The Function Of A Management Information System Mis Accounting Essay

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The function of a Management Information System (MIS) is to provide sufficient information to manager so he could make informed decisions which in turn help him to carry out the designated functions.  The best way to describe MIS is:

"Management Information System (MIS) job is to translate data from both internal and external sources into information that further can be used to assist in making effective decisions for planning, directing and controlling."

There is need for us to make the dissection among a Data-Processing system and an Information System:

·        Data Processing systems register day to day transactions, e.g. sale particular product to a customer.

·        Operational Information Systems study the composed data and do things like making lists of items that are high on demand.

·        The MIS will analyse the sales of data to highlight trend of sales of various products so to enable decisions as to whether or not the product needs promotion for its sales, or whether it should be taken off market.

 

The MIS must provide information to managers on 3 different levels:

·        Operational - day-to-day decisions e.g. ordering in more stock or discontinuing the particular stock.

·        Tactical -"short term effect or medium term effect" decisions e.g. introduction of exclusive stock to a particular retail store;

·        Strategic - referred to long term decisions that will affect the future of the company, e.g. whether or not to open a new store, or to take over rivals.

Types of Decision

Two kinds of decisions a manager can make:

·        Structured - which follows a fixed pattern and has a definite routine and procedure to deal with problem, e.g. an order need to be placed with a supplier when the stock is below 15 %?

 ·       Unstructured - These decisions require knowledge, insight, and proper assessment.  In this problem may well crop up without warning (could be threatening), and the right decision can be critical.

 The manager may well go through the following period when feel bit confused while taking a decision:

 1.     Recognise the problem The MIS may provide information about the performance of the particular department, and about where the actual problem lies.

2.     Consider the solution a spreadsheet could well be used to look after "What if" situations.

3.     The solution is chosen by means of the manager's wisdom as well as the information gathered from the MIS sheet.

4.     The solution is implemented and reviewed the data is then provided by the MIS on which the solution is examined and provided.

Task 2

a.

I 0 16

F

A 0 20 20 50

J

50 53

E

D

B

C

0 2 2 12 12 13 18 19

K 0 2

H

G 12 18 18 22

-It is not possible to start production within 48 weeks, because the critical time taken is 53 weeks by the network diagram.

-Critical activities: A-F-J: 20 + 30 + 3 = 53

-Tasks which are not on the critical path, does not affect the process, this time is float or slack:

Total Float = Max of time taken for each of the non critical activity = 10 weeks.

Your previous solution you mention 37 weeks is the non critical activity.. is it 10 or 37 weeks

b. Yes, It is possible to crash (i.e. reduce the duration of) certain activities at increase cost.

Preceding Task

Start Time

End Time

A

-

0

20

B

-

0

2

C

B

2

12

D

C

12

13

E

D

13

19

F

A,E

20

50

G

C

12

18

H

G

18

22

I

-

0

16

J

I,F,H

50

53

K

0

2

i)

As suggested by James, the production manager, that only activity I need to be crashed as it is one of the cheapest options and reduces time greatly but his decision would be wrong, as we see that activity is not the part of the critical activities. So there will be no impact of activity time reduction will affect the whole process.

ii)

Preceding Task

Start Time

End Time

Normal Cost ('000)

Crash Cost ('000)

A

-

0

18

4

10

B

-

0

2

C

B

2

12

D

C

12

13

E

D

13

18

1

3

F

A,E

18

46

15

27

G

C

12

18

H

G

18

22

I

-

0

16

.5

8

J

I,F,H

46

48

16

20

K

0

2

If I will take the crash costs and optimized results, I will choose the crash cost of activity E,F and I. By taking these crash costs, there would be no lost profit, as our process will be over in 48 weeks.

With taking this crash costs, our critical path would also be changed. It will be

B-C-D-E-F-J. Because this will lead to the lowest extra cost.

Task 3

Given: Demand/ Day = 300

Cost of ordering = 110

Cost of holding = .25

Average inventory= Ordered Quantity/2 + Safety stock

= !500/2 + 600 = 1350

Inventory turn/ per day = Demand/ Average inventory = 300/1350 = .22 turns per day.

EOQ = √2 * Demand * Cost of Ordering/ Cost of holding

= √ 2 * 300 * 110/ .25

= 514

Suggestion is to reduce the safety stock to reduce the cost. Hence cost of carrying would be minimized.

Cost of holding extra papers would be 1000 * .25 = 250. But the discount is less than 250. Hence we will not take this offer.

Cost of holding extra papers = 1000 *.25 = 250. Hence the discount must be more than 250.

Discount in Percentage = 250 * 100 / 2500 = 10 %

Task 4

1.

TURBO

Cash Outflow = 125,000

Total Inflows = 30,000 + 35,000 + 40,000 + 40,000 + 40,000 = 185,000

Accounting Rate of Return =

Desperation =

Desperation - inflow Y1

Desperation - inflow Y2

Desperation - inflow Y3

Desperation - inflow Y4

Desperation - inflow Y5

Total inflow - Desperation /5 =

ARR =

(1, 85,000 - 1, 25,000)/1, 25,000 = 48%

Write details step of how you found the Payback Period

Payback Period for turbo = 3 Years 1 Months

JET

Cash Outflows = 140,000

Total Inflows = 30,000 + 40,000 + 50,000 + 60,000 + 70,000 = 250,000

Accounting Rate of Return = (250,000 - 140,000) / 140,000 = 78.57%

Same here

Payback Period for Jet = 3 years 4 months same here

Net Present Value

TURBO

What you calculate to find the NPV

Net Present Value =

-125,000 + (30,000)/ 1.15 + (35,000)/(1.15)^2 + (40,000)/(1.15)^3 + (40,000)/(1.15)^4 + (40,000)/(1.15)^5 = - 2947.97

JET

Same here

Net Present Value =

-140,000 + (30,000)/1.15 + (40,000)/(1.15)^2 + (50,000)/(1.15)^3 + (60,000)/(1.15)^4 + (70,000)/(1.15)^5 = 15,927

2. For JET, NPV is positive. Hence we will do take jet.