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(a) Explain the following categories of systems in connection with management decision making, clearly distinguishing between the categories: (i.) Transaction processing systems; ...

(a) Explain the following categories of systems in connection with management decision making, clearly distinguishing between the categories:
(i.) Transaction processing systems;
(ii.) Management Information Systems;
(iii.) Decision Support Systems;
(iv.) Executive Support Systems;
(b) Identify and briefly explain the three fundamental components of an expert system. Explain how an expert system may be used in a business application.

Answers

Gregory
a) (i) Transaction processing systems (TPSs)
These are computerized systems that perform and record daily routine transactions necessary to conduct the business. An example is a point of sale system. Transaction processing systems serve the operational level of an organization. The inputs to a TPS are transactions and events. The processing consists of listing, sorting, merging, and updating. The outputs are detailed reports, lists and summaries. TPSs specifically serve operational personnel and supervisors. They enable supervisors to make structured decisions by the reports they provide e.g. a decision to restock based on the stock levels report.

(ii) Management Information Systems (MISs)
These are information systems at the management level of an organization that serve the functions of planning, controlling and decision making by providing routine summary and exception reports. The inputs to an MIS include summary transaction data, high volume data and simple models. The processing consists of routine reports, simple models and low-level analysis. The information outputs include summary and exception reports. MISs specifically server middle managers. They enable them to make structured decisions.
(iii) Decision Support System (DSSs)
These are information systems at the organization?s management level that combine data and sophisticated analytical models or data analysis tools to support non-routine decision making. The information inputs to a DSS include low-volume data or massive databases optimized for data analysis, analytical models and data analysis tools. The processing consists of interactive simulations and analysis. The outputs consists of special reports, decision analyses and responses to queries. DSSs specifically serve professionals and staff managers. They enable them to make unstructured decisions e.g. business contract analysis, corporate planning and forecasting.

(iv) Executive Support Systems
These are information systems at the organization?s strategic level designed to address unstructured decision making through advanced graphics and communication. ESSs have aggregate external and internal data ad information inputs. The processing is interactive and it?s characterized by graphics and simulations. The information outputs of an ESS include projections and response to queries. ESSs specifically serve middle managers. They enable them to make unstructured decisions e.g. processing a loan application.
b) Expert system
This is a knowledge intensive program that captures the expertise of a human in limited domains of knowledge.
General database
This contains relevant common knowledge such as historical information, statistical data, coefficients, constants, etc

Inference engine
This is the software component of the expert system that evaluates and manipulates facts and rules in the knowledge base. It then makes associations and inferences resulting in a recommended action for a user.

Knowledge acquisition model
It?s used by experts to enter facts and rules into the system. This usually happens with the assistance of the knowledge engineer.

Explanatory Interface (Part of the User Interface)
This shows the trail of reasoning used to reach a decision. It outlines facts used, the rules applied and the order of application.
Uses of expert systems in business applications
1. Medical underwriting systems for health insurance firms.
These could be used to underwrite applicants for health insurance after assessing their eligibility and medical risks.
2. Loan underwriting systems
These could be used to make credit worthiness decisions on loan requests.
3. Investment banking systems
These could be used to ensure that financial advisers of such institutions respect their clients? preferences (e.g. which stocks or which sectors to exclude when making purchases). This is achieved through a rule-based system that maintains rules keeping a particular stock item from entering a client?s portfolio.
4. Insurance claim estimation systems
They attempt to produce an accurate estimation of insurance claims.
5. Customer service systems
They direct customer enquiries to a specific source of help without delay.

Gregorymasila1 answered the question on March 28, 2018 at 14:39

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