Management Information Systems (MIS)

Session 1

Term 1, BM (Batch of 2022-24)

XLRI: Xavier School of Management

Introduction
 Welcome to the ‘Spreadsheet Modeling’ module of the course ‘Management Information
Systems’ (MIS)
 How to use spreadsheets as a modeling tool for decision-making in business contexts

 But why do we need spreadsheets?

 Solving real-life business problems is becoming extremely challenging
 Complex interactions among underlying factors + increasing complexity of business problems

 Decision-makers need to consider potential after-effects before taking a decision

 Spreadsheet modelling allows us opportunities to consider different nuances before taking a decision

 Spreadsheet-based approach helps in (Team-based + Repetitive) decision making

 Communicating information/insights to team members, top management, clients, etc.

 MBA graduates are expected to have a fairly advanced knowledge of MS Excel

 MS Excel is widely used across industry verticals and horizontals for ‘structured’ decision-making purposes

Management Information System (MIS) | Session 1 1

Introduction (Contd.)
 This module aims to introduce the students to different aspects of decision-making

 abstracting the reality,

 identifying potential alternatives,

 assessing the merits and demerits of different alternatives,

 visualizing potential outcomes, and

 taking a decision with some level of clarity on the expected consequences

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Session Plan

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Evaluation Component
 Just one evaluation component for this module - the Mid-Term

 Weightage – 30 Marks

 Duration - 90 minutes

 Mode - Offline

 Pattern - Closed Book, Subjective (Excel-based model-building/ problem-solving)

Management Information System (MIS) | Session 1 4

Certain Expectations
 It is absolutely fine if you are not feeling comfortable when introduced to new
concepts/features
 Please let me know if you need additional help/guidance

 For any question/clarification, do not hesitate to reach out

 During the sessions: Stop me and ask

 Outside the session: (Email) kushal@xlri.ac.in; (Mobile) +91 8584074065

 No request for marks/grade reconsideration to be entertained once the examination is over

 Instances of plagiarism/misconduct/indiscipline would be dealt according to institute rules

Management Information System (MIS) | Session 1 5

Harold’s Decisional Problem (Play Inc.)
 Harold owns a playground fabrication company Play Inc. He is considering whether or not
to expand his business with a new product line of tire swing shaped like animals (e.g., a
horse).
He expects to sell each swing at a price of $80. The material to make each swing will cost
$10. He expects that it will take three hours of labor to make each swing at $15 per hour.
Storing tires requires a special storage facility with special insurance because of the risk of
fire. Harold estimates that the storage facility and insurance will cost $1200 per month.
In the first year, Harold expects to sell 500 units. He expects sales to be fairly constant at
750 units every year after that. Develop a spreadsheet model to assist Harold in deciding
whether to launch this product or not.

 What is the decision?

 What are the decision alternatives?
 What are the decision criteria (i.e., on what basis the decision would be made)?
 How do the inputs and decision action get translated into the output?

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Influence Diagram
 An influence diagram provides a graphical presentation of the relationships in a model

 Arrows are used to depict the influence of certain variables on other variables
 The direction of the arrow indicates the direction of the influence

 Basic Influence Diagrams can be used to structure our approach before attempting a
model-building problem

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Basic Influence Diagram

Profit

Revenue Expenditure

Fixed Cost Cost of Goods Sold (COGS)

Selling Price Quantity Sold Materials Labor Hours

Labor Cost Per Hour

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Good Spreadsheet Modelling Practices
 A clear, logical layout to the overall model
 Ensure sound logical flow of intermediate calculations

 Separation of different parts of a model (if required, across multiple worksheets)

 Separate sections for inputs, model (with intermediate calculations), and output(s)

 Clearly state the assumptions (if any) alongside the inputs

 Include explanatory texts in the forms of comments, whenever necessary

 Do not put numbers directly into intermediate formulas (Do Not Hard-Code!)
 During the examination, hard-coding would be penalized

 Use range names, whenever necessary

 Clear communication of the result of model analysis

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Reliability Improvement
 Reliability (i.e., the ability to perform required calculations without error) of spreadsheet-
based models can be improved in a number of ways –

 Breaking down complex formulas in multiple intermediate calculations

 Assessing the reliability of intermediate calculations as the model is getting developed

 Testing the model with simple inputs

 Robustness check
 Whether the model works without any trouble for possible ranges of values for all inputs

Management Information System (MIS) | Session 1 10

Thank You