Supporting Decision Making

Chapter10

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

10-2

• 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

Learning Objectives

10-3

• Explain how the following information systems can support the information needs of executives, managers, and business professionals– Executive information systems

– Enterprise information portals

– Knowledge management systems

• Identify how neural networks, fuzzy logic, genetic algorithms, virtual reality, and intelligent agents can be used in business

Learning Objectives

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• Give examples of several ways expert systems can be used in business decision-making situations

Learning Objectives

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Decision Structure

• Structured (operational)– Procedures can be specified in advance

• Unstructured (strategic)– Not possible to specify procedures in advance

• Semi-structured (tactical)– Decision procedures can be pre-specified,

but not enough to lead to the correct decision

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Data Mining

• Provides decision support through knowledge discovery– Analyzes vast stores of historical business data– Looks for patterns, trends, and correlations– Goal is to improve business performance

• Types of analysis– Regression– Decision tree– Neural network– Cluster detection– Market basket analysis

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Market Basket Analysis

• One of the most common uses for data mining– Determines what products customers purchase

together with other products

• Other uses

– Cross Selling

– Product Placement

– Affinity Promotion

– Survey Analysis – Fraud Detection– Analyze Customer Behavior

10-8

Executive Information Systems (EIS)

• Combines many features of MIS and DSS

• Provides immediate and easy information

• Identifies critical success factors

• Features– Customizable graphical user interfaces

– Exception reports

– Trend analysis

– Drill down capability

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Benefits of Expert Systems

• Captures human experience in a computer-based information system

Limitations of Expert Systems

• Limited focus

• Inability to learn

• Maintenance problems

• Development cost

• Can only solve specific types of problems in a limited domain of knowledge

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Knowledge Engineering

• A knowledge engineer

– Works with experts to capture the knowledge they possess

• Facts and rules of thumb

– Builds the knowledge base

• if necessary, the rest of the expert system

– Similar role to systems analysts

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Neural Networks

• Modeled after the brain’s mesh-like network of interconnected processing elements (neurons)

– Interconnected processors operate in parallel and interact with each other

– Allows the network to learn from the data it processes

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Genetic Algorithms

• Genetic algorithm software

– Uses Darwinian, randomizing, and other mathematical functions

– Simulates an evolutionary process, yielding increasingly better solutions to a problem

– Used to model a variety of scientific, technical, and business processes

– Useful when thousands of solutions are possible

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Virtual Reality (VR)

• Virtual reality is a computer-simulated reality– Fast-growing area of artificial intelligence

– Originated from efforts to build natural, realistic, multi-sensory human-computer interfaces

– Relies on multi-sensory input/output devices

– Creates a three-dimensional world through sight, sound, and touch

• Telepresence– Using VR to perform a task in a different location

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Intelligent Agents

• Software surrogate for an end user or a process that fulfills a stated need or activity

– Uses built-in and learned knowledge base to accomplish tasks

• Software robots or bots

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Types of Intelligent Agents

• User Interface Agents– Interface Tutors – Presentation Agents– Network Navigation Agents– Role-Playing Agents

• Information Management Agents– Search Agents – Information Brokers– Information Filters