Decision-making with MIS involves utilizing information and insights provided by the Management Information System (MIS) to make informed decisions. MIS offers a broad range of data and analysis, including data processing, prediction, planning, control, and assistance, to aid in making the best possible decisions.
The MIS provides quick, reliable, and accurate information, enabling managers to make informed and prompt decisions. By leveraging the insights provided by MIS, managers can analyze a variety of factors, including financial, operational, and customer-related data, among others.
Table of Content
Decision Making With MIS in Organization
- Tactical Decisions
- Operational Decisions
- Travelling Salesman Problem
- Control and Planning
- Strategic Decisions
An important task of all employees within the organization is to make decisions about various things. At the lowest level of the organization, the workers have to decide how to go about their work. Although their work is usually quite structured, they have to make choices and evaluate consequences, using the given details.
For example, a salesperson may have a fixed route to travel to meet several clients during the day, but he still has to decide how to proceed given the actual conditions on the ground and also how many appointments he already has, and how many are pending. These are called tactical decisions. The salesperson has clear objectives to attain and has to make minute, low-level decisions to achieve those objectives.
Consider another example of a shop-floor assembly line worker. In a typical manufacturing assembly line, say in a factory that makes automobiles, the worker is given a fixed set of jobs to do. The worker is provided with the equipment and the material required to do the job and is given a timeline for completing the work. The worker also has to attend to other constraints that involve communicating with the supervisor; adhering to company rules regarding safety, security, and health, and interacting with co-workers.
The worker who is doing the job of assembly within such constraints has to make minute, tactical decisions regarding the work, like a selection of tools, setting up of tools, use of material resources, information to be entered into the shop-floor information systems, and the timing and content of information to be communicated to upstream and downstream workers, etc.
Another example is that of a nurse attending to patients in a hospital ward. A typical nurse has to make many decisions during the day regarding patient care and providing support to physicians. The nurse’s main tasks may be outlined clearly, which may include attending to patients on a fixed number of beds, providing them with timely doses of medication, recording the medication and nutrition given to the patient in the information systems, assisting the physician with check-ups and diagnosis, and ensuring the health care provided is according to the quality norms specified by the hospital.
The nurse’s decisions will revolve around all these activities – which jobs to prioritize, when an emergency occurs how to proceed with the activities, what information to convey to managers and attending doctors, and how to coordinate activities with other nurses.
Decisions made by managers that have a medium-term scope are often called operational decisions. These decisions are based on aggregate data and impact the activities for the medium term which could range from the next few months to the next few quarters. Operational decisions are often supported by decision support systems that use specialized models to provide detailed and carefully analyzed solutions to decision problems.
The following examples show the types of operational decisions supported by decision support systems:
- Operations managers can decide on inventory levels to be maintained to meet the production targets for the firm and also control the amount of working capital locked into inventory. Decision support tools allow managers to use mathematical models that rely on current and past inventory and production levels to predict, quite precisely, the quantities of materials to be in inventory.
- Finance managers can use decision support tools to arrive at the best allocations for investment in various types of market opportunities. Finance managers have to balance the available liquidity against the market risk of investment and the best returns possible. The tools help answer the question of how much to invest in what and also the possible scenarios that might result from the decisions.
- Software project managers have to make decisions regarding:
- (a) How well projects are progressing,
- (b) whether they will complete on time,
- (c) whether they will be completed within the allocated budget, and
- (d) whether the projects will meet the objectives of the customers.
- (a) How well projects are progressing,
Project managers control the number of people on a project, the money allocated to the project, and the deliverables of the project. Decision support tools help them visualize and estimate, using past data on the current and similar projects, how the projects will fare.
- Decision support tools are used in the strategy function of various organizations. The tools enable managers to visualize future trends in the economy, competitors’ responses, and industry trends. The tools can also help in simulating the impacts of strategies formulated by the organization.
For example, the impact of introducing new products in a market with many competitors can be simulated in a computer program that shows how the products will fare under different price scenarios.
- Marketing managers can use decision support tools to find the most cost-effective routes for the salespersons to cover the market. Travel entails costs and hence managers want to follow the least cost routes that also allow sales personnel to meet all their customers. This decision is often complicated by customers making sudden calls to the salesperson, or weather or traffic conditions not permitting some routes.
Travelling Salesman Problem
The traveling salesman problem is an example of an operational decision. The problem is depicted. The salesman has to cover all the cities in one tour at the lowest possible cost.
The salesman can start from Bangalore and then follow any sequence, such as Chennai– Mumbai–Bhopal–New Delhi–Kolkata–Ranchi or Kolkata–Ranchi– New Delhi–Mumbai– Bhopal–Chennai. If all the combinations of cities are counted, there are 720 ways in which the salesman can cover all the cities after starting from Bangalore.
Each of these is called a tour. For the lowest cost tour, the salesman would have to calculate the distance covered for each possible tour and take the shortest one. If the salesman starts the tour from any of the other six cities, the problem increases to 5040 possible tours! It is very difficult to compute the lowest cost for such a large number of tours. Hence it is a wise step to rely on a decision support system that can do the job efficiently.
The traveling salesman problem is a very well-known and well-researched problem. When the number of cities increases to about 20, the possible tours increase to more than 2 × 1018 tours which is about 2 million trillion tours! Such a large number of calculations become hard to complete, even for computers.
Control and Planning
Supervisors, managers, and knowledge workers have to make decisions that are more long-term in nature and are far removed from the hour-to-hour and day-to-day activities of the firm. Managers and supervisors need information for control and planning. Control implies monitoring activities against given objectives, and taking action relevant to the situation. To exercise control, managers need summary information that shows how the activities of the organization have progressed and how close they are to the given objectives.
For example, managers in charge of marketing a product have to see:
- How much the sales have been as compared to the targets?
- Which regions have either exceeded or fallen behind the targets?
- Which schemes for marketing are most successful?
- How the sales personnel fared against their targets.
- What is the nature of comments from customers, etc?
When this information is provided on a monthly or quarterly basis, managers can take decisions that change the course of activities for the next period. They could, for example, provide more personnel to a region that is slacking in sales, increase incentive schemes in another place, launch advertising campaigns, modify budgets of personnel, etc. to achieve their targets. Controlling activities is thus guided by the information available.
Planning is another activity that managers undertake. Planning involves forecasting situations in the future and arranging for activities that will address them. For example, for the marketing manager, planning may involve setting up marketing incentive schemes to boost slack in sales, or redeploying sales personnel in a region, or send personnel to special training programs, and so on. Planning thus involves envisaging a set of activities for the future.
Control and planning are intertwined decisions that managers often have to take. For example, for a manager of the finance function, the job will involve monitoring the finances of the organization which will include borrowing, lending, monitoring of current assets and liabilities, and investing in stocks, bonds, futures, funds, etc.
The manager has to control all these accounts by changing allocations and positions so that they are in line with the organization’s objectives of financial performance, and also plan for the future based on the current activities of the organization. So, if the organization is growing in terms of revenues and there are likely to be accumulated surpluses, the finance manager will have to decide how to invest the surplus to obtain proper returns.
Another set of decisions made by top managers of an organization is termed strategic decisions. These are long-term in scope and have a long time horizon of years. By nature, these decisions impact the very manner in which the organization does its work. Strategic decisions are related to the vision and mission of the organization – the decisions determine how the organization will realize what it was created for originally and what it strives to achieve eventually.
Information systems such as executive information systems are used for making strategic decisions. Some examples are as follows:
- For firms manufacturing pharmaceuticals, strategic decisions will revolve around what markets to enter, what type of population segments to target, and how to survive the competition. Information systems can provide data and inputs on the current operations of the organization, the market response of various segments, and industry data on the competition.
These can be used with models that forecast trends of pharmaceutical sales, show potential changes in market segments, highlight potential untapped and niche areas, and help in predicting economic factors that will affect the organization.
- For a government department, such as the revenue department of a state in India, the strategic decisions will include deciding on how to reach out to all revenue segments in the population, how to provide government services efficiently, and how to enhance services that improve revenue intake. Information systems support tools can be used to understand the demographics of the revenue population, and the segments that are most underserved and identify trends in revenue collection.
- The Indian Railways uses information on ticket and freight transport sales to decide on which routes to further enhance its services and in which regions to start train services. The strategic decisions involve long-term infrastructure growth and planning for future demand for services.