UNIT 11 COMPUTER, MANAGEMENT FUNCTIONS AND

DECISION MAKING
Structure
11.0
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
11.9

Objectives
Introduction
Financial Decision-making
Personnel Decision-making
Marketing Decision-making
Production Decision-making
Materials Decision-making
Maintenance Decision-making
Let Us Sum Up
Clues to Answers

11.0 OBJECTIVES
After reading this Unit you will be able to:

understand the role of computers in Management Decision-making, and

appreciate the need for proper handling of the information and an efficient Management
Information System at corporate level.

11.1 INTRODUCTION
The common experience in the Indian scene has been a plethora of transaction-processing
systems which have been abiding for long. Left to themselves, computer professionals have
usually been good at planning, designing, developing and implementing the transactionprocessing systems, due to their inherent advantages of recurring qualitative data and decisive
logic base. On the other hand, MIS at a corporate level always needs involvement of the usermanager in an intensive way and this has shown a tardy growth.
In this Unit we take up some selective applications of computers in the decision-making areas.

11.2 FINANCIAL DECISION-MAKING

At corporate level MIS would still need the database comprising the transaction-processing
inputs, such as, cash transactions, receipts, issues, return, foreign exchange earned or spent,
rejections, interests, depreciation, etc. The other inputs are in the nature of the various accounting
rules and procedures, apart from the scales of payment.

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Based on the above, the financial management decisions are made with monthly and annual final
accounts, profit and loss accounts, balance sheet, etc. In addition, cash accounts are needed by
management, apart from the cost accounting for pay-roll accounting, suppliers ledger and
preparation of capital and operations budget.
To build up a corporate-level MIS for a tourism organisation, one can look at such selective data
as bills payable and bills receivable, and segregate them commodity-wise, establishment-wise,
region-wise and agent-wise. This immediately gives a management decision-making capability to
examine and take remedial action on the differences and deviations from the set pattern. The
analysed data for financial decision-making can have various management ratios and
management trends leading on to managerial forecasts. Linked data can be of the form of interrelated items between finance and inventory, between finance and marketing, between finance
and production costing, and between finance and personnel. Integrated data can take the form of
obtaining a picture for total credit, total sales turn over, total profit and so on.
The corporate areas to be helped would be cash planning, credit planning, profit planning, and
facility planning. For instance, cash inflow and outflow are of great interest for most
organisations and much monumental bankruptcy takes place in organisations due to the faulty
cash-flow adjustments. Similarly, the credit planning takes care of voluntary and involuntary
credit, in establishment where voluntary credit is often deliberately introduced to push new
products, to lift accumulated stock or to provide relief to bulk customers. In all such areas,
decision-making is facilitated by an appropriate MIS, as has been experienced in many
organisations.
In service organisations, investment planning and budget planning are additional features.
Interestingly, budget planning can be a common feature in both production and service
organisations. The tourism organisations have shown a tremendous scope for corporate MIS in
terms of trends, analysis and forecasts arising out of various reconciliation processes such as
inter-branch, inter-agents or even for such instruments as travellers cheques and so on. Financial
data can be generated and stored for hotel tariffs, package tour costs, commissions to distributors,
volume of business provided by distributors, etc.
In the domain of public administration, commercial tax data-base has been built up in some of the
Indian states for various categories of taxes on commodity-wise, establishment-wise, region-wise
and year-wise bases. Such a data-base has given rise to a capability of concentration upon tax
evasion cases selectively, to strengthen the inspection machinery for tax non-realisation cases, to
keep track of recovery of diverse installments in court-injunction cases and generally to
streamline pursuit of the outstandings.

11.3 PERSONNEL DECISION-MAKING

Personnel pay rolls have been an old hat in transaction-processing systems. In a number of
organisations, pay-rolls have been extended to cover the entire gamut of employee service,
namely, income-tax assessment and recovery, provident fund accumulation and withdrawal,
compulsory deposits (when they existed) and statutory reports and returns. A comprehensive

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database for personnel decision-making would require not merely such financial data but also
other categories of pre-recruitment and post-recruitment personnel data.
Examples of comprehensive personnel data would include prior qualifications, experience,
categories and grades of posting, places of transfer, experience gained, new qualifications,
acquired, training undertaken, disciplinary actions, merit rewards and performance appraisals, etc.
Such a data-base can be used for retrieval of selective data to assess grade-wise, year-wise and
region-wise personnel inflow and outflow, for deciding upon recruitment planning as well as
promotion planning. A similar approach can be undertaken to match availability of persons
experience-wise, location-wise and duration-wise with the demand of such persons in new
locations with appropriate grades and experiences for purposes of personnel plan. Career
development planning can also be done while looking at the grade-wise, experience-wise and
qualification-wise profile and decide on fresh areas of training and education.
Finally, retirement planning can be done by looking at the selective aggregation of data on
personnel wastage, so that recruitment can be undertaken and the bulk of retirement benefits can
be released rightaway pending the settlement of accounts.
Personnel decision-making based on corporate MIS has become quite common in a number of
large organisations in the country. In addition, states like Andhra Pradesh and Madhya Pradesh
have often done personnel planning for doctors and teachers respectively using comprehensive
database approach. Bhilai Steel Plant has planned total human resource management with
creation of complete data-base including history and skills of personnel; and manpower planning
and administration, including establishment functions; training needs as identified in the appraisal
reports and so on.
In tourism many jobs are seasonal and in certain cases outside people are hired (like guides,
escorts) to carry specific jobs. Any good organisation will keep a database of such persons with
quality rankings and their rates for the services. This data needs constant upgradation.

11.4 MARKETING DECISION-MAKING

Sales invoicing and sales accounting have been the early transaction-processing systems in most
organisations. The inputs can be the deciding of a tour package, inspection of all the places of
concern and despatch of documents on tours arranged and despatched apart from the price
schedules, some occasional returns. Such data can be built into a comprehensive data-base which
can help eventually the market planning and the publicity (advertisement) planning on one hand
and linkages with order-processing on the other.
Both market planning and publicity planning depend on the creation of a number of profiles with
full particulars such as customer profile, product profile and user industry profile. The seasonality
of orders, the trends in market fluctuations, the philosophy of industrial indents and the ebb and
flow of relevant markets can be assessed and taken care of in such a planning process.
Destination data, customer profile data, costs data etc. come handy in designing the
product/service mix along with the product line. Similarly data on competition is also useful for
marketing planning.

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On the other hand, linkages with order-processing gives a vital control on the quantity of tours to
be arranged or suspended to meet live and dead orders, respectively. Such a dynamic inter-facing
can help to eliminate a lot of infructuous order execution and finished tours inventory creation.
Check Your Progress 1
1) How can a data base help in financial decision making?

2) What types of marketing data can be used in tourism?

11.5 PRODUCTION DECISION-MAKING

The production of goods is a general term used very often in most of the organisation. In the
service sector it can be thought as a substitute for the service to be rendered or specifically in the
tourism sector, for example, it can be a term used to specify all the tour packages specially
designed every year as the goods produced.
The basic inputs are the salient production data collected periodically from all the production
units or designing units as and when the main events occur. The corporate MIS would involve:
performance review on a periodic basis (daily, monthly and annually), monitoring of in-process
inventory, other performance statistics, comparison of the current production with the past
performance, receipt and consumption of services and energy resources and daily analysis of
performance.
Corporate production decision-making involves production planning and control (PPC) and this
involves certain elements:

The first element of PPC is the order processing involving maintenance of current status of
orders and despatch programmes.

The second element of PPC is the corporate production MIS indicated earlier.

The third element of PPC is the material tracking including maintenance of detailed
production schedules through various stages of operations (from initial idea up to the final
finishing); in-process material and so on.

The fourth element of PPC is the planning, including annual plans based on market demands;
maintenance schedule and corporate plan requirements; quarterly and monthly plans based on
annual plans and organisation targets; daily plans for fulfillment of monthly plans;
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comparison of plan versus performance at different time intervals; and preparation of

subsidiary plans for requirement of raw-material, energy resources and finished inventory.
Many organisations have today incorporated PPC as part of their corporate MIS. This is very
useful in hotel, airlines and tour operators.

11.6 MATERIALS DECISION-MAKING

Materials accounting based on receipts, issues, returns, and rejections have been the part of
transaction-processing system in all organisations so far. For the purpose of materials decisionmaking, comprehensive databases can have three components of purchasing, inventory, and
materials review.
The purchasing data-base can help creating a corporate MIS for monitoring of purchase indents
up to acceptance of tenders, monitoring of purchase orders against schedules of delivery, analysis
of lead-time delays, vendor-rating (in terms of quality performance of delivery schedule), and
monitoring payments against deliveries.
The inventory data-base can help increasing a corporate MIS for preparation of standard
specifications for regular consumption items, prompt inspection and acceptance of delivered
goods, preparation of receipts documents, monitoring of stock balance, purchase dues, and
indents dues; monitoring of procurement of regular consumption items, decentralised control of
consumption, analysis of consumption and movement (particularly for slow moving, non-moving
and critical) of items for control forecasting and budgetary control of consumption and
procurement and so on.
Materials review data-base can help in creating a corporate MIS for the on-going review of the
various control parameters such as re-order level, re-order quantity, the phasing of deliveries for
A class items, the bulk purchasing of B and C class items and so on. Basically, materials
review should look critically at all the expected norms of purchasing and inventory so that a
dynamic adjustment is possible before the on-set of any crisis.
Materials review data is essential for hotels and tourist transporters along with others subsidiary
products and services in tourism like emporiums, restaurants, etc.

11.7 MAINTENANCE DECISION-MAKING

Maintenance management distinguishes between preventive maintenance and breakdown
maintenance. While preventive maintenance can be planned, the breakdown maintenance is
invariably unplanned.
As regards plant preventive maintenance, the experience with oil refineries, industrial blast
furnace, dock facilities and thermal projects have all shown that a thorough planning and a
scheduling of preventive maintenance can be immensely time-saving and cost-reducing. The
same is applicable in case of tourism transport operations and hotels maintenance, vehicle
breakdown or bad maintenance in hotels can adversely affect the business.

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Transaction-processing systems have looked at the records of components, spare-parts, jugs,

fixtures and tools as inputs, and consumption statements and maintenance accounts as outputs.
These inputs can still be valid for building up a corporate MIS with such additional data as
equipment conditions, history of failures, direct cost of maintenance, inventory values and
materials movement, man-hours spent, over-time paid, other resource usage, maintenance of
employees performance, reliability and maintainability of equipment, and maintenance
contribution to the finances.
From such a comprehensive database, one can generate MIS reports for transport control, such as
vehicle register (to provide vehicle specifications and project details), vehicle history (to provide
maintenance particulars), major failure report, forecast on maintenance (providing probable
failure time and period), office non-availability, reliability and maintainability, and maintenance
schedules (providing maintenance activities to be done during a specific period). One can also
generate MIS reports on work control, such as, craft performance report (providing planned and
actual performance of each craft), craftsmans performance report, maintenance planning
efficiency report (providing an efficiency ratio on planned activities), overtime report, resource
levelling report (providing analysis of resource required job-wise), delay cause report, etc. One
can finally generate materials control reports and cost control reports providing management
details of costs and material transactions involved in maintenance management.

Check Your Progress 2

1) Discuss the four elements of PPC.

2) How can data be used for maintenance decision-making?

11.8 LET US SUM UP

This Unit provided a brief account of the practice of computer-aided decision-making in such
selected functional areas as finance, personnel, marketing, production, materials and maintenance.
These can be applied to many other services as all have similar needs to build up from basic
inputs a good quality database each and then to evaluate selective data, analysed data, inter-linked
data and aggregated data to derive suitable MIS support to decision-making at the corporate level.
The practice is becoming more and more endemic in the Indian environment and the proliferation
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can only be beneficial to the management in the long run. Medium and small enterprises in
tourism should make use of this practice for a professional decision-making.

11.9 CLUES TO ANSWERS

Check Your Progress 1
1) The financial decisions are made with annual and monthly final accounts, profit and loss
accounts, balance sheet, etc. All the above are based on data base. Study Sec. 11.2 to learn
more about financial decision-making.
2) Data on tours arranged and despatched, destination data, customer profile data, costs data,
etc. are the marketing data used for tourism. Study Sec. 11.4 to know more about marketing
data used.
Check Your Progress 2
1) The four elements of PPC are:
i)

Maintenance of current status of orders and despatch programmes,

ii) Corporate production MIS,

iii) Maintenance of detailed production schedule and
iv) Planning.
Study Sec. 11.5 to know more about PPC.
2) Maintenance decision-making is helped by data as comprehensive database help generate
MIS reports for providing management details of costs and material transaction involved in
maintenance management. Study Sec. 11.7 and answer in detail.

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