Year: 2020

Information classification is a process in which organizations assess the data that they hold and the level of protection it should be given.

Organizations usually classify information in terms of confidentiality i.e. who is granted access to see it. A typical system will include four levels of confidentiality:

• Confidential (only senior management have access)
• Restricted (most employees have access)
• Internal (all employees have access)
• Public (everyone has access)

As you might expect, larger and more complex organizations will need more levels.

Take hospitals, for example: doctors and nurses need access to patients’ medical histories, which are highly sensitive, but they shouldn’t have access to other types of information that would fit that criteria, such as the hospital’s financial records.

Classification by Characteristic

Based on Anthony’s classification of Management, information used in business for decision-making is generally categorized into three types:

1. Strategic Information

Strategic information is concerned with long term policy decisions that defines the objectives of a business and checks how well these objectives are met. For example, acquiring a new plant, a new product, diversification of business etc, comes under strategic information.

2. Tactical Information

Tactical information is concerned with the information needed for exercising control over business resources, like budgeting, quality control, service level, inventory level, productivity level etc.

3. Operational Information

Operational information is concerned with plant/business level information and is used to ensure proper conduction of specific operational tasks as planned/intended. Various operator specific, machine specific and shift specific jobs for quality control checks comes under this category.

Classification by Application

In terms of applications, information can be categorized as:

1. Planning Information

These are the information needed for establishing standard norms and specifications in an organization. This information is used in strategic, tactical, and operation planning of any activity. Examples of such information are time standards, design standards.

2. Control Information

This information is needed for establishing control over all business activities through feedback mechanism. This information is used for controlling attainment, nature and utilization of important processes in a system. When such information reflects a deviation from the established standards, the system should induce a decision or an action leading to control.

3. Knowledge Information

Knowledge is defined as “information about information”. Knowledge information is acquired through experience and learning, and collected from archival data and research studies.

4. Organizational Information

Organizational information deals with an organization’s environment, culture in the light of its objectives. Karl Weick’s Organizational Information Theory emphasizes that an organization reduces its equivocality or uncertainty by collecting, managing and using these information prudently. This information is used by everybody in the organization; examples of such information are employee and payroll information.

5. Functional/Operational Information

This is operation specific information. For example, daily schedules in a manufacturing plant that refers to the detailed assignment of jobs to machines or machines to operators. In a service oriented business, it would be the duty roster of various personnel. This information is mostly internal to the organization.

6. Database Information

Database information construes large quantities of information that has multiple usage and application. Such information is stored, retrieved and managed to create databases. For example, material specification or supplier information is stored for multiple users.

Information, as required at different levels of manage­ment can be classified as operational, tactical and strategic.

1. Strategic information

While the operational information is needed to find out how the given activity can be performed better, strategic information is needed for making choices among the busi­ness options.

The strategic information helps in identifying and evaluating these options so that a manager makes informed choices which are different from the competitors and the limita­tions of what the rivals are doing or planning to do. Such choices are made by leaders only.

Strategic information is used by man­agers to define goals and priorities, initiate new programmes and develop policies for acquisition and use of corporate resources. For example, information regarding the long-term needs of funds for on-going and future projects of the company may be used by top level managers in taking decision regarding going public or approaching financial institutions for term loan.

Strategic infor­mation is predictive in nature, relies heavily on external sources of data, has a long-term perspective, and is mostly in summary form. It may sometimes include ‘what if’ scenarios. However, the strategic information is not only external information.

For long, it was believed that strategic information are basically information regarding the external environment. However, it is now well rec­ognised that the internal factors are equally responsible for suc­cess or failures of strategies and thus, internal information is also required for strategic decision making.

Figure represents the types of information required at different levels of managerial hierarchy.

It may be remembered that each type of information has its role to play in managerial effectiveness. Each type of information is needed with varying degree by the managers at all levels. Thus, a part of operational information may be used even by the chief executive of­ficer of a company.

The difference lies in the proportion of each type of information in the total information needs of managers at different levels of managerial hierarchy.

2. Tactical information

Tactical information helps middle level man­agers allocating resources and establishing controls to implement the top level plans of the organisation. For example, information regarding the alternative sources of funds and their uses in the short run, opportunities for deployment of surplus funds in short- term securities, etc. may be required at the middle levels of man­agement.

The tactical information is generally predictive, focusing on short-term trends. It may be partly current and partly histori­cal, and may come from internal as well as external sources.

3. Operational information

Operational information relates to the day-to-day operations of the organization and thus, is useful in ex­ercising control over the operations that are repetitive in nature. Since such activities are controlled at lower levels of management, operational information is needed by the lower management.

For example, the information regarding the cash position on day-to-day basis is monitored and controlled at the lower levels of manage­ment. Similarly, in marketing function, daily and weekly sales in­formation is used by lower level manager to monitor the perform­ance of the sales force.

It may be noted that operational informa­tion pertains to activities that are easily measurable by specific standards. The operational information mainly relates to current and historical performance, and is based primarily on internal sources of data. The predictive element in operational information is quite low and if at all it is there, it has a short term horizon.

1. Observation

Observation method has occupied an important place in descriptive sociological research. It is the most significant and common technique of data collection. Analysis of questionnaire responses is concerned with what people think and do as revealed by what they put on paper. The responses in interview are revealed by what people express in conversation with the interviewer. Observation seeks to ascertain what people think and do by watching them in action as they express themselves in various situations and activities.

Observation is the process in which one or more persons observe what is occurring in some real life situation and they classify and record pertinent happenings according to some planned schemes. It is used to evaluate the overt behaviour of individuals in controlled or uncontrolled situation. It is a method of research which deals with the external behaviour of persons in appropriate situations.

According to P.V. Young, “Observation is a systematic and deliberate study through eye, of spontaneous occurrences at the time they occur. The purpose of observation is to perceive the nature and extent of significant interrelated elements within complex social phenomena, culture patterns or human conduct”.

From this definition it is clearly understood that observation is a systematic viewing with the help of the eye. Its objective is to discover important mutual relations between spontaneously occurring events and explore the crucial facts of an event or a situation. So it is clearly visible that observation is not simply a random perceiving, but a close look at crucial facts. It is a planned, purposive, systematic and deliberate effort to focus on the significant facts of a situation.

According to Oxford Concise Dictionary, “Observation means accurate watching, knowing of phenomena as they occur in nature with regard to cause and effect or mutual relations”.

This definition focuses on two important points:

Firstly, in observation the observer wants to explore the cause-effect relationships between facts of a phenomenon.

Secondly, various facts are watched accurately, carefully and recorded by the observer.

2. Interview

Interview as a technique of data collection is very popular and extensively used in every field of social research. The interview is, in a sense, an oral questionnaire. Instead of writing the response, the interviewee or subject gives the needed information verbally in a face-to-face relationship. The dynamics of interviewing, however, involves much more than an oral questionnaire.

Interview is relatively more flexible tool than any written inquiry form and permits explanation, adjustment and variation according to the situation. The observational methods, as we know, are restricted mostly to non-verbal acts. So these are understandably not so effective in giving information about person’s past and private behaviour, future actions, attitudes, perceptions, faiths, beliefs thought processes, motivations etc.

The interview method as a verbal method is quite significant in securing data about all these aspects. In this method a researcher or an interviewer can interact with his respondents and know their inner feelings and reactions. G.W. Allport in his classic statement sums this up beautifully by saying that “if you want to know how people feel, what they experience and what they remember, what their emotions and motives are like and the reasons for acting as they do, why not ask them”.

Interview is a direct method of inquiry. It is simply stated as a social process in which a person known as the interviewer asks questions usually in a face to face contact to the other person or persons known as interviewee or interviewees. The interviewee responds to these and the interviewer collects various information from these responses through a very healthy and friendly social interaction.

However, it does not mean that all the time it is the interviewer who asks the questions. Often the interviewee may also ask certain questions and the interviewer responds to these. But usually the interviewer initiates the interview and collects the information from the interviewee.

Interview is not a simple two-way conversation between an interrogator and informant. According to P.V. Young, “interview may be regarded as a systematic method by which a person enters more or less imaginatively into the life of a comparative stranger”. It is a mutual interaction of each other.

The objectives of the interviewer are to penetrate the outer and inner life of persons and to collect information pertaining to a wide range of their experiences in which the interviewee may wish to rehearse his past, define his present and canvass his future possibilities. These answers of the interviewees may not be only a response to a question but also a stimulus to progressive series of other relevant statements about social and personal phenomena.

In similar fashion, W.J. Goode and P.K Hatt have observed that “interviewing is fundamentally a process of social interaction”. In the interview two persons are not merely present at the same place but also influence each other emotionally and intellectually.

3. Schedule

Schedule is one of the very commonly used tools of data collection in scientific investigation. P.V. Young says “The schedule has been used for collection of personal preferences, social attitudes, beliefs, opinions, behaviour patterns, group practices and habits and much other data”. The increasing use of schedule is probably due to increased emphasis by social scientists on quantitative measurement of uniformly accumulated data.

Schedule is very much similar to questionnaire and there is very little difference between the two so far as their construction is concerned. The main difference between these two is that whereas the schedule is used in direct interview on direct observation and in it the questions are asked and filled by the researcher himself, the questionnaire is generally mailed to the respondent, who fills it up and returns it to the researcher. Thus the main difference between them lies in the method of obtaining data.

Goode and Hatt says, “Schedule is the name usually applied to a set of questions which are asked and filled by an interviewer in a face to face situation with other person”. Webster defines a schedule as “a formal list, a catalogue or inventory and may be a counting device, used in formal and standardized inquiries, the sole purpose of which is aiding in the collection of quantitative cross-sectional data”.

The success of schedule largely depends on the efficiency and tactfulness of the interviewer rather than the quality of questions posed. Because the interviewer himself asks all the questions and fills the answers all by himself, here the quality of question has less significance.

4. Questionnaire

Questionnaire provides the most speedy and simple technique of gathering data about groups of individuals scattered in a wide and extended field. In this method, a questionnaire form is sent usually by post to the persons concerned, with a request to answer the questions and return the questionnaire.

According to Goode and Hatt “It is a device for securing answers to questions by using a form which the respondent fills in himself. According to GA. Lundberg “Fundamentally the questionnaire is a set of stimuli to which illiterate people are exposed in order to observe their verbal behaviour under these stimuli”.

Often the term “questionnaire” and “schedule” are considered as synonyms. Technically, however, there is a difference between these two terms. A questionnaire consists of a set of questions printed or typed in a systematic order on a form or set of forms. These form or forms are usually sent by the post to the respondents who are expected to read and understand the questions and reply to them in writing in the spaces given for the purposes on the said form or forms. Here the respondents have to answer the questions on their own.

On the other hand schedule is also a form or set of forms containing a number of questions. But here the researcher or field worker puts the question to the respondent in a face to face situation, clarifies their doubts, offers the necessary explanation and most significantly fills their answers in the relevant spaces provided for the purpose.

Since the questionnaire is sent to a selected number of individuals, its scope is rather limited but within its limited scope it can prove to be the most effective means of eliciting information, provided that it is well formulated and the respondent fills it properly.

A properly constructed and administered questionnaire may serve as a most appropriate and useful data gathering device.

5. Projective Techniques

The psychologists and psychiatrists had first devised projective techniques for the diagnosis and treatment of patients afflicted by emotional disorders. Such techniques are adopted to present a comprehensive profile of the individual’s personality structure, his conflicts and complexes and his emotional needs. Adoption of such techniques is not an easy affair. It requires intensive specialized training.

The stimuli applied in projective tests may arouse in the individuals, undergoing the tests, varieties of reaction. Hence, in projective tests the individual’s responses to the stimulus situation are not considerate at their face value because there are no ‘right’ or ‘wrong’ answers. Rather emphasis is laid on his perception or the meaning he attaches to it and the way in which the endeavors to manipulate it or organizes it.

The purpose is never clearly indicated by the nature of the stimuli and the way of their presentation. This also does not provide the way of interpretation of the responses. Since the individual is not asked to describe about himself directly and since he is provided with stimulus in the form of a photograph or a picture or on ink- blot, etc., the responses to these stimuli are construed as the indicators of the individual’s own view of the world, his personality structure, his needs, tensions and anxieties etc. says Bell.

6. Case Study Method

According to Biesanz and Biesenz “the case study is a form of qualitative analysis involving the very careful and complete observation of a person, a situation or an institution.” In the words of Goode and Hatt, “Case study is a way of organizing social data so as to preserve the unitary character of the social object being studied.” P.V. young defines case study as a method of exploring and analyzing the life of a social unit, be that a person, a family, an institution, cultural group or even entire community.”

In the words of Giddings “the case under investigation may be one human individual only or only an episode in first life or it might conceivably be a Nation or an epoch of history.” Ruth Strong maintains that “the case history or study is a synthesis and interpretation of information about a person and his relationship to his environment collected by means of many techniques.”

Shaw and Clifford hold that “case study method emphasizes the total situation or combination of factors, the description of the process or consequences of events in which behaviour occurs, the study of individual behaviour in its total setting and the analysis and comparison of cases leading to formulation of hypothesis.”

The value of information is a very slippery concept as information per se does not have any universal value. Its value is related to the person who uses it, when he uses it and for what he uses it. Any assessment of the value of information is therefore related to the value of the decision-making supported by such information.

For example consider two persons lost in the Sahara desert. One person has an adequate supply of drinking water (more than he could desire) and another has exhausted his supply. If one were to approach these two individuals with information about a drinking water well in the surrounding, such information will obviously have greater value for the one who has exhausted his water supply. For the one who is thirsty, this information is the most valuable piece of information for him at that point of time as it will determine if he will survive. If by chance the information reaches this thirsty person late and he dies of thirst, then the value of the same information becomes zero. So we can see that the same information can have different value for different people at different points in time. Hence, it will be fair to conclude that value of information is relative. There is no absolute value of information.

However, the normal mathematical and economical explanation of value of information suggests that if an event occurs whose expectation was low and information of its occurrence is known then such information is valuable. For example let us say that the reader of this text gets the information that an earthquake of 10.5 magnitude in the Richter scale is going to hit India and the epicenter of the earthquake will be the very spot on which he is located, then that information is more valuable to him than the information (say) that he has to pass his BCA exam to get into the MCA course. In the former case the information is more valuable to him as he is not expecting it but in the latter case he already knows the information with certainty and expects it fully and hence the value for such information is less. All market mechanisms work on this model of information. This has already been dealt with in the earlier chapter and as Eq.1 suggests, the value of information of an event is the negative logarithm of the probability of occurrence of the event. Therefore, the more unlikely the event the more its information value, if communicated correctly. This is also exhibited in our behavior as eons of evolutions have shaped us in a manner that we tend to attach more value to unlikely events. In a game setting for example, say a horse racing game, if the odds of a horse winning the race are more then the payoff for that horse is less. Similarly, if a stock in the stock market is likely to outperform the market then the price payoff for that stock is not high, but if a stock that is likely to underperforms, performs beyond expectation, then the price payoff become very high. Thus, we can that the issue of value of information is a complicated one.

Normative Value of Information

Marschak (1971) and McGuire (1972) made seminal contributions to this field of work. Decision theory has developed this concept further and the basic assumption is that we always have some preliminary information about the occurrence of events that are related to our decisions. This information or knowledge is represented by an a priori assignment of probability of occurrence to the event and hence a calculated payoff. The a priori probability might be objective or subjective as the case may be and with the knowledge of additional information the probabilities are modified resulting in a change in the expected payoffs. This approach is however, only good for theoretical discussions as its practical applicability is poor. The problem for such cases has to be highly structured, which is rarely the case in management.

Subjective Value of Information

It is the subject view of the information available. It is the subjective perception or impression of the information. This subjective value approach varies widely with individuals. In the subjective valuation of information, no probabilities are calculated. Subjective value of information is the person’s (receiver’s) comprehensive impression about the information content.

Decision-making is a cognitive process that results in the selection of a course of action among several alternative scenarios.

Decision-making is a daily activity for any human being. There is no exception about that. When it comes to business organizations, decision-making is a habit and a process as well.

Effective and successful decisions result in profits, while unsuccessful ones cause losses. Therefore, corporate decision-making is the most critical process in any organization.

In a decision-making process, we choose one course of action from a few possible alternatives. In the process of decision-making, we may use many tools, techniques, and perceptions.

In addition, we may make our own private decisions or may prefer a collective decision.

Usually, decision-making is hard. Majority of corporate decisions involve some level of dissatisfaction or conflict with another party.

Decision-Making Process

Following are the important steps of the decision-making process. Each step may be supported by different tools and techniques.

Step 1: Identification of the Purpose of the Decision

In this step, the problem is thoroughly analyzed. There are a couple of questions one should ask when it comes to 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?
• Does the problem have a deadline or a specific time-line?

Step 2: Information Gathering

A problem of an organization will have many stakeholders. In addition, there can be dozens of factors involved and affected by the problem.

In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved in the problem. For the process of information gathering, tools such as ‘Check Sheets’ can be effectively used.

Step 3: Principles for Judging the Alternatives

In this step, the baseline criteria for judging the alternatives should be set up. When it comes to defining the criteria, organizational goals as well as the corporate culture should be taken into consideration.

As an example, profit is one of the main concerns in every decision making process. Companies usually do not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles should be identified related to the problem in hand.

Step 4: Brainstorm and Analyze the Choices

For this step, brainstorming to list down all the ideas is the best option. Before the idea generation step, it is vital to understand the causes of the problem and prioritization of causes.

For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps you to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify the causes with the highest effect.

Then, you can move on generating all possible solutions (alternatives) for the problem in hand.

Step 5: Evaluation of Alternatives

Use your judgment principles and decision-making criteria to evaluate each alternative. In this step, experience and effectiveness of the judgment principles come into play. You need to compare each alternative for their positives and negatives.

Step 6: Select the Best Alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best alternative is an informed decision since you have already followed a methodology to derive and select the best alternative.

Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the help of subordinates.

Step 8: Evaluate the Results

Evaluate the outcome of your decision. See whether there is anything you should learn and then correct in future decision making. This is one of the best practices that will improve your decision-making skills.

Process and Modeling in Decision-Making

There are two basic models in decision-making:

• Rational models
• Normative model

(i) Rational models

The rational models are based on cognitive judgments and help in selecting the most logical and sensible alternative. Examples of such models include – decision matrix analysis, Pugh matrix, SWOT analysis, Pareto analysis and decision trees, selection matrix, etc.

A rational decision making model takes the following steps −

• Identifying the problem,
• Identifying the important criteria for the process and the result,
• Considering all possible solutions,
• Calculating the consequences of all solutions and comparing the probability of satisfying the criteria,
• Selecting the best option.

(ii) Normative model

The normative model of decision-making considers constraints that may arise in making decisions, such as time, complexity, uncertainty, and inadequacy of resources.

According to this model, decision-making is characterized by −

• Limited information processing – A person can manage only a limited amount of information.
• Judgmental heuristics – A person may use shortcuts to simplify the decision making process.
• Satisfying – A person may choose a solution that is just “good enough”.

Dynamic Decision-Making

Dynamic decision-making (DDM) is synergetic decision-making involving interdependent systems, in an environment that changes over time either due to the previous actions of the decision-maker or due to events that are outside of the control of the decision-maker.

These decision-makings are more complex and real-time.

Dynamic decision-making involves observing how people used their experience to control the system’s dynamics and noting down the best decisions taken thereon.

Sensitivity Analysis

Sensitivity analysis is a technique used for distributing the uncertainty in the output of a mathematical model or a system to different sources of uncertainty in its inputs.

From business decision perspective, the sensitivity analysis helps an analyst to identify cost drivers as well as other quantities to make an informed decision. If a particular quantity has no bearing on a decision or prediction, then the conditions relating to quantity could be eliminated, thus simplifying the decision making process.

Sensitivity analysis also helps in some other situations, like −

• Resource optimization
• Future data collections
• Identifying critical assumptions
• To optimize the tolerance of manufactured parts

Static and Dynamic Models

Static models

• Show the value of various attributes in a balanced system.
• Work best in static systems.
• Do not take into consideration the time-based variances.
• Do not work well in real-time systems however, it may work in a dynamic system being in equilibrium
• Involve less data.
• Are easy to analyze.
• Produce faster results.

Dynamic models

• Consider the change in data values over time.
• Consider effect of system behavior over time.
• Re-calculate equations as time changes.
• Can be applied only in dynamic systems.

Simulation Techniques

Simulation is a technique that imitates the operation of a real-world process or system over time. Simulation techniques can be used to assist management decision making, where analytical methods are either not available or cannot be applied.

Some of the typical business problem areas where simulation techniques are used are –

• Inventory control
• Queuing problem
• Production planning

Operations Research Techniques

Operational Research (OR) includes a wide range of problem-solving techniques involving various advanced analytical models and methods applied. It helps in efficient and improved decision-making.

It encompasses techniques such as simulation, mathematical optimization, queuing theory, stochastic-process models, econometric methods, data envelopment analysis, neural networks, expert systems, decision analysis, and the analytic hierarchy process.

OR techniques describe a system by constructing its mathematical models.

Heuristic Programming

Heuristic programming refers to a branch of artificial intelligence. It consists of programs that are self-learning in nature.

However, these programs are not optimal in nature, as they are experience-based techniques for problem solving.

Most basic heuristic programs would be based on pure ‘trial-error’ methods.

Heuristics take a ‘guess’ approach to problem solving, yielding a ‘good enough’ answer, rather than finding a ‘best possible’ solution.

Group Decision-Making

In group decision-making, various individuals in a group take part in collaborative decision-making.

Group Decision Support System (GDSS) is a decision support system that provides support in decision making by a group of people. It facilitates the free flow and exchange of ideas and information among the group members. Decisions are made with a higher degree of consensus and agreement resulting in a dramatically higher likelihood of implementation.

Following are the available types of computer based GDSSs −

(i) Decision Network

This type helps the participants to communicate with each other through a network or through a central database. Application software may use commonly shared models to provide support.

(ii) Decision Room

Participants are located at one place, i.e. the decision room. The purpose of this is to enhance participant’s interactions and decision-making within a fixed period of time using a facilitator.

(iii) Teleconferencing

Groups are composed of members or sub groups that are geographically dispersed; teleconferencing provides interactive connection between two or more decision rooms. This interaction will involve transmission of computerized and audio visual information.

A programmed decision is used to solve routine, repetitive but complex problems. These techniques are also called as Quantitative Techniques. The managers working at lower-level of management make these decisions.

Various Approaches or Techniques for making programmed decisions are:

1. Linear Programming

Linear Programming is a quantitative technique. It is used to decide how to distribute the limited resources for achieving the objectives. Here, linear, means the relationship between variables, and programming means taking decisions systematically. Linear programming is used when two or more activities are competing for limited resources. For e.g. product mix decisions, inventory management decisions, etc. Linear programing is used for Agriculture, Industry, Contract biding and Evaluation of tenders.

2. Decision Tree

A decision tree is a diagram which shows all the possible alternatives of a decision. All this information can be seen at one glance. It is also easy to understand. A decision tree is like a horizontal tree. The base of the tree is called the Decision Point. From this point, the different alternatives and sub-alternatives are shown as branches and sub-branches. The manager must study all the alternatives very carefully and select the best alternative.

3. Game Theory

A game is a situation involving at least two people. Each persons decision is based on what he expects the other to do. Game theory is used for deciding about competitive pricing. For e.g. A company may increase the price of its product when it feels that the competitor may also increase the price. For e.g. Pepsi will increase its price if it feels that Coca Cola will also increase its price. Here, both decisions- makers adapt to each other’s decisions.

4. Simulation

Simulation technique is used to decide about complex problems. The effect of the decision is observed in a simulated situation and not in a real situation. For e.g. A company can find out the effectiveness of its new advertisement by first showing it to few people before telecasting it on TV.

5. Queueing Theory

This technique is used to find solutions to the waiting list problems in case of airline reservations, railway reservations, college admissions, etc. Queueing theory helps to find out the optimum number of service facilities required and the cost of these services. For e.g. A transport company may introduce more vehicles to carry the passengers in the waiting list. This will prevent the passengers from going to the competitor’s company.

6. Network Techniques

Managers use network techniques like PERT (Program Evaluation Review Technique) and CPM (Critical Path Method) for complex projects, where many activities have to be completed. With the help of these techniques, complex projects can be completed as per the schedule. Network techniques save time and cost.

7. Probability Decision Theory

Probability Decision theory is based on the assumption that the future is uncertain. There is a chance that a certain event may or may not take place. Based on available data and subjective judgement of the manager, various probabilities are assigned (given) to alternative courses of action (decision). The likely / possible outcomes of different alternatives are evaluated, and the most likely alternative is selected.

8. Payoff Matrix

Payoff matrix is a statistical technique, which helps managers to choose the best alternative. A payoff is the return or reward for selecting the best alternative. The best alternative can be a combination of many alternatives or a single alternative. For e.g. A manager may decide to increase sales and profit by increasing advertising, improving quality of the product, reducing the price, etc. Each alternative or a combination of alternatives may provide an expected reward.

A database intends to have a collection of data stored together to serve multiple applications as possible. Hence a database is often conceived of as a repository of information needed for running certain functions in a corporation or organization. Such a database would permit not only the retrieval of data but also the continuous modification of data needed for control of operations. It may be possible to search the database to obtain answers to queries or information for planning purposes.

Purpose of Database

A database should be a repository of data needed for an organization’s data processing. That data should be accurate, private, and protected from damage. It should be accurate so that diverse applications with different data requirements can employ the data. Different application programmers and various end-users have different views upon data, which must be derived from a common overall data structure. Their methods of searching and accessing of data will be different.

Advantage of Using Database

• Database minimizes data redundancy to a great extent.
• The database can control the inconsistency of data to a large extent.
• Sharing of data is also possible using the database.
• Database enforce standards.
• The use of Databases can ensure data security.
• Integrity can be managed using the database.

Various Levels of Database Implementation

The database is implemented through three general levels. These levels are:

• Internal Level or Physical level
• Conceptual Level
• External Level or View Level

The Concept of Data Independence

As the database may be viewed through three levels of abstraction, any change at any level can affect other levels’ schemas. Since the database keeps on growing, then there may be frequent changes at times. This should not lead to redesigning and re-implementation of the database. The concepts of data independence prove beneficial in such types of contexts.

• Physical data independence
• Logical data independence

Basic Terminologies Related to Database and SQL

(i) Relation

In general, a relation is a table, i.e., data is arranged in rows and columns. A relation has the following properties:

• In any given column of a table, all the items are of the same kind, whereas items in different columns may not be of the same kind.
• For a row, each column must have an atomic value, and also for a row, a column cannot have more than one value.
• All rows of a relation are distinct.
• The ordering of rows in a relationship is immaterial.
• The column of a relation are assigned distinct names, and the ordering of these columns is immaterial.

(ii) Tuple

The rows of tables in a relationship are generally termed as Tuples.

(iii) Attributes

The columns or fields of a table is termed as Attributes.

(iv) Degree

The number of attributes in a relation determines the degree of relation.  A relation having three attributes is said to have a relation of degree 3.

(v) Cardinality: The number of tuples or rows in a relation is termed as cardinality.