MANAGEMENT INFORMATION SYSTEM – UIS20202J

UNIT – I

INTRODUCTION TO MIS

A Management Information System (MIS) is a systematic organization and

presentation of information that is generally required by the management of an organization
for making better decisions for the organization. The MIS data may be derived from various
units of the organization or from other sources. However it is very difficult to say the exact
structure of MIS as the structure and goals of different types of organizations are different.
Hence both the data and structure of MIS is dependent on the type of organization and often
customized to the specific requirement of the management.

Definition - Management Information System or 'MIS' is a planned system of collecting,

storing, and disseminating data in the form of information needed to carry out the functions
of management.

COMPONENTS OF MIS

The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for processed
data, and Management is the ultimate user, the decision makers.

Management information system can thus be analysed as follows,

Management

Management covers the planning, control, and administration of the operations of a concern.
The top management handles planning; the middle management concentrates on controlling;
and the lower management is concerned with actual administration.

Information

Information, in MIS, means the processed data that helps the management in planning,
controlling and operations. Data means all the facts arising out of the operations of the
concern. Data is processed i.e. recorded, summarized, compared and finally presented to the
management in the form of MIS report.

System

Data is processed into information with the help of a system. A system is made up of inputs,
processing, output and feedback or control.

Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.

FRAMEWORK FOR MIS ORGANIZATION

Strategic Planning

Strategic planning is a method of focusing on improvements in the goals of the organization,

the methods that are to be used to achieve these objectives; policies that are framed by
management experts to control, organize, and use organizational resources to reduce the cost
and maximize profit. Overall, strategic planning helps in designing the strategies of the
company, and is used in formulating policies to control the acquisition, handling of the
business activities, and gets involved in reframe strategy whenever required. From a
philosophical perspective, strategic planning must be design in such a way so that an
organization may achieve its aim and objectives as well as can keep itself up to date on new
developments through changes to the objectives, the financial aspects of the resources
needed, and the guiding principles and policies to be followed in obtaining, using the
organizational resources.

Operational Control

Operational control is a process of managing operational activities of an organization that are

carried out to achieve optimal utilization of the resources and successful implementation of
the operational activities in an organization like production, stock management, financial
process, HRM, etc. To run it smoothly, matrices allow for pre-established processes and
decision rules to be used, the constant assurance of effective acquisition and use of resources
in the areas in which the results can be reasonably well understood, and operations are
optimally organized and managed. For instance – the directives set by our superiors are
followed as per our ability and that the tasks we perform effectively and efficiently. These
decisions at lower levels of the company have very little effect on the organization. There is a
fixed timeline for decisions being taken, and there are certain "routines" that immediately
proceed to complete the process.

Management Control

Management control is a process of assuring that resources are collected and used effectively
and efficiently, resulting in the accomplishment of the organizational key objectives. In this
process, an executive or superiors, or managers will be used to assess the productivity of
his/her department, identify the issues, formulate some new and innovative strategies, make
some rules of control, set protocol, and evaluate the risk allocation of resources. This job is
mainly taking care of the middle-level management of the company. At this level, managers
must be taking advice from the strategic planning hierarchy and must be monitoring the
organization's activities so that the strategic priorities can be set and accomplished efficiently
and successfully.

MIS Need for Information Systems

Managers make decisions. Decision-making generally takes a four-fold path,

● Understanding the need for decision or the opportunity,

 ● Preparing alternative course of actions,

● Evaluating all alternative course of actions,

● Deciding the right path for implementation.

MIS is an information system that provides information in the form of standardized reports
and displays for the managers. MIS is a broad class of information systems designed to
provide information needed for effective decision making.

Data and information created from an accounting information system and the reports
generated thereon are used to provide accurate, timely and relevant information needed for
effective decision making by managers.

Management information systems provide information to support management decision making, with the fol

● Pre-specified and preplanned reporting to managers.

● Interactive and ad-hoc support for decision making.

● Critical information for top management.

MIS is of vital importance to any organization, because,

● It emphasizes on the management decision making, not only processing of data

generated by business operations.

● It emphasizes on the systems framework that should be used for organizing

information systems applications.

OBJECTIVES OF MIS

The goals of an MIS are to implement the organizational structure and dynamics of the
enterprise for the purpose of managing the organization in a better way and capturing the
potential of the information system for competitive advantage.

Following are the basic objectives of an MIS

 ● Capturing Data

● Processing Data

o making calculations with the data

o sorting data

o classifying data and

o summarizing data

● Information Storage

● Information Retrieval

● Information Propagation

CHARACTERISTICS OF MIS

● It should be based on long-term planning.

● It should work as a complete and comprehensive system covering all interconnecting

subsystems within the organization.
 ● It should be planned in a top-down way, as the decision makers or the management
should actively take part and provide clear direction at the development stage of the
MIS.

● It should be able to make forecasts and estimates, and generate advanced

information, thus providing a competitive advantage. Decision makers can take
actions on the basis of such predictions.

● It should create linkage between all subsystems within the organization, so that the
decision makers can take the right decision based on an integrated view.

● It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.

● Although the MIS is an integrated, complete system, it should be made in such a

flexible way that it could be easily split into smaller subsystems as and when
required.

● A central database is the backbone of a well-built MIS.

INFORMATION VS DATA

Data can be described as unprocessed facts and figures. Plain collected data as raw facts
cannot help in decision-making. However, data is the raw material that is organized,
structured, and interpreted to create useful information systems.

Data is defined as 'groups of non-random symbols in the form of text, images, voice
representing quantities, action and objects'.

Information is interpreted data; created from organized, structured, and processed data in a
particular context.

Definition - "Information is a data that has been processed into a form that is meaningful to
the recipient and is of real or perceived value in the current or the prospective action or
decision of the recipient."
 Information can be defined as meaningfully interpreted data. If we give you a number
1-212-290-4700, it does not make any sense on its own. It is just raw data. However if we say
Tel: +1-212-290-4700, it starts making sense. It becomes a telephone number.

INFORMATION, KNOWLEDGE AND BUSINESS INTELLIGENCE

Information Hierarchy

● Data The raw material of information.

● Information Data organized and presented by someone.

●
Knowledge Information read, heard, or seen, and understood.

●
Wisdom Distilled and integrated knowledge and understanding.

Information/Data Collection Techniques

The most popular data collection techniques include

● Surveys A questionnaire is prepared to collect the data from the field.

● Secondary data sources or archival data: Data is collected through old records,
magazines, company websites etc.

●
Objective measures or tests An experimental test is conducted on the subject and the data is collecte
 ●

Interviews Data is collected by the system analyst by following a rigid procedure and collecting the

preconceived questions through personal interviews.

INFORMATION SYSTEM

"Information system is set of people, information technology, and business process in order
to achieve a business objective."

Information systems are a set of interconnected elements working together to collect, process,
store, and distribute information to help coordination, visualization in an organization,
analysis, and decision-making.

INFORMATION SYSTEM (VS) MANAGEMENT INFORMATION SYSTEM

The Information system can be defined as a collection of software, hardware,

and telecommunications network that people develop and use to gather, create, and distribute
useful data, mainly in organizational settings. In other words, an information system means a
collection of interrelated components which work together to gather, process, store, and break
down the information to help decision making.

A Management Information System is an information system that evaluates,

analyses, and processes an organization's data to produce meaningful and useful information
based on which the management can take right decisions to ensure future growth of the
organization.

Components of Information System

There are various components of an information system:

1. Hardware

2. Software

3. Data

4. Procedures

5. People

6. Feedback

1. Hardware

Hardware means equipment and machinery. This category encompasses the computer and all
of its supporting equipment in modern information systems. The supporting devices contain
input and output devices, communication devices and storage devices. Hardware in pre-
computer information systems may contain ledger books and ink.

2. Software
In an information system, software means computer programs as well as the manuals which
support them. Computer program means the machine-readable instructions that tell circuitry
in the system's hardware to work to generate helpful information from the data. In most cases,
programs are stored on an input/output medium, such as a tape or disk. The software which is
for pre-computer information systems comprises instructions for using them, which means
the guidebook for a card catalog and the information regarding how the hardware was
configured for use such as columns headings in the ledger book.

3. Data

Data means facts that systems use to generate valuable knowledge. Data is usually stored in
machine-readable form on tape or disk until the computer requires them. The data in pre-
computer information systems is usually stored in a human-readable format.

4. Procedures

Procedures mean rules which govern how an operation is performed in an information

system. "Procedures are for people what software is for hardware" is a general analogy that
we used to clarify the importance of procedures in a system.

5. People

Every system requires individuals if the system is to be beneficial. People are often the most
neglected part of the system, and they are possibly the factor that has the greatest impact on
the success or failure of information systems.

This contains clients, yet additionally the individuals who operate as well as service the
computers, those who support the network of computers, and the individuals who keep up the
information.

6. Feedback

Another component of an information system is feedback, which determines that an

information system can be offered with feedback. However, this component is not needed to
function.
Communication

Using information technology, instant messaging, emails, voice, and video calls,
communication becomes inexpensive, faster, and effective.

Availability

With the help of the Information system, it is possible for businesses around the world to be
open around the clock. This implies that a business can be open anytime, anyplace, making
buys from various nations simpler and more helpful. It likewise implies that you can have
your products delivered right to your doorstep without making more effort.

Creation of New Types of Jobs

The creation of new and exciting jobs is another advantage of the information system. We
can create various opportunities using IT such as computer programmers, Hardware and
Software developers, Web designers, and Systems analysers.

Globalization and Cultural Gap

We may reduce semantic, Geological, and some social constraints by implementing an

information system. Sharing data, information, knowledge, communication, and connections
between different nations, societies, and dialects are a lot easier.

DISADVANTAGES OF INFORMATION SYSTEM

Expensive
Installing a management information system can be expensive for a company. Information
technology—while cheaper today than previous years—can represent a significant expense,
especially for larger organizations. These systems may also require ongoing support or
upgrade fees, which can represent future fixed cash outflows. Companies must create a
budget to pay for these items to ensure the information system stays current with business
technology. Attempting to integrate these systems with technology currently in use can also
increase expenses.

Maintenance

Companies may need to hire maintenance individuals to help keep an electronic information
system running smoothly. These individuals often need experience in computer science
functions and other business topics. Not only does this increase labor costs, but it also
requires additional training and ongoing education for these individuals. Business technology
can change frequently, creating an environment where companies must have trained
individuals who can properly maintain computers, websites, servers and other equipment in
use by the management information system.

Ineffective

Management information systems have the potential to become ineffective in a company's

operations. As with all computer systems, the management information system is only as
good as the programmer. Gathering unimportant or non-essential information can delay
business decisions because managers must request additional input. Spending too much time
reprogramming or correcting issues can also increase the time spent in the decision-making
process. Business owners and managers may also need extensive training on new systems,
creating a learning curve that will hopefully diminish over time.

Types of Information System

The types of information systems are as follows:

1. Transaction Processing System (TPS)

● The term "transaction processing system" refers to an information system that

processes data originating from business transactions.

● The primary purpose of a transaction processing system is to offer transactions to

update records and produce reports required for storekeeping.

● Online Transaction Processing and Batching Processing are the methods which we
used to complete the transaction.

● Examples of transaction processing systems are Stock control systems, Payroll

systems, Bill systems.

2. Management Information System (MIS)

● The purpose of a management information system is to transform comparatively raw

data accessible through using the Transaction Processing System into a summarized
and aggregated form for managers, generally in the form of a report. Operational
supervisors and middle management are likely to use the reports.

● In MIS, there are various kinds of reports generated. Few reports are a kind of
summary report, ad-hoc reports, exception report, and on-demand report.

● Examples of Management Information Systems are Human resource management

systems and Sales management systems.

3. Decision Support System (DSS)

 ● Another type of information system is a decision support system. It is interactive,
which offers information, data manipulation tools, and models to support decision-
making in a semi-structured and unstructured scenario.

● This type of information system includes tools and techniques to help gather relevant
information and examine options, and substitutes, the end-user being more elaborate
in making DSS than MIS.

● Examples of Decision Support System: Bank loan management systems, financial

planning systems.

4. Experts System

● The expert system contains expertise which is helpful for a manager in identifying
problems or in problem-solving. The principles of artificial intelligence research are
used to develop these kinds of information systems.

● This type of information system is a knowledge-based system. It acts as an expert

consultant to users by utilizing its knowledge of a specific area.

● There are some components of expert systems such as Knowledgebase and software
modules. These modules make inferences based on knowledge and provide answers to
a user's query.
Approaches in developing MIS

1) Top-down Approach

In this method, the entire system is partitioned into a hierarchy of subsystems. The overall
system is divided into a number of subsystems, which are then divided into a number of other
subsystems in a top-down approach.
A behavioral classification is used in the top-down approach of MIS development. This
approach also defines the strategic and tactical decisions and the necessary decisions to
operate the various key activities of MIS development. Many of them, strategies, goals, and
plans are recognized by top management executives and conveyed to the administrative
management levels.

The key objectives of the systems are established and ways to achieve them are decided in
top-down design. They're gradually pushed down the organizational hierarchy to be created
and defined well.

2) Bottom-up Approach

As its name implies, this approach mainly starts with the leaf-level or bottom-most
management and proceeds progressively to the upper management levels. After recognizing
the primary transactions, the needed file requirements and information processing programs
are developed for each lifestream system which is then moved towards data integration that is
stored in different files of the information system. A bottom-up approach is functional to
identify the various factors and understand the difficult situations and formulate strategies to
deal with them.

3) Integrative Approach

In the integrative approach subsystems of a system are integrated with each other in such a
way so that the objective of the system can be fulfilled.
An integrative approach of a system development may consist of followings -

● Design a system that can be achieving the major objectives of the system using its
subsystems.
● Designing a system that combines the various functions performed by its subsystems.
● Designing a system that is not very clear to the user but is concealed under the
previously existing subsystems.

Managers at all levels can control the design using an integrated approach. Top management
determines the structure and design of MIS that is appropriate for the business.

CONSTRAINTS IN DEVELOPING MIS

Following are the major constraints in developing and MIS

● No clear definition of mission and purpose.

● No objectives for the company.
● Mis-Organisation.
● Communication gap.
● Lack of management participation.

MIS takes into account mainly quantitative factors, thus it ignores the non-quantitative
factors like morale, attitudes of members of the organisation, which have an important
bearing on the decision making process of executives.
MIS is less useful for making non-programmed decision making. Such types of decisions
are not of routine type and thus they require information, which may not be available from
existing MIS to executives.

MIS effectiveness decreases due to frequent changes in top management, organisational

structure and operational team.

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.

The quality of the outputs of MIS is basically governed by the quality of inputs and
processes.

MIS may not have requisite flexibility to quickly update itself with the changing needs of
time, especially in a fast changing and complex environment.

The effectiveness of MIS is reduced in organisations, where the culture of hoarding

information and not sharing with others holds.

MIS cannot provide tailor made information packages suitable for the purpose of every type
of decision made by executives.

1. Lack of Strategy

Many of the most common MIS issues can be traced back to a lack of a solid strategy.
Information systems leaders are well aware of the many tools available to gather data on their
network. But putting that information to use is often a challenge.

At one time, technology departments served as a separate operation, providing tech support
and keeping an organization’s server equipment running. Today, MIS leadership often sits
alongside other business leaders, working together to ensure that the technology being used
supports the overall mission of the company moving forward.

2. Meeting Organizational Needs

MIS plays an ever-increasing role in organizations, with professionals relying on technology
for every aspect of operations. Sales and marketing rely heavily on customer relationship
software to track client interactions, for instance, while accounting needs its own software for
billing, invoicing and financial tracking.

With more than half of all companies now relying on big data analytics, MIS is playing an
even more important role. Before making a decision, today’s management teams are likely to
pull reports on existing activity to ensure they use facts rather than make educated guesses.

3. Attracting and Retaining Top Talent

The professionals most in demand include developers and programmers, database

administrators and IT leaders and managers. Even as an increasing number of businesses shift
to cloud software, the IT shortage continues to affect businesses. If cloud technology
providers have difficulty finding professionals to support the applications their clients use,
the businesses will see issues. Even with cloud technology, though, many organizations find
they still need to have an MIS specialist on staff to ensure the business meets its goals.

4. Keeping Up with Change

If one thing is for certain in information technology, it’s that nothing will remain the same for
long. From one year to the next, innovations mean that software needs to be upgraded and
even replaced. In order to remain competitive, businesses have to keep up with this, investing
in software that will give them an edge.

As businesses respond to those changes, though, they face a challenge in getting employees
on board with adjusting what they do. At one time this was simply training employees to go
from old paper-based processes to using computers in the first place. Today, managers have
to onboard new systems while ensuring they provide employees what they need to be
productive.

5. Integrating New Technologies

Although there are plenty of comprehensive solutions, businesses will inevitably find that
they have multiple types of software operating at once. This includes general administrative
tools like Microsoft Office, as well as specialized tools for accounting, customer relationship
management and project-management tools, among many others. Ensuring all these tools
work together is essential since otherwise, employees will find they have to duplicate
processes.

Complicating matters is the fact that employees no longer work using just one dedicated
computer on a desk in an office space. Many employees work in the field, using laptops and
tablets. You’ll also have numerous cellphones in addition to the laptop and desktop
computers your employees use, bringing challenges to providing support without risking
security.

INFORMATION SYSTEM FOR DECISION MAKING

1. Information from Company Operations

When you base your decisions on data available from management information systems,
they reflect information that comes from the operations of your company. Management
information systems take data generated by the working level and organize it into useful
formats. Management information systems typically contain sales figures, expenses,
investments and workforce data. If you need to know how much profit your company has
made each year for the past five years to make a decision, management information systems
can provide accurate reports giving you that information.

2. Capability to Run Scenarios

The capability to run scenarios is a key decision-making tool. Some management information
systems have this feature built in, while others can provide the information required for
running scenarios on other applications, such as spreadsheets. Your decision is influenced by
what happens if you decide a certain way. What-if scenarios show you how different
variables change when you make a decision. You can enter reduced staff levels or increased
promotion budgets and see what happens to revenue, expenses and profit for different levels
of cuts or increases. Management information systems systems play a critical role in making
realistic scenarios possible.

3. Projections to Assist in Decision Making

Any decisions you make result in changes in the projected company results and may require
modifications to your business strategy and overall goals. Management information systems
either have trend analysis built in or can provide information that lets you carry out such an
analysis. Typical business strategies include projections for all fundamental operating results.
A trend analysis allows you to show what these results would be in the current situation
and how they will change once you have implemented the decisions you have taken. The
new values form the basis of your strategic approach going forward.

4. Implementation and Evaluation

While you make your decisions with specific goals in mind and have the documentation
from management information systems and trend analysis to support your expectations, you
have to track company results to make sure they develop as planned. Management
information systems give you the data you need to determine whether your decisions have
had the desired effect, or whether you have to take corrective action to reach your goals. If
specific results are not on track, you can use management information systems to evaluate the
situation and decide to take additional measures if necessary.

TRANSACTION PROCESSING SYSTEM

What is a Transaction?

● A business activity between seller and buyer to exchange an asset for payment.

● Basic business operations such as customer orders, purchase orders, receipts, time
cards, invoices, and payroll checks in an organization.

Types of Transactions

●
Internal Transactions Those transactions, which are internal to the company and are related with the

●
External Transactions Those transactions, which are external to the organization and are related with
History of TPS

One of the first transaction processing systems was the American Airline SABRE system,
which became operational in 1960. Designed to process up to 83,000 transactions a day, the
system ran on two IBM 7090 computers. SABRE was migrated to IBM System/360
computers in 1972, and became an IBM product first as Airline control Program (ACP) and
later as Transaction Processing Facility (TPF). In addition to airlines, TPF is used by large
banks, credit card companies, and hotel chains.

Qualifiers

In order to qualify as a TPS, transactions made by the system must pass the ACID test. The
ACID tests refers to the following four prerequisites:

● Atomicity

● Consistency

● Isolation
 ● Durability

Atomicity

Atomicity means that a transaction is either completed in full or not at all. For example, if
funds are transferred from one account to another, this only counts as a bonafide transaction
if both the withdrawal and deposit take place. If one account is debited and the other is not
credited, it does not qualify as a transaction. TPS systems ensure that transactions take place
in their entirety.

Consistency

TPS systems exist within a set of operating rules (or integrity constraints). If an integrity
constraint states that all transactions in a database must have a positive value, any transaction
with a negative value would be refused.

Isolation

Transactions must be independent of each other. This doesn’t actually happen. The user just
believes that it does. Isolation involves the appearance of treating each transaction separately
and keeping the data for each transaction separate.

Durability

Once transactions are completed they cannot be undone. To ensure that this is the case even
if the TPS suffers failure, a log will be created to document all completed transactions. These
four conditions ensure that TPS systems carry out their transactions in a methodical,
standardized and reliable manner.

Features of Transaction Processing Systems

● Rapid response Fast performance with a rapid response time is critical.

Transaction processing systems are usually measured by the number of transactions
they can process in a given period of time.
● Continuous Availability The system must be available during the time period
 when the users are entering transactions. Many organizations rely heavily on their
TPS. A breakdown will disrupt operations or even stop the business.
●
Data Integrity The system must be able to handle hardware or software problems without
corrupting data. Multiple users must be protected from
attempting to change the same piece of data at the same time, for example two
operators cannot sell the same seat on an airplane.
●
Ease Of Use Often users of transaction processing systems are casual users. The system should be
simple for them to understand, protect them from data-entry errors
as much as possible, and allow them to easily correct their errors.
● Modular growth The TPS hardware and software components should be able to be
upgraded individually without requiring a complete overhaul.
● Controlled processing Only authorized personnel, staff members, or employees
should be able to access the system at a time.

Types of Transaction Processing System

1 Batch Processing

As the name suggests, the processing of transactions takes place over batches. These batches
can be customized as per organization requirements. For example, a company may want to
process the payroll of its employees in a weekly or bi-weekly manner, thus the batches of
employee salaries will be processed over a span of one and two weeks respectively. There is
generally a time delay in this type of processing. Batch processing is where the information is
collected and stored as a batch but not processed immediately. Batch processing is useful for
enterprises that need to process large amounts of data using limited resources. Example:
Payment by cheque, Credit card transactions, etc. Batch Processing system
 2 Real-time Processing

Under real-time processing, every single transaction is processed with immediate effect.
There is no time delay in the real-time processing system. A system whereby each transaction
is processed immediately, without the delay of accumulating transactions into a batch.

Real-time transaction

● Mostly in Online shopping

● Uses PCI cards (Payment Card Industry)

● PayPal or Worldpay, We Pay, e-Way, ICEPAY, ATM’s.

Components of a Transaction Processing System (TPS)

Following are the 4 major components of an ideal TPS:

1. Inputs: The source documents fetched from the transactions made by customers or
organizations and contain information regarding money. These may be bills, invoices,
coupons, customer orders, etc.
2. Outputs: The documents generated after the complete processing of the inputs are
called outputs.
3. Processing units: Processing refers to the step where the information provided at the
input step is broken down into segments to be processed into relevant output.
4. Storage: The location in the memory where all the desired information is stored is
called memory. Generally, the information is stored in the form of ledgers.

Main Functions of a TPS(Transaction Processing System)?

The main functions of a TPS are conducted by the above-mentioned primary components.
These include:

1. Input functions: Securing and inputting the data of the transactions that have taken
place
2. Output functions: Producing the report and record of the input data to be used for
future references and validating the transaction
3. Storage functions: Storing the data from both input and output operations and
ensuring the availability of data for operations like information access, retrieval,
sorting, and updating.
4. Processing functions: Computing, calculating, sorting, and defining the input data to
get the desired results.

LIMITATIONS OF TPS

● Managing operations with the TPS can be complicated if the company is not big
enough to efficiently use the transaction processing system.
● TPS needs both hardware and software components to efficiently manage high data
volume. This capacity makes TPSs susceptible to software security breaches in the
form of the virus and faulty hardware issues such as power outage can disrupt the
whole system.
● Effective integration of a TPS in a company operation requires skilled personnel, it
also requires a link with associate company branches to maintain a secure flow of
information. This high requirement can create instability and flux in the company’s
daily operations.

UNIT - II
INTELLIGENT SUPPORT SYSTEM

Intelligent support systems (ISS) are systems that facilitate decisions requiring the use of
knowledge, intuition and experience.

Systems that fall into this category are:

● Decision support systems (DSS)

● Executive information systems (EIS)

● Artificial intelligence and expert systems (AIES)

DECISION SUPPORT SYSTEM (DSS)

Decision support systems (DSS) are interactive, well-integrated systems that provide
managers with data, tools and models to facilitate semi-structured decisions or tactical
decisions. Decision support systems are computerized systems that provide managers with
internal and external data and decision making models that facilitate semi-structured decision
making. As you may recall, a tactical decision is partly structured and partly unstructured.

An example of tactical decision is bidding on a contract. Part of the task is structured—for

example, considering standard operational costs and overheads—while part is unstructured,
since the bidder must take into account the way competitors may bid on the same contract.
DSS provides the decision maker with a set of tools and techniques that can be “mixed and
matched” in creative ways to solve semi-structured problems.

How a DSS works?

A DSS accesses and processes large volumes of internal and external data and integrates
them with various decision-making models.

● Internal data are often downloaded form the TPS or form other information systems.
(Downloading means moving data from a larger system, such as a mainframe, to a
smaller system such as a PC).
 ● External data may come a wide variety of sources, such as the Dow Jones, The Wall
street Journal, or other external databases maintained by government agencies or
private companies.

Analysis of DSS

○ The alternative generated by a decision maker can be further analyzed using

“what if” analysis, which assesses the impact of changes, made to input or
output variables. For example, producing pricing is a complex decision that
takes into account a number of internal factors such as material costs,
production costs, labor costs, and external factors such as competitor pricing
and product demand.
○ A DSS can present a manager with different pricing alternatives and help
answer “what if” questions such as these; “what if the price of raw materials
increases by 3.6% a year?” “What if demand for a product increases by 10%?”
“What if a competitor reduces its price for a similar product by 20%?”
○ A DSS also allows managers to perform goal-seeking, which specifies the
actions a manager should take in order to accomplish a certain goal. For
example, suppose the goal of the company is to increase sales of product A by
10%. A DSS can help a marketing manager decide on the course of action to
take regarding operating costs, product pricing, advertising and other related
issues in order to achieve the goal.
● Group decision support system: GDSS are a set of interactive, well-integrated systems
that facilitate and support group decision making. DSS is a tool that facilitates the
process of decision making more than simply solving a given problem.

EXECUTIVE INFORMATION SYSTEMS (EIS)

A second type of ISS, used primarily by top management, is the Executive

information system (EIS). It is a user-friendly, interactive system, designed to meet the
information needs of top management engaged in long-range planning, crisis management
and other strategic decisions.
 The primary difference between DSS and an EIS is that the goal of an EIS is not so
much to generate alternatives for a given problem as it is to integrate data from different
sources and present it in a useful format to the decision maker. An EIS is user-friendly and
almost intuitive to use; it has excellent menus and graphic capabilities. Another special
characteristic of an EIS is its drill-down capability, which is the ability of the system to
provide information at any level of detail desired by the decision maker. For example, the
CEO of a company may want a breakdown of sales figures on a regional basis or on a store-
wide basis. The drill down facility can provide both. A drill-down is a feature that allows the
user to get information at any desired level of detail from an EIS.

Characteristics of DSS and EIS

○ DSS and EIS are intelligent support systems designed to provide middle and
top managers with information necessary to make decisions that require
intuition and judgment.
○ Both DSS and EIS are intuitive, interactive, user-friendly systems that
augment the decision-making capabilities of a manager. They are menu-driven
and often have excellent color and graphic capabilities.
○ Both systems use internal and external data to solve problems. Managers at
this level tend to rely more on external data than on internal data.
○ A DSS also uses various decision-making models to provide managers with
alternative solutions to a given problem. An EIS provides managers with
information integrated from a variety of sources.
○ Both systems are equipped with decision-making tools such as “what-if”
analysis and goal seeking. In addition to these tools an EIS is equipped with
drill-down capabilities.
● A DSS can support both individual decision making and group decision making.
Decision support systems that support group decision making are referred to as group
decision support systems. (GDSS).

ARTIFICIAL INTELLIGENCE AND EXPERT SYSTEMS (AIES)

Artificial Intelligence: The third type of ISs is artificial intelligence (AI), a branch of
computer science whose goal is to design and develop computer systems that emulate human
intelligence. AI attempts to endow machines with capabilities and characteristics that would
indicate intelligence if found in a human being.

Expert systems: Expert systems (ES) are a branch of AI. It is software designed to capture the
knowledge and problem-solving skills of a human expert. Expert systems are good solving
semi-structured and unstructured problems and can solve problems that require theoretical
knowledge and practical experience. More important, they help organizations acquire and
retain knowledge that is vital to the competitiveness and the success of the company.

An expert system has three main components:

○ A knowledge base: The knowledge base, as its name implies, serves as a

storehouse of knowledge and experience gathered from experts in a given
field, including facts, theorems, and principles related to a given area of
knowledge or field of study. For example, an expert car mechanic would be
the source of knowledge for an expert system designed to solve car problems.
○ An inference engine: The second component of an expert system is the
inference engine, which uses rules of behavior and interrelationships between
different pieces of knowledge to solve the given problem. It selects the
appropriate knowledge, applies it to the problem and resolves any conflicts
that may arise in the process.
● A user interface: The user interface consists to tools, such as menus, graphics, and
explanation facilities that help users to interact with system. Of particular importance
is the explanation module in an expert system, which provides explanations as to how
a problem was solved and how the knowledge was used to solve the problem.

Characteristics of expert systems

○ An expert system is a program designed to capture the knowledge and

problem solving skills of a human expert. Expert systems are a branch of
artificial intelligence.
 ○ Expert systems handle problems that require knowledge, intuition and
judgment.
○
○ Expert systems, unlike DSS and EIS, can replace decision makers.
○ An expert system has three main components; the knowledge base, which
stores the knowledge, the inference engine, which stores the reasoning
principles used by the expert, and the user interface which allows the user to
interact with the system.
● Expert systems are not designed for any one level of management; their primary
function is to disseminate expertise throughout the organization.

DEFINITION DECISION SUPPORT SYSTEM (DSS)

Decision support systems (DSS) are interactive software-based systems intended to

help managers in decision-making by accessing large volumes of information generated from
various related information systems involved in organizational business processes, such as
office automation systems, transaction processing systems, etc.

DSS uses the summary information, exceptions, patterns, and trends using the
analytical models. A decision support system helps in decision-making but does not
necessarily give a decision itself. The decision makers compile useful information from raw
data, documents, personal knowledge, and/or business models to identify and solve problems
and make decisions.

Programmed and Non-programmed Decisions

There are two types of decisions - programmed and non-programmed decisions.

Programmed decisions
are basically automated processes, general routine work, where

● These decisions have been taken several times.

● These decisions follow some guidelines or rules.

For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions
occur in unusual and non-addressed situations, so

● It would be a new decision.

● There will not be any rules to follow.
● These decisions are made based on the available information.
● These decisions are based on the manger's discretion, instinct, perception and
judgment.

For example, investing in a new technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions. Therefore, there will
be no exact report, content, or format for these systems. Reports are generated on the fly.

ATTRIBUTES OF DSS
 ● Adaptability and flexibility
● High level of Interactivity
● Ease of use
● Efficiency and effectiveness
● Complete control by decision-makers
● Ease of development
● Extendibility
● Support for modeling and analysis
● Support for data access
● Standalone, integrated, and Web-based

CHARACTERISTICS OF DSS

● Support for decision-makers in semi-structured and unstructured problems.

● Support for managers at various managerial levels, ranging from top executive to line
managers.
● Support for individuals and groups. Less structured problems often require the
involvement of several individuals from different departments and organization
levels.
● Support for interdependent or sequential decisions.
● Support for intelligence, design, choice, and implementation.
● Support for a variety of decision processes and styles.
● DSSs are adaptive over time.

BENEFITS OF DSS

● Improves efficiency and speed of decision-making activities.

● Increases the control, competitiveness and capability of futuristic decision-making of
the organization.
● Facilitates interpersonal communication.
● Encourages learning or training.
● Since it is mostly used in non-programmed decisions, it reveals new approaches and
sets up new evidence for an unusual decision.
 ● Helps automate managerial processes.

COMPONENTS OF A DSS

Following are the components of the Decision Support System

1. Database Management System (DBMS)

To solve a problem the necessary data may come from

2. Model Management System

It stores and accesses models that managers use to make decisions. Such models ar

3. Support Tools
Support tools like online help; pulls down menus, user interfaces, graphical analysi
CLASSIFICATION OF DSS

There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows

1. Text Oriented DSS

It contains textually represented information that could have a bearing on decision. It a

2. Database Oriented DSS

Database plays a major role here; it contains organized and highly struct

3. Spreadsheet Oriented DSS

It contains information in spread sheets that allows create, view, modi

4. Solver Oriented DSS

It is based on a solver, which is an algorithm or procedure written for perfor

5. Rules Oriented DSS

It follows certain procedures adopted as rules.

6. Compound DSS
It is built by using two or more of the five structures explained above.

TYPES OF DSS
 1. Status Inquiry System

It helps in taking operational, management level, or middle level management decisio

2. Data Analysis System

It needs comparative analysis and makes use of formula or an algorithm, for

3. Information Analysis System

In this system data is analyzed and the information report is generate

4. Accounting System

It keeps track of accounting and finance related information, for example, fina

5. Model Based System

Simulation models or optimization models used for decision-making are used

Advantages of a Decision Support System

● A decision support system increases the speed and efficiency of decision-making

activities. It is possible, as a DSS can collect and analyze real-time data.
● It promotes training within the organization, as specific skills must be developed to
implement and run a DSS within an organization.
● It automates monotonous managerial processes, which means more of the manager’s
time can be spent on decision-making.
● It improves interpersonal communication within the organization.

Disadvantages of a Decision Support System

● The cost to develop and implement a DSS is a huge capital investment, which makes
it less accessible to smaller organizations.
 ● A company can develop a dependence on a DSS, as it is integrated into daily
decision-making processes to improve efficiency and speed. However, managers tend
to rely on the system too much, which takes away the subjectivity aspect of decision-
making.
● A DSS may lead to information overload because an information system tends to
consider all aspects of a problem. It creates a dilemma for end-users, as they are left
with multiple choices.
● Implementation of a DSS can cause fear and backlash from lower-level employees.
Many of them are not comfortable with new technology and are afraid of losing their
jobs to technology.

UNIT - III

COMPONENTS OF DSS

The components of decision support system are as follows :

1. Data Management Sub-System

Data management sub-system comprises a database that contains appropriate data related to
the situation and is managed by the database management system (DBMS) software. The data
management sub-system can be connected to this corporate data warehouse. A corporate data
warehouse refers to the library of corporate relevant decision-making data. The data is stored
and accessed by a database web server. The element of data management subsystem are as
follows :

i) Database management system

ii) Query facility

iii) DSS database

iv) Data directory

2. User Interface Sub-System

The intensive interaction between the computer and decision maker has led to the unique
contribution of DSS. This sub-system helps the user to communicate with the DSS. A user-
friendly reliable graphical user interface structure is offered by the web browser for most of
the DSS.

3. Model Management Sub-System

Model management subsystem includes modelling languages that are used for building
custom models. It can be related to corporate or external storage of models. Model base
management system refers to a software package that includes statistical, financial,
management science or other quantitative models that offer the analytical capabilities of the
system and suitable software management. It can be related to corporate or external storage
models. MBMS solution is implemented and run on application servers.

Model management sub-system comprises of the following elements :

i) Model directory

ii) Model base

iii) Model base management system

iv) Modelling language

v) Model execution, integration and command processor

4. Knowledge Based Management Sub-System

This sub-system easily integrates with the other DSS components. Knowledge based
management sub-system can act as an independent component or can provide support to any
other sub-system. It enhances the decision-makers intelligence. The knowledge is provided
via web browsers. It can be interrelated with the organisation knowledge base which is a part
of the knowledge management system.

FUNCTIONS OF DSS

1. Model Building

DSS aids in the decision-making process by identifying the most appropriate model for
solving problems. It considers the input variables, inter relationship among the variables,
problem assumption and constraints to design a suitable model.

For example : A television manufacturing company has given the responsibility to its
marketing manager to develop a sales forecasting model for colour TV sets.
2. Risk Analysis

DSS is especially helpful while taking medium or high risk decisions. Decisions can be low,
medium or high risks. DSS helps in assessment of risks of various alternatives by managers
in a business enterprise which helps in making decisions.

3. Goal Oriented

This activity refers to the procedure of determining the value of input that is required to
succeed a particular goal.

For example : While deciding to buy a house, a person first calculates the equated monthly
installments that she or he can afford and for how long.

4. Graphical Analysis

It provides a large volume of data in graphical format to visualise it easily and quickly.
Managers can also view the impact of various courses of action. The use of graph is
recommended when :

i) Forecasting

ii) Detecting Trends over time

iii) A quick summary of data is required

iv) Composing points and patterns at different variables

5. What-if Analysis

If this activity, an end user will make changes to variables or relationships among them to
notice the resulting changes in other variables.

For example : If advertising cost is cut by 10% what would be the corresponding impact on
sales ?

CHARACTERISTICS OF DSS
1. Performs Complex, Sophisticated Analysis and Comparisons Using Advanced
Software Packages -

There are several programs (part of DSS) used by various methods that analyse the raw data.

For example : A market research survey can be analysed by different standalone analytical
programs associated with DSS. It is DSS which then integrates these programs to come up
with com

2. Provides Report and Presentation Flexibility -

This information gathered with the help of DSS may be displayed on the computer screen or
can be printed according to the needs of the decision makers. Managers get access to different
kinds of reports in formats that fit their requirements.

3. Provides Rapid Access to Information -

Continuous and Rapid access of information is offered by DSS.

For example : The metres on the dashboard of a vehicle are used to keep a watch on how the
vehicle is running.

4. Supports Drill-Down Analysis -

DSS helps the manager in going through details of the project by drilling down through data.

For example : When reviewing the total project cost, the manager can easily break it down to
estimate the cost for each phase, activity or task.

5. Handles Large Amounts of Data from Different Sources -

DSS has the ability to accumulate data from different databases which are stored on different
computer systems or networks. It can also source data from the internet.

6. Offers both Textual and Graphical Orientation -

DSS can produce information in a wide variety of text and graphics such as plain texts,
tables, Pie Charts, Trends Lines, line drawings etc. All of these provide a better
understanding of a situation to managers and help them to communicate the same to others.

ADVANTAGES OF DSS
1. Facilitating Communication

DSS helps in indicating when a particular action should be adopted in future or why a
particular action was acceptable in the past. The DSS facilitates interpersonal communication
and hence it is used as a tool for the benefit of business.

2. Increasing Organisational Control

DSS controls this information, which is in turn used by the managers in assessing the
productivity of an individual in the quantity and quality of their decision making ability.
Some DSS can evaluate the individual's decision making skills.

3. Improving Personal Efficiency

DSS aids in improving personal efficiency. Although it does not do any work in actuality, it
aids in doing any work a bit faster and with greater efficiency.

For example : Budgets were earlier prepared manually before spreadsheets software was
discovered but DSS helps to make work faster with less changes of error.

4. Promoting Learning or Training

DSS helps people to learn more about computer and software packages that are present in it.
Although this was never the motive of DSS, it promotes learning as well.

5. Improving Problem Solving

DSS helps a person or a group of people in solving problems at a much faster pace with
accuracy. When probably applied, it increases the efficiency of a task. It aids in solving the
problem as a whole.

DISADVANTAGES OF DSS

1. Limited Storage Capability

DSS has computation limitations because of its small memory and limited storage capacities.

2. Difficult
It is difficult to understand inter-dependency of functions within the system. Monitoring of
consequences of DSS function usage in relation to decision scenerio and integrity of database
is complex.

3. Slow

The speed of DSS is much slower than large mainframes.

4. Limited Information Sharing

Decision support systems are mostly designed for individual use but when they are designed
for multiple accesses by several computers, DSS provides only limited sharing of its
information.

5. Translation Problems

The translation problems can occur at the time when users interact with DSS databases
because these databases in turn are made up of different data models, which may face
translation problems while interfacing with one another.

6. Confliction

As users have to constantly work on several decision scenarios at the same time, they have to
simultaneously monitor the decisions taken.

7. Require Extensive Knowledge

There are applications which need extensive technical knowledge.

DEVELOPMENT OF DSS

• Phase one – Choosing the project or problem to be solved: Departments involved are
committed to the process of finding a suitable solution

• Phase two – Selecting software and hardware: Select suitable DSS software and hardware

• Phase three – Data acquisition and management: Acquire and maintain data in the
knowledge base

• Phase four – Model subsystem acquisition and management: Build the model base: acquire
and include relevant models in the model base
• Phase five – Dialogue subsystem and its management: Develop the user interface

• Phase six – Knowledge component: Perform knowledge engineering

• Phase seven – Packaging: The various software components of the DSS will be put together
for easy testing and usage

• Phase eight – Testing, evaluation and improvement: Test the DSS with sample input and
validate it to prove that the DSS is reliable

• Phase nine – User training: Train users in using the DSS

• Phase 10 – Documentation and maintenance: Produce documentation and maintain the DSS,
and

• Phase 11 – Adaption: Adapt DSS to suit user needs

GROUP DECISION SUPPORT SYSTEM

GDSS is the abbreviation for Group Decision Support System. It is a system that
supports decision-making and has been designed and structured in such a way so that the
members constituting a group can interact with each other to arrive at a particular decision. It
provides support for various group decision-making activities such as file sharing, integration
of the individual opinions with that of the group, communication, modelling of group actions
and any other action which requires interaction of the group members.

The decision support systems that have been mentioned till now facilitate a single
person to take decisions by providing computerised support. These decisions fall into the
unstructured or semi-structured category. Most of the decisions that have to be taken in the
organisation are generally a group effort rather than taken by a single person.

The main characteristic of the Group Decision Support Systems or GDSS is to

support exchange and flow of information and ideas seamlessly between various members of
the decision-making group. It also maintains the privacy of the members. There are also
many other terms that have been introduced for the use of information technology in
decision-making within a group. Some of the popular terms that are in use include Group
Support System (GSS), Computer-Supported Co-operative Work (CSCW), computerised
collaborative work support and Electronic Meeting System (EMS). Groupware is the term
that has been coined for software used in such a scenario.

Thus, a computer-based system is interactive in nature and helps in solving problems

that are unstructured in nature when a group of decision makers are working in collaboration
with each other.

FEATURES OF GDSS

1) Ease of Use

It consists of an interactive interface that makes working with GDSS simple and easy.

2) Better Decision Making

It provides the conference room setting and various software tools that facilitate users at
different locations to make decisions as a group resulting in better decisions.

3) Emphasis on Semi-structured and Unstructured Decisions

It provides important information that assists middle and higher level management in making
semi-structured and unstructured decisions.

4) Specific and General Support

The facilitator controls the different phases of the group decision support system meeting
(idea generation, discussion, voting and vote counting, etc.) what is displayed on the central
screen and the type of ranking and voting that takes place, etc. In addition, the facilitator also
provides general support to the group and helps them to use the system.

5) Supports all Phases of the Decision Making

It can support all the four phases of decision making, viz intelligence, design, choice, and
implementation.

6) Supports Positive Group Behavior

In a group meeting, as participants can share their ideas more openly without the fear of
being criticized, they display more positive group behavior towards the subject matter of the
meeting.

COMPONENTS OF GDSS

A group decision support system (GDSS) is composed of 3 main components, namely

hardware, software tools, and people.

1) Hardware

It includes electronic hardware like the computer, equipment used for networking, electronic
display boards and audiovisual equipment. It also includes the conference facility, including
the physical set up – the room, the tables, and the chairs – laid out in such a manner that they
can support group discussion and teamwork.

2) Software Tools

It includes various tools and techniques, such as electronic questionnaires, electronic

brainstorming tools, idea organizers, tools for setting priority, policy formation tools, etc. The
use of these software tools in a group meeting helps the group decision-makers to plan,
organize ideas, gather information, establish priorities, take decisions and document the
meeting proceedings. As a result, meetings become more productive.

3) People
It comprises the members participating in the meeting, a trained facilitator who helps with the
proceedings of the meeting, and an expert staff to support the hardware and software. The
GDSS components together provide a favorable environment for carrying out group
meetings.

Group Decision Support System (GDSS) Software Tools

Group decision support system software tools help the decision-makers in organizing their
ideas, gathering required information and setting and ranking priorities. Some of these tools
are as follows:

● Electronic Questionnaire: The information generated using the questionnaires

helps the organizers of the meeting to identify the issues that need immediate
attention, thereby enabling the organizers to create a meeting plan in advance.
● Electronic Brainstorming Tools: It allows the participants to simultaneously
contribute their ideas on the subject matter of the meeting. As the identity of
each participant remains secret, individuals participate in the meeting without
the fear of criticism.
● Idea Organizer: It helps in bringing together, evaluating and categorizing the
ideas that are produced during the brainstorming activity.
● Tools for Setting Priority: It includes a collection of techniques, such as simple
voting, ranking in order and some weighted techniques that are used for voting
and setting priorities in a group meeting.
● Policy Formation Tool: It provides the necessary support for converting the
wordings of policy statements into an agreement.

ADVANTAGES OF GDSS

1) More Information in Less Time

It is possible to gather a huge amount of information in a very short time period as GDSS
facilitates the members of the team to work parallel.
2) Greater Participation

The risks associated with conformity pressure and groupthink is greatly decreased when the
members of the group work in a GDSS because the members are able to express their
thoughts freely. This is due to the anonymity feature extended by GDSS.

3) More Structure

In a GDSS environment the discussions are much more concentrated and focused. Irrelevant
degradations are greatly reduced.

4) Automated Documentation

Comments are preserved forever and the system provides the result without any delay.
Excellent graphics make viewing more attractive.

DISADVANTAGES OF GDSS

1) Cost

A significant amount of cost may be associated with putting up the infrastructure consisting
of the room, network connectivity and the software.

2) Security

This risk arises when the facility for setting up GDSS has been rented. There are chances that
information gets leaked to peers by a low level employee.

3) Technical Failure

The system must be properly implemented to reduce the risk associated with loss of
connectivity and power loss. It is highly dependent on LAN/WAN infrastructure and
bandwidth.

4) Keyboarding Skills

If the members get frustrated they might participate less.

5) Training

There is variation in the learning curve of the user in various situations.

6) Perception of Messages
MIS-interpretations may occur in case the members communicate less verbally.

RELATIONSHIP BETWEEN MIS AND DSS

DSS MEASURES OF SUCCESS IN ORGANIZATIONS

● System quality – the desirable characteristics of an information system. For example:

ease of use, system flexibility, system reliability, and ease of learning, as well as
system features of intuitiveness, sophistication, flexibility, and response times.
● Information quality – the desirable characteristics of the system outputs; that is,
management reports and Web pages. For example: relevance, understandability,
accuracy, conciseness, completeness, understandability, currency, timeliness, and
usability.
● Service quality – the quality of the support that system users receive from the IS
department and IT support personnel. For example: responsiveness, accuracy,
reliability, technical competence, and empathy of the personnel staff. SERVQUAL,
adapted from the field of marketing, is a popular instrument for measuring IS service
quality.
● System use – the degree and manner in which staff and customers utilize the
capabilities of an information system. For example: amount of use, frequency of use,
nature of use, appropriateness of use, extent of use, and purpose of use.
● User satisfaction – users' level of satisfaction with reports, Web sites, and support
services. For example, the most widely used multi-attribute instrument for measuring
user information satisfaction can be found in.
● Net benefits – the extent to which IS are contributing to the success of individuals,
groups, organizations, industries, and nations. For example: improved decision-
making, improved productivity, increased sales, cost reductions, improved profits,
market efficiency, consumer welfare, creation of jobs, and economic development
have used production economics to measure the positive impact of IT investments on
firm-level productivity.

UNIT - IV
ONE WAY CHI-SQUARE TEST

Chi-square test is a hypothesis testing method. Two common Chi-square tests involve
checking if observed frequencies in one or more categories match expected frequencies.
There are two commonly used Chi-square tests: the Chi-square goodness of fit test and the
Chi-square test of independence. Both tests involve variables that divide your data into
categories. As a result, people can be confused about which test to use. The table below
compares the two tests.

TWO WAY CHI-SQUARE TEST

DATA TRANSFORMATION

Data transformation is the process in which data gets converted from one format to another.
The most common data transformation process involves collecting raw data and converting it
into clean, usable data. Data transformation increases the efficiency of business and analytic
processes, and it enables businesses to make better data-driven decisions. During the data
transformation process, an analyst will determine the structure of the data. This could mean
that data transformation may be:

● Constructive: The data transformation process adds, copies, or replicates data.

● Destructive: The system deletes fields or records.

● Aesthetic: The transformation standardizes the data to meet requirements or

parameters.

● Structural: The database is reorganized by renaming, moving, or combining columns.

Data Transformation Process

When data is extracted from its local source, it’s typically raw and unusable. To overcome
this issue, the data needs to be transformed. The entire process for transforming data is
known as ETL, which stands for Extract, Load, and Transform. Through the ETL process,
analysts can convert data to its desired format. Here are the steps involved in the data
transformation process:

1. Data Discovery: During the first stage, analysts work to understand and identify data
in its source format. To do this, they’ll use data profiling tools. This step helps
analysts decide what they need to do to get data into its desired format.

2. Data Mapping: During this phase, analysts perform data mapping to determine how
individual fields are modified, mapped, filtered, joined, and aggregated. Data
mapping is essential to many data processes, and one misstep can lead to incorrect
analysis and ripple through your entire organization.

3. Data Extraction: During this phase, analysts extract the data from its original source.
These may include structured sources such as databases or streaming sources such as
customer log files from web applications.

4. Code Generation and Execution: Once the data has been extracted, analysts need to
create a code to complete the transformation. Often, analysts generate codes with the
help of data transformation platforms or tools.

5. Review: After transforming the data, analysts need to check it to ensure everything
has been formatted correctly.

6. Sending: The final step involves sending the data to its target destination. The target
might be a data warehouse or a database that handles both structured and unstructured
data.

Data Transformation Types

There are several different ways to transform data. These include:

1. Scripting
Data transformation through scripting involves using Python or SQL to write the code to
extract and transform data. Python and SQL are scripting languages that allow you to
automate certain tasks in a program. They also allow you to extract information from data
sets. Scripting languages require less code than traditional programming languages and are
therefore less intensive. You can also update multiple jobs utilizing the Python Mitto SDK,
enabling your business to interact remotely with schedules, jobs, and other business
functions.

2. On-Premises ETL Tools

ETL tools allow you to extract, transform, and load data. ETL tools take the painstaking work
it requires to script the data transformation by automating the process. On-premises ETL
tools are hosted on company servers. While these tools can help save you time, using them
often requires extensive expertise and significant infrastructure costs.

3. Cloud-Based ETL Tools

As the name suggests, cloud-based ETL tools are hosted in the cloud. These tools are often
easiest for non-technical users to utilize. They allow you to collect data from any cloud
source and load it into your data warehouse. With cloud-based ETL tools, you can decide
how often you want to pull data from your source, and you can monitor your usage. Zuar's
Mitto is an example of a product that has ETL/ELT capabilities, but also helps you manage
the data both earlier and further along in its journey. Mitto can be hosted either on-premise or
in the cloud.

Data Transformation Techniques

There are several data transformation techniques that can help structure and clean up the data
before analysis or storage in a data warehouse. Here are some of the more common methods:

● Data Smoothing: This is the data transformation process of removing distorted or

meaningless data from the dataset. It also detects minor modifications to the data to
identify specific patterns or trends.

● Data Aggregation: Data aggregation collects raw data from multiple sources and
stores it in a single format for accurate analysis and reports. This technique is
necessary when your business collects high volumes of data.
 ● Discretization: This data transformation technique creates interval labels in
continuous data to improve efficiency and easier analysis. The process utilizes
decision tree algorithms to transform a large dataset into compact categorical data.

● Generalization: Utilizing concept hierarchies, generalization transformslow-level data

attributes into high-level data attributes to create a clear data snapshot.

● Attribute Construction: This technique allows a dataset to be organized by creating

new attributes from an existing set of attributes.

● Normalization: Normalization transforms the data so that the attributes stay within a
specified range for more efficient extraction and data mining algorithm application.

Data Transformation: Benefits

Transforming data can help businesses in a variety of ways. Here are some of the biggest
benefits of data transformation:

1. Better Organization: Transformed data is easier for both humans and computers to
use.

2. Improved Data Quality: There are many risks and costs associated with bad data. Data
transformation can help your organization eliminate quality issues such as missing
values and other inconsistencies.

3. Perform Faster Queries: You can quickly and easily retrieve transformed data.
4. Better Data Management: Businesses are constantly generating data from more and
more sources. If there are inconsistencies in the metadata, it can make it more of a
challenge to organize and understand it. Data transformation refines your metadata, so
it’s easier to organize and understand.

5. More Use Out of Data: While businesses may be collecting data constantly, a lot of
that data sits around unanalyzed. Transformation makes it easier to get the most out of
your data by standardizing it and making it more usable.
ONE WAY ANOVA

A one-way ANOVA (“analysis of variance”) compares the means of three or more

independent groups to determine if there is a statistically significant difference between the
corresponding population means.

A one-way ANOVA uses the following null and alternative hypotheses:

● H0 (null hypothesis): μ1 = μ2 = μ3 = … = μk (all the population means are equal)

● H1 (alternative hypothesis): at least one population mean is different from the rest

Assumptions

For the results of a one-way ANOVA to be valid, the following assumptions should be met:

1. Normality – Each sample was drawn from a normally distributed population.

2. Equal Variances – The variances of the populations that the samples come from are equal.
You can use Bartlett’s Test to verify this assumption.

3. Independence – The observations in each group are independent of each other and the
observations within groups were obtained by a random sample.
where:

● SSR: regression sum of squares

● SSE: error sum of squares
● SST: total sum of squares (SST = SSR + SSE)
● dfr: regression degrees of freedom (dfr = k-1)
● dfe: error degrees of freedom (dfe = n-k)
● dft: total degrees of freedom (dft = n-1)
○ k: total number of groups
○ n: total observations
● MSR: regression mean square (MSR = SSR/dfr)
● MSE: error mean square (MSE = SSE/dfe)
● F: The F test statistic (F = MSR/MSE)
● p: The p-value that corresponds to Fdfr, dfe

If the p-value is less than your chosen significance level (e.g. 0.05), then you can reject the
null hypothesis and conclude that at least one of the population means is different from the
others.
 Note: If you reject the null hypothesis, this indicates that at least one of the population means
is different from the others, but the ANOVA table doesn’t specify which population means
are different. To determine this, you need to perform post hoc tests, also known as “multiple
comparisons” tests.

PROBLEMS - https://atozmath.com/example/CONM/Anova.aspx?he=e&q=anova1

CALCULATION OF MEASURES OF CENTRAL TENDENCY

The central tendency is stated as the statistical measure that represents the single value of the

entire distribution or a dataset. It aims to provide an accurate description of the entire data in

the distribution. Measures of central tendency help you find the middle, or the average, of a

data set. The 3 most common measures of central tendency are the mode, median, and mean.

● Mode: the most frequent value.

● Median: the middle number in an ordered data set.

● Mean: the sum of all values divided by the total number of values.

Mean
The mean represents the average value of the dataset. It can be calculated as the sum of all
the values in the dataset divided by the number of values. In general, it is considered as the
arithmetic mean. Some other measures of mean used to find the central tendency are as
follows:
 ● Geometric Mean
● Harmonic Mean
● Weighted Mean

It is observed that if all the values in the dataset are the same, then all geometric, arithmetic
and harmonic mean values are the same. If there is variability in the data, then the mean value
differs. Calculating the mean value is completely easy. The formula to calculate the mean
value is given as

The histogram given below shows the mean value of symmetric continuous data and the
skewed continuous data.
 In symmetric data distribution, the mean value is located accurately at the centre. But in the
skewed continuous data distribution, the extreme values in the extended tail pull the mean
value away from the centre. So it is recommended that the mean can be used for the
symmetric distributions.

Median
Median is the middle value of the dataset in which the dataset is arranged in the ascending
order or in descending order. When the dataset contains an even number of values, then the
median value of the dataset can be found by taking the mean of the middle two values.

Consider the given dataset with the odd number of observations arranged in descending order
– 23, 21, 18, 16, 15, 13, 12, 10, 9, 7, 6, 5, and 2

Here 12 is the middle or median number that has 6 values above it and 6 values below it.

Now, consider another example with an even number of observations that are arranged in
descending order – 40, 38, 35, 33, 32, 30, 29, 27, 26, 24, 23, 22, 19, and 17
 When you look at the given dataset, the two middle values obtained are 27 and 29.

Now, find out the mean value for these two numbers.

i.e.,(27+29)/2 =28

Therefore, the median for the given data distribution is 28.

Mode
The mode represents the frequently occurring value in the dataset. Sometimes the dataset may
contain multiple modes and in some cases, it does not contain any mode at all.

Consider the given dataset 5, 4, 2, 3, 2, 1, 5, 4, 5

Since the mode represents the most common value. Hence, the most frequently repeated
value in the given dataset is 5.

Based on the properties of the data, the measures of central tendency are selected.

● If you have a symmetrical distribution of continuous data, all the three measures of
central tendency hold good. But most of the time, the analyst uses the mean because it
involves all the values in the distribution or dataset.
● If you have skewed distribution, the best measure of finding the central tendency is
the median.
● If you have the original data, then both the median and mode are the best choice of
measuring the central tendency.
● If you have categorical data, the mode is the best choice to find the central tendency.

What are the 4 measures of central tendency?

The four measures of central tendency are mean, median, mode and the midrange. Here, mid-
range or mid-extreme of a set of statistical data values is the arithmetic mean of the maximum
and minimum values in a data set.
What are central tendency examples?

Central tendency is a statistic that represents the single value of the entire population or a
dataset. Some of the important examples of central tendency include mode, median,
arithmetic mean and geometric mean, etc.

How do you find the central tendency?

The central tendency can be found using the formulas of mean, median or mode in most of
the cases. As we know, mean is the average of a given data set, median is the middlemost
data value and the mode represents the most frequently occurring data value in the set.

What is the purpose of central tendency?

The purpose of the central tendency is to provide an exact representation of the entire
collected data. It is often defined as the single value that is representative of the data.

What is the difference between mean and median?

Mean is the average (or arithmetic mean) of the values of a data set, whereas median is the
middlemost value of the data.

Which is the best central tendency measure?

The mean is considered the best measure of central tendency to use if the data distribution is
continuous and symmetrical.

MULTIDIMENSIONAL SCALING

What is multidimensional scaling in machine learning?

Multidimensional Scaling (MDS) is a family of mathematical models that can be utilized for
the purpose of analyzing and visualizing the distances between objects, where the distance is
known between pairs of these objects.

It is a way to visualize the level of similarity of individual cases of a dataset. It is employed to

make possible the translation of “information about the pairwise 'distances' among a set of n
objects or individuals" into a configuration of n points that is mapped into an abstract
Cartesian space.

It refers to a set of related ordination techniques that is utilized in information visualization,

especially for displaying the information that is contained in a distance matrix. MDS is a type
of non-linear dimensionality reduction. Multidimensional scaling is based on similarity or
dissimilarity data.

What is classical multidimensional scaling?

Classical Multidimensional Scaling (CMDS) is a method that showcases the structure of

distance-like data in the form of a geometrical picture. CMDS is also referred to as Principal
Coordinates Analysis (PCoA), Torgerson Scaling, or Torgerson–Gower scaling.

It takes an input matrix displaying dissimilarities between pairs of items and generates an
output in the form of a coordinate matrix whose configuration minimizes a loss function
known as strain.

This is how a Classical MDS algorithm tends to work:

It makes use of the fact that it can derive the coordinate matrix X through eigenvalue
decomposition from B = XX’. By making use of double centering, the matrix B can be
computed from proximity matrix D.

What is metric multidimensional scaling (mMDS)?

mMDS is a superset of classical multidimensional scaling. It generalizes the optimization

procedure to a wide range of loss functions and input matrices of known distances with
weights and so on.
What is non-metric multidimensional scaling (nMDS)?

Unlike metric multidimensional scaling, non-metric multidimensional scaling identifies a

non-parametric monotonic relationship between the dissimilarities in the item-item matrix as
well as the Euclidean distances between items, along with the location of every item in the
low-dimensional space.

The basic steps that are involved in the functioning of an nMDS algorithm are:

● Identifying a random configuration of points.

● Calculate the distances d between the points.
● Find the optimal monotonic transformation of the proximities, for the purpose of
obtaining optimally scaled data f(x).
● Minimizing the stress between the optimally scaled data and the distances by
identifying a fresh configuration of points.
● Comparing the stress to some criterion. If the stress is small enough then you can
leave the algorithm; if not, you can return to the second step.

What is generalized multidimensional scaling (GMDS)?

This is an extension of metric multidimensional scaling. In GMDS, an arbitrary smooth non-

Euclidean space becomes the target space. Generalized multidimensional scaling allows you
to find the minimum-distortion embedding of one surface into another when the
dissimilarities are distances on a surface and the target space is another surface.

What is stress in multidimensional scaling?

Stress is the measure of goodness-of-fit in multidimensional scaling. It is based on the

differences between the predicted and the actual distances.

This measures the difference between the observed (dis)similarity matrix and the estimated
similarity matrix by using one or multiple estimated stimuli dimensions.

Lower stress indicates that the fit is better.

What is the purpose of multidimensional scaling?

The key purpose of multidimensional scaling is mapping the relative location of objects using
data that can demonstrate how the objects differ. Torgerson undertook seminal work on this
method.

What is multidimensional scaling used for?

Multidimensional scaling (MDS) is used to represent high-dimensional data in a low-

dimensional space while preserving the similarities between data points. This is critical for
analyzing and revealing the genuine structure hidden in the data. It can be used on noisy data
to reduce the effect of the noise on the embedded structure. MDS can also lower information
retrieval complexity in large datasets. It has many applications in data mining, gene network
research, genomics research, and other domains.

How is multidimensional scaling calculated?

Here are the basic steps for calculating multidimensional space:

● Start by assigning a number of points to coordinates in n-dimensional space.

● Next, you’ll need to calculate the Euclidean distances for all pairs of points. This can
be accomplished with the use of the Pythagorean theorem (a2 + b2 = c2). Now you
get the similarity matrix.
● After that, you want to make a comparison between the similarity matrix and the
initial input matrix by means of evaluating the stress function.
● Adjust coordinates, for minimizing stress

What is the difference between MDS and PCA?

MDS transforms distances into similarities and then performs PCA on those similarities. So,
you can technically call PCA or PCoA (Principal Coordinate Analysis) the algorithm for the
simplest multidimensional scaling. nMDS is based on the iterative ALSCAL or PROXSCAL
algorithms or other similar algorithms. This is more versatile as a mapping technique than
PCA is. PCA is simply a method, while MDS is an entire class of analysis.

Multidimensionality Scaling Methods

Multidimensional Scaling is a family of statistical methods that focus on creating mappings
of items based on distance. Inside Multidimensional Scaling, there are methods for different
types of data:

● Metric Multidimensional Scaling, also called Principal Coordinate Analysis, is a

subtype of Multidimensional Scaling that deals with numerical distances, in
which there is no measurement error (you have exactly one distance measure for
each pair of items).
● Nonmetric Multidimensional Scaling is a subcategory of Multidimensional
Scaling that deals with non-numerical distances between items, in which there is
no measurement error (you have exactly one distance measure for each pair of
items).
● Individual Differences Scaling is a type of Multidimensional Scaling that applies
when you have multiple (different) estimates of the distances between items. This
is often the case when multiple individuals each give an estimation of the
distances between all the pairs.
● Multidimensional Analysis of Preference is a type of Multidimensional Scaling
that applies when you have multiple (different) estimates of the distances
between items. This method does not work on distance matrices yet rather it
works on ranking data (multiple participants each rank items from best to worst).

PAIRWISE COMPARE COLUMN PROPORTIONS

VARIABILITY

Variability describes how far apart data points lie from each other and from the center of a

distribution. Along with measures of central tendency, measures of variability give you

descriptive statistics that summarize your data.

Variability is also referred to as spread, scatter or dispersion. It is most commonly measured

with the following:

 ● Range: the difference between the highest and lowest values

● Interquartile range: the range of the middle half of a distribution

● Standard deviation: average distance from the mean

● Variance: average of squared distances from the mean

Why does variability matter?

While the central tendency, or average, tells you where most of your points lie, variability

summarizes how far apart they are. This is important because the amount of variability

determines how well you can generalize results from the sample to your population.

Low variability is ideal because it means that you can better predict information about the

population based on sample data. High variability means that the values are less consistent, so

it’s harder to make predictions.

Data sets can have the same central tendency but different levels of variability or vice versa.

If you know only the central tendency or the variability, you can’t say anything about the

other aspect. Both of them together give you a complete picture of your data.

Example: Variability in normal distributionsYou are investigating the amounts of time spent

on phones daily by different groups of people.

Using simple random samples, you collect data from 3 groups:

● Sample A: high school students,

● Sample B: college students,

● Sample C: adult full-time employees.

All three of your samples have the same average phone use, at 195 minutes or 3 hours and 15

minutes. This is the x-axis value where the peak of the curves are.

Although the data follows a normal distribution, each sample has different spreads. Sample A has

the largest variability while Sample C has the smallest variability.

1. Range

The range tells you the spread of your data from the lowest to the highest value in the

distribution. It’s the easiest measure of variability to calculate.

To find the range, simply subtract the lowest value from the highest value in the data set.

Range exampleYou have 8 data points from Sample A.

Data (minutes) 72 110 134 190 238 287 305 324

The highest value (H) is 324 and the lowest (L) is 72.

R=H–L
R = 324 – 72 = 252

The range of your data is 252 minutes.

Because only 2 numbers are used, the range is influenced by outliers and doesn’t give you

any information about the distribution of values. It’s best used in combination with other

measures.

2. Interquartile range

The interquartile range gives you the spread of the middle of your distribution.

For any distribution that’s ordered from low to high, the interquartile range contains half of

the values. While the first quartile (Q1) contains the first 25% of values, the fourth quartile

(Q4) contains the last 25% of values.

The interquartile range is the third quartile (Q3) minus the first quartile (Q1). This gives us

the range of the middle half of a data set.

 Interquartile range exampleTo find the interquartile range of your 8 data points, you first find

the values at Q1 and Q3.

Multiply the number of values in the data set (8) by 0.25 for the 25th percentile (Q1) and by 0.75

for the 75th percentile (Q3).

Q1 position: 0.25 x 8 = 2

Q3 position: 0.75 x 8 = 6

Q1 is the value in the 2nd position, which is 110. Q3 is the value in the 6th position, which is 287.

IQR = Q3 – Q1

IQR = 287 – 110 = 177

The interquartile range of your data is 177 minutes.

Just like the range, the interquartile range uses only 2 values in its calculation. But the IQR is

less affected by outliers: the 2 values come from the middle half of the data set, so they are

unlikely to be extreme scores.

The IQR gives a consistent measure of variability for skewed as well as normal distributions.

Five-number summary
Every distribution can be organized using a five-number summary:

● Lowest value

● Q1: 25th percentile

● Q2: the median

● Q3: 75th percentile

● Highest value (Q4)

These five-number summaries can be easily visualized using box and whisker plots.
Box and whisker plot exampleFor each of our samples, the horizontal lines in a box show Q1,

the median and Q3, while the whiskers at the end show the highest and lowest values.

3. Standard deviation

The standard deviation is the average amount of variability in your dataset.

It tells you, on average, how far each score lies from the mean. The larger the standard

deviation, the more variable the data set is.

There are six steps for finding the standard deviation by hand:

1. List each score and find their mean.

2. Subtract the mean from each score to get the deviation from the mean.

3. Square each of these deviations.

 4. Add up all of the squared deviations.

5. Divide the sum of the squared deviations by n – 1 (for a sample) or N (for a

population).

6. Find the square root of the number you found.

● Steps 1–4

● Step 5

● Step 6

Standard deviation example

Step 1: Data (minutes) Step 2: Deviation from mean Steps 3 + 4: Squared deviation

72 72 – 207.5 = -135.5 18360.25

110 110 – 207.5 = -97.5 9506.25

134 134 – 207.5 = -73.5 5402.25

190 190 – 207.5 = -17.5 306.25

238 238 – 207.5 = 30.5 930.25

287 287 – 207.5 = 79.5 6320.25

305 305 – 207.5 = 97.5 9506.25

324 324 – 207.5 = 116.5 13572.25

 Mean = 207.5 Sum = 0 Sum of squares = 63904

Standard deviation formula for populations

If you have data from the entire population, use the population standard deviation formula:

Formula Explanation

● σ = population standard deviation

● = sum of…

● X = each value

● μ = population mean

● N = number of values in the population

Standard deviation formula for samples

If you have data from a sample, use the sample standard deviation formula:

Formula Explanation

● s = sample standard deviation

● = sum of…

● X = each value

● x̅ = sample mean

● n = number of values in the sample

 Why use n – 1 for sample standard deviation?
Samples are used to make statistical inferences about the population that they came from.

When you have population data, you can get an exact value for population standard deviation.

Since you collect data from every population member, the standard deviation reflects the

precise amount of variability in your distribution, the population. But when you use sample

data, your sample standard deviation is always used as an estimate of the population standard

deviation. Using n in this formula tends to give you a biased estimate that consistently

underestimates variability. Reducing the sample n to n – 1 makes the standard deviation

artificially large, giving you a conservative estimate of variability. While this is not an

unbiased estimate, it is a less biased estimate of standard deviation: it is better to overestimate

rather than underestimate variability in samples. The difference between biased and

conservative estimates of standard deviation gets much smaller when you have a large sample

size.

4. Variance

The variance is the average of squared deviations from the mean. A deviation from the mean

is how far a score lies from the mean.

Variance is the square of the standard deviation. This means that the units of variance are

much larger than those of a typical value of a data set.

While it’s harder to interpret the variance number intuitively, it’s important to calculate

variance for comparing different data sets in statistical tests like ANOVAs.

Variance reflects the degree of spread in the data set. The more spread the data, the larger the

variance is in relation to the mean.

Variance exampleTo get variance, square the standard deviation.

s = 95.5

s2 = 95.5 x 95.5 = 9129.14

The variance of your data is 9129.14.

To find the variance by hand, perform all of the steps for standard deviation except for the

final step.

Variance formula for populations

Formula Explanation

● σ2 = population variance

● Σ = sum of…

● Χ = each value

● μ = population mean

● Ν = number of values in the population

Variance formula for samples

Formula Explanation

● s2 = sample variance

● Σ = sum of…

● Χ = each value

● x̄ = sample mean

● n = number of values in the sample

Biased versus unbiased estimates of variance

An unbiased estimate in statistics is one that doesn’t consistently give you either high values

or low values – it has no systematic bias. Just like for standard deviation, there are different

formulas for population and sample variance. But while there is no unbiased estimate for

standard deviation, there is one for sample variance. If the sample variance formula used the
sample n, the sample variance would be biased towards lower numbers than expected.

Reducing the sample n to n – 1 makes the variance artificially larger. In this case, bias is not

only lowered but totally removed. The sample variance formula gives completely unbiased

estimates of variance.

So why isn’t the sample standard deviation also an unbiased estimate?

That’s because sample standard deviation comes from finding the square root of sample

variance. Since a square root isn’t a linear operation, like addition or subtraction, the

unbiasedness of the sample variance formula isn’t carried over the sample standard deviation

formula.

What’s the best measure of variability?

The best measure of variability depends on your level of measurement and distribution.

Level of measurement
For data measured at an ordinal level, the range and interquartile range are the only

appropriate measures of variability. For more complex interval and ratio levels, the standard

deviation and variance are also applicable.

Distribution
For normal distributions, all measures can be used. The standard deviation and variance are

preferred because they take your whole data set into account, but this also means that they are

easily influenced by outliers. For skewed distributions or data sets with outliers, the

interquartile range is the best measure. It’s least affected by extreme values because it focuses

on the spread in the middle of the data set.

 UNIT - V

DEVELOPMENT OF LONG RANGE PLANS OF MIS

• The plan for development and its implementation is a basic necessity for MIS.

• In MIS the information is recognized as a major resource like capital, time and
capacity.

• If information (resource) is to be managed well, it calls upon the management to plan

for it and control it for the appropriate use in the organization.

• With the advancement of IT, it is possible to recognize information as a valuable

resource like money and capacity.

• It is necessary to link its acquisition, storage, use and disposal as per the business
needs for meeting the business objectives.

• So we need MIS flexible enough to deal with the changing information needs of the
organization. It should be an open system. The designing of such an open system is a
complex task.
• It can be achieved if MIS is planned, keeping in view the plan of the business
management of the organization.

Contents of the MIS plan

Long range MIS plan provides direction for the development of the systems, and provides a
basis for achieving the specific targets or tasks against a time frame.

MIS Goals & Objectives

Goals are to consider management philosophy, policy constraints, business risks, internal and
external environment of the organization and the business

The typical goals are as under

• Provide an online information on the stock, markets and the account balances

• The query processing should not exceed more than 3 sec.

• The focus of the system will be on the end user computing and access facilities

• Information support will be the first in the strategic areas of management such as
marketing or service or technology.

Strategy for the Plan achievement

• Development Strategy: An online, a batch, a real time. Technology platform.

• System development strategy: SSAD or OOT. Database VS conventional etc.

• Resources for system development: In house VS external, customised development
VS the use of packages.

• Manpower composition: Analyst, programmer skills and know-how.

The architecture of the MIS

It provides a system structure and their input, output and linkages. It also provides handling
of systems & subsystems by way of simplification, coupling and decoupling of subsystems

The system development schedule

A schedule is made for the development of the system. Unless the systems are fully
developed their integration is not possible.

Hardware and software plan

• Giving due regard to the technical and operational feasibility, the economics if
investment is worked out. Then the plan of procurement is made after selecting the hardware
and software.

• The selection of the architecture, the approach to the development and choice of
hardware and software are the strategic decisions and needs to be taken very carefully.

ASCERTAINING THE CLASS OF INFORMATION

Functional Managerial Information

• The functional information is defined as a set of information required by the

functional head in conducting the administration and management of the function.

• Functional information is largely factual, statistical and detailed in multi-dimensions

of the function. Such information is used for planning, budgeting and controlling the
operations of the function.

• If you take sales information, it can be processed in several ways such as product,
product groups, market segment, geographic zone, locations etc.
• The functional information can be assessed on the following three parameters:

• The work design

• The responsibility

• The functional objectives.

Work design

For example, for the customer order scrutiny the available stock, the price, the terms of
payment and the probable delivery is an information set evolved out of the work design of
customer order processing. The procedure of the order processing requires this information.

Responsibility

The managers in the functional areas of management are responsible for achieving the targets
and accomplishing the goals and objectives. So important to inform and update the
information on target at regular intervals.

Functional objective

Each function has its own objectives which are derived out of the corporate goals.

Some of the business plan objectives are given below based on which each function is the
organization derives its objectives

• The total sales per month is Rs. 10 million

• The finished goods inventory not to exceed Rs. 1 million

• The outstanding more than six months not to exceed Rs. 0.2 million

• The employee attendance per month should be 90 percent

DETERMINING THE INFORMATION REQUIREMENT

In order to collect information so as to study existing systems and to determine information

requirements, there are different strategies, which could be used for a purpose. These
strategies are discussed below.
Interview

The interview is a face-to-face method used for collecting the required data. In this method, a
person (the interviewer) asks questions from the other person being interviewed may be
formal or informal and the questions asked may be structured or unstructured. The
interviewer must plan the interview and should have a clear understanding of issues.

Questionnaire

A questionnaire is a term used for almost any tool that has questions to which individuals
respond. The use of questionnaires allows analysts to collect information about various
aspects of a system from a large number of persons. The questionnaire may contain
structured or unstructured questions. The use of a standardized questionnaire gives more
reliable data than other fact finding techniques.

Record Review

Record review is also known as review of documentation. Its main purpose is to establish
quantitative information regarding volumes, frequencies, trends, ratios, etc. In record review,
analysts examine information that has been recorded about the system and its users.
Procedures, manuals and forms are useful sources for the analyst to study the existing
systems. The main limitation of this approach is that the documentation on the existing
system may not be complete and up-to-date.

Observation
Another information-gathering tool used in system studies is observation. It is the process of
recognizing and noting people, objects and occurrences to obtain information. Observation
allows analysts to get information, which is difficult to obtain by any other fact-finding
method. This approach is most useful when analysts need to observe the way documents are
handled, processes are carried out and whether the specified steps are actually followed. This
technique is time consuming and costly. Electronic observation and monitoring methods are
being used these days because of their speed and efficiency.

DEVELOPMENT AND IMPLEMENTATION OF THE MIS

a) Development and Implementation of the MIS

Once the plan of MIS is made, the development of the MIS calls for determining the strategy
of development as discussed earlier, the plan consists of various systems and subsystems. The
development strategy determines where to begin and in what sequence the development can
take place with the sole objective of assuring the information support. The choice of the
system or the subsystem depends on its position in the total MIS plan, the size of the system,
the user’s understanding of the systems and the complexity and its interface with other
systems. The designer first develops systems independently and starts integrating them with
other systems, enlarging the system scope and meeting the varying information needs.
Determining the position of the system in the MIS is easy. The real problem is the degree of
structure and formalization in the system and procedures which determine the timing and
duration of development of the system. Higher the degree of structured and formalization,
greater is the stabilization of the rules, the procedures, decision-making and the
understanding of the overall business activity. Here, it is observed that the user’s and the
designer’s interaction is smooth, and their needs are clearly understood and respected
mutually. The development becomes a method of approach with certainty in the input process
and outputs.

b) Prototype Approach
When the system is complex, the development strategy is Prototyping of the System.
Prototyping is a process of progressively ascertaining the information needs, developing a
methodology, trying it out on a smaller scale with respect to the data and the complexity,
ensuring that it satisfies the needs of the users, and assessing the problems of development
and implementation.

This process, therefore, identifies the problem areas, inadequacies in the prototype visa is the
fulfillment of the information needs. The designer then takes steps to remove the
inadequacies. This may call upon changing the prototype of the system, questioning the
information needs, streamlining the operational systems and procedures and moving user
interaction.

In the prototyping approach, the designer’s task becomes difficult, when there are multiple
users of the same system and the inputs they use are used by some other users as well. For
example, a lot of input data comes from the purchasing department, which is used in accounts
and inventory management.

The attitudes of various users and their role as the originators of the data need to be
developed with a high degree of positivism. It requires, of all personnel, to appreciate that the
information is a corporate resource, and all have to contribute as per the designated role by
the designer to fulfill the corporate information needs. When it comes to information, the
functional, the departmental, the personal boundaries do not exist. This calls upon each
individual to comply with the design needs and provide without fail the necessary data inputs
whenever required as per the specification discussed and finalized by the designer.

Bringing the multiple users on the same platform and changing their attitudes toward
information, as a corporate resource, is the managerial task of the system designer. The
qualification, experience, knowledge, of the state of art, and an understanding of the
corporate business, helps considerably in overcoming the problem of changing the attitudes
of the multiple users and the originators of the data.

c) Life Cycle Approach

There are many systems or subsystems in the MIS which have a life cycle, that is, they have
birth and death. Their emergence may be sudden or may be a part of the business need, and
they are very much structured and rule-based. They have 100% clarity of inputs and their
sources, a definite set of outputs in terms of the contents and formats. These details more or
less remain static from the day the system emerges and remains in that static mode for a long
time. Minor modifications or changes do occur but they are not significant in terms of
handling either by the designer or the user of the system. Such systems, therefore, have a life
and they can be developed in a systematic manner and can be reviewed after a year or two,
for significant modification, if any.

Examples of such systems are payroll, share accounting, basic financial accounting, finished
goods accounting and dispatching, order processing, and so on. These systems have a fairly
long duration of survival and they contribute in a big way as sources of data to the Corporate
MIS. Therefore, their role is important and needs to be designed from the viewpoint as an
interface to the Corporate MIS.

d) Implementation of the Management Information System

The implementation of the system is a management process. It brings about organizational
change; It affects people and changes their work style. The process evokes a behavior
response which could be either favorable or unfavorable depending upon the strategy of
system implementation.

In the process of implementation, the system designer acts as a change agent or a catalyst. For
a successful implementation, he has to handle the human factors carefully. The user of the
system has a certain fear complex when a certain cultural work change is occurring. The first
and foremost fear is about the security to the person if the changeover from the old to new is
not a smooth one. Care has to be taken to assure the user that such fears are baseless and the
responsibility, therefore, rests with the designer. The second fear is about the role played by
the person in the organization and how the change affects him. On many occasions, the new
role may reduce his importance in the organization, the work design may make the new job
impersonal, and a fear complex may get reinforced that the career prospects may be affected.

There are certain guidelines for the systems designer for the successful implementation of the
system. The system designer should not question beyond a limit the information needed of
the user.

1. Not to forget that his role is to offer a service and not to demand terms.

2. Remember that the system design is for the use of the user and it is not the designer’s
prerogative to dictate the design features. In short, the designer should respect the demands of
the user.

3. Not to mix up technical needs with the information needs. He should try to develop a
suitable design with appropriate technology to meet the information needs. The designer
should not recommend modifications of the needs, unless technically infeasible.

4. Impress upon the user the global nature of the system design which is required to
meet the current and prospective information need.

5. Not to challenge the application of the information in decision-making. It is the sole

right of the user to use the information the way he thinks proper.

6. Impress upon the user that the quality of information depends on the quality of input.
7. Impress upon the user that you are one of the users in the organization and that the
information is a corporate resource and he is expected to contribute to the development of the
MIS.

8. Ensure that the user makes a commitment to all the requirements of the system design
specifications. Ensure that he appreciates that his commitments contribute largely to the
quality of the information and successful implementation of the system.

9. Ensure that the overall system effort has the management’s acceptance.

10. Enlist the user’s participation from time to time, so that he is emotionally involved in
the process of development.

11. Realize that through serving the user, he is his best guide on the complex path of
development.

12. Not to expect perfect understanding and knowledge from the user as he may be the
user of a non-computerized system. Hence, the designer should be prepared to change the
system specifications or even the design during the course of development.

13. Impress upon the user that the change, which is easily possible in a manual system, is
not as easy in the computer system as it calls for changes in the programs at cost.

14. Impress upon the user that perfect information is nonexistent; His role therefore still
has an importance in the organization.

15. Ensure that the other organization problems are resolved first before the MIS is taken
for development.

16. Conduct periodical user meetings on systems where you get the opportunity to know
the ongoing difficulties of the users.

17. Train the user in computer appreciation and systems analysis as his perception of the
computerized information system will fall short of the designer’s expectation.

Implementation of the MIS in an organization is a process where organizational

transformation takes place. This change can occur in a number of ways. Lewin’s model
suggests three steps in this process.

The first step is unfreezing the organization to make the people more receptive and interested
in the change.
The second step is choosing a course of action where the process begins and reaches the
desired level of stability.

The third step is Refreezing, where the change is consolidated and equilibrium is reinforced.
Many times, this process is implemented through an external change agent, such as a
consultant playing the role of a catalyst.

The significant problem in this task is the resistance to change. The resistance can occur due
to three reasons, viz., the factors internal to the users of information, the factors inherent in
the design of the system and the factors arising out of the interaction between the system and
its users. The problem of resistance can be handled through education, persuasion, and
participation. This can be achieved by improving the human actors, and providing incentives
to the users, and eliminating the organizational problems before implementing the system.

CALCULATING FREQUENCIES & DESCRIPTIVE

If Ann wanted to infer what the population distribution of volleyball players’ sock sizes
looked like she could do so from her sample. If she is going to send volleyball coaches
packages of socks for the players to try, she will want to have the packages contain an
assortment of sizes that will allow each player to have a pair that fits. Ann wants to infer what
the distribution of volleyball players’ sock sizes looks like. She wants to know the mean and
variance of that distribution. Her data, again, are shown in Table 1.1.

MULTIPLE REGRESSION ANALYSIS

As the name suggests, multiple regression is a statistical technique applied on datasets

dedicated to draw out a relationship between one response or dependent variable and multiple
independent variables. Form the definition it is obvious that the study of an event or
phenomena will have various factors causing its occurrence. Multiple regression works by
considering the values of the available multiple independent variables and predicting the
value of one dependent variable.

Example: A researcher decides to study students’ performance from a school over a period of
time. He observed that as the lectures proceed to operate online, the performance of students
started to decline as well. The parameters for the dependent variable “decrease in
performance” are various independent variables like “lack of attention, more internet
addiction, neglecting studies” and much more.

Why to use multiple regression analysis?

In case of linear regression, although it is used commonly, it is limited to just one

independent and one dependent variable. Apart from that, linear regression restricts to the
training dataset and does not predict a non-linear regression.

For the same limitations and to cover them, we use multiple regression. It focuses on
overcoming one particular limitation and that is allowing to analyse more than one
independent variable.

Multiple regression equation

We will start the discussion by first taking a look at linear regression equation:

y = bx + a

Where,

y is a dependent variable we need to find, x is an independent variable. The constants a and b

drives the equation. But according to our definition, as the multiple regression takes several
independent variables (x), so for the equation we will have multiple x values too:

y = b1x1 + b2x2 + … bnxn + a

Here, to calculate the value of the dependent variable y, we have multiple independent
variables x1, x2, and so on. The number of independent variables can grow till n and the
constant b with every variable denotes its numeric value. The purpose of the constant a is to
denote the dependent variable’s value in case when all the independent variable values turn to
zero.

Example: So for above example, the multiple regression equation would be:

y = b1 * attention + b2 * internet addiction + b3 * technology support + … bnxn + a

Assumptions for multiple regression analysis

● The variables considered for the model should be relevant and the model should
be reliable.
● The model should be linear and not non-linear.
● Variables must have normal distribution
● The variance should be constant for all levels of the predicted variable.

Benefits of multiple regression analysis

● Multiple regression analysis helps us to better study the various predictor

variables at hand.
● It increases reliability by avoiding dependency on just one variable and have
more than one independent variable to support the event.
● Multiple regression analysis permits you to study more formulated hypotheses
that are possible.

RESIDUALS

The difference between the observed value of the dependent variable (y) and the predicted
value (ŷ) is called the residual (e). Each data point has one residual.

Residual = Observed value - Predicted value

e=y-ŷ

Both the sum and the mean of the residuals are equal to zero. That is, Σ e = 0 and e = 0.

Residual Plots
A residual plot is a graph that shows the residuals on the vertical axis and the independent
variable on the horizontal axis. If the points in a residual plot are randomly dispersed around
the horizontal axis, a linear regression model is appropriate for the data; otherwise, a
nonlinear model is more appropriate.

The table below shows inputs and outputs from a simple linear regression analysis.

x y ŷ e

60 70 65.411 4.589

70 65 71.849 -6.849

80 70 78.288 -8.288

85 95 81.507 13.493

95 85 87.945 -2.945

And the chart below displays the residual (e) and independent variable (X) as a residual plot.

The residual plot shows a fairly random pattern - the first residual is positive, the next two are
negative, the fourth is positive, and the last residual is negative. This random pattern indicates
that a linear model provides a decent fit to the data.

Below, the residual plots show three typical patterns. The first plot shows a random pattern,
indicating a good fit for a linear model.
Random pattern

Non-random: U-shaped

Non-random: Inverted U

The other plot patterns are non-random (U-shaped and inverted U), suggesting a better fit for
a nonlinear model.

PROBLEM - The actual weights and self-perceived ideal weights of a random sample of 40
female university students enrolled in an introductory Statistics course at the University of
Auckland are displayed on the scatter plot below. A regression line has been drawn. The
equation of the regression line is

predicted y = 0.6089x + 18.661 or predicted ideal weight = 0.6089 × actual weight + 18.661

Consider the female whose actual weight is 72kg and whose self-perceived ideal weight is
70kg.

Her predicted ideal weight is 0.6089 × 72 + 18.661 = 62.5kg

The residual for this observation is 70kg – 62.5kg = 7.5kg

This is also displayed on the scatter plot.

INFERENTIAL STATISTICS

Inferential statistics is a branch of statistics that makes the use of various analytical tools to
draw inferences about the population data from sample data. Apart from inferential statistics,
descriptive statistics forms another branch of statistics. Inferential statistics help to draw
conclusions about the population while descriptive statistics summarizes the features of the
data set.

There are two main types of inferential statistics - hypothesis testing and regression analysis.
The samples chosen in inferential statistics need to be representative of the entire population.
In this article, we will learn more about inferential statistics, its types, examples, and see the
important formulas.

What is Inferential Statistics?

Inferential statistics helps to develop a good understanding of the population data by

analyzing the samples obtained from it. It helps in making generalizations about the
population by using various analytical tests and tools. In order to pick out random samples
that will represent the population accurately many sampling techniques are used. Some of the
important methods are simple random sampling, stratified sampling, cluster sampling, and
systematic sampling techniques.

Inferential Statistics Definition

Inferential statistics can be defined as a field of statistics that uses analytical tools for drawing
conclusions about a population by examining random samples. The goal of inferential
statistics is to make generalizations about a population. In inferential statistics, a statistic is
taken from the sample data (e.g., the sample mean) that used to make inferences about the
population parameter (e.g., the population mean).

Types of Inferential Statistics

Inferential statistics can be classified into hypothesis testing and regression analysis.
Hypothesis testing also includes the use of confidence intervals to test the parameters of a
population. Given below are the different types of inferential statistics.
Inferential Statistics Examples

Inferential statistics is very useful and cost-effective as it can make inferences about the
population without collecting the complete data. Some inferential statistics examples are
given below:

● Suppose the mean marks of 100 students in a particular country are known. Using
this sample information the mean marks of students in the country can be
approximated using inferential statistics.
● Suppose a coach wants to find out how many average cartwheels sophomores at
his college can do without stopping. A sample of a few students will be asked to
perform cartwheels and the average will be calculated. Inferential statistics will
use this data to make a conclusion regarding how many cartwheel sophomores
can perform on average.

Inferential Statistics vs Descriptive Statistics

Descriptive and inferential statistics are used to describe data and make generalizations about
the population from samples. The table given below lists the differences between inferential
statistics and descriptive statistics.

Inferential Statistics Descriptive Statistics

Inferential statistics are used to make Descriptive statistics are used to

conclusions about the population by quantify the characteristics of the data.
using analytical tools on the sample
data.

Hypothesis testing and regression Measures of central tendency and

analysis are the analytical tools used. measures of dispersion are the
important tools used.

It is used to make inferences about an It is used to describe the

characteristics of a known sample or
 unknown population population.

Measures of inferential statistics are t- Measures of descriptive statistics are

test, z test, linear regression, etc. variance, range, mean, median, etc.

INFERENTIAL STATISTICS FOR SINGLE MEAN

http://www.math.umd.edu/~mboyle/courses/131/ex.pdf

INFERENTIAL STATISTICS FOR CATEGORICAL VARIABLE

http://www.math.umd.edu/~mboyle/courses/131/ex.pdf

What are the types of Statistical Tests in Inferential Statistics?

Comparison tests

It looks for the differences in mean and medians or scores. To know which test approach will
suit the aim, you need to check if your data meets the conditions for the respective tests.

Type of Comparison Parametric What’s being Samples

test compared

t-test Yes Means 2

samples
 ANOVA Yes Means 3+
samples

Mood’s median No Medians 2+

samples

Wilcoxon signed-rank No Distributions 2

samples

Wilcoxon rank-sum No Sums of rankings 2

(Mann-Whitney U) samples

Kruskal-Wallis H No Mean rankings 3+

samples

Correlation tests

Tell the level of association between two variables.

Type of Correlation test Parametric Variables

 Pearson’s r Yes Interval/ratio variables

Spearman’s r No Ordinal/interval/ratio
variables

Chi square test of No Nominal/ordinal variables

independence

Regression tests

They show if you change the predicted variables whether it causes the output variables to
change or not. Depending on the number of variables you have, you can decide whether to
take the regression tests or not.

Types of Regression Predictor Outcome

test

Simple linear regression 1 interval/ratio variable 1 interval/ratio

 variable

Multiple linear 2+ interval/ratio 1 interval/ratio

regression variable(s) variable

Logistic regression 1+ any variable(s) 1 binary variable

Nominal regression 1+ any variable(s) 1 nominal variable

Ordinal regression 1+ any variable(s) 1 ordinal variable

TIME SERIES

● A Time-Series represents a series of time-based orders. It would be Years, Months,

Weeks, Days, Horus, Minutes, and Seconds
● A time series is an observation from the sequence of discrete-time of successive
intervals.
● A time series is a running chart.
● The time variable/feature is the independent variable and supports the target variable
to predict the results.
● Time Series Analysis (TSA) is used in different fields for time-based predictions –
like Weather Forecasting, Financial, Signal processing, Engineering domain – Control
Systems, Communications Systems.
 ● Since TSA involves producing the set of information in a particular sequence, it is
distinct from spatial and other analyses.
● Using AR, MA, ARMA, and ARIMA models, we could predict the future.

Introduction to Time Series Analysis

Time Series Analysis is the way of studying the characteristics of the response variable with
respect to time, as the independent variable. To estimate the target variable in the name of
predicting or forecasting, use the time variable as the point of reference. In this article we will
discuss in detail TSA Objectives, Assumptions, Components (stationary, and Non-
stationary). Along with the TSA algorithm and specific use cases in Python.

What is Time Series Analysis

Definition:

A time series is nothing but a sequence of various data points that occurred in a successive
order for a given period of time

Objectives:

● To understand how time series works, what factors are affecting a certain variable(s)
at different points of time.
● Time series analysis will provide the consequences and insights of features of the
given dataset that changes over time.
● Supporting to derive the predicting the future values of the time series variable.
● Assumptions: There is one and the only assumption that is “stationary”, which means
that the origin of time does not affect the properties of the process under the statistical
factor.
How to analyze Time Series?

Quick steps here for your reference, anyway. Will see this in detail in this article later.

● Collecting the data and cleaning it

● Preparing Visualization with respect to time vs key feature
● Observing the stationarity of the series
● Developing charts to understand its nature.
● Model building – AR, MA, ARMA and ARIMA
 ● Extracting insights from prediction

Significance of Time Series and its types

TSA is the backbone for prediction and forecasting analysis, specific to the time-based
problem statements.

● Analyzing the historical dataset and its patterns

● Understanding and matching the current situation with patterns derived from the
previous stage.
● Understanding the factor or factors influencing certain variable(s) in different periods.
With the help of “Time Series” we can prepare numerous time-based analyses and results.

● Forecasting
● Segmentation
● Classification
● Descriptive analysis`
● Intervention analysis

Components of Time Series Analysis

● Trend
● Seasonality
● Cyclical
● Irregularity
● Trend: In which there is no fixed interval and any divergence within the given dataset
is a continuous timeline. The trend would be Negative or Positive or Null Trend
● Seasonality: In which regular or fixed interval shifts within the dataset in a continuous
timeline. Would be bell curve or saw tooth
● Cyclical: In which there is no fixed interval, uncertainty in movement and its pattern
● Irregularity: Unexpected situations/events/scenarios and spikes in a short time span.
What are the limitations of Time Series Analysis?

Time series has the below-mentioned limitations, we have to take care of those during our
analysis,

● Similar to other models, the missing values are not supported by TSA
● The data points must be linear in their relationship.
● Data transformations are mandatory, so a little expensive.
● Models mostly work on Uni-variate data.

Data Types of Time Series

There are two major types.

● Stationary
● Non- Stationary
Stationary: A dataset should follow the below thumb rules, without having Trend,
Seasonality, Cyclical, and Irregularity component of time series

● The MEAN value of them should be completely constant in the data during the
analysis
● The VARIANCE should be constant with respect to the time-frame
● The COVARIANCE measures the relationship between two variables.
Non- Stationary: This is just the opposite of Stationary.