Introduction to MIS1 Copyright © 1998 by Jerry Post INFSY540.1 Information Resources in Management...
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Transcript of Introduction to MIS1 Copyright © 1998 by Jerry Post INFSY540.1 Information Resources in Management...
Introduction to MIS 1
Copyright © 1998 by Jerry Post
INFSY540.1Information Resources in Management
Lesson #4
Chapter 9
Decisions in Business Areas
2
Decisions inFunctional Areas
Fin
ance
Mod
els
Acc
ount
ing
Mod
els
Pro
duct
ion
Mod
els
Mar
ketin
g M
odel
s
Hum
an R
esou
rce
Mod
els
Strategy
TacticalDecisions
Operations
Company
Decision Making and
Problem Solving
Herb Simon’s Model of Decision Making and Problem Solving
Decision Making and
Problem Solving
Intelligence
Design
Choice
Implementation
Monitoring
Herb Simon’s Model of Decision Making and Problem Solving
5
Programmed versus Nonprogrammed Decisions Programmed decisions
Structured situations with well defined relationships Quantifiable Management information system
Nonprogrammed decisions Ill-structured situations with vague or changing relationships
between variables Not easily quantifiable in advance Decision support systems
6
Problem Solving Approaches
An Overview of Management Information Systems
9
Figure 10.3
10
Figure 10.4
11
Characteristics of an MIS Fixed format, standard reports Hard-copy or soft-copy reports Uses internal data User-developed reports Users must request formal reports from IS department
12
13
Figure 10.7
14
Manufacturing MIS Inventory management (MRP, JIT) Process control
Computer-assisted manufacturing (CAM) Computer integrated manufacturing Flexible manufacturing system
Quality control
15
Figure 10.8
16
Figure 10.9
17
Computers are used to track inventory levels, receipts, and shipments. Sophisticated warehouse information systems automatically route boxes to storage and switch conveyor systems to send packages to trucks waiting at the loading docks.
Production Models Process Control Inventories, MRP Computer Integrated Manufacturing Product Design
18
Integrated Manufacturing
shippingpackingproduction
rawmaterials
time
Q
forecast sales by product
production schedule
workers & materials
optimize schedule
Send EDInotices tosuppliers.
schedule changes
Information & Control
Suppliers
Customers
19
File: C09E05a.xls
Production
20
Production Example Parameters
Number of backup machines Number of repair workers Mean time to failure Mean repair time Cost additional workers Cost of lost production
Output: Total costs
Objective: Hire the number of workers that leads to the least cost
21
Geographic Models
City 1980 pop 1990 pop 1980 per capita income1990 per capita income1980 hard sales1980 soft sales1990 hard sales1990 soft salesClewiston 5219 6085 7645 13598 452 562.5 367.6 525.4Fort Myers 36638 45206 6483 16890 535.2 652.9 928.2 1010.3Gainesville 81371 84770 6150 13672 365.2 281.7 550.5 459.4Jacksonville 540920 635230 6767 15316 990.2 849.1 1321.7 1109.3Miami 346865 258548 6084 16874 721.7 833.4 967.1 1280.6Ocala 37170 42045 6175 12027 359 321.7 486.2 407.3Orlando 128291 164693 6735 16958 425.7 509.2 691.5 803.5Perry 8254 7151 5727 11055 300.1 267.2 452.9 291Tallahassee 81548 124773 6310 14578 595.4 489.7 843.8 611.7Tampa 271523 280015 6441 15081 767.4 851 953.4 1009.1
File: C09GISa.xls
22
Tampa
Miami
Fort Myers
JacksonvilleTallahassee
Gainesville
Ocala
Orlando
Clewiston
Perry
7000+
6700
6400
6100
5800-
1980 1990
17,000
15,000
13,000
11,000
9,000
per capita income
Red
3.2
Yellow
2.3
Blue
1.9
Green
2.3
Red
1.7
Yellow
1.1
Blue
1.0
Green
1.1
Red
2.1
Yellow
1.7
Blue
1.1
Green
1.4
Red
5.0
Yellow
4.2
Blue
3.2
Green
3.7
Red
1.8
Yellow
1.5
Blue
1.2
Green
1.4
Red
2.6
Yellow
3.0
Blue
1.9
Green
1.6
Red
3.6
Yellow
3.8
Blue
3.2
Green
2.9
Red
3.5
Yellow
3.8
Blue
2.5
Green
2.0
Red
1.4
Yellow
2.0
Blue
2.1
Green
1.7
Red
3.7
Yellow
4.8
Blue
3.2
Green
2.7
1990HardGoods
1990SoftGoods
1980HardGoods
1980SoftGoods
23
Accounting
Because of the volume of data, accountants are primary users of information systems. Spreadsheets are used to evaluate the financial condition of the firm and help make decisions.
24
Accounting Models Transaction Processing & Tactics
Accounting systems are models Standards for reports Decisions & Data
Control Systems Accuracy Fraud
Strategic Support Information Customization
25
Traditional Cost Accounting
File: C09E01a.xls
Activity Based Costing
26
Activity Based Costing
Process SalesOrders
SourceParts
ExpediteSupplierOrders
ExpediteInternal
Processing
ResolveSupplierQuality
ReissuePurchase
Orders
ExpediteCustomer
Orders
ScheduleIntracompany
Sales
RequestEngineering
Change
ScheduleParts
ResolveProblems
Process DiagramIdentify Subsystems
Assign costs to each subprocess by category (salaries, fixed costs . . .)
27
Financial Markets
Information is the essence of a financial market. Its purpose is to bring buyers and sellers together. With thousands of investments and millions of buyers and sellers, brokers are surrounded by data. The problem lies in analyzing and evaluating this data.
28
Finance
Balance Sheet for 1999
Cash 33,562 Accounts Payable 32,872 Receivables 87,341 Notes Payable 54,327 Inventories 15,983 Accruals 11,764 Total Current Assets 136,886 Total Current Liabilities 98,963
Bonds 14,982 Common Stock 57,864
Net Fixed Assets 45,673 Ret. Earnings 10,750 Total Assets 182,559 Liabs. + Equity 182,559
File: C09E02a.xls
29
FinanceIncome Statement for 1999
Sales $97,655 tax rate 1993 40%Operating Costs 76,530 dividends 1993 60%Earnings before interest & tax 21,125 shares out. 1993 9763
Interest 4,053 Earnings before tax 17,072 taxes 6,829 Net Income 10,243
Dividends 6,146 Add. to Retained Earnings 4,097
Earnings per share $0.42
30
Corporate Finance
Results in a CIRCular calculation.
Cash $36,918Acts Receivable 96,075Inventories 17,581
Net Fixed Assets 45,673
Total Assets $196,248
Accts Payable $36,159Notes Payabale 54,327Accruals 12,940
Total Cur. Liabs. 103,427
Bonds 14,982Common Stock 57,864Ret. Earnings 14,915
Liabs + Equity 191,188
Add. Funds Need 5,060
Bond int. rate 5%
Added interest 253
Balance Sheet projected 2000Income Statement projected 2000
Sales $ 107,421Operating Costs 84,183
Earn. before int. & tax 23,238Interest 4,306
Earn. before tax 18,931taxes 8,519
Net Income 10,412
Dividends 6,274
Add. to Ret. Earnings $ 4,165
Earnings per share $0.43
Tax rate 45%Dividend rate 60%Shares outstanding 9763
Sales increase 10%Operations cost increase 10%
Forecast sales and costs.
Forecast cash, accts receivable, accts payable, accruals.
Add gain in retained earnings.
Compute funds needed and interest cost.
Add new interest to income statement.
1
2
3
4
5
12
4
2
3
5Total Cur. Assets 150,576
31
Marketing decisions often entail determining customer preferences. Interviews and data collection are an important first step. Analyzing conflicting data is a challenge that often requires sophisticated decision support tools.
Marketing
32
Government Census
Income Demographics Regional data
Government Legal registration
Drivers license Marriage Housing/construction Business/legal notices
Marketing Data Sources Internal
Sales Warranty cards Customer service Coupons Surveys Focus groups
Purchase Scanner data Competitve market analysis Mailing & phone lists Subscriber lists Rating services Shipping records
33
Marketing
Research and Forecasting
Customer Service
File: C09E03a.xls
34
Promotion Analysis
Regression ResultsWith no promotions:
sales = 20,865 + 342 * consumer + 339 * weekconsumer survey average = 45
Promotion 1:
sales = 42,370 - 62 * consumer - 211 * weekconsumer survey average = 47
Promotion 2:
sales = 13,448 + 501 * consumer + 545 * weekconsumer survey average = 53
Promotion 3:
sales = 44,808 + 98 * consumer - 2067 * weekconsumer survey average = 38
35
-10000
0
10000
20000
30000
40000
50000
60000
$ sa
les
1 3 5 7 9 11 13 15 17 19 21 23 week
No promo promo1 promo2 promo3
InchikiPromotion Options
Promotion Results Graph
36
Figure 10.11
37
Figure 10.12
38
Human ResourcesFile: C09E04a.xls
39
Raises
0500
1000
1500200025003000
35004000
Caulkins Jihong Louganis Naber Spitz Weissm uller
dolla
rs
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
Raise Raise pct Performance
Human Resources
40
Appendix: Financial Ratios Goals
Highlight relationships among financial accounts
Compare firms within industries
Categories Profitability Liquidity Activity Leverage (debt)
DuPont Analysis Margin versus Quantity
41
Profitability Ratios
salesNettaxes before income Net
= margin Profit
goutstandin sharesof Numberdividends + taxes after income Net
= (EPS) shareper Earnings
value) (bookEquity taxes after income Net
= (ROE)equity on Return
EPS shareper price market Average
= E)(P ratio earnings Price /
Higher is better. Except a high P/E ratio might indicate that a stock is overpriced in the market.
42
Liquidity Ratios
sliabilitie Currentassets Current
= ratio Current
sliabilitie CurrentsInventorie - assets Current
= test Acid) (or Quick
Higher is better. Except too high implies excess cash on hand--which should be invested.
43
Activity Ratios
assets Total salesNet
= turnover Asset
Inventory soldgoods of Cost
= turnoverInventory
day per Salesreceivable Accounts
= period collection Average
Low implies excess capacity or poor sales.
Low implies poor inventory management or weak sales.
Low implies poor management of collections.
44
Leverage Ratios
assets Totaldebt Total
= ratio Debt
charges Interestcharges Interest + taxes before Income
= earned interest Times
Low implies problems with covering debt payments.
Highly variable, depending on management and industry.
45
DuPont Analysis
equity Commonassets Total
x assets Total
income Net
Leverage x ROA
= ROE
ROA =
Profit margin x Total asset turnover
Net income
Sales x
Sales
Total assets
Choice: sell at high profit margin, or high volume.