CHAPTER 2

INFORMATION IN DECISION
MAKING

❖ Meaning and Importance of Information

❖ Sources and Types of Information
❖ Information Requirements At Management Levels
❖ Relevance of Information in Decision Making
INTRODUCTION TO INFORMATION

‘Information’, everyone comes across this word in their day to day life. As far as MIS is
concerned, information has different meaning and does not comprise only of data. In decision
making we require information, since it has a significant value as compared to data. Information
helps in bringing clarity and creating a response in human mind. MIS make a clear distinction
between data and information. The relation between the two can be thought as raw materials
(Data) which goes through some processing and as output we get finished products
(Information). Another important aspect of information is presentation. The data which is
gathered and processed in best way, if is not presented properly then it fails the purpose of
communicating value to receiver. Methods such as summarization and message routing are used
to improve communication.

While communicating information, Methods which are not biased in nature should be chosen.
For example, while using classification techniques to filter out information, it should be kept in
mind that no information should be eliminated or skipped. The presentation of such information
will be biased and may influence the user. For example, for lengthy information only first few
entities get more attention than others. For a better and concise understanding information is
presented in graphical manner, but even in this case the choice of scale, the graphic size and the
color used may create biasness in the viewer’s mind.

2.1 Meaning and Importance of Information

Data and Information are viewed as separate entities in MIS. As explained earlier, Data is similar
to raw materials while Information is similar to finished products obtained after processing of
raw materials. Information is the most crucial resource in the operation and management of
organizations. When relevant information is available timely, it improves the performance of
managerial functions such as planning, organizing, leading, and control. The information system
acts as the nervous system of the organization. It connects all organizational components which
results in better operations in any circumstances.
As all modern organizations uses information as their main engine. This shows the importance
of information systems which refers as computer-based systems designed to support the
operations, management, and decision functions of an organization. Thus, decision makers in
organizations get information support from these information systems. These systems comprise
of transaction processing systems, management information systems, decision support systems,
and strategic information systems.

Whereas data is referred as raw, figures, symbols, objects, events and unevaluated facts etc. Data
can be viewed as a collection of facts lying in some storage. E.g. a telephone directory or
population records. Information relates to processed data that has been converted in to a
meaningful and useful context and used by a user who can make decisions upon it. Information
corresponds to communication and reception of knowledge and intelligence. It notifies,
stimulates, reduces uncertainty, uncover additional details and helps in eliminating redundancy.
It provides influence for individual decisions and directs one to perform relevant actions based
upon.

A specific piece of data can be termed as information in specific context. For example, in
telephone directory when someone looks for one particular number then that number becomes or
acts as information otherwise it remains there only as a data element. Computer systems helps in
processing these types of information in much faster and easier way. When processing large
amount of data, computers helps a lot in quick conversion of such data in to information. Raw
data is recorded or entered in such system and processed upon automatically. This transformed
information comes out as system output and helps managers in their decision making.

Data Information
It is raw fact and figures. E.g. number 75 is When data is stored in some structural form
data. like a student obtained 75% marks, then it
acts as information.
It is not much significant to a user or business Information is always significant to a user or
organization. business organization.
These are pieces of information which are Information is organized and meaningful
atomic in nature. collection of data.
Raw data does not contribute in decision It contributes in decision making process of
making. any organization.
It is generally unorganized in nature. It is always in organized form.
It is recorded and collected directly from the It is dependent on the data that is collected
source and is independent from information. from the source.

Characteristics of Information
Information characteristics can be classified in to relevance, timeliness, accuracy, cost-
effectiveness, reliability, usability, exhaustiveness, and aggregation level. Any information
which leads to improved decision making can be termed as relevant. It can also come under
relevant information if it reconfirms a previous decision. If it does not deal with anything related
to business problem, then it becomes irrelevant. For example, if the information about human
population across the world becomes irrelevant if your business only concerned about population
related to a certain country. Parameters underlying good quality about any information are hard
to determine.
Quality of information means its fitment for use, or its reliability. Following are the essential
characteristic features of Information -

Timeliness

Impartiality Accuracy

Characteristics of
Information
Explicitness Relevance

Completeness Adequacy

Fig No. 1 Characteristics of Information

• Timeliness: Any information which does not reach its audience in timely manner
becomes irrelevant. Timeliness concerned with the information reaching its recipients
within the prescribed timeframes. For effective decision-making, each decision maker
 should get information at the right time, i.e. business users must get information when
they need it. Any delay in getting the information will destroy its value. Another
paradigm for timeliness to be effective that the information should also be up-to-date i.e.
current information.

• Accuracy: Information required by business users should be accurate and up to date. By

accurate information, means it should be clear and free from any mistakes and errors.
Accurate information should also unbiased in nature. Any inaccurate information given to
business users would result in wrong decisions, which will bring harm to business in
future. Since managers take their decisions on the basis of information supplied in MIS
reports, it becomes MIS responsibility to provide accurate information.

• Relevance: Every decision maker needs information which is relevant to his/her interest.
Any such information which provides answers for the recipient interest like what, why,
where, when, who and why classifies as relevant information. MIS should be able to
generate multiple report keeping in mind needs of different decisions. Such report will be
useful to managers and help them to make better decisions.

• Adequacy: Adequacy corresponds to information which provides enough details i.e. MIS
must provide reports in such a manner that they contain information with necessary
details support it. This does not mean that the report should include any extra or
inadequate information of corresponding matter. Anu inadequate reports may create
confusion for decision makers which can lead to crises. On the other hand, information
overload also may result in chaos.

• Completeness: Any information report should be complete in nature and should meet all
the requirements of decision makers. Incomplete information may bring harm to
organization and may result in wrong decisions.
 • Explicitness: An explicit information does not require further analysis and able to
provide a crystal and clear perspective about the concerned matter. All such report comes
under explicit and good quality.

• Impartiality: Impartial information does not include any biasness. Such information is
always collected without any distorted view of the problem / situation.

2.2 Sources and Types of Information

Sources of Information
An Information Source is one that provides with some information. In other words we can say
that whatever information we get from anyone or anywhere can be termed as information source.
A information might contain facts related to an organization or individual etc. Information
sources can be observations, motivational speech, organization reports, pictures etc.

Primary

Documentary Secondary

Sources of Tertiary
Information

Formal
Non-
Documentary
Informal

Fig No. 2 Sources of Information

Documentary Sources: These are those information resources which are usually published or
recorded in the form of hard copy. It includes:-
 • Primary Sources: They are those published records which contains the original research
and description of the latest ideas on old themes. They give the unfiltered data and
provide first hand information. For example: magazines and periodicals, conference
proceedings, research reports etc.
• Secondary Sources: They are those sources of information which are directly or indirectly
derived from primary sources of information. The information present in primary sources
are modified on the basis of requirements are thus forms the secondary source of
information. For example: textbooks, monographs, reference works etc.
• Tertiary Sources: Information gathered from primary and secondary sources are
reformatted as per the requirements and then put into an easily understandable form,
becomes the tertiary source of information. Its primary objective is to help the user to
extract the meaningful information from primary and secondary sources in simplified
format. For example: yearbooks, directories, bibliographies etc.

Non-Documentary Sources: It forms an important part of communication especially in

computer science and technology. These sources provide that information which other sources
are not able to provide to the users. It includes:
• Formal Sources: They include information from research organizations, societies,
government departments, universities, industries etc.
• Informal Sources: They include information from informal conversations, informal
meetings, visitors etc.

Types of Information
Information can be classified on the basis of characteristics of data, application of data in
organization and management levels.

Classification by Characteristic
• Action Information: The information which results in performing an immediate action
falls under the umbrella of Action Information. For example, when required target for
any quarter falls short by margins more than 30 %, then results in immediate actions for
future business plans.
• Non-action Information: This type of information is descriptive in nature and it
provides clarity about the concerned situation. For example, daily transaction details for
any business provides day to day growth but does not trigger any immediate action.
Immediate action may concern about quarterly, biannually or annual reports.

Classification By Classification By Classification by

Characteristic Management Application

Action vs
Strategic Planning
Non-Action

Recuring vs
Tactical Control
Non-Recuring

Internal vs
Operational Knowledge
External

Fig No. 3 Types of Information

• Recurring Information: Any information which is generated on a routine basis can be

termed as recurring information. For example, any daily, monthly, biannual or annual
account statements.
• Non-Recurring Information: Any information that is needed on situation that is non-
repetitive in nature can be termed as non-recurring information. For example, Financial
analysis of stock prices in case the market crashes / booms.
• Internal Information: Any information which is generated through the internal sources
of any organization classifies as Internal Information. E.g. Pay slips for all employees.
• External Information: Any information which is generated through the external sources
classifies as External Information. E.g. Government policy affecting concerned business,
competitor reports, industry surveys etc.
Classification by Management
• Strategic Information: Information required at different levels of organization is not the
same. There is always significant difference in information required between top and
bottom levels of organization. The information used at the very top level of organization
by the management is known as Strategic Information. CEOs, Directors or other top-level
executives who make long term decisions for the organization needs this type of
information. It is collected on broad basis and contains a mix of both internal and external
information. This information also consists of a specified timeline which is generally
revolves around one year to five years and so on. MIS provides relevant information
which helps in constructing a well-defined strategic plan. Strategic plan does not provide
guarantee to achieve success but always helps in making better decision depending upon
the situations. Its always better to opt for a good strategic plan that is supported by
enough facts. A good strategic plan always better than a poor or vague strategic plan,
which have little or no details in them.

• Tactical Information: Once a strategic plan is prepared based on strategic information,

it lays foundation for next level of information i.e. Tactical Information. This information
is required for tactical planning and decision-making activities, but all such activities
should follow the guidelines provided by strategic plan. This information mostly uses
internal sources, but some time it requires some inputs from external sources as well.
This information is mostly used by middle level management. It helps in achieving short
terms plans and goals related to a project or a single objective. The timescale used is
between 6 months to 3 years, totally depending upon the strategic plan. In few cases, it
can have a timeline between 1 month to 6 months. This depends on the project level.
Generally small projects have such timelines. Tactical plans are specific in nature and
contains medium level of details. They deal with individual roles and responsibilities,
budget constraints and timelines. These plans must deal at operational level and have
specific objectives associated with them.

• Operational Information: The lowest level of information required is operational

information. It is required for operational planning which in turn is based on tactical
 plans. The lowest level of management in an organization uses this information and
implements the operational plans. Some of such business users, who require this
information can be supervisors, foreman, senior workers or directly staff etc. The
timeline can involve immediately, daily, week or maximum a month or so. Tactical
planners require the results of operational work to evaluate their performance and plans,
which in turn provide results to top management to evaluate strategic plans.

Classification by Application
• Planning Information: The information which is required to establish standard norms
and specification in an organization called as Planning Information. While planning an
activity, this information is used at various levels like strategic, tactical, and operational.
Examples of this type of information includes time standards and design standards etc.
• Control Information: This information which is required to establish control over all
business activities through feedback mechanism is called as Control Information. It helps
in various activities of an organization like controlling attainment, nature and utilization
of important processes in a system. When this information shows some deflection from
established standards, then system asks for a decision or an action to control such
deviation.
• Knowledge Information: This information is the one which is acquired through
experience and learning and collected from archival data and research studies. Hence, it
is defined as "information about information". This is based on past experiences by
different users in an organization.

Knowledge
Human mind purposefully organizes the information and evaluate it to produce knowledge. In
other words the ability of a person recalls or uses his information and experience is known as
knowledge.
Types of Knowledge

Fact Based or Information Based: The knowledge gained from fundamentals and through
experiments.
Heuristic Knowledge: It is knowledge of good practice, experience and good judgment.

• The knowledge gained from fundamentals

Fact Based or Information and through experiments.
Based Knowledge

• It is a knowledge of good practice,

experience and good judgement.
Heuristic Knowledge

Fig No. 4 Types of Knowledge

2.3 Information Requirements at Management Levels

Management Levels
Management is generally viewed as an entity which does mainly one function i.e. to provide
continuous run and growth in any business organization. Even though it is considered as a
monolithic entity, but it does act like one. As explain earlier, different levels of management
perform specific functions. Strategy is carved out by top level, tactical problems are solved by
middle level and bottom level deals with operational issues. Hence it is quite clear that the top
level will be taking strategic decisions, middle level will be taking tactical decisions and bottom
level will be taking operational decisions. In-order to take such decisions, contextual or related
information is required.
 Fig No. 5 Management Hierarchy and Information Needs

Top Level of Management

The Top Level Management usually comprises of Board of Directors (BOD), Chief Executive
Officer (CEO) and Chief Technical Officer (CTO). Out of all these, most important one is Chief
Executive Officer, who is also known as General Manager (GM), Managing Director (MD) or
President. It totally depends upon the structure of the organization. Whereas Board of Directors
(BOD) are called as representatives of the Shareholders, i.e. they are selected by the
Shareholders of the company. Further, the CEO is selected by the BODs of the organization. The
main functions of top level management can be following -
• It determines the objectives, policies and plans of the organization.
• It assembles and allocates all the required and available resources of the organization.
• It is also called as the ‘Brain of the organization’ since it performs the functions related to
thinking, planning and deciding. Therefore, they are also called as the Administrators or
think tank of the organization.
• They spend more time in planning and organizing.
• Long term plans of any organization, which is generally between 5 to 10 years are
prepared by them.
 • It has maximum control over authority and responsibility. Hence, they represent the final
authority in the organization.
• They are directly responsible to the Shareholders, Government and the General Public.
• Organization’s success or failure mainly depends on their efficiency and decision
making.
• They possess various conceptual or technical skills.

Middle Level of Management

The Middle Level Management usually comprises of individual Departmental Heads (HOD),
Branch Managers, and the Junior Executives. Finance Managers, Purchase Managers, etc.
constitutes departmental heads. For leading a branch or local unit responsibility lies with branch
managers. Similarly, assistant finance managers, assistant purchase managers etc. are examples
of Junior Executives. Top level management selects middle level management. The main
functions of middle level management are following -
• It provides advice or recommendation to top level management.
• Implementing policies and plans made by top level management, resides with middle
level management.
• It co-ordinate the activities with-in the departments.
• They act as a bridge between top level Management and lower level management.
• Mostly their roles involve coordinating and communicating.
• Short-term plans of their departments are made by them.
• They have limited authority and responsibility compared to top level management.
• They are directly responsible to top level management.
• They need more managerial and technical skills and less conceptual skills than top level
management.

Lower Level of Management

The lower level management usually consists of the foremen and the supervisors. Middle level
management selects them. They are also called Operative / Supervisory level or First Line of
Management. The lower level management performs following functions -
• It directs the workers and employees towards their work.
 • They help in boosting the morale of employees / workers.
• They act as a link between workers and middle level management.
• Management decisions are communicated to workers by lower level management
• Also, they provide details to management about the performance, difficulties, feelings,
demands, etc., of the workers.
• Their majority time is spent in directing and controlling.
• Managers at this level make daily, weekly and monthly plans.
• Even though, their authority is limited but their main responsibility is getting the work
done from the workers.
• They regularly provide reports to middle level management.
• Apart from experience and basic management skills, they mainly possess more technical
and communication skills.

2.4 Relevance of Information in Decision Making

A decision is the choice out of several options made by the decision makers to achieve some
objective in a given situation. Business decisions are those which are made in the process of
conducting business to achieve its objective in a given environment. Decision making is a
process of identifying a problem or opportunity, understanding the context in which a problem or
opportunity has occurred, generating alternative solutions to tackle the problem or take
advantage of the opportunity and then making a choice among the many alternatives. At each
stage of decision making process, information is required. If one does not have any information
about the problem or opportunity then one cannot proceed with the decision making.
Information plays the most vital role in the choice part of the decision making process.
Alternative solutions are evaluated on the basis of available information about the outcome of
each alternative and only then the alternative which maximizes the benefits or minimizes the
hardship chosen.

Essentials of Good Decision Making

• Categorical Interpretation: At every stage the decision can be made if the real problem
is interpreted and identified with in depth study and observation.
 • Application of Limiting Factors: Managers can do better if they apply the limiting
factors principle. In choosing from among alternatives, the more a manager recognize and
searches for those factors which are limiting and critical to gained of desired objectives.
• Adequate Information: Information is the life blood of an organization because all
decisions are based on this. More the quantity of reliable information higher is the
validity of the decision.
• Considering Other Views: While making decision, it is desirable that all alternatives are
considered before arriving at a decision. Equally desirable is the fact that while making a
decision other views should also be considered.
• Timeliness: A decision to be effective must be made at a proper time. A delay in
decision making may result in loss of opportunities in this fast changing environment.

Decision Making Process

Identification Principles for Brainstorm and

Information Evaluation of Select the Best Execute the Evaluate the
of Decision Judging the Analyze the
Gathering Alternatives Alternative decision Results
Purpose Alternatives Choices

Fig No. 6 Decision Making Process

Identification of the Purpose of the Decision: For solving any problem, first step is to analyze
it properly. This step is focused about providing answers to basic questions for identifying the
purpose of the decision.
• What exactly is the problem?
• Why the problem should be solved?
• Who are the affected parties of the problem?
• What is the deadline or a specific time-line to solve the problem?

Information Gathering: Since an organization involves multiple stakeholders, and multiple

factors that are affected by the problem. In-order to solve the problem, one need to gather as
much as information related to the factors and stakeholders involved in the problem. For
information gathering, many tools such as 'Check Sheets' can be effectively used.

Principles for Judging the Alternatives: If some alternatives are available to problem, then
baseline criteria for judging the alternatives should be set up in advance as part of this step. For
defining the criteria for alternatives, organizational goals and culture both should be considered.
For example, profit is main goal of every organization unless it is an exceptional case. Similarly,
baseline principles must be identified related to the problem.

Brainstorm and Analyze the Choices: Brainstorming is one of the best possible way to list
down all the ideas to solve the problem. It is important to understand the causes of the problem
and prioritization order of solving them. Cause-and-Effect diagrams and Pareto Chart tool helps
in doing this. Cause-and-Effect diagram helps in identifying all possible causes of the problem.
Whereas pareto chart helps in prioritizing and identifying the causes having highest effect.

Evaluation of Alternatives: All gathered judgment principles and decision-making criteria

should be used to evaluate every possible alternative solution. To do this, prior experience and
effectiveness of the judgment principles provides help. Every alternative needs to be compared
for their positives and negatives.

Select the Best Alternative: After the completion of all steps and evaluating all alternatives
selection of the best alternative becomes easy. It is an informed decision since methodology to
derive and select the best alternative is already decided.

Execute the decision: For executing the decision the decided plan or decided sequence of
activities should be followed. In-order to do so, either the plan needs to be executed by yourself
or with the help of subordinate members.

Evaluate the Results: The outcome of decision should be recorded and learning from it should
be kept in mind to enhance or correct decisions in future. This helps in improving decision-
making skills.
Decision Making Models
Two basic models available to help in decision-making are -
• Rational models
• Normative model

Rational Models: These models are based on cognitive judgments. These models provide help
in selecting the most logical and sensible alternative. Examples for such models are decision
matrix analysis, Pugh matrix, SWOT analysis, Pareto analysis and decision trees, selection
matrix, etc.
A rational decision-making model has following steps:
• Identifying the problem.
• Identifying the important criteria for the process and result.
• Considering all possible solutions.
• Calculating the consequences of all solutions and comparing the probability of satisfying
the criteria.
• Selecting the best option.

Normative Models: These models consider situations that may possibly arise in making
decisions, such as time, complexity, uncertainty, and inadequacy of resources. As pet this model,
decision-making process can be characterized into -
• Limited information processing – Amount of information that can be managed is always
limited.
• Judgmental heuristics – Shortcuts can be used to simplify the decision-making process.
• Satisficing – If a solution is available that is just "good enough", it should be considered.

Herbert Simon Model of Decision Making

Decision Making is a process in which the decision maker uses information to arrive at a
decision. The core of this process is described by Herbert Simon in a model. He described the
model in three phases.
 Intelligence
Insufficient Data

Design
No Satisfactory
Solution

Choice

Fig No. 7 Herbert Simon Model

• Intelligence: This is the first step towards the decision making process. In this step, the
decision maker identifies or detects a problem or an opportunity which is not according to
plan rule or standard. In this process the attention of the manager is drawn to all problem
situations by highlighting the significant differences between the actual and the expected,
the budgeted or the targeted.

• Design: Design is the process of designing solution outlines for a problem. Alternative
solutions are designed to solve the same problem. Each alternative solution is evaluated
after gathering data about the solution. Evaluation is done on the basis of positive and
negative aspects of each solution.

• Choice: The possible solutions are compared against each other to find out the most
suitable solution in this stage. The best solution may be identified using various tools or
experiences.
In these phases, if the manager fails to reach a destination, he starts the process all over again and
again from the intelligence phase where additional data and information is collected, the decision
making model is refined, the selection criteria is changed and decision is arrived.

Types of Decisions

Stategic Decision

Based on
Frequency of Tactical Decision
Decision

Operational
Types of Decision
Decisions

Programmed
Decision
Based on
Structuring of
Decision
Unprogrammed
Decision

Fig No. 8 Types of Decisions

Classification on the basis of Frequency of Decision

Strategic Decision: A strategic decision is a major choice of action involving the way in which
an organization reacting to its environment using the resources and find the long term objectives.
Features:
• It is a major action which affect the entire organization or significant part of it.
• It involves commitment of large amount of resources-human, physical and financial.
• It has high level of future because resources are committed for long term.
• Because of high level of importance attached to a strategic decision it is made by top
management which has much wider perspective of the organization and its environment.
Tactical Decision: Tactical decision is one which is made in order to implement a strategic
decision.
Features:
• It is made within the broad framework provided by the strategic decisions.
• It is concerned more with effective utilization of resources that have been committed by
the strategic decision.
• It is relevant to a unit or department of an organization.
• It is made by middle level managers who are responsible for looking the operation of a
unit or department.

Operational Decision: A operational; decision is made by lower level managers in relation to

day to day affairs like allowing/disallowing credit to customers, maintenance of plant or
machinery etc.
Features:
• It is concerned with how an action should be put into operation so that the action achieves
its objectives.
• It is well structured and leaves very little option to the decision maker.
• It is of short term nature and affects a narrow part of the organization.
• The authority for making operational decisions is given to the lower level managers.

Classification on the basis of Structuring of Decision

Programmed Decision: It is also known as structured decision, is routine and repetitive and is
made within the framework of organizational policies and rules. These policies and rules are
established in advance to solve the problem in the organization. Such decisions are made by
managers at comparatively lower level where the factors affecting decision making are static and
well structured.

Non-Programmed Decision: It is also known as unstructured decision, is relevant for solving

unique/unusual problem in which various alternatives cannot be decided in advance. A common
feature of non-programmed decisions is that they are new and non recurring and therefore
readymade solutions are not available. Since these decisions are of high importance because of
their long term affects, these are made by managers at higher levels in the organization.

Importance of Information in Decision making process

Relevant information is always critical for decision maker, since the quality of decision making
mostly dependent on the quality of information received. Information is useful for decision
makers in following ways -
• It improves representation of an entity.
• It updates the level of knowledge.
• It helps in removing the element of surprise.
• It reduces uncertainty.
• It improves the decision-making process.
• Value of Information is must.

It is quite clear that information provides deep impact on decision making, and hence its value
can be closely related to decisions that result from its use. Information does not possess or
represent an absolute universal value. The value of information varies in relation to its users,
when it is required or in what situations it will be used. Hence, information is like available other
commodities in practice. For example, the value of water is different for someone who has lost
his way in mountains compared to a wanderer lost in desert. The modern theory of normative
value of information is developed by economists and statisticians which in further derived from
decision theory. The underlying fact about this theory is that preliminary knowledge is always
available about the occurrence of events that are important and specific to our decisions. Any
available additional information may change the view towards the occurred probabilities and
help in continuosly changing our decisions and expected results from such decisions. Therefore,
the value of additional information is always calculated as the difference in expected payoff
obtained by reduced uncertainty in relation to future events.

Information helps in supporting decisions and in-turn these decisions trigger actions and these
actions affect the performance of the business organization. Information impact can be traced in
terms of the difference obtained in performance. All this tracing related to the impact of
information is only possible provided that the measurements are recorded carefully, the
relationships among variables are well defined and isolation of irrelevant factors has been done.
All these measured differences in performance due to informational factors is called the realistic
value or revealed value of information. For information systems which mainly provide support to
middle and top management, the possible resulting decisions usually relates to events that are not
strictly defined and must involve probabilities that cannot be quantified practically. The
decision-making process is mostly obscure in nature and resultant outcomes are scaled by
multiple and incomparable dimensions. For case like these, one may either attempt to perform a
multi-attribute analysis or can focus on deriving an overall subjective value. This subjective
value reflects people's comprehensive thinking about information and the money which they can
afford to pay for specific information.
SUMMARY

• Information is the most crucial resource in the operation and management of

organizations.
• MIS make a clear distinction between data and information. The relation between the two
can be thought as raw materials (Data) which goes through some processing and as
output we get finished products (Information).
• Information characteristics can be classified in to relevance, timeliness, accuracy, cost-
effectiveness, reliability, usability, exhaustiveness, and aggregation level.
• Information can be classified on the basis of characteristic, management and application.
• On the basis of characteristic, it includes: action vs non-action, recurring vs non-recurring
and internal vs external information.
• On the basis of management, it includes: strategic, tactical and operational information.
• On the basis of application, it includes: planning, control and knowledge.
• Knowledge is of two types: Fact based and Heuristic Knowledge.
• Essentials of Good Decision Making are: Categorical Interpretation, Application of
Limiting Factors, Adequate Information, Considering Other Views and Timeliness
• The decision making process includes following steps: Identification of the Purpose of
the Decision, Information Gathering, Principles for Judging the Alternatives, Brainstorm
and Analyze the Choices, Evaluation of Alternatives, Select the Best Alternative, Execute
the decision and Evaluate the Results
• The types of decisions are: Strategic, Tactical, Operational, Programmed and Non-
Programmed Decisions.
REVIEW QUESTIONS

Q1 Define information. Discuss its importance in an organization.

Q2 Differentiate between data and information with examples.
Q3 Discuss various characteristics of information.
Q4 Explain various types and sources of information that exists in an organization.
Q5 What is knowledge? Explain its types.
Q6 Explain the type of information required at various management levels.
Q7 Discuss the importance of information in decision making.
Q8 Describe in detail the process of decision making.
Q9 Discuss decision making models that are used in an organization.
Q10 Explain Herbert Simon model of decision making.
Q11 What are the types of decisions that are implemented in an organization.