:

Submittedto
Prof K.G.MURALIDHRA
 Objectives
You will be able to:
 Define financial decision making
 Describe decision making process steps
 Explain the roles of computer in financial decision
making
 Describe different types of decision making computer
systems
 Explain the advantages of computer in financial decision
making
 Table of Contents
 Financial decision making
 Decision making process
 Intervention of computer in the decision
making process
 Types of decision making computer systems
 Benefits of computer in a decision making
process
 Financial Decision Making
Decision making is choosing between several possible
courses of actions related to an issue.

Financial decision making involves decisions concerning

financial related issues such as:
determining the proper amount of funds to employ in a
firm
 selecting projects and capital expenditure analysis
 raising funds on the most favourable terms possible
 managing working capital such as inventory and
accounts receivable.
Decision Making Process
The steps in decision making process are:
1) Gathering information.
2) Recalling knowledge and prior experiences.
3) Understanding the various sides of the issue.
4) Imagining the various possibilities of actions.
5) Comparing, weighing and evaluating them.
6) Making a choice between those alternative solutions / actions
6b) If the course of actions is complex, preparing a planning.
7) Implementing the decision.
Decision Making Process
Work Flow
Intervention of computer in the
decision making process
 Gathering information
 Information comes from a variety of sources through a
variety of means.
 Reports generated by different computer systems assist
management in making decision. Examples are sales
report, productivity and costing reports, trend analysis e.t.c
from various application software.
 The Internet is a source of on-line information and has
grown rapidly over the years; it is the most widely used
means of transferring information. Examples of information
search engines are Google, Wikipedia, Ask.com and Yahoo.
 Intervention of computer in the
decision
making process
 Recalling knowledge and prior
experiences

Computer systems can store information and

retrieve them as long as the systems are
available.
Several Database Management Systems (DBMS)
manage data efficiently for easy access and
retrieval. Examples of DBMS are MYSQL,
Microsoft Access, Oracle, RDBMS e.t.c
 Intervention of computer in the
decision
making process
 Understanding the various sides of the issue

Advances in the area of computing have made it

possible to have systems that attempt to
reproduce the performance of one or more human
experts, most commonly in a specific problem
domain. Such systems have the capability to learn
because it is constantly being given cause and
effect, thereby understanding various sides within
its knowledge base.
 Intervention of computer in the
decision
making process
 Understanding the various sides of the issue

Applications such as Microsoft Excel can be deployed as

an expert system to aid decision making.

It can be utilized to plot line of best fit and graphs which
are used to forecast market analysis.
Example shown in bellow fig
Intervention of computer in the
decision
making process
 Comparing, weighing and evaluating
Computer systems aid in formatting and manipulating
data. Several tools with different capabilities can be
interfaced to provide users with a single easily used
language to present data in a way that will best support
the end-user to compare, weigh and evaluate data.
Examples are bar chart, pie chart, graphs e.t.c Data
analysis tools such as Audit Command Language (ACL),
Microsoft Access e.t.c are also useful.
Intervention of computer in the
decision
making process
 Implementing the decision.
Depending on the nature of the decision to be
taken, there are computer aided tools that can
facilitate the implementation of the decision.
There are various tools available such as;

Computer aided software engineering (CASE)

Computer aided recording tools (CART)
Computer aided summarisation tool (CAST)
Intervention of computer in the
decision
making process
 Implementing the decision.

Computer aided software engineering (CASE)

This is the scientific application of a set of tools
and methods to a software which is meant to result
in high-quality, defect-free, and maintainable
software products. It also refers to methods for the
development of information system together with
automated tools that can be used in the software
development.
Computer aided recording tools
(CART)
CART is a tool that converts coordinate
information, obtained from any source, into
an intelligent 3D CAD (computer aided
design) Model without having to do any
manual drafting at all.
Computer aided summarisation tool
(CAST)
Computer aided summarization tool tries
to help the human summariser by
selecting the important information from a
document. In this way, human effort and
time is reduced to linking the extracted
sentences in a coherent way and, possibly,
removing the redundant information or
adding missing information
Graphical representation of a typical computer aided loan approval decision
making process in a bank.
Decision Making Computer
Systems
Decision Support Systems (DSS)
DSS are a specific class of computerized
information systems that supports business
and organizational decision-making activities.
A properly-designed DSS is an interactive
software-based system intended to help
decision makers compile useful information
from raw data, documents, personal
knowledge, and/or business models to identify
and solve problems and make decisions.
Decision Making Computer
System
Typical information that a decision support application might
gather and present would be:
an inventory of all of your current information assets
comparative sales figures between one week and the next,
projected revenue figures based on new product sales
assumptions;
the consequences of different decision alternatives, given
past experience in a context that is described.
Decision Making Computer
Systems
Executive Information System (EIS)

EIS is a type of management information

system intended to facilitate and support the
information and decision-making needs of
senior executives by providing easy access to
both internal and external information
relevant to meeting the strategic goals of the
organisation. It is commonly considered as a
specialized form of a DSS.
Decision Making Computer
Systems
 EIS allows information to be collated and displayed to the user without manipulation or
further processing. The user can then quickly see the status of his chosen department or
function, enabling them to concentrate on decision making. It offers strong reporting and
data mining capabilities which can provide all the data the executive is likely to need.
 The two main aspects of an EIS system are integration and visualization. The newest
method of visualization is the Dashboard and Scorecard. The Dashboard is one
screen that presents key data and organizational information on an almost real time and
integrated basis. The Scorecard is another one screen display with measurement
metrics which can give a percentile view of whatever criteria the executive chooses.
 There are a number of ways to link decision making to organizational performance. From
a decision maker's perspective these tools provide an excellent way of viewing data.
Outcomes displayed include single metrics trend analyses, demographics, market shares
and a myriad of other options. The simple interface makes it quick and easy to navigate
and call the information required.
Decision Making Computer
Systems
Expert Systems (ES)

ES are computer systems which embody

some of the experience and specialised
knowledge of an expert and thereby mimic the
expert and act as a consultant in a particular
area. Knowledge is often represented in an
Expert System in a knowledge base, which is a
network of interconnected rules which
represent the human expertise.
Benefits of computer in
financial decision
Information generated from the systems is used in
financial decision making.
Computer helps to fast track data analysis for
decision making
Computer increases accuracy and reduce errors and
time required to solve problems.
Helps automate the decision making process
Reveals new approaches to thinking about the
problem space
Generates new evidence in support of a decision
Promotes learning and training.
Information that is provided is better understood and
offers efficiency for decision makers.
It brings consistency to the decision making process.