Case Study -1

A waiter takes an order at a table, and then enters it online via one of the six terminals located in the
restaurant dining room. The order is routed to a printer in the appropriate preparation area: the cold item
printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink. A
customer’s meal check-listing (bill) the items ordered and the respective prices are automatically
generated. This ordering system eliminates the old three-carbon-copy guest check system as well as any
problems caused by a waiter’s handwriting. When the kitchen runs out of a food item, the cooks send out
an ‘out of stock’ message, which will be displayed on the dining room terminals when waiters try to order
that item. This gives the waiters faster feedback, enabling them to give better service to the customers.
Other system features aid management in the planning and control of their restaurant business. The
system provides up-to-the-minute information on the food items ordered and breaks out percentages
showing sales of each item versus total sales. This helps management plan menus according to
customers’ tastes. The system also compares the weekly sales totals versus food costs, allowing planning
for tighter cost controls. In addition, whenever an order is voided, the reasons for the void are keyed in.
This may help later in management decisions, especially if the voids consistently related to food or
service. Acceptance of the system by the users is exceptionally high since the waiters and waitresses
were involved in the selection and design process. All potential users were asked to give their impressions
and ideas about the various systems available before one was chosen.

Questions
1. What would make the system a more complete MIS rather than just doing transaction processing?
2. Explain the probable effects that making the system more formal would have on the customers and
the management?

Answer:

1. If the management provides sufficient incentive for efficiency and results to their customers, it would
make the system a more complete MIS and so the MIS should support this culture by providing such
information which will aid the promotion of efficiency in the management services and operational
system. It is also necessary to study the keys to successful Executive Information System (EIS)
development and operation. Decision support systems would also make the system a complete MIS as it
constitutes a class of computer-based information systems including knowledge-based systems that
support decision-making activities. DSSs serve the management level of the organization and help to take
decisions, which may be rapidly changing and not easily specified in advance.

Improving personal efficiency, expediting problem solving (speed up the progress of problems solving in
an organization), facilitating interpersonal communication, promoting learning and training, increasing
organizational control, generating new evidence in support of a decision, creating a competitive
advantage over competition, encouraging exploration and discovery on the part of the decision maker,
revealing new approaches to thinking about the problem space and helping automate the managerial
processes would make the system a complete MIS rather than just doing transaction processing.

2.   The management system should be an open system and MIS should be so designed that it highlights
the critical business, operational, technological and environmental changes to the concerned level in the
management, so that the action can be taken to correct the situation. To make the system a success,
knowledge will have to be formalized so that machines worldwide have a shared and common
understanding of the information provided. The systems developed will have to be able to handle
enormous amounts of information very fast.

An organization operates in an ever-increasing competitive, global environment. Operating in a global

As the transactions are taking place every day, the system stores all the data which can be used later on
when the hotel is in need of some financial help from financial institutes or banks. As the inventory is
always entered into the system, any frauds can be easily taken care of and if anything goes missing then
it can be detected through the system.
Case Study – 2

The Company is considered to be a leader in the design and production of industrial and commercial air-
conditioning equipment. While most of the products were standard items, a considerable number
involving large sales volume were specially designed for installation in big office buildings and factories.
Besides being an innovator in product design and having an exceptionally good customer service
department, the company is well known for its high-quality products and its ability to satisfy the customer
requirements promptly.

Because of its rapid growth, the company had to be careful with its cash requirements, especially for
accounts receivable and for inventories. For many years, the company had kept inventories under close
control at a level equal to 1.7 times the monthly sales, or a turnover of nearly 6 times per year. But, all of
a sudden, inventories soared to triple monthly sales, and the company found itself with Rs.30 crores of
inventories above a normal level. Calculating a cost of carrying inventory at 30 percent of the value of
inventories (including the cost of money, storage and handling, and obsolescence), it was estimated that
this excess inventory was costing the company Rs.9 crores per year in profits before taxes. In addition, it
forced them to call on its bank for more loans than had company been expected.
Mr. Deepak Mehra, president of Connair, was understandably worried and incensed when this matter
came to his attention. He was told that the primary reasons for this rise in inventory were excessive
buying of raw materials in advance because of anticipated shortages and the failure of a new computer
software, with the result the people in the production and purchasing departments were not having
complete information as to what was happening to inventory for several months.

Mr. Mehra, taking the stand that no company should let something like this surplus inventory occur
without advance notice and that no manager can be expected to control a business on the basis of
history, instructed his vice-president for finance to come up with a program to get better control of
inventories in the future.

Questions:
1. What do you find wrong with Connair’s controls?
2. Are there any other techniques or approaches to control that you would suggest?