The Importance of Information in Decision-making Information is a basic requirement for decision-making. It significantly determines the effectiveness of not only the final decision but also the process of decision-making itself. Therefore, decision- making is sometimes regarded as the processing and conversion of information into action. Hence timely collection and processing of information is of such great importance—all big concerns now have devised management information system, mostly computer based. Managers require information to recognize and define problem situations, to develop alternative courses and to select the best alternative. During the course of decision making, new information may become available which is to be absorbed. The information helps the managers to have a better view of the decision situations and to reduce the complexity and uncertainty surrounding them. With the availability of information, the problem situation becomes more controllable and manageable.
Management Information System Management Information System (MIS) is the system of organizing the information flow and network within the organization. It is concerned with the systematic generation of information, both from internal and external sources, for purposes of feeding it to the various managerial levels in an integrated manner at the proper time to help them in their decision-making function. MIS is also concerned with proper storage and retrieval of information as required by managers. The decision-making centers in the organization are inter-linked through MIS, in a manner that decisions made at higher levels are used as inputs for decisions made at the lower levels. All information is to be specifically decision oriented. It is, however, to be remembered that information is not a substitute for managerial skills and judgment for making decisions. MIS does not replace the decision-making system. Nor should it be allowed to dominate the managerial system. It is meant to assist managers and not to dictate them.
Elements of Programmed Decisions The modern techniques for making major decisions on routine but complex problems are mostly quantitative. They are based on the scientific method, the most salient elements of which are the following :
(i) Statement of clear objectives.
(ii) Definition of the problem.
(iii) Formulation of hypotheses.
(iv) Collection of facts.
(v) Testing the hypotheses.
(vi) Explanation of results.
The aim is to help managers to make precise and perfect decisions for efficient utilization of scarce resources. Quantification of variables and determination of relationships amount them through mathematical equations helps the process of arriving at optimal decisions.