44095: IT for Management Review & Part 2 Requirements By:Ian Perry Room: C41C Tel:

Ian PerrySlide : IT for Management: Review & Part 2 Requirements IT4M: Learning Outcomes? Understand the distinction between data, information & knowledge. Relate theoretical information technology models to business organisations, in order to understand business needs. Assess an organisation, to identify the role of IT-based support systems in a given business context. Use software tools to produce a working example of an IT-based support system which addresses specific business needs.

Ian PerrySlide : IT for Management: Review & Part 2 Requirements IT4M: Assessment Method? A single assignment, in two-parts, based upon the ‘EZPC’ Case Study scenario. Part 1 a)Analyse the current information system, as presented by the Case Study, using appropriate systems diagrams. (30 Marks) b)Where, and how, might Information Technology (IT) be used to improve the efficiency and/or effectiveness of Case Study organisation’s information system? (20 Marks) Part 2 Build a software tool that can help improve a specific aspect of the information system for the Case Study organisation. (50 Marks)

Ian PerrySlide : IT for Management: Review & Part 2 Requirements EZPC – Case Study EZPC assemble PC Systems for sale to customers such as PC World, Dixons, Currys, etc. Each PC System is ‘made-to-order’ (as a result of a request from a specific customer), based on a limited set of ‘Standard’ PC Configurations. The computer components (i.e. Processors, Hard Disks, Memory, etc.), from which the PC systems are assembled, are purchased from a number of suppliers. EZPC also sells computer components directly to the same Customers. The components, either waiting to be assembled into PC Systems, and/or to be passed on directly to EZPC’s customers, are stored at one of three different warehouse locations, i.e.: Leeds, Newcastle, & Reading The Leeds Warehouse acts as the Head Office for EZPC; all dealings with suppliers are controlled from the Head Office. -- SNIP --

Ian PerrySlide : IT for Management: Review & Part 2 Requirements EZPC – Continued At each Warehouse -- SNIP –- A fourth group of staff control the warehouse operations; ordering & receiving components from suppliers, -- SNIP –- How things work? -- SNIP –- If a ‘work order’ can not be completed, due to a lack of components, then the Warehouse must raise a ‘purchase order’ (via the Head Office) with one of EZPC’s Suppliers. -- SNIP --

Ian PerrySlide : IT for Management: Review & Part 2 Requirements EZPC – Problems? -- SNIP –- Each of the Warehouses is quite small, and can only hold a small stock of computer components and assembled PCs, so ‘work orders’ often become ‘purchase orders’ (once again a manual calculation). Raising a ‘purchase order’ with one of EZPC Suppliers can result in a delay of up to 10 days for the delivery of the computer components. Often, even when Warehouse is almost full of computer components, a ‘work order’ cannot be completed; as these are the wrong components with which to satisfy a specific customer ‘request’.

Ian PerrySlide : IT for Management: Review & Part 2 Requirements Stella, the Manager in charge of purchasing stock for EZPC, often ‘gets it wrong’, i.e.: buys too many of those components for which the demand is low. does not buy enough of those components for which the demand is high. At a recent business seminar, someone told Stella that all she needs to do is to work out the Economic Order Quantity (EOQ) for every component that EZPC stocks. This person kindly provided Stella with a ‘simple’ formula (see next slide) for working out EOQ, but she is having trouble using it. Case Study Update - 1

Ian PerrySlide : IT for Management: Review & Part 2 Requirements Economic Order Quantity?  The kindly person also said that it is not always prudent to order the exact EOQ that is indicated by the above formula; and suggested that it might also be wise to create an EOQ Optimisation Table & Chart (see next 2 slides), for a range of possible re-order amounts.  A ‘simple’ EOQ Formula

Ian PerrySlide : IT for Management: Review & Part 2 Requirements EOQ Optimisation Table You need to build a table of calculations, for a variable range of Re-order Amounts (R); e.g. 5, 10, 15, 20, etc. Then calculate the following for each value of R: Annual Holding Cost (AHC) = HC x (R/2) Annual Ordering Cost (AOC) = OC x (D/R) Total Annual Cost (TAC) = AHC + AOC And present them in a table like this:

Ian PerrySlide : IT for Management: Review & Part 2 Requirements EOQ Optimisation Chart Producing a line chart of the data from the EOQ Optimisation Table; should result in something like this: NB. The Point at which the AHC and AOC curves cross is the EOQ, however; the TAC curve is usually relatively flat either side of this point, which shows how much more, or less, can actually be re-ordered without having a major effect on the TAC.

Ian PerrySlide : IT for Management: Review & Part 2 Requirements What you have to do? The spreadsheet you develop should be as easy to use as possible, so: use multiple worksheets; in order to separate input, lookup & output areas. use named ranges & simple macros; in order to automate the process of moving between worksheets, and printing specific sections of worksheets. make your data entry worksheet as ‘bullet- proof’ as possible; as mistakes in data entry are the biggest cause of error with any IT-based ‘solution’.

Ian PerrySlide : IT for Management: Review & Part 2 Requirements The Assignment & Deadline? A single assignment, in two-parts, based upon the ‘EZPC’ Case Study. Part 1 Analyse the current information system, as presented by the Case Study, using appropriate systems diagrams. (30 Marks) Where, and how, might Information Technology (IT) be used to improve the efficiency and/or effectiveness of Case Study organisation’s information system? (20 Marks) Part 2 Build a software tool that can help improve a specific aspect of the information system for the Case Study organisation. (50 Marks) Assignment Deadline Monday, the 12 th of May, 2008.