9-1 McGraw-Hill/Irwin

Copyright 2007 by The McGraw-Hill Companies, Inc. All

Chapter

9Decision Support SystemsDecision Support MIS and DSS Artificial Intelligence Expert SystemsMcGraw-Hill/Irwin

Copyright 2007 by The McGraw-Hill Companies, Inc. All

Learning Objectives1. 2. 3.

4.

Identify the changes taking place in the form and use of decision support in business. Identify the role and reporting alternatives of management information systems. Describe how online analytical processing can meet key information needs of managers. Explain the decision support system concept and how it differs from traditional management information systems.

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Learning Objectives5.

Explain how the following information systems can support the information needs of executives, managers, and business professionals:Executive information systems b. Enterprise information portals c. Knowledge management systemsa.

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Learning Objectives5.

6.

Identify how neural networks, fuzzy logic, genetic algorithms, virtual reality, and intelligent agents can be used in business. Give examples of several ways expert systems can be used in business decisionmaking situations.

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Case 1: Centralized Business Intelligence at WorkStarting

each business-intelligence project from scratch

leads toReinventing

the wheel High development and support costs Incompatible systemsSome

companies are standardizing on fewer businessintelligence tools and making them available throughout the organization and Business-intelligence competency centers

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Case Study Questions1.

2. 3.

What is business intelligence? Why are business intelligence systems such a popular business application of IT? What is the business value of the various BI applications discussed in the case? Is a business-intelligence system an MIS or a DSS?

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Real World Internet Activity1.

Companies are taking advantage of the competitive edge they enjoy from high-quality business intelligence. To meet the demand for applications to support the process, vendors are developing a wide variety of offerings. Using the Internet,

See if you can find several examples of software products to support the management of business intelligence. Do they all take the same approach, or are there different ways of managing the process?

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Real World Group ActivityBusiness

intelligence competency centers can be quite costly to start and maintain. There prevalence, however, suggests the benefits are worth the costs. In small groups,Discuss

the various skills and job roles necessary for a competitive business intelligence competency center. Can such centers be considered competitive advantage or simply competitive necessity?

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Information required at different management levels

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Levels of Management Decision MakingStrategic

management

Executives

develop organizational goals, strategies, policies, and objectives As part of a strategic planning processTactical

managementand business professionals in self-directed

Managers

teams Develop short- and medium-range plans, schedules and budgets Specify the policies, procedures and business objectives for their subunits9-11

Levels of Management Decision MakingOperationalManagers

management

or members of self-directed teams Develop short-range plans such as weekly production schedules

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Information QualityInformation

products whose characteristics, attributes, or qualities make the information more value Information has 3 dimensions:Time Content Form

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Attributes of Information Quality

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Decision StructureStructured

situations where the procedures to follow when a decision is needed can be specified in advance Unstructured decision situations where it is not possible to specify in advance most of the decision procedures to follow Semistructured - decision procedures that can be prespecified, but not enough to lead to a definite recommended decision

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Information Systems to support decisionsManagement Decision Support Information Systems SystemsDecision support provided Information form and frequency Information format Information processing methodology9-16

Provide information about the Provide information and performance of the techniques to analyze organization specific problems Periodic, exception, demand, Interactive inquiries and and push reports and responses responses Prespecified, fixed format Information produced by extraction and manipulation of business data Ad hoc, flexible, and adaptable format Information produced by analytical modeling of business data

Decision Support TrendsPersonalized

proactive decision analytics Web-Based applications Decisions at lower levels of management and by teams and individuals Business intelligence applications

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Business Intelligence Applications

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Decision Support SystemsDSS Provide

interactive information support to managers and business professionals during the decision-making process Use:Analytical

models Specialized databases A decision makers own insights and judgments Interactive computer-based modelingTo9-19

support semistructured business decisions

DSS components

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DSS Model baseModelA

base

software component that consists of models used in computational and analytical routines that mathematically express relations among variables

Examples:Linear

programming models, Multiple regression forecasting models Capital budgeting present value models

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Management Information SystemsMIS Produces

information products that support many of the day-to-day decision-making needs of managers and business professionals Prespecified reports, displays and responses Support more structured decisions

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MIS Reporting AlternativesPeriodic

Scheduled Reportsformat on a regular basis

Prespecified

ExceptionReports

Reports

about exceptional conditions May be produced regularly or when exception occursDemand Push

Reports and Responsesavailable when demanded pushed to manager

Information Information9-23

Reporting

Online Analytical ProcessingOLAPEnables

mangers and analysts to examine and manipulate large amounts of detailed and consolidated data from many perspectives Done interactively in real time with rapid response

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OLAP Analytical OperationsConsolidationAggregation

of data

Drill-downDisplay

detail data that comprise consolidated

dataSlicing

and Dicing

Ability

to look at the database from different viewpoints

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OLAP Technology

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Geographic Information SystemsGISDSS

that uses geographic databases to construct and display maps and other graphics displays That support decisions affecting the geographic distribution of people and other resources Often used with Global Position Systems (GPS) devices

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Data Visualization SystemsDVSDSS

that represents complex data using interactive three-dimensional graphical forms such as charts, graphs, and maps DVS tools help users to interactively sort, subdivide, combine, and organize data while it is in its graphical form.

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Using DSSWhat-ifEnd

Analysis

user makes changes to variables, or relationships among variables, and observes the resulting changes in the values of other variables

SensitivityValue

Analysis

of only one variable is changed repeatedly and the resulting changes in other variables are observed

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Using DSSGoal-SeekingSet

a target value for a variable and then repeatedly change other variables until the target value is achieved How can analysisOptimizationGoal

is to find the optimum value for one or more target variables given certain constraints One or more other variables are changed repeatedly until the best values for the target variables are discovered9-30

Data MiningMain

purpose is to provide decision support to managers and business professionals through knowledge discovery Analyzes vast store of historical business data Tries to discover patterns, trends, and correlations hidden in the data that can help a company improve its business performance Use regression, decision tree, neural network, cluster analysis, or market basket analysis9-31

Market Basket AnalysisOne

of most common data mining for marketing The purpose is to determine what products customers purchase together with other products

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Executive Information SystemsEISCombine

many features of MIS and DSS Provide top executives with immediate and easy access to information About the factors that are critical to accomplishing an organizations strategic objectives (Critical success factors) So popular, expanded to managers, analysts and other knowledge workers

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Features of an EISInformation

presented in forms tailored to the preferences of the executives using the systemCustomizable

graphical user interfaces Exception reporting Trend analysis Drill down capability

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Enterprise Interface PortalsEIPWeb-based

interface Integration of MIS, DSS, EIS, and other technologies Gives all intranet users and selected extranet users access To a variety of internal and external business applications and servicesTypically

tailored to the user giving them a personalized digital dashboard

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Enterprise Information Portal Components

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Knowledge Management SystemsThe

use of information technology to help gather, organize, and share business knowledge within an organization Knowledge Portals

EnterpriseEIPs

that are the entry to corporate intranets that serve as knowledge management systems

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Enterprise Knowledge Portals

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Case 2 Artificial Intelligence The Dawn of the Digital BrainNumenta

will translate the way the brain works into an algorithm that can run on a new type of computer The human brain does not work like a computer Intelligence, according to Hawkins, is pattern recognition

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Case Study Questions1.

2. 3.

What is the business value of AI technologies in business today? What value might exist if Jeff Hawkins can build a machine to think like humans? Why has artificial intelligence become so important to business? Why do you think banks and other financial institutions are leading users of AI technologies? What are the benefits and limitations of this technology?

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Real World Internet Activity1.

The concept of human thought is still a mystery despite the development of our understanding of the fundamental processes of the human brain. For many years, scientists have worked hard to develop humanlike machines, but none have been able to perform as well as the human brain when it comes to reasoning. Using the Internet,

See if you can find evidence of other projects similar to that of Hawkins. What is the current state of the art in this area of research and development?

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Real World Group ActivityThe

case ends by asking the question of whether we can ever build a machine more intelligent than a human. The real question is what will we do with it, or with us, if we are successful. In small groups,Brainstorm

about a future with machines that can equal or exceed the intelligence of humans. What good would come of such an accomplishment? What potential risks might occur?9-42

Artificial Intelligence (AI)A

field of science and technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics, and engineering Goal is to develop computers that can simulate the ability to think, as well as see, hear, walk, talk, and feel

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Attributes of Intelligent BehaviorThink

and reason Use reason to solve problems Learn or understand from experience Acquire and apply knowledge Exhibit creativity and imagination Deal with complex or perplexing situations Respond quickly and successfully to new situations Recognize the relative importance of elements in a situation Handle ambiguous, incomplete, or erroneous information9-44

Domains of Artificial Intelligence

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Cognitive ScienceBased

in biology, neurology, psychology, etc. Focuses on researching how the human brain works and how humans think and learn

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RoboticsBased

in AI, engineering and physiology Robot machines with computer intelligence and computer controlled, humanlike physical capabilities

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Natural InterfacesBased

in linguistics, psychology, computer science,

etc. Includes natural language and speech recognition Development of multisensory devices that use a variety of body movements to operate computers Virtual reality Using

multisensory human-computer interfaces that enable human users to experience computersimulated objects, spaces and worlds as if they actually exist

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Expert SystemsES A

knowledge-based information system (KBIS) that uses its knowledge about a specific, complex application to act as an expert consultant to end users is a system that adds a knowledge base to the other components on an IS

KBIS

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Expert System ComponentsKnowledge Facts

Base

about specific subject area Heuristics that express the reasoning procedures of an expert (rules of thumb)Software

Resources

Inference

engine processes the knowledge and makes inferences to make recommend course of action User interface programs to communicate with end user Explanation programs to explain the reasoning process to end user9-50

Expert System Components

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Methods of Knowledge RepresentationCase-Based

knowledge organized in form of

casesCases:

examples of past performance, occurrences and experiences

Frame-BasedFrames:

knowledge organized in a hierarchy or network of framesentities consisting of a complex package of data values

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Methods of Knowledge RepresentationObject-BasedObjects:

knowledge organized in network of objectsdata elements and the methods or processes that act on those data

Rule-BasedRules:

knowledge represented in rules and statements of factstatements that typically take the form of a premise and a conclusion Such as, If (condition) then (conclusion)

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Expert System BenefitsFaster

and more consistent than an expert Can have the knowledge of several experts Does not get tired or distracted by overwork or stress Helps preserve and reproduce the knowledge of experts

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Expert System LimitationsLimited

focus Inability to learn Maintenance problems Developmental costs Can only solve specific types of problems in a limited domain of knowledge

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Suitability Criteria for Expert SystemsDomain:

subject area relatively small and limited to welldefined area Expertise: solutions require the efforts of an expert Complexity: solution of the problem is a complex task that requires logical inference processing (not possible in conventional information processing) Structure: solution process must be able to cope with illstructured, uncertain, missing and conflicting data Availability: an expert exists who is articulate and cooperative

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Development ToolExpert

System Shell

Software

package consisting of an expert system without its knowledge base Has inference engine and user interface programs

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Knowledge EngineerA

professional who works with experts to capture the knowledge they possess Builds the knowledge base using an iterative, prototyping process

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Neural NetworksComputing

systems modeled after the brains mesh-like network of interconnected processing elements, called neurons Interconnected processors operate in parallel and interact with each other Allows network to learn from data it processes

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Fuzzy LogicMethod

of reasoning that resembles human reasoning Allows for approximate values and inferences and incomplete or ambiguous data instead of relying only on crisp data Uses terms such as very high rather than precise measures

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Genetic AlgorithmsSoftware

that uses

Darwinian

(survival of the fittest), randomizing, and other mathematical functions To simulate an evolutionary process that can yield increasingly better solutions to a problem

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Virtual Reality (VR)Computer-simulated

reality Relies on multisensory input/output devices such asa

tracking headset with video goggles and stereo earphones, a data glove or jumpsuit with fiber-optic sensors that track your body movements, and a walker that monitors the movement of your feet

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Intelligent AgentsA

software surrogate for an end user or a process that fulfills a stated need or activity Uses its built-in and learned knowledge base To make decisions and accomplish tasks in a way that fulfills the intentions of a userAlso

called software robots or bots

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User Interface AgentsInterface

Tutors observe user computer operations, correct user mistakes, and provide hints and advice on efficient software use Presentation show information in a variety of forms and media based on user preferences Network Navigation discover paths to information and provide ways to view information based on user preferences Role-Playing play what-if games and other roles to help users understand information and make better decisions9-64

Information Management AgentsSearch

Agents help users find files and databases, search for desired information, and suggest and find new types of information products, media, and resources Information Brokers provide commercial services to discover and develop information resources that fit the business or personal needs of a user Information Filters receive, find, filter, discard, save, forward, and notify users about products received or desired9-65

Case 3: Robots are the common denominatorTelerobotic-assisted

medical procedures Flexible automobile body shop with wireless inventory replenishment

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Case Study Questions1. 2. 3.

What is the current and future business value of robotics? Would you be comfortable with a robot performing surgery on you? Why or why not? The robots being used by Ford Motor Co. are contributing to a streamlining of their supply chain. What other applications of robots can you envision to improve supply chain management beyond those described in the case?

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Real World Internet Activity1.

Applications for robots are being explored in every possible setting. Using the Internet,

See if you can find some examples where robots have been used to improve a process, reduce costs, or make the impossible possible.

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Real World Group ActivityThe

previous case in the chapter described the development of a machine that could think just like humans. Combined with advanced robotics, such a machine could conceivably perform most actions as well, or possibly better, than humans. In small groups,Discuss

how the combination of advanced AI and robotics could be used to create business value. What would we want such machines to be able to do or not do?9-69