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Chapter 2

Chapter 2.docx

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University of Ottawa
Mirou Jaana

Chapter 2 – Decision Making and Business Processes When you implement information systems, your goal is to give you more information about what is going on in your organization, reduce costs, improve products or services, etc. What are the reasons for the growth of decision-making information systems? Organizations can function without information systems, but processing the data would cost a lot of human labour, and time, and may have errors. (Implementing an information system saves time, labour costs, and reduces errors). The organization is like a pyramid (analysts at the bottom, executives at the top. Analysts, Managers, Executives. Information systems different in each levels, and detailed information provided is different at each level. At each functional areas you will also have different information systems: For example: Sales and Marketing, Manufacturing and Production, Finance and Accounting, Human Resources. We look at information systems, by the level of employees or managers that they serve. Transaction processing system (TPS) - the basic business system that serves the operational level (analysts) in an organization  Everything that deals with the frontlines, and front jobs. Such as delivering and invoicing, systems used by cashiers, payroll uses transaction processing systems also. Online transaction processing (OLTP) – the capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information  Higher level of systems that are a bit smarter, and support the decision making of managers more. They do multidimensional analysis, online analytical processing, etc. which are more advanced than percentages, averages, etc.  It is more analytical than the transaction processing system (TPS)  The manipulation of information to create business intelligence in support of strategic decision-making. o BI broad term that refers to information people used to support their analytical and strategic decision-making.  It has an algorithm embedded in it based, that is pre-determined to perform a task when it receives certain data.  It is multidimensional. (Multidimensional analysis) The questions asked are more complex. Example: You are in Ottawa and you want to compare the sales on east and west end during Christmas for a specifc store, compared to the sales in july. You look at stores, seasons, sales by month, etc. Then you see where you are doing well, and copy it in the future, to support decision- making in the organization. 1. Sensitivity analysis  The study of the impact that changes in one (or more) parts of the model have on other parts of the model  Example: In the restaurant business if you change the size of a cup size, whether it will affect the profitability or not.  You don’t have a specifc goal you’re looking at, but you see what happens if you change one variable.  You keep fluctuating a variable up or down, to see how it affects your model.  Example: In healthcare, people want to see how the dosage of a medication would affect the outcome or interact with another variable. 2. What-if analysis  Checks the impact of a change in an assumption on the proposed solution  You change one assumption. “If something happens what would the outcome be”  Example: If the economic situation improves, what would happen if the dollar value increases by x amount, how would this affect my sales? 3. Goal-seeking analysis  Finds the inputs necessary to achieve a goal such as a desired level of output  What inputs and resources are necessary to achieve your target goal.  If your goal is to increase productivity by a certain percent, what input and resources would be necessary. What should I do with the shift work? Hire more people, get more machines?  Have a goal, and try to see what you need to achieve this goal. A decision-support system that we use every day is excel goal-seeker. There are so many features that we don’t use and it’s the best example of a decision-support system. TPS and DSS should be connected Transaction Processing Systems (TPS)/Decision Support Systems (DSS)- Two people might look at the same data, but see things completely differently. Example someone in finance and someone in marketing would see something different in the data based on experience. It depends on what system, and what tool you are using to analyze the data. Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization. The major difference between Executive Information system (EIS) and a decision- support system (DSS): - Executive Information systems also use external sources of information (market analysis, financial figures, stocks, in addition to the internal data in the organization. Digital dashboard – integrates information from multiple components and presents it in a unified display - They extract the key information and present it to the executives. - You find it all in one screen. Question: The type of system that answers the question “how many parts are in inventory” That would be operational-level system. No a) strategic-level system No b) Manage
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