Paper: Information Management System and Hospitality

Code: MSCH 104

Module 4
Management Information System

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.

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.

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 − Capturing contextual data, or operational information that
will contribute in decision making from various internal and external sources of
organization.
 Processing Data − The captured data is processed into information needed
for planning, organizing, coordinating, directing and controlling functionalities
at strategic, tactical and operational level. Processing data means −
o making calculations with the data
o sorting data
o classifying data and
o summarizing data
 Information Storage − Information or processed data need to be stored for
future use.
 Information Retrieval − The system should be able to retrieve this
information from the storage as and when required by various users.
 Information Propagation − Information or the finished product of the MIS
should be circulated to its users periodically using the organizational network.

Characteristics of MIS
Following are the characteristics of an MIS −
 It should be based on a long-term planning.
 It should provide a holistic view of the dynamics and the structure of the
organization.
 It should work as a complete and comprehensive system covering all
interconnecting sub-systems 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 based on need of strategic, operational and tactical information of
managers of an organization.
 It should also take care of exceptional situations by reporting such situations.
 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 sub-systems 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 sub-systems as and
when required.
 A central database is the backbone of a well-built MIS.

Characteristics of Computerized MIS

Following are the characteristics of a well-designed computerized MIS −
 It should be able to process data accurately and with high speed, using
various techniques like operations research, simulation, heuristics, etc.
 It should be able to collect, organize, manipulate, and update large amount of
raw data of both related and unrelated nature, coming from various internal
and external sources at different periods of time.
 It should provide real time information on ongoing events without any delay.
 It should support various output formats and follow latest rules and regulations
in practice.
 It should provide organized and relevant information for all levels of
management: strategic, operational, and tactical.
 It should aim at extreme flexibility in data storage and retrieval.

Nature and Scope of MIS

The following diagram shows the nature and scope of MIS −
 MIS - Information Need & Objective

Information processing beyond doubt is the dominant industry of the present century.
Following factors states few common factors that reflect on the needs and objectives
of the information processing −
 Increasing impact of information processing for organizational decision
making.
 Dependency of services sector including banking, financial organization,
health care, entertainment, tourism and travel, education and numerous others
on information.
 Changing employment scene world over, shifting base from manual
agricultural to machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and
reduced product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of
information processing.
 Use of information processing in reduction of energy consumption, reduction
in pollution and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery
system, educational institutions, natural resource planning, customer relation
management and so on.
In a nutshell −
 Information is needed to survive in the modern competitive world.
 Information is needed to create strong information systems and keep these
systems up to date.

Implications of Information in Business

Information processing has transformed our society in numerous ways. From a
business perspective, there has been a huge shift towards increasingly automated
business processes and communication. Access to information and capability of
information processing has helped in achieving greater efficiency in accounting and
other business processes.
A complete business information system, accomplishes the following functionalities −
 Collection and storage of data.
 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.
The following list summarizes the five main uses of information by businesses and
other organizations −
  Planning − At the planning stage, information is the most important ingredient
in decision making. Information at planning stage includes that of business
resources, assets, liabilities, plants and machineries, properties, suppliers,
customers, competitors, market and market dynamics, fiscal policy changes of
the Government, emerging technologies, etc.
 Recording − Business processing these days involves recording information
about each transaction or event. This information collected, stored and
updated regularly at the operational level.
 Controlling − A business need to set up an information filter, so that only
filtered data is presented to the middle and top management. This ensures
efficiency at the operational level and effectiveness at the tactical and strategic
level.
 Measuring − A business measures its performance metrics by collecting and
analysing sales data, cost of manufacturing, and profit earned.
 Decision-making − MIS is primarily concerned with managerial decision-
making, theory of organizational behaviour, and underlying human behaviour
in organizational context. Decision-making information includes the socio-
economic impact of competition, globalization, democratization, and the
effects of all these factors on an organizational structure.
In short, this multi-dimensional information evolves from the following logical
foundations −
 Operations research and management science
 Theory of organizational behavior
 Computer science −
o Data and file structure
o Data theory design and implementation
o Computer networking
o Expert systems and artificial intelligence
 Information theory
Following factors arising as an outcome of information processing help speed up of
business events and achieves greater efficiency −
 Directly and immediate linkage to the system
 Faster communication of an order
 Electronic transfer of funds for faster payment
 Electronically solicited pricing (helps in determining the best price)

Information Needs and its Economics

MIS always facilitates organizations in many aspects. Following functions
shows the information needs and its economics. These are as follows –

Operational Control
 MIS provides highly reliable and detailed information on a daily or weekly
basis to ensure organizational control.
  For instance, a manufacturing supervisor needs to know if material waste
is unnecessary, if expensive overruns are planned, or if the time for a job
has expired.
 A high volume of timely and accurate information extracted from daily
operations is given by MIS.

Middle Management
 Middle-level managers need information on issues that impact their
divisions, such as rapid drops in revenue, increased demand for a specific
product line, large-scale supplier issues, etc.
 MIS contains summarized information from within the organization as well
as from sources outside the organization on these matters.
 It is not beneficial to have large data in itself; it can even confuse the
decision-maker in most instances.
 In MIS, the basic merit is that if the information is given in a thorough way
such that timely, knowledgeable and rational decisions can be made.

Top Management
For top executives, MIS offers information for strategic planning and
supervision of management.

External sources (economic climate, technological developments,

competitive changes, etc.) are closely studied and comprehensively
evaluated for strategic planning.

It is difficult to computerize this information since the supporting data is

normally outside the organization's control.

MIS provides reports on the overall financial performance of the company

to ensure top management power, such as information on quarterly
revenue, earnings, inventory management, movements, etc. Regardless
of the degree to which it is used, the fundamental purpose of the MIS
remains the same as supplying administrators with the knowledge they
need to conduct their duties effectively.

The importance of the information generated by an MIS depends on the

consistency, quantity, timeliness, and relevance of the information to
management behavior. It is important to weigh the cost of collecting the
data against the advantages of the information.

For managerial work and in that context for managerial decision making,
sufficient and timely knowledge is inestimable. MIS provides managers
with information, so MIS needs to provide information that corresponds to
the information needs of the manager. We make a recommendation on
how to take the information needs of the manager more holistically into
account to ensure that MIS (will) provide information that will adhere to
the information needs of the manager.
 MANAGEMENT INFORMATION AND
CONTROL SYSTEMS

An Information system is a combination of hardware and software and

telecommunication networks that people build to collect, create and distribute
useful data, typically in an organization. It defines the flow of information
within the system. The objective of an information system is to provide
appropriate information to the user, to gather the data, process the data and
communicate information to the user of the system.
Components Of Information System

Components of the information system are as follows:

1. Computer Hardware:
Physical equipment used for input, output and processing. The hardware
structure depends upon the type and size of the organization. It consists of
an input and an output device, operating system, processor, and media
devices. This also includes computer peripheral devices.
2. Computer Software:
The programs/ application program used to control and coordinate the
hardware components. It is used for analysing and processing of the data.
These programs include a set of instruction used for processing information.
Software is further classified into 3 types:

1. System Software
2. Application Software
3. Procedures
3. Databases:
Data are the raw facts and figures that are unorganized that are later
processed to generate information. Softwares are used for organizing and
serving data to the user, managing physical storage of media and virtual
resources. As the hardware can’t work without software the same as
software needs data for processing. Data are managed using Database
management system.
Database software is used for efficient access for required data, and to
manage knowledge bases.
4. Network:

 Networks resources refer to the telecommunication networks like the

intranet, extranet and the internet.
 These resources facilitate the flow of information in the organization.
 Networks consists of both the physicals devices such as networks cards,
routers, hubs and cables and software such as operating systems, web
servers, data servers and application servers.
 Telecommunications networks consist of computers, communications
processors, and other devices interconnected by communications media
and controlled by software.
 Networks include communication media, and Network Support.
5. Human Resources:
It is associated with the manpower required to run and manage the system.
People are the end user of the information system, end-user use information
produced for their own purpose, the main purpose of the information system
is to benefit the end user. The end user can be accountants, engineers,
salespersons, customers, clerks, or managers etc. People are also
responsible to develop and operate information systems. They include
systems analysts, computer operators, programmers, and other clerical IS
personnel, and managerial techniques.

Types of Information System

Following are the DIMENSIONS of information system:

 • Senior management makes long-range strategic decisions about
products and services as well as ensures financial performance of the
firm.
• Middle management carries out the programs and plans of senior
management.
• Operational management is responsible for monitoring the daily
activities of the business.
 knowledge workers, such as engineers, scientists, or architects, design
products or services
 data workers, such as secretaries or clerks, assist with scheduling and
communications at all levels of the firm. Production or service workers
actually produce the product and deliver the service

Information Systems are classified by organisational levels, mode of data,

processing, system objectives and type of support provided.
Following are the TYPE of information system:
1. Transaction Processing System (TPS):
 Transaction Processing System are information system that processes
data resulting from the occurrences of business transactions
 Their objectives are to provide transaction in order to update records and
generate reports i.e to perform store keeping function
 The transaction is performed in two ways: Batching
processing and Online transaction processing.
 Example: Bill system, payroll system, Stock control system.
2. Management Information System (MIS):
 Management Information System is designed to take relatively raw data
available through a Transaction Processing System and convert them into
a summarized and aggregated form for the manager, usually in a report
 format. It reports tending to be used by middle management and
operational supervisors.
 Many different types of report are produced in MIS. Some of the reports
are a summary report, on-demand report, ad-hoc reports and an
exception report.
 Example: Sales management systems, Human resource management
system.
3. Decision Support System (DSS):
 Decision Support System is an interactive information system that
provides information, models and data manipulation tools to help in
making the decision in a semi-structured and unstructured situation.
 Decision Support System comprises tools and techniques to help in
gathering relevant information and analyse the options and alternatives,
the end user is more involved in creating DSS than an MIS.
 Example: Financial planning systems, Bank loan management systems.
4. Experts System:
 Experts systems include expertise in order to aid managers in diagnosing
problems or in problem-solving. These systems are based on the
principles of artificial intelligence research.
 Experts Systems is a knowledge-based information system. It uses its
knowledge about a specify are to act as an expert consultant to users.
 Knowledgebase and software modules are the components of an expert
system. These modules perform inference on the knowledge and offer
answers to a user’s question
5. Executive Information System
Executive Information System also known as Executive Support System. It is
developed for the Senior Management of the organization. It helps them to
analyse the trends by viewing various reports including summaries; and then
making the strategic decisions for the business.

For example, the management may require data of sales of the organizations
that may be department wise or product wise ranging over a specific period of
time. The system also include information about inventory, assets and
revenue either collected or projected.

Management Information System (MIS) Models

A model is an abstraction of something it represents (some phenomenon),

called an entity. For example, if a model represents a firm, then the firm is an
entity.
Types of Models:
1. Physical Models:
It is a model that exists in three-dimensional form. For example, clay
model of a new automobile developed by designers.
2. Narrative Models:
It is created by verbal or written description. Also, these can be created
anywhere without much resources hence they are most popular.
3. Graphs:
It is usually a two-dimensional diagram. For example, graphs and charts.
4. Mathematical Models:
It uses symbolic notations and mathematical equations to represent a
system. It can be represented by 3-D also. Following are the types of
mathematical models:
 (a). Influence of Time:
Static Model does not include time as a variable whereas, Dynamic
Model allows the changes of system attributes to be derived as a
function of time.
 (b). Degree of Certainty:
A probability is a chance of occurring something will happen.
Probabilities ranges from 0 to 1. A model that includes probabilities is
called Probabilistic model, otherwise it is called a Deterministic model.
 (c). Ability to Achieve Optimization:
Optimizing Model selects the best solution among the alternatives. A
SUB-OPTIMIZING MODEL permits the manager to enter a set of
decisions, once this step is completed the model will project an
outcome. It leaves the decision task on the manager.
Steps of Model Construction:
 Define the problem and the factor that influence it.
 Select criteria to guide the decision and establish objectives.
 Formulate a model that helps management to understand the
relationships between the influence factors and the objectives the firm is
trying to achieve.
 Collect the relevant data while trying to avoid the incorporation of
superfluous information into the model.
 Identify and evaluate the alternatives.
 Select the best alternative.
 Implement the alternative.
The below shown figure is an model of Management Information System
(MIS).
Components of MIS Model:
1. Organizational Problem Solvers:
Outputs are used by persons who are responsible for solving the firm’s
problems(say managers).
2. Database:
It’s contents are used by software that produces report as well as
mathematical model.
3. Mathematical Model:
It produces information as a simulation of firm’s operation.
4. Report Writing Software:
It produces both periodic and special report.
5. Environment:
The environment is of great importance to the firm. It is the very reason of
the firm’s existence.
Advantages:
 Can be a learning experience.
 Provides predictive power.
 Less expensive than trial and error method.
 Speed allows consideration of more options.
Disadvantages:
 Difficult to model a business system.
 High degree of mathematical skills required.

Management Information System (MIS)

Management Information System (MIS) is one of the five major Computer

Based Information Systems (CBIS) . Its purpose is to meet the general
information needs of the managers in firm or organization. MIS is a computer
based system that makes information available to users with similar needs.
Management Information System (MIS) consists of following three pillars:
Management, Information, and System. These are explained as following
below.
1. Management: art of getting things done through and with the people of in
formally organized groups. Managerial functions:
(i) Planning
(ii) Organizing
(iii) Staffing
(iv) Directing
(v) Controlling
2. Information: data that have a meaning with a context, where data is raw
facts about an entity (entity is the object of interest).
3. System: set of inter-related components with a clearly defined boundary
working together to achieve a common goal.
Why one should study MIS: It may be a student aspiring to become a
manager in some organisation, an entrepreneur or a professional.
Information system and information technology is a vital component of any
successful business and is regarded as a major functional area like any
other functional area of a business organization like marketing, finance,
production, human resources (HR) etc. Information systems play following 3
vital roles for a business organisation:
1. Supports the business processes and operations of an organisation.
2. Support of decision making by employees and managers of an
organisation.
3. Support the strategies of an organisation for competitive advantage.
Advantages of MIS:
 Improves quality of an organization or an information content by providing
relevant information for sound decision making.
 MIS change large amount of data into summarize form and thereby avoid
confusion which may an answer when an information officer are flooded
with detailed fact.
 MIS facilitates integration of specialized activities by keeping each
department aware of problem and requirements of other departments.
 MIS serves as a link between managerial planning and control. It
improves the ability of management to evaluate and improve
performance.
Disadvantages:
 Too rigid and difficult to adapt.
 Resistance in sharing internal information between departments can
reduce the effectiveness.
 Hard to quantify benefit to justify implementation of MIS.
 Quality of output of an MIS is directly proportional to quality of input and
processes.
Major System in an Organizational Systems: Organizational information
system are logical rather than physical way of thinking about MIS. The
following are the management levels:
1. Strategic Planning Level: Plan
2. Management Control Level: Organize
3. Operational Control Level: Direct
Operational control level includes:
1. Marketing: It is the area in which considerable effort as spent in
describing how the computer could be applied to the entire range of
marketing operations.
2. Finance: It does not embrace title of financial information system
although computer based information system in that area are common.
For ex-payroll, taxation.
3. Human Resource: It represents area where most current attention is
being focused. Terms Human Resource Information System (HRIS), and
Human Resource Management System (HRMS) are common.
4. Manufacturing: It describes how the computer could be applied to the
entire range of information collection.
5. Information Resource: It also embraced computer processing and
applied the technology as both conceptual information system and
physical manufacturing system. For example: quality control, cost control.

Difference between Management Information System (MIS)

and Decision Support System (DSS)
Decision Support System (DSS) is an interactive, flexible computer based
information system or sub-system intended to help decision makers use
communication technologies, data, documents to identify and solve
problems, complete decision process tasks and make decision.
Management Information System (MIS) consists of following three pillars:
Management, Information, and System. These are explained as following
below.
1. Management: art of getting things done through and with the people of in
formally organized groups.
2. Information: data that have a meaning with a context, where data is raw
facts about an entity (entity is the object of interest).
3. System: set of inter-related components with a clearly defined boundary
working together to achieve a common goal.

Management Information System (MIS) is a computer based system that

makes information available to users with similar needs.

Difference between Management Information System (MIS) and

Decision Support System (DSS):

MIS(MANAGEMEN DSS(DECISIO
T INFORMATION N SUPPORT
PARAMETER SYSTEM) SYSTEM)

Develop certain
Identifies information tools for using
1. Main task requirement. decision process.

Main stress is on Main stress is on

2. Main stress efficiency. effectiveness.

3. Type of Uses corporate Uses special

database used database. database.
 MIS(MANAGEMEN DSS(DECISIO
T INFORMATION N SUPPORT
PARAMETER SYSTEM) SYSTEM)

Main emphasis is
4. Data related Data storage is of great on data
task importance manipulation

dependent on
Very much dependent management
5. Dependency on on computer judgement.

Management
Indirect access of data enjoys direct
6. Access to data is provided access

Principal use is
planning, staffing,
7. Principal use Principal use is control decision making.

8. Constructed by Created by users

Created/develope vendors or information alone or with
d by specialists specialists.

Middle level, lower Analysts,

level, sometimes professionals,
9. Types of users senior executive managers.

Focuses on
Focuses on information decision support,
10. Main focus processing. analysis.

Difference between EIS and DSS

1. Decision Support System (DSS) :
It’s a computer based system that aids the process of decision making. It is
an interactive, flexible and adaptable computer system. It is especially
developed for supporting the solution of a non-structured management
problem for improved decision making.
DSS are a specific class of computerized information system that supports
business and organizational decision-making activities.
Advantages :
 It saves time.
 Enhances efficiency.
 Reduces the cost.
 It improves personal efficiency.
 It increases the decision maker satisfaction.
Disadvantages :
 Information Overload.
 Status reduction.
 Over-emphasize decision making.
2. Executive Information System (EIS) :
EIS is defined as a system that helps the high-level executives to take policy
decisions. This system uses high level data, analytical models and user
friendly software for taking decisions. It is a structured, automated tracking
system that operates continuously to keep everything managed. It provides
exception and status reporting capabilities.
Advantages :
 Easy to use.
 Ability to analyze the trends.
 Time management.
 Efficiency.
 Enhances business problem solving.
Disadvantages :
 Functions are limited.
 Difficult to keep current data.
 System can run slow.
 Less reliable.

Difference between DSS and EIS :

DSS EIS

It is used by professionals. It is used by executives.

 DSS EIS

It is required for day-to-day It is required for strategic plans and

operations. procedures.

It deals with semi and

unstructured data. It deals with only unstructured data.

It consists of only internal It consists of both internal and external

information. information.

It allows taking non-routines It allows taking decisions to meet the

decisions. strategic goals of the organization.

It is used with mainframes, micro

and distributed systems. It is used with distributed systems.

Difference between DSS and Expert System

1. Decision Support System (DSS) : It’s a computer-based system that aids

the process of decision-making. It is an interactive, flexible and adaptable
computer system. It is specially developed for supporting the solution of a
non-structured management problem for improved decision-making. DSS is
a specific class of computerized information systems that supports business
and organizational decision-making activities.
Components of DSS:
 Model Management
 Data Management
 User Interface Management
Advantages:
 It saves time.
 Enhances efficiency
 Reduces the cost
 It improves personal efficiency
 It increases the decision-maker satisfaction.
Disadvantages:
 Information Overload
 Status reduction
 Over-emphasize decision-making.
Types of Decision Support systems are Document-driven, Data-driven,
Knowledge-driven, Model-driven, and Communication-driven.
Applications include medical diagnosis, business management, agriculture,
rail projects, and many more.
Examples: GPS route planning, Crop-planning, ERP dashboards, and
others.
2. Expert System: It is a computer program that is designed to mimic the
decision-making ability of a decision-maker. It organizes a set of knowledge
about a particular subject. It contains facts and judgmental knowledge which
gives it the ability to guess like a human. There are set of rules on which it
makes decisions using an if-else structure. The inference engine does
reasoning by manipulating the knowledge base. The user interface
represents questions and information to the operator and also receives
answers from the operator.
Components of Expert System:
 Knowledge Base
 Knowledge acquisition and learning module
 Inference Engine
 User Interface
 Explanation module

Advantages:
 Cost is reduced
 Danger is reduced
 Increases the availability
 Performance
Disadvantages:
 It can make absurd errors if data is entered incorrectly.
 Doesn’t provide a creative response in certain situations.
 It relies on rules and knowledge being correct.
Types of Expert Systems are rule-based expert systems, frame-based
expert systems, fuzzy expert systems, neural expert systems, and neuro-
fuzzy expert systems.
Applications include Help desks and Information management. Hospitals.
Employee performance evaluation. Loan analysis. and many more.
Examples: MYCIN, DENDRAL, and others.

Difference between DSS and Expert System:

S.
No. DSS Expert System

DSS is an interactive system An Expert System is a problem-

that enables decision-makers to solving computer program that
solve unstructured or semi- excels at a particular issue domain
structured problems by taking that is difficult to solve and takes
1. help from models and data. specialized knowledge and ability.

2. It facilitates decision-making. It automates decision-making.

The decision environment is The decision environment has

3. unstructured. structure.

It extracts or gains knowledge Inject expert knowledge into a

4. from a computer system. computer system.

Alternatives still may not be Alternatives and goals are

5. completely understood. frequently predetermined.

Characteristics of the problem

6. domain are complex and broad. In this, it is limited and specialized.

The type of data manipulation is The type of data manipulation is

7. numeric. symbolic.

8. It has limited capacity. It has a full capacity.

9. It uses goals and system data to The expert system can eventually
establish alternatives and replace the human decision-maker.
 S.
No. DSS Expert System

outcomes, so a good decision

can be made.

Management Control System: Objectives,

Functions and Advantages
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