The relative value of a management information system, a simulation study

Yrjö Seppälä

Omega, 1980, vol. 8, issue 1, 39-45

Abstract: A relative value of a management information system (MIS) is defined in this paper by a ratio u1/u0, where u0 is a value of a utility function of an enterprise whose management information system is perfect, and u1 is its value when it is not perfect and may produce inaccurate or out-of-date data among correct information. Our simulation model contains beuristics which describe the operational and strategic information system of an enterprise. The environment of the enterprise may be stable or dynamic. A mathematical formula, based on simulations, is developed. This formula describes how the relative value of an MIS depends on such factors as the accuracy of an operational information system, delays in information flow, the quality of a strategic information system, a reinvestment ratio used in the enterprise, and a number of investment periods. This formula has been found suitable in an enterprise with a strategically stable environment, but not with a turbulent environment.

Date: 1980
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