Tax - Miller's Case

ASSIGNMENT CASE 1

SUGGESTED ANSWER

1. Discuss the criteria to consider in specifying the structure and features of CGC’s new system.

Need for market information - The factors that affect the demand and supply for gas must be isolated, their relative importance determined, and their effect quantified.

Need for accuracy - The level of accuracy required of the system determines the required level of detail, quality of the input data, and sophistication of the system logic. While the system must be designed to provide the accuracy that matches the need, care must be taken to ensure that excessive effort is not spent in being overly accurate in specific areas when the overall accuracy is inherently less due to the planning environment.

Frequency of use - The frequency of system use provides direction as to the level of automation and sophistication needed. If the system will be used only once each month to project the effect of the most recent actual data, it may be sufficient to develop a less sophisticated system. If it is likely that a variety of alternatives will be evaluated each month, a sophisticated, on-line system will be more desirable.

Turnaround required - The need for timely reporting at month end provides guidance as to the degree of automation and the level of complexity that will be appropriate. Because the system is to be used for both multi-year planning and monthly tactical planning, the system should be designed to provide for quick turnaround of results at month end. Accordingly, consideration must be given to minimizing data input requirements.

Cost/benefit analysis - The new system must be justified on a cost/benefit basis.

Data processing environment - Typically, planning systems require a significant amount of computer resources, both in terms of processing time and data storage.

Supportability - Company personnel must be able to support the system...