INFORMATION SYSTEM : An information system is any combination of information technology

and people's activities that support operations, management and decision making. This term is used to refer not only to the information and communication technology (ICT) that an organization uses, but also to the way in which people interact with this technology in support of business processes. Information systems are different from business processes. They help to control the performance of business processes.

Types of information system :

There are various types of information systems, for example: transaction processing systems, operational systems, decision support systems, knowledge management systems, database management systems,. transaction processing systems ,management information systems.

EXCEL SOLVER :
Excel solver is a part of an information system which organizes data in a tabular grid. Simple lists may be organized, but the data can also be processed using advanced tools built into the information system . Solvers basic purpose is to find a solution that is, values for the decision variables in our model that satisfies all of the constraints and maximizes or minimizes the objective cell value .Solver uses a computer's fast processing power to subject any mathematical scenario to rapid data analysis for purposes of finding a solution to complicated formulas. The kind of solution you can expect, and how much computing time may be needed to find a solution, depends primarily on three characteristics of your model:

Model size (number of decision variables and constraints, total number of formulas) The mathematical relationships (e.g. linear or nonlinear) between the objective and constraints and the decision variables The use of integer constraints on variables in our model

With Solver, one can find an optimal (maximum or minimum) value for a formula in one cell called the objective cell subject to constraints, or limits, on the values of other formula cells on a worksheet. Solver works with a group of cells called decision variable cells that participate in computing the formulas in the objective and constraint cells. Solver adjusts the values in the decision variable cells to satisfy the limits on constraint cells and produce the result you want for the objective cell. The objective, constraint and decision variable cells and the formulas interrelating them form a Solver model; the final values found by Solver are a solution for this model. Solver uses a variety of methods, from linear programming and nonlinear optimization to genetic and evolutionary algorithms, to find solutions. ADVANTAGES: EXCel solver is the most common and one of the most effective ways to manage business and supply chain operations. It provides the flexibility to address the issues unique to ones business in a standard and easy to understand format. The Solver functionality provides the power to find optimal or best solutions to meet business objectives like maximizing profit, minimizing cost or achieving a specific business goal. Very easy to prepare data within Excel and to post process the results for presentation. Solver is not limited to linear-only constraints, thus component balance (bi-linear) reconciliation problems can be handled, although they were not tested here. Solver is not limited to equality constraints, thus for example all estimates can be forced to be positive.

LINEAR ALGEBRA : Whereas more conventional Excel formulas process straightforward

calculations, Solver takes Excel's math engine much further and runs advanced problem-solving algorithms to discover results for multiple variables simultaneously. This is particularly useful when there are many unknowns, or many different sets of equations, each with its own set of unknown variables. Solver saves hours of manual algebra calculations in these circumstances

Optimization

Optimization is a key purpose of Solver as used in the corporate world. As with linear algebra, many product development cycles are influenced by multiple factors, each of which can significantly change profit margins or product quality. If the relationship between these factors and a company's desired goals can be expressed mathematically, Solver can quickly identify the value of these factors to meet those goals

LIMITATIONS

While Excel's solver is an excellent introduction into the power of "what if" analysis that many companies use, it is also a limited product for particularly large operations. Many corporations have their own proprietary tools that work similarly to Solver but can handle much larger sets of data and a greater number of simultaneous variables
The built-in Solver allows only for a maximum of 200 variables, although one can upgrade to the full version Solver uses a generic solver but is not optimized for the characteristics of a data reconciliation problem, such as linear or bi-linear problems, and quadratic cost functions. It is easy to define a problem that becomes unstable. In the example, adding the redundant constraint of the world causes solution instability.

The Solver was very sensitive to the estimates and derivative estimation methods when applied to the example problem and objective functions. Unfortunately it still indicated converged solution even though the results were way off. In the example we know the correct answer allowing us to tune the solver until it gets the right answer; in a real problem we do not.

Irrespective of objective function, Solver took 25~75 iterations to converge. This could be an issue for realistically sized (100~1000s of variables) reconciliation problems. There is no access to such intermediate products such as the covariance matrix with which to perform more sophisticated gross error detection.

EXCEL SOLVER DEMO PRODUCT MIX Consider the following problem:

Imagine that you are managing a factory that is building three products: TV sets, stereos and speakers. Each product is assembled from parts in inventory, and there are five types of parts: chassis, picture tubes, speaker cones, power supplies and electronics units. Your goal is to produce the mix of products which will maximize profits, given the inventory of products on hand. From this description, we can see that o decision variables are the number of products to build o The objective function will be (gross) profit. Assume that you can sell TV sets for a gross profit of $75 each, stereos for a profit of $50 each, and speaker cones for $35 each 75*TV sets + 50*stereos + 35*speakers

To assemble a TV set, you need 1 chassis, 1 picture tube, 2 speaker cones, 1 power supply and 2 sets of electronics. To make a stereo, you need 1 chassis, 2 speaker cones, 1 power supply and 1 set of electronics. To build a speaker, all you need is 1 speaker cone and 1set of electronics. The parts you have on hand are 450 chassis, 250 picture tubes, 800 speaker cones, 450 power supplies and 600 sets of electronics. If we temporarily use the symbols: o x for the number of TV sets assembled, o y for the number of stereos, and o z for the number of speakers, The total profit is: Maximize 75 x + 50 y + 35 z (Profit) Building each product requires a certain number of parts of each type. The number of parts used depends on the mix of products built (constraint left hand side), and the number of parts of each type on hand (constraint right hand side): 1 x + 1 y + 0 z <= 450 (Chassis) 1 x + 0 y + 0 z <= 250 (Picture tubes) 2 x + 2 y + 1 z <= 800 (Speaker cones) 1 x + 1 y + 0 z <= 450 (Power supplies) 2 x + 1 y + 1 z <= 600 (Electronics)

The Excel Solver Product mix interface looks like

This model provides data for several products using common parts, each with a different profit margin per unit. Parts are limited, so your problem is to determine the number of each product to build from the inventory on hand in order to maximize profits.

Problem Specifications

Target Cell

D18

Goal is to maximize profit.

Changing cells

D9:F9

Units of each product to build.

Constraints

C11:C15<=B11:B15

Number of parts used must be less than or equal to the number of parts in inventory.

D9:F9>=0

Number to build value must be greater than or

equal to 0.

The formulas for profit per product in cells D17:F17 include the factor ^H15 to show that profit per unit diminishes with volume. H15 contains 0.9, which makes the problem nonlinear. If you change H15 to 1.0 to indicate that profit per unit remains constant with volume, and then click Solve again, the optimal solution will change. This change also makes the problem linear.