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We have chosen IKEA as our topic, But we are struck by the company problem and 2 strategies (describe the nature of your organizations DSS

We have chosen IKEA as our topic, But we are struck by the company problem and 2 strategies

(describe the nature of your organizations DSS problem) and (Prepare and explain 2 strategies (or 2 sets of constraints) and the rationale behind.)

Any idea of the company's problem and 2 strategies?

Aims of Group Project The aim of this group project is to apply what you learnt about decision support systems (DSS) in a real-world situation. A DSS is a mathematical program (with some symbolic representations to represent real world objects, quantities and meanings) to solve business decision problems, which are often shared resource allocation problems (see Tutorial D or case 18 of Advanced Cases in MIS). Mathematical constraints are used to express resource allocation limits e.g. maximum available cotton (C) for T-shirt production in a factory is 10 tons (this limit can be expressed as a constraint: C <= 10 tons). Some constraints may conflict with another, and thus finding solutions or the best solution is a difficult mathematical problem called optimization or linear programming problem. You have to demonstrate how to make good use of tools such as Microsoft Excel and Excels solver to represent a concrete business mathematical problem and to solve decision-making problems of a certain organization, such as increase the productivity, cash flow and net income of a company by a target %. Also, this project hopes to enhance your creativity, initiative, co-operation and teamwork spirit, communication and planning skills.

Your presentation (and report) should include:

  1. Introduction: Briefly describe the background of your business organization: its procedures, acitivities and operations - how it gathers, processes and uses input data and/or information to make daily/weekly/monthly/yearly business operations and decisions etc. Draw a data flow diagram showing how data and information moves or flows around basic operations in your business organizations.

  1. Aims of your study - describe the nature of your organizations DSS problem e.g. maximizing the net income by increasing the production of profitable goods or minimizing the operational cost by cutting staff. Describe why and how this problem occurred (global economic downturn due to the shortage of oil, or seasonal change/demand due to extreme hot weather, increased competition), and what strategies (e.g. reduce rental expenses, increase sales by doing more advertising, cut labour cost or reduce number of staff etc.) is used to solve this problem.

  1. Build and demonstrate your decision support system using MS Excel and MS Excels Solver. Descriptions of the optimization problem:
  2. Changing cells (the factors you could change in order to, say, maximize the profit)
  3. What data you would input in the process (e.g. materials; manpower; money). List and explain any facts and constants e.g. tax rate.
  4. What data you would produce as target output (e.g. cash flow, net income)
  5. Prepare an income statement in your spreadsheet. Explain any assumptions converting from the production into sales.
  6. Calculate all costs (explain the formulae and constants involved). List and explain all the formulas/calculations for any intermediate and final results.
  7. Calculate the revenue (explain the formulae and constants involved). List and explain all the formulas/calculations for any intermediate and final results.
  8. Derive the net income

  1. Prepare and explain 2 strategies (or 2 sets of constraints) and the rationale behind. See Tutorial D (or case 18), which has 2 sets of constraints. You must have at least 5 constraints in each strategy (or set of constraints).

A set of constraints is actually based on the business rules/conditions/limits imposed by your organization or economic factors imposed by external forces. You need to explain what your economic factors and business rules/conditions/limits are, and the constraints must be realistic enough to reflect the normal running operational procedures. You can use any accounting principles, economic, management theories etc. you learnt from other subjects to formalize and/or explain your set of constraints. Explanation is required for each strategy (or set of constraints).

The constraints within each set must not conflict with each other otherwise no solution will be found Microsoft Excels Solver will inform you this when you run Excels solver.

Each constraint may be set/based on the following:

  • input due to limited resources,
  • product mix, and
  • ratios,
  • other (interesting) constraints you could figure out from accounting principles, economic theories.

How to gain more marks: Use more accounting/ finance concepts and principles, inventory, economic and management theories, marketing strategies you have learnt, e.g. net present value, supply & demand, debt & repayment, break-even, contribution margin, cost-benefit etc.

Results & conclusions: Demonstrate by running 2 sets of constraints, and any (interesting) conclusions could be drawn from comparing various results derived from different sets of constraints.

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