Midterm Review

Midterm:
Time, Venue, Seating
• 2007, Saturday, Mar 24, 2pm-4pm
• LTA
• You are assigned seating
– Check seating on Webct  lecture materials
 seating plan
 Midterm
• Scope
– All slides
• Qs were designed by me and Prof. Zhang
(instructor of L3/L4) together based on slides.
– All related chapters (1-7, except 4.7, 4.8, 7.4)
– Reading the textbook is a requirement
 Midterm
• This exam is “closed book.” Accordingly,
– You are NOT allowed to use books or notes during the exam.
– You are NOT allowed to talk to other students during the exam.
– You are NOT allowed to use PDAs, laptops, cell phone, or other
aids.
 Midterm
• There are totally 75 Qs. Each Q is worth 1 point.
– 23 T/F
– 52 MC

• At the end of the exam, you need to return the question

booklet AND your MC sheet. Your exam will be
disqualified if you do not return both.

• You have 120 minutes, please pace yourself accordingly.

 Midterm
• Now, a more efficient way is to start from the
slides to revise.

– If you find any concept, rule, and explanation on

slides, you need to memorize and understand those.
– If you find a concept/rule on slides without detailed
explanations, you need to refer to the textbook.
 Midterm
• For instance, about digitization
– Which one of the following is an example of digitization?
– Which one of the following is an example of information
goods? (you need to understand information goods)
– Which one of the following is a result of digitization?
(you need to understand marginal costs reduction by
digitization)
 Spent 17 hours in LTJ
Business implications
Mgmt
• Info. processing:
data  information

Organizational use
Major IS (1) (1) Digital EB
• Two-dimension Economy (7)
framework to analyze IS
• Working in the digital
world
• Ethical issues 1. E-biz evolution
2. Biz implications
- Benefits
- Drawbacks
Technology components People 3. Models

HW SW Network Internet DB Nature of the digital economy

(2) (3) (5) (6) (4) -globalization -digitization
-speed -merger
-ideas -new markets
 Midterm
Business implications
Mgmt

Organizational use
Major IS (1) (1) Digital EB
Economy (7)

9 11 17
38
Technology components People
37
HW SW Network Internet DB
(2) (3) (5) (6) (4)

12 7 11 5 3
 Midterm
• Slides offer answers to 67 Qs (90%) in the
midterm.
– Suggest you start from slides.
– Assume you have read the textbook (a requirement)
– You find a definition on slides. Memorize.
– You find a term without definition. Refer to the
textbook
• The rest 8 Qs are also mentioned in class.
– For example, summary of the intellectual property
law, working in the digital economy, ethics in the
digital world
Chargeback
 Digital economy
Key points
• ISMT101 emphasis
• Globalization
– Enabler, Benefits
• Dynamic pricing
– Concept
– Dynamic pricing in auctions
• Digitization
– Information goods
– Marginal costs reduction
• “Long tail” effect
– Benefits, Enablers
 Our emphasis

Business
MGTO
MKTG

ISMT 101

Computer Science

Technology
 Enabler of globalization

• Information technology—enabler of global

communications in a business-to-business
setting

• Communications in a business-to-business setting

– Information about products
– Price
– Quantity
– Invoice, shipping information, payment information
– Damage…
• Internet-based business-to-business communications
– An important part of B2B e-business
 Fixed costs=FC, marginal costs=MC, variable costs=VC
Total costs=TC, average costs=AC

• FC: copyright • FC: copyright

• VC: printing & binding • VC: make a CD

# FC MC VC TC AC # FC MC VC TC AC
1 1000 10 10 1010 1010 1 1000 1 1 1001 1001
2 1000 10 20 1020 510 2 1000 1 2 1002 501
3 1000 10 30 1030 343 3 1000 1 3 1003 334
… … 10 … … … … … 1 … … …
1000 1000 10 10000 11000 11 1000 1000 1 1000 2000 2
10,000 10.1 10,000 1.1
 Q&A – marginal costs

Q: Do “lower MC” always significantly reduce AC? Is this universally

true?

• We focus on information goods whose major functions build on

information.
– Consider: cars versus maps
– Today, NOT all products/services in our economy can be digitized.
• We will observe significantly reduced AC when quantity is large.
– Mathematically, when quantity approaches infinity, average costs
approach marginal costs.
 Q&A – dynamic pricing
Q: How long is the time window for considering “anytime”

• This should be considered in a relative sense, that is, within a

certain period of time

• Examples—beer

– Online grocery, price may change even more frequently

– PARKnSHOP, price may change on a weekly basis
– In the ground-floor restaurant, beer price does not Pricing
change for a long while more
dynamic
 Assume KAR and HAC are willing to pay 49.46 and 55.35, respectively.

YES
KAR
Dynamic
pricing
HAC 104.81 YES
47 49.46 52 54 55.35 58
Price

YES YES No No No No
KAR
Listed
pricing
HAC YES YES YES YES YES No

94 98.92 52 54 55.35 0
Increased variety: “short head”  “long tail”

Sales Short head Anthropology

( inventory in History
physical stores) Mythology
Bible
Art
Long tail @ Biography
cyber space Archaeology…

Best-seller Popularity
 IS in organizations
Key points
• Two-dimensional framework
• Major types of IS
– TPS…EIS
– For each: Users, major function (input, output)
• Major components of IS
– HW…people
 Data  information

Pruning

Analyzing
Data Information
Styling
Information System—
Distributing A set of interrelated
Information technologies
that work together for…
 IS in organizations

Organization is an administrative and functional structure

applied to people who are working toward a specific goal.
Store
Employees

Store
Managers

HK Regional
Managers

Headquarter

Finance/ Human
Operations Marketing
Accounting Resources
IS in marketing and sales
TPS (transaction processing systems)
EIS
• Users: operational-level employees
• Input: daily operations
DSS • Output: operational data
• Task example: check-out (barcode 
MIS sales data)

KWS

OAS

TPS
 Information system

• MIT study on value of

information systems Market value of a firm
(Brynjolfsson et al. 2002):

Together human
resource and
technologies create
more value.
Hu
m
an
Re
so
u

Technologies
rc
e
 E-business
Key points
• E-business benefits/drawbacks
• E-business models
– Review all B2C and B2B models on slides
• Disintermediation vs. re-intermediation
– Concepts (related to value chain)
– Benefits from disintermediation
– Features of re-intermediation
 E-Business

• IBM coined the term “e-business” in late 1990’s,

and emphasized three key characteristics
– exploiting the latest Internet technologies
– delivering a broad spectrum of applications
– reaching a broad spectrum of users
 E-business benefits

Global Convenience
marketplace Search &
transaction Personalization Better
speed service
Consumers
Become 24/7
sellers

Long tail Zipcar Video PC, Google &

Rental biz Clothing, pizza
models Consumer
Electronics,
Services…
 E-business components

Advantages read, touch… search search, low costs

Disadvantages not very convenient some risk, shipping people may like hardcopy.
 Brick-and-Click refers to Synergy!!

• Such as www.bn.com
• Advantages
– Reputation
– More options for consumers
• Search on the Internet  buy in physical stores
• Buy on the Internet  return to physical stores
• Read in physical stores  buy on the Internet
• Learn product features  buy on the Internet
 B2C—intermediary

• New types of intermediaries connect buyers and sellers

600,000
Affiliated Consumers
Members

Reach consumers revenues lower risk

 Resource
EB developer Approve? center
Create an acct Upload

Work

Request
Pay

Providers
 B2B: Selling

• Direct sales model, direct to other businesses

 E-biz value chain

Value chain = steps required to get goods/services to consumers

B2B B2C

Transportation Manufacturing Distribution Retailing

& logistics

Raw Transportation Transportation Complementary

material & logistics & logistics services
Disintermediation – Stephen King’s three books

Partial
disintermediation

Complete
disintermediation
 Disintermediation vs. reintermediation

• Benefits of disintermediation
– Eliminate charges by “middle men”
– Launch new products quickly
– Obtain richer data about consumers

• Features of the new intermediary

– Render opportunities to vendors who can hardly
reach consumers without IT
– Aggregate more vendors
– Provide price/product comparison agents
– Offer additional services, mainly information-based,
such as insurance and verification
 HW/SW
Major points:
 The role of the CPU and how it operates
 Major types of input devices
 Major types of output devices
 Types of storage (attributes)
 primary storage
 secondary storage
 Different types of systems SW
 Main functions of operating systems
 Various types of applications SW
Volatile Non-Volatile

RAM Primary
ROM
(Used for BIOS) Jump
Drive
Internal
(in CPU)

Cache
 Moore’s Law on Processor Speed
 Moore’s law: the density of circuits on a chip, and thereby the
performance, doubles every 18-24 months
 for the same performance, price is half
 for the same price, performance doubles
 For the last 20 years, PC’s power increased by more than 10,000 times
 Operating Systems (OS)

• Software platform
on which other
programs run
• Provides a connection
between application SW
and HW
 OS major tasks

• Starting the computer (booting)

1. Turn it on.

2. Trigger BIOS 3. Load OS

4. CPU will execute instructions

 Application SW

Time Multi- Virtual

sharing programming memory

CPU RAM
HDD

OS
 Networking
• Transmission media
– Physical media for sending signals
• Data communication hardware
– HW that ensures the data gets to the right place
• Network topology (i.e. Structure)
– Group of devices connected for the purpose of
sharing data
• Protocols
– A format for transmitting data that has been agreed to
be a standard (TCP/IP, Ethernet, Token Ring)
 Communications Hardware

1—Computer
– NIC–Network Interface
Card
2—Intra-network
– Modem
– Hub
3—Inter-network Modem

– Router – HW in packet
switched networks
– Gateway – converts NIC
data from one
standard to another
 Star Network Topology
• Centered around central routing device called a hub
• All network nodes connect to the hub
• Easy to install and update
• Hub can also be a bottleneck
– All data transmissions through the hub
– If hub fails, network fails
 Protocols

• An agreed-upon set of rules that govern

communications in a network
• TCP/IP: support packet switching over the Internet
• Transmission Control Protocol (TCP)
– Break a message to be sent into packets
– Re-assemble packets
– Check for errors and resend packets, if needed
 Protocols

• Internet Protocol (IP)

– Specify a unique IP address
– Determine the optimal paths for packets switching

Destination Origin Position,

Data
IP IP Error?

Packet

• TCP/IP –widely used by business, even for

internal networks
– Intranet, Extranet
 Once setup,  More fault tolerant
guarantees that the
message goes  Robust to physical
through network dysfunction

 Any one segment  Robust to possible

along the way errors in data
breaks, the circuit is transmission
disabled
 Client-Server Network Architecture

• Each node is either client or server

• Clients use services
– Send data-processing request to server
– Receive results from server
– Present results to end users
• Servers provide services
– Centralized data processing
– Time sharing technology
– E.g., access to shared data,
e-mail, printing, FAX
 Peer-to-Peer Network Architecture

• All nodes on the network are equal.

• Any node can be both a client and a server.
 Internet
• Architecture
– Access, DNS, TCP/IP
• Fight spam
– IBM’s proposal
• How Google search
– Googlebot
– Page ranking
 Internet architecture—access

Tom
Two ISP’s networks.
No peering
agreements.
Need NAP.
Alice
NAP—high speed
routers
or gateway
 • Get physical
access via ISPs
• Use DNS service
Tom • Use client-server
WWW service to

Domain Name
3 •
download
Communicate
Server using TCP/IP
“198.173.5.35”
protocol
2 4
1 TCP/IP
Alice
7- Application layer Different
applications
6 - Presentation layer

5 – Session layer

4 – Transport layer TCP

Same
Infrastructure
3 – Network layer IP

2 – Data link layer Network adapter

1 – Physical layer Transmitting signals

What happen when you use Skype…

7
6
5

4&3

2
1
Fighting Spam – IBM’s Proposal
 DB
• Basic concepts in DB
– Characters, fields, key, table, database
• File systems may result in redundancy
and anomalies
• Features of hierarchical, network, and
relational models
• Procedure of developing a relational DB