Management Reporting System - requires an understanding of what managers do and the types of problems they face Topics that

provide insight into the factors that influence management information needs: 1. 2. 3. 4. 5. 6. 7. The decision making process Management principles Management function, level, and decision type Problem structure Types of management reports Responsibility accounting Behavioral considerations

The Decision Making Process It is a series of systematic steps taken by the decision-maker. The steps in the decision-making process are to: 1. Identify the problem we observe the symptoms of problems 2. Evaluate the alternative solutions the manager must identify and consider all feasible options a. Identifying decision criteria basis for making a decision Tangible those that we can quantify Intangible cannot be normally quantified b. Assigning weights these weight represents the relative (subjective) importance of each factor to decision. The value of the weight reflects the decision makers judgment of the relative importance of each factor to the decision c. Rating each alternative to evaluate the relative impact of each alternative on the decision criteria. Here, we assign a raw score (RS) to each using a scale of minus (5) to 5 d. Calculating weighted scores (WS) multiplying the weight by the RS value To illustrate this step consider the decision-making process of a production manager who must renovate an aging production line. Let us assume that the manager has the following 3 options: 1. Increase the labor force and keep the existing production line equipment 2. Reduce significantly (or eliminate) the labor force and automate the production line with new but unproven technology 3. Retain the labor force and upgrade the equipment with proven technology Alternatives B WS 30 80 RS 5 20 WS 150 40 RS 4 5

Decision Criteria Weight

Improvement in efficiency Flexibility of operations

A RS 1 4 30 20

C WS 120 100

Impact on employee relations Potential cost savings Likelihood of success

20 10 20 100 %

2 (2) 3

40 (20) 60 190

(4) 5 1

(80) 50 20 180

2 1 4

40 10 80 350

Total

3. Implement the best solution the implementation stage of the decision-making process involves a good deal of detailed planning. This is also the most protracted and time-consuming portion of the decision-making process. Phases of the Implementation Arranging for the financing of the project Negotiating contracts with vendors and contractors Obtaining licenses, building permits, and zoning authorizations Organizing retraining programs for employees who are faced with new practices, procedures, and equipment Planning the cutover from the old system to the new one

4. Conduct post implementation review the objectives of the review are to determine if both the decision and the decision-making process were sound

Management Principles Management principles provide insight into the management information needs. The principles that most directly influence the MRS are formalization of tasks, responsibility, authority, span of control, and management by exception. Formalization of Tasks This principle suggests that management should structure the firm around the tasks it performs rather than around individuals with unique skills. Implication for the MRS: formalizing the tasks of the firm allows specification of the information needed to support the tasks. The information system must focus on the task, not the individual performing the task. Otherwise, information requirements would need to be reassessed with the appointment of each new individual to the position.