Decision Support Systems are widely used as a part of an Organizations Accounting Information System (AIS). Give example to support this statement.
Decision Support Systems are widely used as a part of an Organizations Accounting Information System (AIS). Give example to support this statement.
Ans.
A DSS invariably forms part of a Firm’s Accounting System, which can be illustrated as follows –
1. Cost Accounting System:
(a) Cost Accounting applications help business in various ways, e.g. Pricing, Cost ascertainment, Quotations, Budgeting, Cost Analysis, etc. DSS can accumulate these cost data to assist decision-making in these areas.
(b) Cost Accounting DSS can be combined effectively with other applications like Productivity Systems, to measure the effectiveness of specific operating processes.
2. Capital Budgeting System:
(a) Evaluation of investment decisions requires use of appropriate indices and tools. Decision-makers can supplement analytical techniques (like NPV, IRR, etc.) with. decision support tools, which adopt the benefits of new technology not considered in the traditional financial analysis.
(b) A DSS designed to support decisions about investments in automated manufacturing technology is Auto-Man. It allows decision makers to consider financial, non-financial, quantitative and qualitative factors in their decision-making processes. Using this DSS, Accountants, Managers and Engineers can identify and prioritise the important factors for decision-making.
3. Budget Variance Analysis System:
(a) Budgeting Analysis enables cost control and evaluation of managerial performance.
(b) A computerised DSS can be used to generate monthly variance reports for division Managers. The system allows these Managers to graph, view, analyse and annotate budget variances, and also create additional budget projections using the forecasting tools provided in the system.
(c) Mutual Funds, Investment Planners, Financial Institutions use Budget Variance Analysis DSS.
4. Financial Analysis:
DSS may be used to analyze the financial position of business, by using the following tools in automated conditions – (a) Ratio Analysis, (b) Balance Sheet Analysis, (c) Cash Flow Analysis, and (d) Receivable Analysis.
5. Product Costing:
This is used to analyse the utilization of budgets & corresponding Actual performance.
6. Portfolio Management:
(a) An Equity Analyst is required to analyze the Company Equities and hybrid securities for various parameters like Income, P/E Ratio, Economic Conditions, Industry Outlook, etc.
(b) DSS provides support to the Equity Analyst for analyzing and evaluating various parameters, and projecting the estimated future Equity Price and returns therefrom.
7. General Decision Support System:
(a) Here, the User inputs data and seeks answers about a specific problem domain. An example is a program called Expert Choice.
(b) In this model, the User works interactively with the computer to develop a hierarchical model of the decision problem.
(c) The DSS then asks the User to compare decision variables with each other, e.g. the system might ask the User to compare the importance of Cash inflows and Initial investment amount for a Capital budgeting decision. The decision maker makes judgments about which investment is best with respect to Cash flows and which requires the smallest Initial investment.
(d) Expert Choice program analyses these judgments and presents the decision-maker with the best alternative.
