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INFORMATION SYSTEMS AND MANAGERIAL DECISION MAKING 49

Data Warehousing, Data Mining, and Operations Research
Data warehousing and data mining are aspects of information systems. Most
companies are now aware of the benefits of creating a data warehouse that
serves as the central repository of all data collected from disparate sources
including those pertaining to the company’s finance, manufacturing, sales, and
the like. The data warehouse is usually built from data collected through the dif-
ferent departments of the enterprise and can be accessed through various on-line
analytical processing (OLAP) tools to support decision making. Data warehous-
ing can be described as the process of extracting, transferring, and integrating
data spread across multiple external databases and even operating systems, with
a view to facilitate analysis and decision making.
Complementary to the functions of data warehousing, many companies resort
to data mining as a strategic tool for reaching new levels of business intelli-
gence. Using algorithms to analyze data in a meaningful way, data mining more
effectively leverages the data warehouse by identifying hidden relations and pat-
terns in the data stored in it. For instance, data mining makes it possible to trace
retail sales patterns by ZIP code and the time of day of the purchases, so that
optimal stocking of items becomes possible. Such “mined” data pertaining to the
vital areas of the organization can be easily accessed and used for different pur-
poses. For example, staffing for different times of the day can be planned, as can
the number of check-out counters that need to be kept open in retail stores, to
ensure efficiency as well as effectiveness. We can see that data mining helps to
clarify the underlying patterns in different business activities, which in turn facil-
itates decision making.
Operations research (OR) or management science (MS) is another sophisti-
cated tool used to simplify and thus clarify certain types of complex problems
that lend themselves to quantification. OR uses higher mathematics and statistics
to identify, analyze, and ultimately solve intricate problems of great complexity
faced by the manager. It provides an additional tool to the manager by using
quantification to supplement personal judgment. Areas of problem solving that
easily lend to OR include those relating to inventory, queuing, sequencing, rout-
ing, and search and replacement. OR helps to minimize costs and increase effi-
ciency by resorting to decision trees, linear programming, network analysis, and
mathematical models.
Other information systems such as the Management Information Systems
(MIS), Decision Support System, the Executive Information System, and the Expert
System are good decision-making aids, but not necessarily involved with data
collection and analyses in the strict sense.
In sum, a good information system collects, mines, and provides a wide range
of pertinent information relating to aspects of both the external and internal envi-
ronments of the organization. By using the wide variety of tools and techniques
available for solving problems of differing magnitude, executives, managers, and
others entrusted with responsibility for results at various levels of the organiza-
tion can find solutions to various concerns merely by securing access to these
data available in the system and analyzing them.