Business Decision Making - Essay Example

?Business Decision Making Task a) The questionnaire should be relevant and user-friendly and it should be structured in such a way that it could easily extract a considerable amount of information without causing any offence or boredom to the respondent. Question 1) How often do you use the services offered by the library? This should have been a close ended question but it has been structured as an open ended question. Such types of questions invite some obvious replies and information obtained from this can be unreliable and meaningless. The term often is ambiguous in this case and different respondents will interpret it in different manner. For instance, some of the respondents will answer that they use library services 5 times a month while other may respond twice a week. It is difficult to quantify data from such types of response. To make this question more reliable, it should provide multi choices in the form of common time horizon: Once a Week 2-5 times a Week 6-10 times a Week More than 10 times a Week Question 2) How many books or publications have you borrowed from the library? 0 1-5 5-10 10-15 20-50 50-100 This question has three flaws inherent in it. Firstly, the answers are overlapping as we find some of the answers in more than one option. A respondent who has borrowed 5 books is unclear on whether it selects the option 1-5 or 5-10 since both of them contain the same answer. Secondly, this question neglects many of the options in between the answers. It leaves out the category for 16-20 and more than 100 books. Finally, this question requires the respondents to perform mental arithmetic. It’s difficult for the respondents to memorize that how many times they have exactly borrowed books or publications from the library. The answers should be wide in range. For instance, it should start with the option of less than 10 rather than 0. Question 3) The last time you visited the library, what was the purpose of your visit? Search for a book Search for a periodical Get information from a librarian Study peacefully This question also provides limited information regarding the answers. It neglects several other alternative options which are not provided in the list of answers. To make it easier for respondents, there should be an option for “If Other than Please mention below” Question 4) Were your needs satisfied? Yes/No Now this question forces the respondent to answer either their needs were satisfied or not. There can be a case that few needs were satisfied while others were not, so how does a respondent answer under such circumstances. This should not have been treated as a dichotomous question but rather it should have answers in the form provided below: Very satisfied Fairly satisfied Neither satisfied nor dissatisfied Fairly dissatisfied Very dissatisfied Question 5) How satisfied are you with the quality provided by the library and the attitude of the library staff? 1 2 3 4 5 This question lacks additional details regarding the rating scale. Some individuals might consider 1 to be excellent while other might consider 5 to be excellent. Therefore, a note should elaborate on the details of the rating scale. Secondly, this question asks about two separate elements in a single question which is inappropriate. The quality and attitude of the library staff are two separate things and they should be treated separately. Question 6) What do you dislike about the library? This question assumes that all the respondents dislike something about the library. Hence, it is compelling the respondents to think negatively and find some negative aspect about the library. The question should have first asked whether there are any issues inherent in the operations of the library. If the answer had been yes than it should have asked what you dislike about the library. Question 7) Are there any improvements that could be made to the library to provide a better service? Yes/No This question simply asks whether improvements could be made to the library but it does not discover the improvement initiatives that the public is demanding. The question should have further asked if yes than what sort of improvements are required to provide a better service. Question 8) Do you approve or disapprove of the recent proposals made by the Library Management Committee, such as the proposal to double fines for overdue books? Approve/Disapprove This is not a valid question since many of the respondents might not be aware of the recent proposals made by the Library Management Committee. Furthermore, even if some of the respondents are aware of the recent proposals still they may have a neutral attitude towards the decisions made by the committee. Question 9) Are you aware of these proposals? Yes/No The sequence of this question is wrong as this question should have been posed prior to asking the question regarding the approval and disapproval of recent proposals. Question 10) Why do you disapprove of these proposals? This question again makes an irrational assumption that the respondent has disapproved of the proposal. This should have been a last question in the sequence of these three related questions. It should first stark by knowing whether the respondent has disapproved any proposal and if the answer is “yes” than it should proceed with this question otherwise it is useless. Question 11) Are you against not having longer opening hours? Against/Not against There are three problems inherent in this question. Firstly, the question has double negatives in its structure which is difficult to comprehend for the reader. Instead of asking the respondent with unnecessary negatives, it should have a positive statement. Secondly, this question can be considered as a leading question as it can inadvertently influence the respondent. The purpose of such statements should be obvious and they should not be phrased in a way that makes the respondent to provide a biased answer. Finally, respondents can have a neutral attitude towards the question therefore the answers should also include an option for “Don’t know”. Question 12) Level of education This has also been structured as an open ended question and can provide unreliable data. It should have a list of options like Primary, Higher School, Undergraduate, Graduate, Phd etc. (b) The planning process of a library should incorporate the changing needs of the community which predominantly includes the demographics, socioeconomic status, employment trends and development plans (Evans & Sapnaro, 2005). The questionnaire designed for this survey does not address all these issues. Secondly, for rural and cosmopolitan areas it is imperative to identify who uses the library and for what purpose they use it. The type of information that best serves the need of community should be properly identified since both the rural and urban communities have different needs. In the rural communities of Africa the problem of inappropriate book collections has been exacerbated by book donations from West which contains content which is irrelevant to the needs of rural communities. For instance, the agricultural information contained in Western donated books does not necessarily apply to African conditions due to differences in technology and infrastructure (Garcia & Nelson, 2007). Hence, it is vital to collect information regarding the informational needs of the community. The physical facilities (spacing, technology etc.) are also critical for maintaining the quality of service provided by the library. The questionnaire does not address the needs for physical facilities that are to be provided to the community. (c) (i) The table provides the initial capital outlay and the incremental savings provided by installing the automated lending system Year Cash Flow 0 -?90,000 1 ?20,000 2 ?25,000 3 ?30,000 4 ?45,000 We will first check using the discount rate values of 10% IRR is the discount rate at which the Net Present Value (NPV) of the cash flows is equal to 0. At 10% discount rate NPV = -90,000 + 20,000/1.10 + 25,000/1.102 + 30,000/1.103 + 45,000/1.104 NPV = -90,000 + 20,000 (0.909) + 25,000 (0.826) + 30,000 (0.751) + 45,000 (0.683) NPV = -90,000 + 18,180 + 20,650 + 22,530 + 30,735 NPV = 2,095 At 10% discount rate, the NPV is positive therefore the IRR must be greater than 10% At 15% discount rate NPV = -90,000 + 20,000/1.15 + 25,000/1.152 + 30,000/1.153 + 45,000/1.154 NPV = -90,000 + 20,000 (0.869) + 25,000 (0.756) + 30,000 (0.657) + 45,000 (0.571) NPV = -90,000 + 17,380 + 18,900 + 19,710 + 25,695 NPV = -8,315 At 15% discount rate, the NPV is negative therefore the IRR must be between 10% and 15%. Now let us check the NPV at 11% discount rate and we shall use the discount factor for 11% At 11% discount rate NPV = -90,000 + 20,000/1.11 + 25,000/1.112 + 30,000/1.113 + 45,000/1.114 NPV = -90,000 + 20,000 (0.901) + 25,000 (0.812) + 30,000 (0.731) + 45,000 (0.659) NPV = -90,000 + 18,018 + 20,291 + 21,935 + 29,642 NPV = -10 At 11% discount rate the NPV is close to 0 therefore the IRR is 11% (ii) As the head of library service in Burwash, I will install the automated lending system only if my cost of borrowing shall be less than 11%. The system can provide savings which are practicable and could be realized at an interest rate of less than 11% otherwise the funds could be invested somewhere else in the library system. (iii) The IRR is comparably an easy and convenient method which calculated the return on the original money invested. Another advantage is that we do not need to compute the cost of capital for the project. Among the major disadvantages of the IRR method include its ability to provide conflicting results as opposed to NPV method for mutually exclusive projects. The contradictory results are because of the size problems and different cash flow patterns (Brigham & Houston, 2007). The Multiple IRR problem can also be an issue of grave concern when the cash flows are not conventional and contain multiple outlays (negative cash flows). Finally, it makes an unrealistic assumption that the cash flows are easily reinvested at the internal rate of return. Task 2 (a) Correlation is the sum of the product of deviations between the variables divided by individual standard deviations. First we will calculate the average of induction and final scores. Average of induction scores = (51+52+59+45+61+54+56+67+63+53)/10 Average of induction scores = 56.1 Average of final scores = (75+72+82+67+75+79+78+82+87+72)/10 Average of final scores = 76.9 Calculating the summation of product of deviations = ((51-56.1)(75-76.9) + (52-56.1)(72-76.9) +(59-56.1)(82-76.9) +(45-56.1)(67-76.9) +(61-56.1)(75-76.9) +(54-56.1)(79-76.9) +(56-56.1)(78-76.9) +(67-56.1)(82-76.9) +(63-56.1)(87-76.9) +(53-56.1)(72-76.9)) / 10 = (9.69 + 20.09 + 14.79 + 109.89 – 9.31 - 4.41 – 0.11 + 55.59 + 69.69 + 15.19) / 10 = 281.1 / 10 = 28.11 The standard deviation for induction scores is = (((51-56.1)2 + (52-56.1)2 + (59-56.1)2 + (45-56.1)2 + (61-56.1)2 + (54-56.1)2 + (56-56.1)2 + (67-56.1)2 + (63-56.1)2 + (53-56.1)2)1/2)/10 =6.16 The standard deviation for final scores is = (((75-76.9)2 + (72-76.9)2 + (82-76.9)2 + (67-76.9)2 + (75-76.9)2 + (79-76.9)2 + (78-76.9)2 + (82-76.9)2 + (87-76.9)2 + (72-76.9)2)1/2)/10 =5.59 Correlation = 28.11 / (6.16)(5.59) Correlation = 0.82 (b) By using the excel function of CORREL(), we have found that the correlation between induction scores and final scores is 0.816. (c) Graph of Induction scores and final scores Figure 1: Comparison of induction and final scores (d) The above graph shows that the induction scores and final scores are significantly different which implies that the course had a drastic impact on their results. Hence, it is recommended that all the trainee staff should attend this course as it has a profound impact on how they conduct sales operations. Task 3 (a) Using the SUM() function in excel we have computed the total scores of the three geographical areas for the first quarter. January February March Total ?’000 ?’000 ?’000 ?’000 North 2,431 3,001 2,189 7,621 South 6,532 5,826 6,124 18,482 West 895 432 596 1,923 Total 9,858 9,259 8,909 28,026 (b) Figure 2: Performance of the geographical areas in the first quarter (Bar Chart) Figure 2: Performance of the geographical areas in the first quarter (Line Chart) Figure 3: Performance of the geographical areas in the first quarter (Pie Chart) (c) The best format among the above displayed is the bar chart that thoroughly describes the composition of all the three geographical areas plus their performance in each of the months. For instance, the South area had the largest share of sales while its sales declined in February. Task 4 (a) Order Quantity Average Stock Number of orders Annual Storage Cost Annual order cost Total Cost 175 87.5 20.57 35 72.00 107.00 200 100 18.00 40 63.00 103.00 225 112.5 16.00 45 56.00 101.00 250 125 14.40 50 50.40 100.40 275 137.5 13.09 55 45.82 100.82 300 150 12.00 60 42.00 102.00 325 162.5 11.08 65 38.77 103.77 350 175 10.29 70 36.00 106.00 The total cost is minimized at 250 units with a total cost of ?100.40. Hence, EOQ is close to 250 units An alternate way of calculating the exact economic order quantity is described below: EOQ = ((2 x Annual Demand x Ordering Cost) / Holding Cost))1/2 EOQ = ((2 x 3600 x 3.5)/0.4)1/2 EOQ = 251 units (b) The economic order quantity is the point where the total costs are minimized. At this point the annual storage cost and ordering costs are equal as it is evident from the intersection of the graphs. (c) Economic order quantity provides a simple way to calculate the quantity which minimizes the costs of inventory management. However, due to its unrealistic and simplistic assumption, critics believe that it is not applicable to the dynamic organizational environment. For instance, it assumes that the demand is constant throughout the period which is not the case in the practical domain. Annual demand will not exist for products which have a life cycle of less than a year. It also assumes that the delivery lead times are constant, which is an impractical assumption. Brown, Lamming, Bessant and Jones (2005) believe that ordering a fixed quantity per order is not an appropriate way in this complex and dynamic market. Another assumption made is that ordering costs are constant with no account taken of the method of ordering (for example email, fax, phone), the time spent placing the order, or the staffing costs of the person placing the order (Slack, Chambers & Johnston, 2007). References Brigham, E. F. & Eugene F. Brigham (Author) › Visit Amazon's Eugene F. Brigham PageFind all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central Houston, J. E. (2007). Fundamentals of Financial Management. New York, NY: Thomson Learning Brown, S., Lamming, R., Bessant, J. and Jones, P. (2005), Strategic Operations Management, 2nd edn, Elsevier Butterworth-Heinemann Oxford. Evans, G. E., & Saponaro, M. Z. (2005), Developing library and information center collections (5th ed.). Englewood, CO: Libraries Unlimited. Garcia, J. & Nelson, S. (2007), Public library service responses. Chicago: The Public Library Association of the American Library Association. Slack, N., Chambers, S. & Johnston, R. (2007), Operations Management, Prentice Hall: Pearson Education, New York Read More