Indexed sequential files store records sequentially in the order they are written, allowing both sequential and random access via a numeric index. The index provides fast retrieval while the sequential storage requires less disk space than keyed files. As inserts and deletes are performed, records may be stored in overflow chains which can gradually get large and slow down retrieval. Data warehouses integrate data from multiple sources for analysis and informed decision making, providing advantages like competitive insights but also challenges in data integration and meeting expanding user needs.