Académique Documents
Professionnel Documents
Culture Documents
Question 1
Discuss various benefits which are attained by implementing a
computerized model for making decision.
(Final May 2003)
Answer
A growing number of companies are making effective use of MIS in
aiding the decision making process. For example, a major chemical
company uses a computer model to simulate an industry segment
and the company’s potential for a share of market and profitability.
A computerized model may incorporate accounting, production,
transportation, manufacturing and marketing operations of the
company. Such models allow a decision maker to consider a large
number of factors in decision-making process, which was not
possible in manual system. This highlights the need to reduce
skepticism that managers have toward sophisticated computerized
decision making aids. This type of model puts pertinent information
into a analytical framework that aids the management decision
making process.
Some of the benefits offered by computerized model for decision-
making are:
1. Managers must deal immediately with many day-to-day business
problems, as well as plan and control their operations. Managers
require different information for the various kinds of decisions
they must make. Computerised model provides reports on
variances, cost-volume-profit analyses, etc to help managers in
decision-making.
2. Computerised models provide managers with data to which
ratios and analysis tools may be applied. They provide
management with a variety of measures of the soundness of the
Management Information and Control Systems
28
Systems Approach and Decision Making
29
Management Information and Control Systems
30
Systems Approach and Decision Making
31
Management Information and Control Systems
products.
(vii) Break-up of the jobs and their resource requirements.
Planning the specific time at which product items should be
manufactured is known as production scheduling. The information is
required by the production-scheduling department so as to meet the
following objectives:
(i) to determine the stages of production in sequential and rational
order;
(ii) to minimise the idle time on the part of the operators and
equipments;
(iii) to assess the extent of need for subcontracting to outside
parties;
(iv) to ensure that completion dates and target dates of
completing the production plans are met fully; and
(v) to study alternative methods to performing the activities so that
time taken to perform can be further reduced.
Question 5
What are the variables that the top management should consider
during negotiations with the labour unions?
(Final Nov. 2004)
Answer
Many types of labour today are unionized. Unionized organisations
usually have strict regulations regarding such items as pay scales,
hiring and firing, promotions and working conditions. Management
has the choice of trade – offs on the following variables during
negotiations with the labour unions
(i) Wage raise
(ii) Paid holidays
(iii) Contribution to employees, insurance and pension plan
(iv) Overtime premiums.
Cost accountants/payroll accountants would be in the best position
to make various estimates for the cost implication of trade off.
Question 6
32
Systems Approach and Decision Making
33
Management Information and Control Systems
34
Systems Approach and Decision Making
35
Management Information and Control Systems
36
Systems Approach and Decision Making
37
Management Information and Control Systems
Question 8
How system approach can be used for solving problems?
(Final Nov. 2005)
Answer
The system approach to management is in fact a way of thinking
about management problems. It visualizes an organization as a
group of interacting and interdependent parts with a purpose.
Managers are not in a position to deal with individual parts
separately since action of one part is going to affect other parts.
Each problem should be examined in its entirety to the extent
possible and economically feasible from the point of view of the
overall system of which the problem under consideration is one part.
Under this approach, a manager should make conscious attempt to
understand the relationship among various parts of the organization
and their role in supporting the overall performance of the
organization. Before solving problem in any financial area, or in any
specific sector of the organization, he should understand fully how
the overall system would respond to changes in its component parts.
To understand howofthe
Defining system
problem approach to problem solving is
or opportunity
applied, let us consider the problem of long delays between receipts
of orders and delivery in some hypothetical company. To seek a
Gathering and analyzing data
solution for the problems by applying systems approach, we would
relating to problem or opportunity
make use of the following steps as shown in the figure given below:
39
Management Information and Control Systems
40
Systems Approach and Decision Making
41
Management Information and Control Systems
42
Systems Approach and Decision Making
43
Management Information and Control Systems
Answer
(a) Financial Decision Making: It deals with procurement of funds
and their effective utilization in the business. There are two
important aspects of financial decision making − first relates to
decisions regarding procurement of funds and second to
decisions regarding effective utilization of funds in the business.
Procurement of funds is a complex problem since there are
number of sources from where the funds may be raised for long-
term such as equity, debentures, bonds etc. or on short-term
such as banks, suppliers, credit etc. These sources have
different characteristics in terms of risk, control and cost.
Effective utilization of funds implies deployment of funds in
several long term and short term assets, properly and profitably.
The funds are procured at a certain cost with a certain level of
risk. If they are not utilized in a manner as to generate higher
income over their cost, they will cause losses to business. Thus,
each decision should be properly analysed while investing in
fixed assets.
For the answer on Financial Decisions by Financial
Information Systems refer Question No.2.
44