the cost estimation system and other systems are shown

in figure. No functions within the cost estimation system result in general

ledger entries.

2. System interfaces :

• After the order is received, materials, machine time and labour requirements

for the job are then estimated and costed using standard costs.

• Overhead costs are also estimated and the job cost estimate is then returned

to the system. This estimate serves as the basis for the selling price that are

quoted to the customer.


3. Files and inputs :

• The cost estimation system requires a standard cost file, in which standard

costs are maintained for each labour, material and machine classification as

well as for standard manufacturing operations. These costs are used for

preparing manufacturing cost estimates.

• The standard cost are updated based upon the information provided by the

budgeting system.

• The file on bill of materials contains the description of all materials required to

produce each product. The file also contains a list of approved vendors.

4. Reports :

• The cost estimation system can prepare manufacturing cost estimation reports

for each job and performance measurement report which shows “the various

cost estimation reports used in processing it and the number of orders

received”.

• The estimated cost and actual cost are compared for each cost classification.

This enables over or underestimation to be identified.

2003 - May [2] (a) Discuss the effect of applying computer technology to Management

Information system. (10 marks)

(b) Explain the concept of decomposition with the help of an example. (10 marks)

Answer :

(a) Effects/ Benefits of using computer for management information system (MIS) can

be describe as follows :

1. Provides More comprehensive information : The use of computer for MIS,

enabled systems expert to provide more comprehensive information to

executives on business matters.

2. Increases the effectiveness of information system :

• Information received in time is of immense value and importance to a

concern.

• Prior to the use of computer technology for information purposes, it was

difficult to provide the relevant information to business executives in time

even after incurring huge expenses.

• The use of computer technology has overcome this problem. Now, it is

not difficult to provide timely, accurate and desired information for the

purpose of decision making.

3. Speed of processing and retrieval of data increases :

• In present scenario business are characterised by high degree of

complexity, keen competition and high risk and reward factors.

• This invariable calls for systems capable of providing relevant information

with minimum loss of time.


• Manual systems, howsoever well organised, often fail to match thedemand for information for decision making.

• Computers with their unbelievably fast computational capability andsystematic storage of information with random access facility haveemerged as an answer to the problems faced in modern daysmanagement.

4. Increases the Scope of analysis :• The use of computer can provide multiple type of information accurately

and in no time to decision makers. Such information equips an executiveto carry out a thorough analysis of the problems and to arrive at the finaldecision.

• Computer is capable of providing various types of sales reports forexample; area wise sales commission of each salesman, product-wisesales, etc.

• These reports are quite useful in analysing the sales department workingand to ascertain their weaknesses so that adequate measures may betaken in time.

• In this way, use of computer has increases the scope of analysis.

5. Scope of use information system has expanded :• The importance and utility of information system in business

organisations was realised by most of the concerns, specially after theinduction of computers for MIS development.

• System experts in business organisations developed areas and functionswhere computerised MIS could be used to improve the working of theconcern.

• This type of applications hitherto are not feasible under the manualsystem.

6. Complexity of system design and operation increased :• The need of highly processed an sophisticated information based on

multitudes of variables has made the designing of the system quitecomplex. During the initial years, after the induction of computer for MISdevelopment, systems experts faced problems in designing systems andtheir operations.

• The reason at that time was the non-availability of experts required for thepurpose. But these days the situation is better. The computermanufacturers have developed some important software to help theirusers.

• Some private agencies are also there who can perform the task ofdeveloping programs, to cater to the specialised needs of theircustomers, either on consultancy basis or on contract.


7. Integrates the working of different information sub-systems :

• A suitable structure of management information system may be a

federation of information sub-system, viz. production, material, marketing,

finance, engineering and personnel.

• Each of these sub-systems are required to provide information to support

operational control, management control and strategic planning.

• Such information may be made available from a common-data-base. This

common data base may meet out the information requirements of

different information sub-system by utillising the services of computers for

storing, processing, analysing and providing such information as and

when required.

• In this way computer technology is useful for integrating the day-to-day

working of different information sub system.

(b) Decomposition :

• A complex system is difficult to comprehend when considered as a whole.

Therefore the system is decomposed or factored into subsystems.

• The boundaries and interfaces are defined, so that the sum of the subsystems

constitutes the entire system.

• This process of decomposition is continued with subsystems divided into

smaller subsystems until the smallest subsystems are of managable size.

• The subsystems resulting from this process generally form hierarchical

structures. In the hierarchy, a subsystem is one element of supra-system (the

system above it)


An example of decomposition is the factoring of an information processing

system into subsystems. One approach to decomposition might proceed as

follows :

1. Information system divided into subsystem such as :

(a) Sales and order entry.

(b) Inventory.

(c) Planning.

(d) Purchasing.

(e) Production.

(f) Personnel and payroll.

(g) Accounting and control.

(h) Environmental intelligence.

2. Each subsystem is divided further into subsystems. e.g. the personnel and payroll

subsystem might be divided into the following smaller subsystems:

(a) Creation validation and updation of personnel pay-roll records.

(b) Personnel reports.

(c) Personnel on Payroll data entry and validation.

(d) Hourly payroll processing.

(e) Incentive Salaried payroll processing.

(f) Payroll reports for management.

(g) Payroll reports for concerned government departments.

3. • If the task is to design and program a new system, the subsystems (major

applications) defined as above, might be further subdivided into smaller

subsystems or modules.

• The hourly payroll processing subsystem might be factored into modules for

the calculation of deductions and net pay, payroll register and audit controls

preparation, cheque printing, and register and controls output.

• Decomposition into subsystems is used to analyse an existing system and to

design and implement a new system.


• In both cases, the investigator or designer must decide how to factor, i.e.,

where to draw the boundaries. The decisions will depend on the objectives of

the decomposition and also on individual differences among designers: the

latter should be minimized.

• The general principle in decomposition, which assumes that system objectives

dictate the process, is functional cohesion. Components are considered to be

part of the same subsystem if they perform or are related to the same function.

• As an example, an application program to be divided into modules

(subsystems) will divide along major program functions such as accumulating

hours worked, calculating deductions, printing a cheque, etc. in design, the

identification of functionally cohesive subsystems is the first step. The

boundary then needs to be clearly specified, interfaces simplified, and

appropriate connections established among the subsystems.

2003 - May [3] (b) Discuss various benefits which are attained by implementing a

computerised model for making decision. (10 marks)

Answer :

• Effective decision making process in the global scenario can not be possible

without effective use of Management Information System (MIS).

• A computerized model may incorporate accounting, production, transportation,

manufacturing and marketing operations of the company. Such model allow a

decision maker to consider a large number of factors in decision-making process,

which was not possible in manual system.

• This highlights the need to reduce skepticism that managers have toward

sophisticated computerized decision making aids.

• This type of model puts pertinent information into a analytical framework that aids

the management decision making process.

Some of the benefits offered by computerized model for decision-making are:

Benefits Explanations

1. Providing

Prompt

Information.

Manager must deal immediately with many day-today

business problems, as well as plan and control their

operations. Managers require different information for the

various kinds of decisions they must make. Computerised

model provides reports on variances, cost-volume-profit

analysis, etc to help managers in decision-making.


2. Helps in Data

Analysis

Computerised models provide managers with data to which

ratios and analysis tools may be applied. They provide

management with a variety of measures of the soundness of

the organization and make it possible to explore ways of

improving the organization’s financial condition.

3. Helps in For

casting

Computerised models make a fairly accurate forecasts that will

affect the organization performance in the future. Forecasting

the financial health of the organization through long-range

budget estimates, provides managers with opportunities to

consider actions that will help the organization survive bad

times or take advantage of a future environment.

4. Helps in

variance

analysis

Compterised models permit managers in tracing variances ie.

actual revenues and expenses and compare these amounts to

expected revenues and expenses and compare these amounts

to expected revenues and expenses. Comparison of budget

data against such standards allow managers to assess how

they use their resources to achieve their goals.

5. Facilitates

cash-

management

The models also estimate the amount of cash that will be

received and spent each month i.e. in which months there will

be excess funds that might be put to use and in which month

there will be insufficient funds. Thus, the information supplied

helps managers to make decisions about investment,

purchasing and borrowing money. The models also help in

tracking cash balances on a day-to-day basis and help the

managers in their investment decisions so as to maximize

organization income.

6. Providing data

base & its

Interface

Computerized models are highly useful for carrying out

analysis of historical data speedily, which may be quite difficult

or even impossible manually for forecasting the future.

2003 - Nov [2] (a) Explain the role played by Financial Information System in making

financial decisions. (8 marks)

(b) (i) Describe briefly three levels of Management. (3 marks)

(ii) Mention atleast two pieces of information — one internal and one external —

required at every one of the levels of Management. (6 marks)

(iii) Discuss the potential impact of computers and MIS at the top level of

Management. (3 marks)


Answer :

(a) Firstly, we try to understand the meaning and scope of Financial Decision Making.

Role of Financial Information System in making Financial Decision

Roles Explanations

1. Estimation of requ-

irements of funds :

• This is the very important and starting point of making

financial decisions.

• A very careful estimation of funds and the time at

which these funds are required is made in this stage.

• This can be done by forecasting all physical activities

of the firm and translating them into monetary units.

2. Capital budgeting

decisions:

• Funds procured from various sources are required to

be invested in different assets.

• With the help of capital budgeting, decision maker

can determine feasibility of investment in long-term

assets. This will help in attainment of financial

objectives.

3. Capital structure

decisions :

• Decisions are to be taken to select an optimum mix

of different sources of capital structure. There are

many options available for procuring funds.


• Decision maker has to decide the ratio between debt

and equity, long-term and short-term funds etc.

• He has to ensure that overall capital structure is such

that the company is able to procure funds at optimum

cost.

4. Working capital

management :

• Working capital management is concerned with the

investment of long term funds into current assets.

• Decisions are to be taken for effective financing of

current assets required for day-to-day running of the

organization.

5. Current assets ma-

nagement :

• Policy decisions are taken regarding various items of

current assets. Credit policy determines the amount

of sundry debtors at any point of time.

• Inventory policy is to be determined jointly between

finance and production department.

6. Tax management : • Tax planning is aimed at reducing of outflow of cash

resources by way of taxes so that the same may be

effectively utilized for the benefit of business.

• The purpose of tax planning is to take full advantage

of exemptions, deductions, concessions, rebates,

allowances and other relief.

7. Profit planning : • This part of profit planning is essential for the growth

of the organization.

• The decisions maker has to make decision regarding

profits and dividends.

• He has to ensure adequate surplus in future for

growth and distribution of dividends.

(b)

(i) Three levels of management are briefly discuss below :

Level & Management Explanation

1. Top level

Management

(Strategic level)

• Strategic level is defined as set of management

positions that is concerned with developing of

organisational missions, objectives and strategies,

directing and managing the organization in an integrated

manner.


• Decisions made at this level of organization to handle

problems critical to the survival and success of the

organization are called strategic decisions.

• Strategic level also establishes a budget framework

under which the various departments will operate.

2. Middle Level

Management

(Tactical Level)

• Tactical level lies in the middle of managerial hierarchy.

At this level, managers plan, organize, lead and control

the activities of other managers.

• Decisions made at this level, called the tactical

decisions, are made to implement strategic decisions.

• Tactical decisions are relatively short, step-like spot

solutions to breakdown strategic decisions into

implementable packages.

3. Supervisory

level

Management

(Ope-rating

Level)

• Operating Level is the lowest level in managerial

hierarchy. The managers at this level coordinate the

work of others who are not themselves managers.

• At supervisory level, managers are responsible for

routine, day-to-day decisions and activities of the

organisation which do not require much judgement

discretion.

• They ensure that specific tasks are carried out

effectively and efficiently.

Characteristic of different Levels of management :

Sl.

No.

Characteristic Top Management Middle

Management

Operating

Management

1 Focus of

Planning

Very heavy Heavy Moderate

Minimum

2 Focus on

Control

Moderate Heavy Heavy

3 Scope of

activity

Extremely broad Entire functional

area

Single subfunc-

tion or sub-task

4 Time frame One to five years Upto one year Day-to-day


5 Type of

information

Mostly external Internal, more

accurate

Internal historical,

h igh level of

accuracy

6 Nature of

activity

Relatively

unstructured

Moderately

Structured

Highly structured

7 Level of

complexity

Very comp lex

many variables

Less complex

better defined

Straight forward

8 Job

measurement

Difficult Less difficult Relatively easy

9 Mental

attributes

effective

Creative,

administrative

Responsive

innovative

Efficient

Persuasive

10 Number of

people involved

Few Moderate

number

Many

11 Result of

activity

Plan, Policies and

Strategies

Implementation

schedules,

performance,

yardsticks

End product

12 Department/

divisional

inter action

Intra-division Intra-department Inter- department

(ii) Management at different levels takes decision matching to their position orhierarchy in the organisation. And different types of information systems aredesigned and developed for them i.e. an information system for a marketingmanager will have different characteristics then information system for a managingdirector.

Types of InformationGenerally information requirement at various levels of management can be dividedinto two broad categories.

1. External Information : This information is obtained from outside the organizationboundary, or we can say this information is related with the environment oforganization, in which organization operate. The environment information primarilyincludes the followings:

Environment Information :

• Government Policies: Information about concessions, benefits, restrictionsof government policies in respect of tax concessions or any other aspects,which may be useful to the organization in the future period.


• Major factors of production: Information related with source, cost, location,availability, accessibility and productivity of the major factors of production viz.(i) labour (ii) materials and parts, and (iii) capital.

• Technological environment : Forecast of any technological changes in theindustry and the probable effect of it on the firm.

• Economic Trends : It includes information relating to economic indicates likeconsumer disposal income, environment, productivity, capital investment etc.such information is valuable for those firms, especially, where output is afunction of these important variables.

2. Internal Information : This information is part of internal functioning oforganization, and this generated form various internal functional areas oforganization; like Marketing, Production, and Finance, etc.


(iii) Please refer 2003 - May [2] (a) on page no. 42

2004 - May [2] (c) Explain three broad categories of the planning information

requirements of executives. (10 marks)

Answer :

Please refer 2003 - Nov [2] (b) (ii) on page no. 47

2004 - May [5] (a) "The Personnel information system is the backbone of any

organisation." Explain. (2 marks)

(b) Discuss various sub-systems of PIS, which are responsible to increase its

operational efficiency. (6 marks)

Answer :

(a) Please refer 2000 - Nov [1] {C} (a) on page no. 30

(b) • The personnel information system deals with the flow of information about

people working in the organisation as well as future personnel needs.

• In most of the organisations, the system is concerned primarily with the six

basic sub-systems of the personnel function.

1. Recruitment.

2. Placement.

3. Training.

4. Compensation.

5. Maintenance and

6. Health and safety.

• It is generally accepted that the personnel function is one of the least

computerised of all the functions. Automated system may not be necessary

for small, but large business firms are realising that computer based personnel

information systems are necessary for increasing the operational efficiency of

personnel management.

• The personnel system should be organised on functional basis. It should have

the following information sub-systems to increase the operational efficiency

of personnel management.

1. Recruitment • Properly managed recruitment sub-system may forecast

personnel needs and skills required for recruiting

personnel at the proper time to meet organisational

manpower needs.

• Such a sub-system may not only furnish information

concerning skills required for company programmes and

processes but also maintains the inventory of skills

available within the organisation


2. Placement • This sub-system is concerned with the task of matching

the available persons with the requirements.

• A good placement sub-system makes use of latest

behavioral tools and techniques.

• It ensures that the capabilities of people are identified

before being matched with properly organised work

requirements.

3. Training and

development

• As technological changes and demands for new skills

accelerate, many componies find that they must develop

much of their requirements from internal sources.

• In addition, a large part of the workforce must constantly

be updated in new techniques and developments.

• This task is the function of the training and development

sub-system.

4. Compensation • This sub-system is concerned with the task of

determining pay and other benefits for the workers of the

concern.

• It makes use of traditional payroll and other financial

records, government reports and unions expectation

before arriving at the final figures of pay and other

benefits for each category of workers.

5. Maintenance • This sub-system is designed to ensure that personnel

policies and procedures are achieved.

• It may be extended to the operation of systems of control

work standards which are required to measure

performance against financial plans or other

programmes, and the many subsidiary records normally

associated with the collection, maintenance and

dissemination of personnel data.

6. Health & Safety • This sub-system is concerned with the health of

personnel and the safety of jobs in the organisation.

2004 - Nov [2] (a) What are the production information requirements of a GM(Production and Operations Management) with regard to production planning andcontrol? (10 marks)

(b) What are the variables that the top management should consider duringnegotiation with the labour unions? (5 marks)


(c) Successful executives take decisions relying more on intuition than on anyquantitative analytical decision technique. Mention five characteristics of the typesof information that are responsible for this phenomenon in executive decision-making. (5 marks)

Answer :

(a) The production planning and control system involves two main procedures.

1. The specification of materials and operations requirements and production

scheduling. The information requirements of a GM for the materials and

operations phase of any organisation are as stated below:

(i) Firm’s policy with regard to production of various products.

(ii) Sales order, sales forecast, stock position, order backlog.

(iii) Available labour force with their capabilities.

(iv) Standards of labour time, material, machine time and overhead cost etc.

(v) Schedule of meeting the sales orders, region-wise, territory-wise etc.

(vi) Quality norms for materials to be used and for the finished products.

(vii) Break-up of the jobs and their resource requirements.

2. Planning the specific time at which product items should be manufactured is

known as production scheduling. The information is required by the

production-scheduling department so as to meet the following objectives :

(i) To determine the stages of production in sequential and rational order ;

(ii) To minimise the idle time on the part of the operators and equipments;

(iii) To assess the extent of need for subcontracting to outside parties;

(iv) To ensure that completion dates and target dates of completing the

production plan are met fully; and

(v) To study alternative methods to performing the activities so that time

taken to perform can be further reduced.

(b) In big or meddle level of organisation, generally labours are unionized.

Unionized organisations usually have strict regulations regarding such items as

pay scales, hiring and firing, promotions and working conditions. Management has

choice of trade - offs on the following variables during negotiations with the labour

unions

(i) Wage raise

(ii) Paid holidays

(iii) Contribution to employees, insurance and pension plan

(iv) Overtime premiums.

Cost accountants/payroll accountants would be in the best position to make

various estimates for the cost implication of trade off.


(c) • Top executives are generally rely much more on their own intuition, gut

feelings and past experience rather than on sophisticated analytical skills.

• The type of decisions that the executives must make is broad. Often,

executives make these decisions based on a vision they have regarding what

it will take to make their companies successful.

• The intuitive character of executive decision-making is reflected strongly in the

types of information found most useful to executives.

Five characteristics of the types of information used in executive decision-

making are as follows:-

Characteristics Used in executive decisions

1. Low level of detail Most important executive decisions are made by

observing broad trends. This requires the executive to be

more aware of the large overviews than the tiny items.

Even so, many executives insist that the answers to some

questions can only be found by mucking through details.

2 High degree of

uncertainty

Executives work in a decision space that is often

characterized by lack of precedent.

3 Lack of structure Many of the decisions made by executives are relatively

unstructured. For instance, what general direction should

the company take? Or what type of advertising campaign

will best promote the new product line? These types of

decisions are not so clear-cut as deciding how to debut a

computer program or how to deal with an overdue

account balance. Also, it is not always obvious which data

are required or how to weigh available data when

reaching at a decision.

4 Future orientation Strategic-planning decisions are made in order to shape

future events. As conditions change, organisations must

also change. It is the executive’s responsibility to make

sure that the organisation keeps pointed toward the

future. Some key questions about the future include: “

How will future technologies affect what the company is

currently doing? Where will the economy move next, and

how might that affect consumer buying patterns? As one

can see, the answers to all of these questions about the


future external environment are vital.

5 Informal source Executives rely heavily on informal source for key

information. For example. Lunch with a colleague in

another firm might reveal some important competitor

strategies. Some other important information sources of

information are meetings, tours around the company’s

facilities to chat with employees, brainstorming with a

trusted colleague or two, and social events. Informal

sources such as television might also feature news of

momentous concerns to the executives.

2005 - May [2] (b) "A decision support system supports the human decision-making

process rather than providing a means to replace it". Justify the above statement by

stating the characteristics of decision support system. (5 marks)

(c) Describe the main pre-requisites of a Management Information System which

makes it an effective tool. (5 marks)

Answer :

(b) • Decision Support System are an application of Herbert Simon Model. The

model has three phases, viz. Intelligence, Design and Choice.

• The decision support system basically helps the information system in the

intelligence phase where the objective is to identify the problem and then go

to the design phase for solution. The choice of selection criterion varies from

problem to problem.

• It is, therefore, required to go through these phases again and again till a

satisfactory solution is found. In the use of three phase cycle, you may use

either inquiry, analysis, and models or accounting system to come to a rational

solution.

• The decision support system helps in making a decision and also in its

performance evaluation. These systems can be used to validate the decision

by performing sensitivity analysis on various parameters of the problem.

• The decision support system refers to a class of system which support in the

process of decision making and does not always give a decision itself. The

nature of the decision is such that the decision makers need a variety of

information, when same or similar types of decisions are to be made.

• These needs are such that wider additional demands on information would be

made, the moment a piece of information is received. The calls on the

information are continuously made till the decision maker is fully satisfied.


• The reason for changing the demands is also because the methods of

decision making undergo a change from time to time.

• The quantum and the scope of information also changes depending upon the

risk in decision making. The higher the risk, more information may be sought.

• A decision support system (DSS) can be defined as a system that provides

tools to managers to assist them in solving semi structured and unstructured

problems in their own, somewhat personalised, way.

• Often, some type of modeling environment perhaps a very simple environment

such as the one accompanying a spreadsheet package- is involved. A DSS

is not intended to make decisions for managers, but rather to provide

managers with a set of capabilities that enables them to generate the

information required by them in making decisions.

• In other words, a DSS supports the-human decision-making process rather

than providing a means to replace it.

• Technically, a DSS does not need to involve high technology.

• Systems that replace human decision making - rather than support it - are

sometimes called programmed decision systems. These systems are used to

make routing, structured decisions, such as approving loans or credit,

reordering inventory, triggering reminder notices, and selecting audit samples.

In programmed decision systems, the focus is on doing something more

efficiently. On the other hand in decision support systems, the focus is on

helping decision makers become more effective.

Characteristics of DSS :-

Please refer 2002 - Nov [7] (c) on page no. 16

(c) Please refer 1999 - Nov [1] {C} (a) on page no. 29

2005 - May [4] (a) A Company is planning to introduce a new range of products. The

top management is advised to get developed on marketing information system which

can enhance the decisional capacities in various marketing activities. You being

in-charge of this project suggest what information sale-systems are required to be

developed. (10 marks)

Answer :

Marketing Information System :

• It is aimed at supporting the decision making, reporting and transaction processing

requirements of marketing and sales management.

• It consists of following inter-related information sub-systems to enhance the

decision-making capacities in various marketing activities:


1. Sales • The objective of the sales manager is to coordinate the sales

effort so that the long-term profitability of the company is

maximized.

• Decisions are required in the area of adequate stocks,

effective distribution channels, effective motivation of sales

personnel, promotion of more profitable products or product

lines and good customer relations.

• Information required for analysis and support of sales is as

stated below:

(a) Sales Support - Sales support information system provides

information to sales personnel about the following:

(i) Product descriptions and performance specifications

(ii) Product prices;

(iii) Quantity discounts

(iv) Sales incentives for salespersons

(v) Sales promotions;

(vi) Strengths and weaknesses of competitor’s product;

(vii) Products inventory levels

(viii) The histories of customers relations with the company.

(ix) Sales policies and procedures established by the

company

(x) Buying habits of customers

(b) Sales Analysis -The sales analysis is a major activity in most

companies involved in sales. Its purpose is to provide

information for analysis of

(i) Product sales trends;

(ii) Product profitability on the product-by-product basis;

(iii) The performance of each sales region and sales

branch;

(iv) The performance of respective sales persons.

Information for sales analysis is derived primarily from

the sales order entry system; the majority of information

from actual sales transactions and is contained on

sales invoice. It includes information on product type,

product quality, price, customer identity and type, sales

region and salesperson etc.


2. Market

research and

intelligence

The objective of marketing research is to investigate problems

confronting the other managers in the marketing function. These

problems may involve sales, product development, advertising

and promotion, customer service or general marketing

management needs.

• To satisfy these decision-making and reporting requirements,

the market research department must either periodically or

upon demand gather information from a wide variety of

sources.

• The investigations undertaken by market research helps in

satisfaction of following informational needs of managers.

(i) Information about the economy and economic trends

and the probable impact of these trends on emand for

the product.

(ii) Information about the past sales ; and sales trends for

the entire industry.

(iii) Information about potential new markets for product.

(iv) Information about competitors, its product, strength,

weaknesses, new product plans, strategies and so on.

3. Advertising

and

Promotions

The decision-maker can use the information provided by

marketing research in a number of ways for decision making

process.

The promotion and advertising development devotes its

attention to planning and executing advertising campaign and to

carry out various product promotions. This includes:

(i) Promotion through limited budget.

(ii) Allocating resources in most effective manner.

(iii) Analysing an array of information, sales people, locations,

products, styles, sizes etc.

(iv) Storing information that can be combined with past

experiences of managers.

(v) Establishing a body of knowledge on the respons of market

for each of the several types of promotional activities such

as coupons, contests, trade show;

(vi) Continuously refreshing and modifying the information

base in accordance with rapid changing environment.


4. Product

Develop-

ment and

Planning

• Product development involves analysing a possible

opportunity for a new product and evaluation preferred

specifications and probable market success.

• Often the market research activity initially perceives the

opportunity and passes along information about it to the new

product development group. Alternatively.

(i) Sales persons may be aware of their need for a new

product;

(ii) Customer call reports may help elicit information about

new product needed which may encourage sales

persons to think about new product possibilities.

(iii) Sales analysis system indicates the most desirable

characteristics for the new product.

(iv) Market researchers gather information about the size

and structure of the market place for the product.

The product development department uses all these

information to develop specifications for a new product. Product

planning system provides marketing management with packaging,

promotion, pricing and style recommendations throughout the life

of product.

5. Product

Pricing

System

• Product pricing is a complex managerial activity that is

affected by product cost, customer demand, market

psychology, competitors, prices and various actions taken by

competitors.

• Prices may be determined on a full cost or marginal cost

basis which is usually seen as the starting point in setting

prices.

• Pricing information system almost always utilizes information

about product cost.

• Past sales profitability information is useful to help in

determining how much prices should be adjusted for changes

in cost to ensure that margins are maintained.

6. Customer

Service

• The objective of marketing department is to satisfy customers

with product and customer service.

• To achieve these objectives, management provides

customers with technical assistance and product

maintenance.


• Decisions are required in the area of training of service

personnel, capabilities of equipment and location

facilities to serve customers and assist in the dissemination

of technical information to the customers.

• These decisions must be congruent with the marketing

management strategy regarding customer satisfaction and

service.

2005 - Nov [2] (a) How system approach can be used for solving problems?

(10 marks)

(b) Define the term system stress and system change. (5 marks)

Answer :

(a) • The system approach to management is in fact a way of thinking about

management problems. It visualizes an organization as a group of interacting

and interdependent parts with a purpose.

• Managers are not in a position to deal with individual parts separately sinceaction of one part is going to affect other parts.

• Each problem should be examined in its entirety to the extent possible andeconomically feasible from the point of view of the overall system of which theproblem under consideration is one part.

• Under this approach, a manager should make conscious attempt tounderstand the relationship among various parts of the organization and theirrole in supporting the overall performance of the organization.

• Before solving problem in any financial area, or in any specific sector of theorganization he should understand fully how the overall system would respondto changes in its components parts.

• To solve problems managers must view the organisation as a dynamic wholeand they should anticipate the intended as well as unintended impacts of theirdecisions. By using systems approach management will understand that theydo not solve individual problems. Rather, they intervene in a system ofinterrelated parts and the managerial functions.

• In order to find out a solution for the problem by applying systems approach,we should make use of the following six steps.


1. Defining of the problem: The problem involved here is of inordinate delay

between the receipt of orders and their delivery. This problem affects the vendor

in many ways, e.g., a bad reputation, loss of customers, reduction in profitability

and even stoppage of due payments.

2. Gathering and analyzing data concerning the problem : The problem of delay

in meeting orders, in this case, say, arises due to the following reasons :

(a) Excessive orders in the hand of vendors.

(b) Shortage of power (fall in production due to shortage of power).

3. Identification of alternative solutions : To over-come the stated problem by

system approach, suppose the following two solutions exist.

(a) Refusal of orders, in case the total size of the orders exceeds the plant-

capacity one shift.

(b) To run the plant in double shift, to meet the commitment in time. Any shortfall

in power supply may be met be installing a generator.

4. Evaluation of alternative solution : Out of the two identified solutions under thepreceding step, the second solution say accounts for an overall increase in theprofitability of the concern after off- setting additional cost for the generator producepower. It also helps in retaining customers and growth of the concern.

5. Selection of the best alternative : Under this step, management more closelyexamines the alternatives and puts its stamp on the best possible alternative. Inthis case say the second alternative is finally chosen.

6. Implementation of solution : The implementation of the solution requires thenecessary policy changes. Besides this, the resources required to run the plant indouble shift and installation of a generator also are to be arranged. Finally,appropriate procedures are developed to exercise smooth production and timelysupply to customers, the concerned officers are accordingly instructed.

(c) System stress and system change • Systems whether they be living or artificial systems, organisational systems,

information systems or systems of controls, change because they undergostress.


• A stress is a force transmitted by a system’s supra-system that causes asystem to change, so that the supra-system can better achieve its goals.

• In trying to accommodate the stress, the system may impose stress on itssubsystems and so on.

Types of Stress : There are two type forms of stresses which can be imposed on asystem separately or concurrently.1. A change in the goal set of the system. New goals may be created or old goals

may be eliminated,2. A change in the achievement levels desired for existing goals. The level of desired

achievement may be increased or decreased.e.g., the goal set for a computer system may change if a requirement is imposed bymanagement (the supra-system) for system data to be shared among multiple usersrather than be available only to a single user.

Consequences of Stress : When a supra-system exerts stress on a system, thesystem will change to accommodate the stress, or it will become pathological; that is,it will decay and terminate.

Process of Adaptation : Systems accommodate stress through a charge in form; therecan be structural changes or process changes. e.g., a computer system under stressfor more shareability of data may be changed by the installation of terminals in remotelocations (a structural change). Demands for greater efficiency may be met by changingthe way in which it sorts data (a process change).It is very unlikely that system changes to accommodate stress will be global change toits structure and processes. Instead, those responsible for the change will attempt tolocalize it by confining the adjustment processes to only one or some of its subsystems. 2005 - Nov [3] (a) What is an Executive Information system? Discuss its various

purposes. (10 makes)

Answer :

Executive Information System :

1. Executive Information System is a DSS specifically designed to meet the special

needs of top-level Managers. EIS is a tool that provides direct on-line access to

relevant information in a useful and navigable format.

2. Relevant Information refers to timely, accurate and actionable information about

aspects of a business that are of particular interest to the executives.

3. The useful and navigable format of the system means that it is specifically

designed to be used by individuals with limited time, limited keyboarding skills and

little experience with computers.

4. EIS and ESS : Executive Information System (EIS) is sometimes referred to as

Executive Support System (ESS). The terms EIS and ESS can be used inter-


changeable. The difference between the two is that the ESS incorporates

additional capabilities like e-mail, auto responses, etc.

Advantages of an EIS :

1. Easy Access : Executives can have easy access to corporate data. DSS provides

executives with access to Financial data, Marketing and Sales information, Human


information. Electronic mail, access to external news and databases, Word


business EIS.

2. Easy navigation : An EIS is easy to navigate since Managers can identify broad


issues.





ability to manipulate data, to project ‘what if’ outcomes and to work with modeling



level decisions making is the benefit that balances out the system’s associated

costs.

Various decisions undertaken through EIS :

(a) Strategic Planning involves determining the general, long-range direction of the

Firm. It addresses the general concerns of the Firm. The CEO is ultimately

responsible for the development of strategic plans.

(b) Tactical Planning refers to the ‘how’, ‘when’, ‘where’ and ‘what’ of the issues

involved in carrying out the Strategic Plan. Executives will not normally be

concerned with tactical details, but about general tactics, e.g. the Vice President

(Finance) addresses how the Firm can best achieve a balance between Debt and

Equity financing, the Marketing Vice-President considers which classes of products

should be produced to be successful in the market.

(c) Fire Fighting Activities address the major problems that requires the attentions

of Executive Level Manager, e.g. (i) if Company is involved in a big lawsuit

threatening its financial solvency, (ii) damage to a major facility, (iii) announcement

of an important product by a competitor, (iv) a strike, (v) a sharp reversal of the

economy, etc.


(d) Control : Executive Management also needs to exert some general control over

the Organisation. For example, if a Strategic Plan calls for a 30% increase in

profitability, constructive feedback from departments initiating such action is

required to ensure accomplishment of that objective. Executives should periodically

review key performance data to see how they compare against planned amounts.

Purposes of an EIS :

1. Managerial Learning :

• An EIS serves many purposes. The primary purpose of an Executive

Information System is to support managerial learning about an organization,

its work processes, and its interaction with the external environment.

• Informed managers can ask better questions and make better decisions.

2. Timeliness :

• EIS allows timely access to information. Timely access also influences

learning. When a manager obtains the answer to a question, that answer

typically sparks other related questions in the manager’s mind. If those

questions can be posed immediately, and the next answer retrieved, the

learning cycle continues unbroken.

• Using traditional methods, by the time the answer is produced, the context of

the question may be lost, and the learning cycle will not continue.

3. Management Attention :

• An EIS has a powerful ability to direct management attention to specific areas

of the organization or specific business problems. Some managers see this

as an opportunity to discipline subordinates.

• Sometimes misaligned reporting system can result in inordinate management

attention to things that are not so important. An EIS system can provide

information that is actually important and represents a balanced view of the

organisation’s objectives.

2006 - May [1] {C} (c) Discuss the limitations of the Management Information system.

(5 marks)

Answer :

In present scenario, MIS is only in adolescent stages. The following are the limitation

of MIS :-

1. One slacking sub-system would throw the entire integrated MIS out of gear.

2. The success of MIS hinges on the quality of software for which there is scarcity of

the brainware, i.e., systems analysts, system designers and programmers.

3. Budgeting of MIS is extremely difficult.

4. MIS is not a substitute for effective management. It means that it cannot replace

managerial judgement in making decisions in different functional areas. It is merely


an important tool in the hands of executives for decision-making and problem

solving.

5. MIS is inherently fragile, highly sensitive and requires continuous monitoring.

6. It cannot provide tailor-made information packages suitable for the purpose of

every type of decision made by executives.

7. Its effectiveness decreases due to frequent changes in top management

organisational structure and operational team.

8. Its effectiveness is reduced in those organisations where the culture of hoarding

information and not sharing with others hold.

9. It is less useful for making non-programmed decisions-Such type of decisions are

not of routine type and thus they require information, which may not be available

from existing MIS to executives.

10. It takes into account mainly quantitative factor; thus it ignores the non-quantitative

factors like morale, attitude of members of the organisation, which have an

important bearing on the decision-making process of executives.

11. Quality of the outputs of MIS is basically governed by the quality of inputs and

processes.

12. MIS may not have requisite flexibility to quickly update itself with changing needs

of time, especially in a fast changing and complex environment.

2006 - May [2] (a) What do you mean by Information ? Describe the important

characteristics of information, which makesituse ful to the organisation. (10 marks)

(b) “Information is necessary to executive for performing the function of planning”.

Substantiate the above statement with regard to information requirements of a

marketing system. (5 marks)

(c) Describe various decisions which can be made with the help of Financial

Information system. (5 marks)

Answer :(a)

Definition of Information

• Information is a necessary and vital input in any decision-making process in an

organisation. However, it is not available in ready form; rather it has to be

generated from data which acts as a raw material that needs some processing.

Figure depicts the generation of information.


• Therefore, information in its unprocessed form is called data, which is generated

as a by-product of transactions taking place in the organisation. Information, on the

other hand, is processed data and has an element of surprise.

• Information reduces uncertainty and triggers action.

• Davis and Olson have defined Information as data that has been processed into

a form that is meaningful to the recipient and is of real or perceived value in current

or prospective actions or decisions.

Types of Information

Broadly speaking, information could be classified on the basis of the purpose for which

it is utillised, into three main categories; namely:

(i) Strategic information,

(ii) Tactical information, and

(iii) Operational information.

1. Strategic Information

• Strategic information is required by the managers at the strategic level of

management for the formulation of organisational strategies.

• This relates to long-term planning policies of the organization as a whole. e.g.,

information pertaining to new technologies, new products, competitors, etc.

2. Tactical Information

• Information in this category is used in short-term planning and is of use at

management control level. e.g., for sales analyses and forecasts, production

resource requirements, annual financial statements, etc.

• This type of information is generally based on data arising from current

activities of the organisation.

• However, some of the tactical information, such as competitor information,

may arise from sources external to the organisation.

3. Operational Information

• Operational information applies to short periods which may vary from an hour

to a few days.

• It is generally used by decision-makers at the operational level. It is often

required for taking immediate action. Examples of operational information may

include current stock-in-hand, work-in-progress levels, outstanding orders

from customers, etc.

• The source of such an information is usually current activity data.

Organizational Information (classification of information)

• Information is everywhere in an organization. When addressing a significant

business issue, employees must be able to obtain and analyze all the relevant

information so they can make the best decision possible.


• Organizational information comes at different levels and in different formats and

“granularities.” Information granularity refers to the extent of detail within the

information (fine and detailed or coarse and abstract.

• Employees must be able to correlate the different levels, formats, and granularities

of information when making decision.

• Successfully collecting, compiling, sorting, and finally analyzing information from

multiple level, in varied formats, exhibiting different granularity can provide

tremendous insight into how an organization is performing.

• Taking a hard look at organizational information can yield exciting and unexpected

results such as potential new markets, new ways of reaching customers, and even

new ways of doing business.

Table showing Levels, Formats, and Granularities of Organizational informations

Information

Types

Range Examples

Information

Levels

Individual Individual knowledge, goals, and strategies

Department Departmental goals, revenues, expenses,

processes, and strategies

Enterprise Enterprise wide revenues expenses, processes,

and strategies

Document Letters, memos, faxes, e-mails, reports, marketing

materials, and training materials

Information

Formats

Presentation Product, strategy, process, financial, customer, and

competitor presentations

Spreadsheet Sales, marketing, industry, financial, competitor,

customer, and order spreadsheets

Database Customer, employee, sales, order, supplier, and

manufacturer databases

Information

Granularities

Detail (Fine) Reports for each salesperson, product, and part

Summary Reports for all sales personnel, all products, and all

parts

Aggregate

(Coarse)

Product, strategy, process, financial, customer, and

competitor presentations

After understanding the different levels, formats, and granularities of information,

it is important to look at a few additional characteristics that help determine the value


of information. These characteristics include transactional, analytical, timeliness, and

quality.

The value of Transactional and Analytical Information

• Transactional information encompasses all of the information contained within a

single business process or unit of work, and its primary purpose is to support the

performing of daily operational tasks.

• Examples of transactional information are withdrawing cash from an ATM, making

ah airline reservation, or purchasing stocks.

• Organizations capture and store transactional information in databases, and they

use it when performing operational tasks and repetitive decisions such as

analyzing daily sales reports and production schedules to determine how much

inventory to carry.

• Analytical information encompasses all organizational information, and its primary

purpose is to support the performing of managerial analysis tasks. Analytical

information includes transactional information along with other information such as

market and industry information.

• Examples of analytical information include trends, sales, product statistics, and

future growth projections.

• Analytical information is used when making important ad hoc decisions such as

whether the organization should build a new manufacturing plant or hire additional

sales personnel.

The Value of Timely Information

• The need for timely information can change for each business decision. Some

decisions require weekly or monthly information while other decisions require daily

information.

• Timeliness is an aspect of information that depends on the situation. In some

industries, information that is a few days or weeks old can be relevant while in

other industries information that is a few minutes old can be almost worthless.

The Value of Quality Information

• One of the major International banks operating in India, serves millions of

customers from its many core systems, each with its won database.

• The databases maintain information and provide users with easy access to the

stored information. Unfortunately, the company failed to develop information-

capturing standards, which led to inconsistent organizational information.

• For example, one system had a field to capture e-mail addresses while another

system did not. Duplicate customer information among the different systems was

another major issue, and the company continually found itself sending conflicting

or competing messages to customers from different operations of the bank.


• A customer could also have multiple accounts within the company, one

representing a life insurance policy and one representing a credit card. The Bank

had no way to identify that the two different customer accounts were for the same

customer.

• WFS had to solve its information quality problems immediately if it was to remain

competitive.

• The company purchased NADIS (Name & Address Data Integrity Software), a

software solution that filters customer information, highlighting missing, inaccurate,

and redundant information. Customer service ratings are on the rise for WFS now

that the company can operate its business with a single and comprehensive view

of each one of its customers.

The Five Common Characteristics of High Quality Information

Characteristics of High Quality Information

Accuracy Are all the values correct? For example, is the name spelled

correctly? Is the dollar amount recorded properly?

Completeness Are any of the values missing? For example, is the address

complete including street, city, state, and zip code?

Consistency Is aggregate or summary information in agreement with detailed

information? For example, do all total fields equal the true total of

the individual fields?

Uniqueness Is each transaction, entity, and event represented only once in the

information? For example, are there any duplicate customers?

Timeliness Is the information current with respect to the business requirements?

For example, is information updated weekly, daily or hourly?

The costs of poor information

Using the wrong information can lead to making the wrong decision. Making the wrong

decision can cost time, money, and even reputations. Every business decision is only

as good as the information used to make the decision. Bad information can cause

serious business ramifications such as :

• Inability to accurately track customers, which directly affects strategic initiatives

such as Customer Relationship Management (CRM) and Supply Chain

Management (SCM).

• Difficulty identifying the organization’s most valuable customers.

• Inability to identify selling opportunities and wasted revenue from marketing to

nonexisting customers and nondeliverable mail.

• Difficulty tracking revenue because of inaccurate invoices.


• Inability to build strong relationships with customers - which increases their buyer

power.

The benefits of goods information

High quality information can significantly improve the chances of making a good

decision and directly increase an organization’s bottom line.

The success of the organisation depends on appreciating and leveraging the true value

of timely and high quality information.

(b) The planning information requirements of executives can be categorised into

three broad categories.

1. Environment

information :

It comprises of the following :

(a) Government policies: Information about conc-

essions/benefits, government policies in respect of tax

concessions or any other aspects, which may be useful

to the organisation in the future period.

(b) Factors of production: Information related with

sources, cost, location, availability, accessability

and productivity of the major factors of production viz., (i)

labour, (ii) materials and parts and (iii) capital.

(c) Technological environment: Forecast of any

technology changes in the industry and the

probable effect of it on the firm.

(d) Economic trends: It includes information relating

to economic indicators like consumer disposal income,

employment, productivity, capital investment etc. Such

information is valuable for those firms specially whose

output is a function of these important variables.

2. Competitive

information :

It includes the following information

(a) Industry demand: Demand forecast of the

industry in respect of the product manufactured and in the

area in which the firm would be operating.

(b) Firm demand: Assessment of the firm’s product

demand in the specified market. It also includes an

assessment of firm’s capability to meet firm’s

demand.

(c) The competitive data: Data of competing firms for

forecasting demand and making decision and plans

to achieve the forecast.


3. Internal

information :

It usually includes information concerning organisations (a)

sales forecast, (b) financial plan/budget, (c) supply factors,

and (d) policies, which are vital for subsidiary planning at all

levels in the organisation.

(c) Please refer 2003 - Nov [2] (a) on Page no.47

2006 - May [3] (b) Describe various software tools used in Decision support system.

(5 marks)

Answer :

The tools of decision support systems : The tools of decision support include a

variety of software supporting database query, modeling, data analysis, and display. A

comprehensive tool kit for DSS would include software supporting these application

areas. Examples of software tools falling into these four categories are given in Table

below:

1. Data-based

Software

2. Model Based

Software

3. Statistical

Software

4. Display-Based

Software

(i) MS-ACCESS

(ii) Dbase IV

(iii) FOCUS

(iv) NOMAD II

(v) RAMIS

(vi) FAXPRO

(vii) R : base 5000

(viii) ORACLE

(ix) SQL

(i) EXCEL

(ii) Foresight

(iii) IFPS

(iv) Lotus 1-2-3

(v) Model

(vi) Multiplan

(vii) Omncalc

(i) SAS

(ii) SPSS

(iii) TSAM

(i) Chart Master

(ii) SASGRAPH

(iii) TELLAGRAF

Software tools for decision support systems (DSS)

Database Languages : Tools supporting database query and report generation use

mainframe, minicomputer, and microcomputer-based databases. FOCUS, RAMIS, and

NOMAD II, for example, are mainframe-based languages supporting database query,

report generation, and simple analysis.

Model-Based Decision Support Software : Model-based analysis tools such as

spreadsheet software enable managers to design models that incorporate business

rules and assumptions. Microcomputer-based spreadsheet programs such as

Lotussuits, and, Excel all support model building and "what if ?" types of analysis.

Mainframe-based spreadsheets such as Megacalc and Omnicalc fulfill the same

purpose. Modeling tools like IFPS and Model are designed to support financial modeling

and analysis.


Tools for Statistics and Manipulation : Statistical analysis software such as SAS and

SPSS supports market researchers, operations research analysts, and other

professionals using statistical analysis functions. Because of the need for increased

number crunching" capabilities, this types of software usually runs on mainframe

computers. Microcomputer-based statistical packages are available as well. For

example, the micro-based version of SPSS has about the same capabilities as the

mainframe version, but it is much slower.

Display-Based Decision Support Software : The final category of decision support

software is display-based software. Graphic displays of output generated from MS-Excel

spreadsheets.

Integrated tools : One issue concerning decision support system is the need for

integrated tools. Integrated tools provide the ability to generate, manipulate, and

statistically analyse data within a single software package. Individual tools supporting

isolated decision support functions such as database query or modeling exist, but these

tools are not always integrated with each other.

An integrated tools can transfer data from a spreadsheet into a graphics program

or from a databases into a statistics programs.

2006 - Nov [2] (a) State the factors to be considered for designing an effective

Management Information system. (10 marks)

(b) Enumerate various information which are required for sales support and sales

analysis. (10 marks)

Answer:

(a) Please refer 1999 - Nov [1] {C} (a) on page no. 29

(b) Information requirements for sales support and sales analysis are

enumerated below:

(i) Sales support : A specialized sales support information system must provide

the following information to sales personnel :

1. Products descriptions and performance specifications.

2. Product Prices.

3. Quantity discounts and other product discount information.

4. Sales incentives for salespersons.

5. Sales promotions.

6. Financing plans for customers.

7. The strengths and weaknesses of competitors products.

8. The histories of customers relations with the company.

9. Sales policies and procedures established by the company.

10. Products that have not yet been introduced.

11. Products inventory levels.


12. Buying habits of consumers.

These and other information come from a variety of sources. Product

performance specifications, for example, may come from the engineering

department.

(ii) Sales Analysis :

Challenger with the competitors in the market, the sales analysis is a very vital

activity. It must provide the following information.

1. Sales trends (product-wise)

2. Product wise profitability

3. Region, branch wise sales performance

4. Sales person wise performance

C The above information is derived from Sales Transaction Processing System as

well as from other system like Financial Accounting System and HR Management

System etc.

C The majority of information comes from actual sales transactions and is contained

on sales invoices. To fully support the sales analysis system, invoices should

contain information about product type product quality, price discount terms,

customer identity and type, sales region, and salesperson.

C Information from other sources should also be included in the sales reports.

Specifically, the sales reports must contain information about the profitability of

products, product lines, sales territories, and individual sales persons. Profitability

reporting requires information about product administrative and selling costs.

2007 - May [3] (b) “Decision support systems are widely used as part of an

Organization’s Accounting Information system”. Give examples to support this

statements. (10 marks)

Answer:

C Decision Support System are widely used as part of an organisation’s AIS. The

complexity and nature of decision support systems vary from organization to

organization.

C Many are developed in-house using either a general type of decision support

program or a spreadsheet program to solve specific problems.

C Below are the examples of DSS in Accounting includes:


1. General

Decision

Support

System:

C Such types of decision support systems are a decision-

maker’s tools that are used to input the data and answer

questions about a specific problem domain to make use of this

type of decision support system.

C An example is a program called Expert Choice. This

program supports a variety of problems requiring decision.

The user works interactively with the computer to develop a

hierarchical model of the decision problem.

C The decision support system them asks the users to

compare decision variables with each other.

C Expert Choice analyses investment judgments and

presents the decision maker with the best alternative.

2. Capital

Budgeting

System :

C Companies require new tools to evaluate high technology

investment decisions.

C Decision makers need to supplement analytical

techniques with decision support tools that consider some

benefits of new technology. One decision support system

designed to support decisions about investments in automated

manufacturing technology that is Auto Man, which allows

decision makers to consider financial, non-financial,

quantitative, and qualitative factors in their decision-making

processes.

C Using this decision support system, accountants,

managers, and engineers identity and prioritize these factors.

C They can then evaluate up to seven investment

alternatives at once.

3. Cost

Accounting

System :

C The health care industry is well-known for its cost

complexity. Managing cost in this industry requires

controlling costs of supplies, expensive machinery,

technology, and a variety of personnel.

C Cost Accounting applications help health care

organisation calculate product costs for individual procedures

or services.

C DSS can accumulate these product costs to calculate total

costs per patient.

C Combining cost accounting DSS and Productivity system

applications allows mangers to measure the effectiveness

of specific operation processes to improve its management


decision-making.

4. Budget

Variance

Analysis

System :

C Financial institutions rely heavily on their budgeting

systems for controlling costs and evaluating managerial

performance, DSS allows comptrollers to graph, view, analyse,

and annotate budget variances, as well as create additional

one-and five year budget projections using the forecasting

tools provided in the system.

C The decision support system thus helps the comptrollers

create and control budgets for the cost-center managers

reporting to them.

2007 - May [5] (c) What is Transaction processing cycle ?Discuss briefly four common

cycles of a business activity. (5 marks)

Answer:

Transaction Processing System (TPS)

1. TPS is an Information System (IS) that manipulates data from business

transactions.

2. These system accumulate information in databases that form the foundation for

higher-level systems say, MIS, DSS, and EIS.

3. Typically, a TPS involves the following activities :

(i) Capturing data to organize in files of databases.

(ii) Processing of files / databases using applications software.

(iii) Current activity processing e.g., stock warnings, issue notes, replenishment

orders.

(iv) Report processing e.g., material reports scrap reports, pareto analysis.

(v) Inquiry/query processing in relation to orders processing, Stock turnover,

Orders outstanding etc.

4. These systems also manage supply-chin. For example purchasing an item at a

Reliance fresh store generates more than a cash register receipt, it also

automatically sends a restocking order to the appropriate supplier.

5. A transaction processing system may follow periodic data preparation and batchprocessing (As in payroll application) or on-line processing (as in inventory controlapplication).

6. People who participate in Transaction processing system (TPS) usually are not ina position to take any management decision.

Components of TPS


The principal components of a transaction processing system include inputsprocessing, storage, and outputs. These components or elements are part of bothmanual and computerized systems. Inputs : Source documents, such as customer orders, sales slips, invoices, purchaseorders, and employee time cared, are the physical evidence of inputs into thetransaction processing system. They serve several purposes.: 1. Capture data. 2. Facilitate operations by communicating data and authorising another operation in

the process. 3. Standardize operations by indicating what data require recording and what actions

need to be taken. 4. Provide a permanent file for future analysis, if the documents are retained. Source documents are typically forms carefully designed for ease of use and accuratedata capture. Processing : Processing involves the use of journals and registers to provide apermanent and chronological record of inputs. The entries are done either by hand insimple manual systems (journalised) or by a data entry operator using a PC. Journalsare used to record financial accounting transacts, and registers are used to record othertypes of data not directly related to accounting.

Journals are used to provide a chronological record of financial transactions. It is,theoretically possible, but not often practicable, to use the two column general ledgeras the only book of original entry. However, to effect a division and saving of labour,special journals with special analysis columns are used to record similar and recurringtransactions. Some of the more common special journals that may by kept are asfollows:1. Sales journal: used to summarise sales made on account.

2. Purchase journal: used to summarize purchase made on account.

3. Cash receipts journal: used to summarize receipts of cash.

4. Cash disbursements journal: used to summarise disbursements of cash.

Storage : Ledgers and files provide storage of data in both manual and computersied

systems. The general ledger, the accounts vouchers payable ledger, and the accounts


receivable ledger are the records of financial account. They provide summaries of a

firm’s financial accounting transactions. All accounting transactions must be reflected

in the general ledger. Adebit-credit entry is input for every transaction.

Computer storage : A file is an organized collection of data. There are several types

of files. A transaction file is a collection of transaction input data. Transaction files

usually contain data that are of temporary rather than permanent interest. By contrast,

a master file contains data that are of a more permanent or continuing interest. To

illustrate this difference, consider the posting of sales on accounting to the accounts

receivable ledger. Because a sales journal is a chronological record of sales-on-account

transactions, it may be called a transaction file. The transaction file consists of raw data

concerning sales to customers. Although there may be several sales to the same

customer, this will not be known until the transaction data are processed. The process

of posting sales to the accounts receivable ledger summarizes sales to an individual

customer.

Computer Processing : When computer are use for processing, two different modes

of processing accounting transactions are possible. These modes are batch processing

and direct processing. Batch processing is conceptually very similar to a traditional

manual accounting system. Batches of transaction are accumulated as a transaction

file. Transaction files are printed to provide documentation of inputs to the accounting

system. Transaction files are subsequently posted to ledgers by computer programs.

Processing converts data information : Management is more interested in summary

data such as total sales and total account balance than in the details of a particular

sales transaction. Management thus has a permanent interest in the information that is

contained in the accounts receivable master file. In contrast, management’s interest in

transaction files is temporary.

Outputs : There is a wide variety of outputs from a transaction processing system. Anydocument generated in the system is an output. Some documents are both output andinput (e.g.,a customer invoice is an output from the order-entry application system andalso an input document to the customer). Other common outputs of a transactionprocessing system are the trial balance, financial reports, operational reports, paycheques, bills of lading, and voucher cheques (payments to vendors). The trial balance lists the balance of all the accounts in the general ledger and tests theaccuracy of the record keeping. Thus, it is fundamental to financial control andpreparation of financial statements.

Financial reports summarise the results of transaction processing and expressthese results in accordance with the principles of financial reporting. Two commonfinancial reports are the balance sheet and the income statement. In addition to thesetwo reports, a wide variety of financial reports can be prepared to suit the needs of


management and others. Operational reports summarize the results of transactionprocessing in a statistical or comparative format. Reports summarizing goods received,goods ordered, customer orders received, and other such activities are essential to theoperation of a firm. The nature and content of such reports depend on the nature of afirm and its transaction processing activities.

Transaction processing requires the management of accounting data as they flowthrough AIS. When planning a new system, the developers usually start by designingthe outputs from the system. These outputs, and especially managerial reports, thenbecome the goals of the AIS and therefore provide a focus for the prerequisite tasks ofdata collection and data processing. Poorly designed reports can harm the value of anAIS. Sometimes reports include too much data. To avoid overloading managers withdata, an AIS should incorporate elements of good report design.

Outputs, then, drive the inputs to an AIS. The fundamental instrument for collectingdata in a typical AIS is the source document. Source documents should be easy to read,easy to understand, and serve to collect and distribute information as well as establishauthenticity or authorisation.

For transaction processing system to gather and process data efficiently,accounting data are often coded. AlSs can use codes to identify accounting informationuniquely, to compress data, to classify transactions in accounts, and to convey specialmeanings. 2007 - Nov [1] {C} (c) Discuss any five benefits which are attained by implementing acomputerised model for making decision. (5 marks)Answer: Please refer 2003 - May [2] (a) on page no. 422007 - Nov [2] (b) System analysts develop various categories of information systemsto meet a variety of business needs. Discuss any three such systems briefly.

(10 marks)Answer:Please refer 2001 - Nov [1] {C} (a) on page no. 352007 - Nov [6] (c) Briefly explain the principles to guide the design of measures andindicators to be included in EIS. (5 marks)Answer:Executive Information System Please refer 2001 - May [2] (b) on page no.34Roles of EIS :-C Functions deal primarily with data about the external environment and data that

come from intormal sources, they are usually less reliant on direct contact withinformation technology then other types of managers.

C When information from their company’s computers is needed, many chief executiveofficers make their subordinates retrieve that information. Because executive


information needs are more ambiguous than those of other levels of management,computers have historically been less useful to executives.

C Many executives have little hands-on experience with computers and do not fullyappreciate now information technology can improve their personal productivity anddecision making skills.

C Studies EIS implementation show that thousands of companies have implementedexecutive information systems. Usually, the executive information systems provideexecutives with access to financial data, marketing and sales information, humanresources information, manufacturing data, and competitive/ strategic information.

C Electronic mail, access to external news and databases, word processing,spreadsheet, and automated filing capabilities are also common in businessexecutive information systems.

C While it is often expensive to develop and maintain an EIS, many organizations feelthat enhanced top level decision making is a benefit that more than balances outany costs associated with the system.

Characteristics of an EIS:-Please refer 2001 - May [2] (b) on page no. 34

2008 - May [2] (b) Describe the main prerequisites of a MIS which makes it an effective

tool. Explain the major constraints in operating it. (10 marks)

Answer :

Please refer 1999 - Nov [1] {C} (a) on page no. 29

2008 - May [4] (b) Briefly discuss four basic components of Decision Support System.

(5 marks)

Answer:

Components of a DSS : A decision support system has four basic components:

(1) One or more databases,

(2) The user,

(3) The model base

(4) A planning language, and

Decision support system


1. Database/s - DSS include one or more databases. The database is common to allusers of the system but is independent of the programs which use the data. Itcontains routine and non routine data from both internal as well as external sourcesan example being, data about economic/market conditions, level of competition etc.

It the database is too large for manual searching then a computer supportedapproach may be worthwhile.

2. User - User of a DSS is the manager with semi-structured or unstructured problemto solve. The users must have a thorough understanding of the problem and thefactors to be considered for solving that problem. It is not necessary that user ofDSS should have thorough knowledge of computers/computer programming forusing DSS for solving a problem as most of the DSS models use easy-to-usesoftware which utilize natural language.

3. Model base - The planning language in DSS allows the user’s to maintain a dialogwith the model base. The model base is the ‘brain of the DSS’. Since it, performsdata manipulation/processing and other specific functions ranging frommathematical calculations to financial computation.

4. Planning languages - There are 2 types of planning languages that are commonlyused in DSS.


C General - purpose planning languages allow users to perform many routinetests for example spreadsheets, they allow budgeting, forecasting and otherworksheets oriented problems.

C Special - purpose planning languages are used for specified purposes suchas PERT, CPM, SAS, SPSS and Minitab.

2008 - May [5] (c) “Personnel information system deals with flow of information relating

to people” Explain. (5 marks)

Answer:

Please refer 2000 - Nov [1] {C} (a) on page no. 30

CA Final Gr. II (New Course)

SHORT NOTES


(c) Benefits of Expert Systems (4 marks)

Answer :



(a) Business applications of Expert Systems for Management Support Systems.

(4 marks)

Answer :

Business applications of Expert Systems for Management Support Systems are given

as follows:

(i) Finance: It provides tax advice and assistance, helping with credit authorization

decisions, selecting forecasting models, providing investment advice.

(ii) Marketing: It helps establishing sales quotas, responding to customer inquiries,

referring problems to telemarketing centers, assisting with marketing timing

decisions, determining discount policies.

(iii) Manufacturing: It helps in determining whether a process is running correctly,

analyzing quality and providing corrective measures, maintaining facilities,

scheduling job-shop tasks, selecting transportation routes, assisting with product

design and faculty layouts.

(iv) Personnel: It is useful in assessing applicant qualifications, giving employees

assisting at filling out forms.

(v) General Business: It helps in assisting with project proposals, recommending

acquisition strategies, educating trainees, evaluating performance.


2011 - Nov [7] Write Short Notes on following :

(a) Objectives of an Operating System (4 marks)

Answer :

Objectives of an Operating System: An operating system (OS) is a program that

controls the execution of an application program and acts as an interface between the

user of a computer and computer hardware. The main purpose of an OS is to provide

an environment in which a user can execute programs in a convenient and efficient

manner. An operating system is an important part of almost every computer system. It

is considered to be the backbone of a computer, managing both software and hardware

resources. OS is responsible for everything from the control and allocation of memory

to recognizing input from external devices and transmitting output to computer displays.

It also manages files on computer hard drives and control peripherals, like printers and

scanners.

Major objectives/functions of an operating system are as follows:

1. Scheduling of Jobs: It can determine the sequence in which jobs are executed,

using priorities established.

2. Managing Hardware and Software Resources: It can first cause the user’s

application program to be executed by loading it into primary storage and then

cause the various hardware units to perform as specified by the application.

3. Maintaining System Security: It may require users to enter a password - a group

of characters that identifies users as being authorized to have access to the

system.

4. Enabling Multiple User Resource Sharing: It can handle the scheduling and

execution of the application programs for many users at the same time, a feature

called multiprogramming.

5. Handling Interrupts: An interrupt is a technique used by the OS to temporarily

suspend the processing of one program in order to allow another program to be

executed. Interrupts are issued when a program requests an operation that does

not require the CPU, such as input or output, or when the program exceeds some

predetermined time limit.

6. Maintaining Usage Records: It can keep track of the amount of time used by

each user for each system unit - the CPU, secondary storage, and input and output

devices. Such information is usually maintained for the purpose of charging users’

departments for their use of the organization’s computing resources.


(c) Limitations of MIS. (4 marks)

Answer :

Please refer 2006 - May [1] {C} (c) on page no. 66


DESCRIPTIVE QUESTIONS

2008 - Nov [2] (b) What is Decision Support System? Briefly explain three

characteristics of Decision Support System. (5 marks)

(c) Explain Executive Information System (EIS). What purpose does it serve?

(5 marks)

Answer :

(b) Please refer 2002 - Nov [7] (c) on page no. 16

(c) Please refer 2005 - Nov [3] (a) on page no. 64

2008 - Nov [3] (a) What do you understand by classifications of Information? Explain

different classifications of information. (10 marks)

Answer :

Please refer 2006 - May [2] (a) on page no. 67

2009 - Nov [2] (a) Identify and justify the type of each one of the following systems

based on how they perform within an environment and/or certainty/uncertainty :

(i) Marketing system

(ii) Communication system

(iii) Manufacturing system

(iv) Pricing system

(v) Hardware-Software system. (5 marks)

Answer :

System System Type Justification

(i) Marketing

system

Open System C The marketing system plays a pivotal role inthe running of a business in the competitiveenvironment.

C The objective of the system is to maximizecustomer satisfaction by providing a freeinteractive environment.

C The system takes input/ feedbacks andfacilitates the outcomes as products of thecompany and to create new customers.

(ii) Communi

cation

system

Open System C The communication system in an organizationis a point of contact to balance the externalinfluence and render its services to thecustomers.

C The system interacts freely with its


environment by taking input and returningoutput.

(iii) Manufact-

uring

System

Closed

System

C Close system is in place to meet a particularobjective. It neither interacts with theenvironment nor changes with the change inthe environment.

C A manufacturing unit is completely isolatedfrom its environment for its operation.

(iv) Pricing

System

Probabilistic

and Open

System

C Pricing system has a probable behavior andinteracts freely with its environment by takinginputs and returning outputs,.

C The pricing system is a dynamic one whichinfluences the form of profit and goodwill of anorganization.

(v) Hardware

Software

System

Closed Deter-

ministic

System

C The interaction among the various parts of thesystem is known with certainty and it does notinteract with the environment and does notchange with the change in the environment.

C In this case the requirements of the hardwareand software inventory are known withcertainty.

C The operational state of these systems ispredictable.

2010 - May [4] (c) Give some important advantages of Information System in business.

(5 marks)

Answer :

Importance of information system in Management Process/ Business Process :

1. Information is required for proper handling of complex managerial problems and

decision making. Innovative ideas for solving critical problems may come out from

good information system.

2. Information makes the Managers realise the need for taking decisions. Information

is a vital input for Managers just like men, money, materials, machinery and

methods.

3. Information helps to-(a) recognise and define the problem, (b) develop alternative

courses of action, and (c) select the best course of action, (d) get have a better

view of the decision situations, and (e) reduce the complexity and uncertainty in

decision making.

4. Information significantly determines the effectiveness of both the final decision,

and the process of decision-making.


5. Information systems helps take right decision at the right time. So, based on well-

designed information system, an organization will gain edge in the competitive

environment.

6. Knowledge gathered though information system may be utilized by managers in

unusual situations.

7. If Information System is viewed as a process, it can be integrated to formulate a

strategy of action or operation.

2010 - May [5] (c) Briefly describe any three of the characteristics of the types of

information used in Executive Decision making. (5 marks)

Answer :

Please refer 2001 - May [2] (b) on page no. 34

2010 - Nov [5] (b) What do you understand from the term ‘database’ ? How is it

implemented in three different levels ? (4 marks)

Answer :

Database : Database can be defined as a ‘Super-file’ which consolidates data records

formerly stored in many data files. The data in a database is organized in such a way

that access to the data is improved and redundancy is reduced.

Implementation of Databases : There are the levels at which database can be

implemented :-

(i) Physical Level : It involves the implementation of the database on the hard disk.

The management of storage and access is controlled by operating system.

(ii) Logical Level : It is designed by professional programs, who have complete

knowledge of DBMS. The storage is logically divided into various tables having

techniques for defining relationships with indexes.

(iii) External Level : The logical level defines schema, which is divided into smaller

units known as sub-schemas and given to the managers, each sub-schema

containing all relevant data needed by one manager.

2011 - May [3] (b) What are the characteristics of Executive Information System ?

(4 marks)

Answer :

Executive Information System is an information system that serves the information

need of top executives. EIS enables its users to extract summary data and model

complex problems without the need to learn complex query languages, statistical

formulas or high computing skills.

EIS is considered as highly user friendly system because it provides a user friendly

graphical reporting system with drill down capabilities. EIS is mainly an advancement

of MIS but it can include the decision support system (DSS) capabilities to solve

complex problems.


Characteristics : (EIS)

1. Easy Access: Executives can have easy access to corporate data. DSS provides

executives with access to Financial data Marketing and Sales information, Human


information. Electronic mail, access to external news and databases, word


business EIS.

2. Easy Navigation : An EIS is easy to navigate since Managers can identify broad


issues.





ability to manipulate data, to project ‘what if outcomes and to work with modeling



level decision making is the benefit that balances out the system’s associated

costs.

2011 - May [5] (b) Enumerate the characteristics of a Computer Based Information

System. (4 marks)

Answer :

Characteristics of a Computer Based Information System are as follows:

1. The system is designed and developed, according to predetermined objectives.

2. A system has a number of interrelated and interdependent subsystems or

components. No subsystem can function in isolation; it depends on other

subsystems for its inputs and provides inputs to others.

3. If one subsystem or component of a system fails, the whole system fails. However,

it depends on ‘how the subsystems are interrelated and interdependent on each

others.

4. The way a subsystems works with another subsystem is called interaction.

Different subsystems interact with each other to achieve the goal of the system.

5. The work done by individual subsystem is integrated to achieve the central goal

of the system.

2011 - Nov [2] (a) Define the term "Information". Discuss various important attributes

that are required for useful and effective information. (8 marks)

Answer :


Information: Information is the data that have been put into a meaningful and useful

context. It has been defined by Davis and Olson as-“Information is data that has been

processed into a form that is meaningful to the recipient and is of real or perceived value

in current or progressive decision”. For example, data regarding sales by various

salesman can be merged to provide information regarding total sales through sales

personnel. This information is of vital importance to a marketing manager who is making

plan for future sales.

Attributes of Information: Some important attributes of useful and effective information

are as follows:

CCCC Availability: If information is not available at the time of need, it is useless. Data

is organized in the form of facts and figures in databases and files from where

various information is derived for useful purpose.

CCCC Purpose: Information must have purposes at the time, it is transmitted to a person

or machine, otherwise it is simple data. Information communicated to people has

a variety of purposes due to variety of activities performed by them in business

organizations. The basic purpose of information is to inform, evaluate, persuade,

and organize.

CCCC Mode and format: The modes of communicating information to humans are

sensory (through sight, hear, taste, touch and smell) but in business they are either

visual, verbal or in written form. Format of information should be so designed that

it assists in decision making, solving problems, initiating planning, controlling and

searching.

CCCC Decay: Value of information normally decays with time and usage and hence, itshould be refreshed from time to time. For example, we access the running scoresheet of a cricket match through Internet sites and this score sheet is continuallyrefreshed at a fixed interval or based on status of the state.

CCCC Rate: The rate of transmission/reception of information may be represented by thetime required to understand a particular situation. Quantitatively, the rate forhumans may be measured by the number of numeric characters transmitted perminute, such as sales reports from a district office. For machines the rate may bebased on the number of bits of information per character (sign) per unit of time.

CCCC Frequency: Frequency with which information is transmitted or received affectsits value. Financial reports prepared weekly may show so little changes that theyhave small value, whereas monthly reports may indicate changes big enough toshow problems or trends.

CCCC Completeness: The information should be as complete as possible. The classicalROI or Net Present Value (NPV) models just provide a point estimate and do notgive any indication of the range within which these estimates may vary. Hartz’smodel for investment decisions provides information on mean, standard deviationand the shape of the distribution of ROI and NPV. With this complete information,


the manger is in a better position to decide whether or not to undertake theventure.

CCCC Reliability: It is just not authenticity or correctness of information, but also failureor success of using information for decision making. If information leads to correctdecision on many occasions, we say the information is reliable.

CCCC Validity: It measures the closeness of the information to the purpose which itpurports to serve. For example, some productivity measure may not measure, forthe given situation, what they are supposed to do e.g., the real rise or fall inproductivity. The measure suiting the organization may have to be carefullyselected or evolved.

CCCC Quality: Quality refers to the correctness of information. Information is likely tobecome incorrect due to personal bias. For example, an over-optimistic salesmanmay give rather too high estimates of the sales. This problem, however, can becircumvented by maintaining records of salesman’s estimates and actual sales anddeflating or inflating the estimates in the light of this.

CCCC Transparency: If information does not reveal directly ‘what we want to know fordecision-making’, it is not transparent. For example, total amount of advance doesnot give true picture of utilization of fund for decision about future course of action;rather deposit-advance ratio is perhaps more transparent information in this matter.

CCCC Value of information: It is defined as difference between the value of the changein decision behaviour caused by the information and the cost of the information. Inother words, given a set of possible decisions, a decision-maker may select oneon basis of the information at hand. If new information causes a different decisionto be made, the value of the new information is the difference in value between theoutcome of the old decision and that of the new decision, less the cost of obtainingthe information.

CCCC Adequacy: Information must be adequate so that the desired actions can be

initiated. Required information should flow on different directions within the

organization and to and from its environment. In addition, the type of information

that flows within the organization or across, should have adequate and relevant

contents.

2012 - May [3] (b) What is Decision Support System? Discuss its characteristics in

brief? (6 marks)

Answer:

Please refer 2002 Nov [7] (c) on page no.16

2012 - May [5] (c) Discuss the constraints in operating a MIS. (4 marks)

Answer:

Please refer 2006 May [1] (c) on page no.66

2012 - Nov [2] (b) What is meant by EIS? What are its characteristics? (6 marks)


(c) Explain any four features of Electronic Mail. (4 marks)

Answer :

(b) Please refer 2011 - May [3] (b) on page no. 87

(c) Electronic MailBusiness organisations are using different type of systems for sending andreceiving the messages electronically. These include, Voice Mail, Fax, E-mail etc.E-mail has become the most popular electronic message communication system.It not only helps to transfer messages immediately but with high reliability. It alsoprovides an economical method of efficient message communication.Some features of E-mail are as follows:• On Line Editor

It provides an efficient editor to edit the new or existing mail.• Storage on Magnetic Media

It helps and facilitates the storage of messages on magnetic media therebyreducing the space required to store the messages.

• Reply and AttachmentThis option helps to reply a received mail by writing the message in receivedmail itself and documents can be attached.

• Forward MailThis helps in forwarding a received mail to another user. This is due to thereason that e-mail could be routed to people having direct interest in themassage with or without changing or/and appending related information to themessage.

2013 - May [2] (c) How does Executive Information System differs from Traditional

Information System? (4 marks)

Answer:

S. No. Basis of Difference Executive Information

System

Traditional Information

System

1. Management level For top or executives For lower staff

2. Nature of information

to be accessed

Specific issues/problems

and aggregate reports

Status reporting

3. Nature of information

to be provided

Online tools and analysis Offline status reporting

4. Information sources More external, less

internal

Only internal

5. Information format Text with graphics Tabular

6. Nature of interface User friendly Computer operated


2013 - May [3] (b) What is an Expert System? List the properties which an application

should posses to qualify for Expert System development. (6 marks)

Answer:


2013 - Nov [2] (a) Define Transaction Processing System (TPS). List out the salient

features of a TPS. (6 marks)

2013 - Nov [6] (b) Describe any six characteristics of an effective management

information system. (6 marks)

Similarly Asked Questions

No. Category Question Marks Frequency

1 Descriptive What are the main pre-requisites of an

effective MIS? Explain them briefly.

99 - Nov [1] (a) and 05 - May [2] (c)

10, 5 2 Times

2 Short Note Write short notes on Material

requirement planning.

03- May [7] (d) and 06-May [7] (a) (iii) 5, 5 2 Times

3 Shorts

Notes /

Descriptive

Executive Information Systems.

Explain.

01- May [2] (b), 03- Nov [7] (a),

05 - Nov [3] (a), 11 - May [3] (b),

12 - Nov [2] (b)

5, 5,

10, 4, 6 5 Times

4 Descriptive Describe any six characteristics of an

effective management information

system. 99 - May [1] (a), 13 - Nov [6]

(b) 10,6 2 Times

ca final gr. ii...q&a-6.2 oooo solved scanner ca final gr. ii paper - 6 answer : organisational...

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