AIS Chapter 1

What is data?

Raw facts collected, recorded, stored, and processed by an information system.

Example:

• Sale date

• Customer name

• Quantity sold

What is information?

Data that has been organized and processed to provide meaning and improve decision making.

Example:

• Monthly sales report

• Inventory turnover report

What is the difference between data and information?

Data are raw facts(inputs). Information is processed data that has meaning and usefulness(output).

What is information overload?

When decision makers receive more information than they can effectively process, causing poorer decisions.

What is the value of information?

The benefit produced by information minus the cost of producing it.

Value = Benefits − Costs

What are the benefits of information?

• Reduced uncertainty

• Better decisions

• Better planning

• Improved scheduling

What costs are associated with information?

• Time

• Labor

• Technology

• Distribution costs

What are the 14 characteristics of useful information?

1. Accurate

2. Available

3. Complete

4. Concise

5. Consistent

6. Current

7. Objective

8. Relevant

9. Reputable

10. Timely

11. Understandable

12. Useable

13. Verifiable

14. Access Restricted

Which characteristic means information is free from errors?

Accurate

Which characteristic means information reduces uncertainty and improves decisions?

Relevant

Which characteristic means information is provided when needed?

Timely

Which characteristic means information can be verified by two or more independent people?

Verifiable

Why do organizations need information?

To make effective decisions and achieve organizational goals.

What must organizations determine before collecting information?

1.     Decisions that need to be made

2.     Information required

3.     Data needed to produce that information

Why is external information important?

Some information comes from customers, vendors, banks, and government agencies.

: What is a business process?

A set of related activities performed to accomplish an organizational goal.

What is a transaction?

An event involving an exchange that can be measured economically.

Examples:

• Sale

• Purchase

• Payroll payment

What is transaction processing?

Capturing transaction data and converting it into useful information.

What are the five major transaction cycles?

Revenue

Expenditure

Production

Human Resources/Payroll

Financing

What is the give/get exchange in the revenue cycle?

Give = Goods/Services

Get = Cash

Activities in the revenue cycle?

• Take orders

• Approve credit

• Ship goods

• Bill customers

• Collect cash

• Handle returns

What is the give/get exchange in the expenditure cycle?

Give = Cash

Get = Inventory/Materials

Activities in the expenditure cycle?

• Request purchases

• Send purchase orders

• Receive goods

• Approve invoices

• Pay vendors

What is the give/get exchange in the production cycle?

Give = Labor and Raw Materials

Get = Finished Goods

Activities in the production cycle?

• Design products

• Schedule production

• Manufacture products

• Store finished goods

What is the give/get exchange in the payroll cycle?

Give = Cash

Get = Labor

Activities in the payroll cycle?

• Hire employees

• Train employees

• Collect time data

• Pay employees

• Calculate taxes

What is the give/get exchange in the financing cycle?

Get = Cash

Give = Interest and Dividends

Activities in the financing cycle?

• Borrow money

• Sell stock

• Pay dividends

• Pay interest

• Retire debt

What is an AIS?

A system that collects, records, stores, and processes data to produce information for decision makers.

What are the six components of an AIS?

People

Procedures

Data

Software

IT Infrastructure

Internal Controls

What are the three functions of an AIS?

Collect and store data

Transform data into information

Provide controls to safeguard assets

Which AIS component protects data from fraud and errors?

Internal Controls

How can an AIS improve product quality?

Monitoring production and identifying quality problems quickly.

How can an AIS improve efficiency?

Providing timely information for better operations and inventory management.

How can an AIS improve decision making?

By reducing uncertainty and providing timely, relevant information.

How can an AIS improve internal controls?

By preventing fraud, errors, and system failures.

What is Artificial Intelligence (AI)?

Technology that simulates human learning, reasoning, and self-improvement.

What is data analytics?

Using software and algorithms to discover patterns and improve business performance.

What does descriptive analytics answer?

What happened?

What does diagnostic analytics answer?

Why did it happen?

What does predictive analytics answer?

What will happen?

What does prescriptive analytics answer?

What should we do?

What is a dashboard?

A visual display of KPIs, metrics, charts, and reports used to monitor performance.

What is blockchain?

A decentralized, distributed digital ledger that records transactions using cryptography.

What is a hash?

A unique code used to identify a block.

Why is blockchain difficult to alter?

Every block contains its own hash and the previous block's hash.

what are the blockchain advantages?

• Accuracy

• Transparency

• Security

• Decentralization

What is a 51% attack?

When a majority of the network gains control and could potentially manipulate transactions.

What is virtualization?

Running multiple systems on one physical computer.

What is cloud computing?

Accessing software, hardware, and platforms through the internet.

What does SaaS stand for?

Software as a Service

What does PaaS stand for?

Platform as a Service

What does IaaS stand for?

Infrastructure as a Service

What is the Internet of Things (IoT)?

Devices with sensors connected to the internet.

What three factors influence AIS design?

Information Technology

Business Strategy

Organizational Culture

How can AIS influence strategy?

By providing information that supports strategic decisions and competitive advantage.

What is a value chain?

Activities that create value for customers.

What are the primary activities in the value chain?

Inbound Logistics

Operations

Outbound Logistics

Marketing & Sales

Service

What are the support activities in the value chain?

Firm Infrastructure

Human Resources

Technology

Purchasing

Which value chain activity includes receiving and storing materials?

Inbound Logistics

Which value chain activity transforms inputs into products?

Operations

Which value chain activity includes advertising?

Marketing and Sales

Which value chain activity includes repairs and customer support?

Service

Which value chain activity includes the process of selling materials?

Outbound Logistics

Comparing means and medians is an example of what type of analytics?

Descriptive Analytics

An AIS is best described as:

A system that collects, records, stores, and processes data to produce information.

Selling inventory to customers belongs to which cycle?

Revenue Cycle

Purchasing inventory from vendors belongs to which cycle?

Expenditure Cycle

Hiring and paying employees belongs to which cycle?

Human Resources/Payroll Cycle

Borrowing money from a bank belongs to which cycle?

Financing Cycle