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Decision Support Systems
Decision SupportMIS and DSS
Artificial IntelligenceExpert Systems
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Learning Objectives
1. Identify the changes taking place in the form and use of decision support in business.
2. Identify the role and reporting alternatives of management information systems.
3. Describe how online analytical processing can meet key information needs of managers.
4. Explain the decision support system concept and how it differs from traditional management information systems.
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Learning Objectives
5. Explain how the following information systems can support the information needs of executives, managers, and business professionals:
a. Executive information systemsb. Enterprise information portalsc. Knowledge management systems
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Learning Objectives
5. Identify how neural networks, fuzzy logic, genetic algorithms, virtual reality, and intelligent agents can be used in business.
6. Give examples of several ways expert systems can be used in business decision-making situations.
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Case 1: Centralized Business Intelligence at Work
Starting each business-intelligence project from scratch leads toReinventing the wheelHigh development and support costsIncompatible systems
Some companies are standardizing on fewer business-intelligence tools and making them available throughout the organization and
Business-intelligence competency centers
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Case Study Questions
1. What is business intelligence? Why are business intelligence systems such a popular business application of IT?
2. What is the business value of the various BI applications discussed in the case?
3. Is a business-intelligence system an MIS or a DSS?
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Real World Internet Activity
1. 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 Activity
Business 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 Making
Strategic managementExecutives develop organizational goals,
strategies, policies, and objectives As part of a strategic planning process
Tactical managementManagers and business professionals in self-
directed teams Develop short- and medium-range plans,
schedules and budgets Specify the policies, procedures and business
objectives for their subunits
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Levels of Management Decision Making
Operational managementManagers or members of self-directed teams Develop short-range plans such as weekly
production schedules
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Information Quality
Information products whose characteristics, attributes, or qualities make the information more value
Information has 3 dimensions:TimeContentForm
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Attributes of Information Quality
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Decision Structure
Structured – 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 decisions
Management Information Systems
Decision Support Systems
Decision support provided
Provide information about the performance of the organization
Provide information and techniques to analyze specific problems
Information form and frequency
Periodic, exception, demand, and push reports and responses
Interactive inquiries and responses
Information format
Prespecified, fixed format Ad hoc, flexible, and adaptable format
Information processing methodology
Information produced by extraction and manipulation of business data
Information produced by analytical modeling of business data
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Decision Support Trends
Personalized proactive decision analyticsWeb-Based applicationsDecisions at lower levels of management and
by teams and individualsBusiness intelligence applications
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Business Intelligence Applications
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Decision Support Systems
DSSProvide interactive information support to
managers and business professionals during the decision-making process
Use:Analytical modelsSpecialized databasesA decision maker’s own insights and judgmentsInteractive computer-based modeling
To support semistructured business decisions
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DSS components
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DSS Model base
Model baseA 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 modelsCapital budgeting present value models
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Management Information Systems
MISProduces information products that support
many of the day-to-day decision-making needs of managers and business professionals
Prespecified reports, displays and responsesSupport more structured decisions
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MIS Reporting Alternatives
Periodic Scheduled ReportsPrespecified format on a regular basis
Exception ReportsReports about exceptional conditionsMay be produced regularly or when exception
occursDemand Reports and Responses
Information available when demandedPush Reporting
Information pushed to manager
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Online Analytical Processing
OLAPEnables 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 Operations
Consolidation Aggregation of data
Drill-down Display 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 Systems
GISDSS that uses geographic databases to construct
and display maps and other graphics displaysThat support decisions affecting the geographic
distribution of people and other resourcesOften used with Global Position Systems (GPS)
devices
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Data Visualization Systems
DVS DSS 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 DSS
What-if Analysis End user makes changes to variables, or
relationships among variables, and observes the resulting changes in the values of other variables
Sensitivity Analysis Value of only one variable is changed repeatedly
and the resulting changes in other variables are observed
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Using DSS
Goal-SeekingSet a target value for a variable and then
repeatedly change other variables until the target value is achieved
How can analysisOptimization
Goal 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 discovered
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Data Mining
Main purpose is to provide decision support to managers and business professionals through knowledge discovery
Analyzes vast store of historical business dataTries 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 analysis
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Market Basket Analysis
One 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 Systems
EISCombine many features of MIS and DSSProvide top executives with immediate and easy
access to informationAbout the factors that are critical to
accomplishing an organization’s strategic objectives (Critical success factors)
So popular, expanded to managers, analysts and other knowledge workers
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Features of an EIS
Information presented in forms tailored to the preferences of the executives using the systemCustomizable graphical user interfacesException reportingTrend analysisDrill down capability
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Enterprise Interface Portals
EIPWeb-based interface Integration of MIS, DSS, EIS, and other
technologiesGives 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 Systems
The use of information technology to help gather, organize, and share business knowledge within an organization
Enterprise Knowledge PortalsEIPs 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 IntelligenceThe Dawn of the Digital Brain
Numenta 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 Questions
1. 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?
2. Why has artificial intelligence become so important to business?
3. 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 Activity
1. 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 Activity
The 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?
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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 Behavior
Think and reasonUse reason to solve problemsLearn or understand from experienceAcquire and apply knowledgeExhibit creativity and imaginationDeal with complex or perplexing situationsRespond quickly and successfully to new
situationsRecognize the relative importance of elements
in a situationHandle ambiguous, incomplete, or erroneous
information
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Domains of Artificial Intelligence
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Cognitive Science
Based in biology, neurology, psychology, etc.Focuses on researching how the human brain
works and how humans think and learn
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Robotics
Based in AI, engineering and physiologyRobot machines with computer intelligence
and computer controlled, humanlike physical capabilities
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Natural Interfaces
Based in linguistics, psychology, computer science, etc.
Includes natural language and speech recognitionDevelopment of multisensory devices that use a
variety of body movements to operate computersVirtual reality
Using multisensory human-computer interfaces that enable human users to experience computer-simulated objects, spaces and “worlds” as if they actually exist
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Expert Systems
ESA knowledge-based information system (KBIS)
that uses its knowledge about a specific, complex application to act as an expert consultant to end users
KBIS is a system that adds a knowledge base to the other components on an IS
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Expert System Components
Knowledge BaseFacts about specific subject areaHeuristics 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 user
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Expert System Components
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Methods of Knowledge Representation
Case-Based – knowledge organized in form of casesCases: examples of past performance,
occurrences and experiencesFrame-Based – knowledge organized in a
hierarchy or network of framesFrames: entities consisting of a complex
package of data values
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Methods of Knowledge Representation
Object-Based – knowledge organized in network of objectsObjects: data elements and the methods or
processes that act on those dataRule-Based – knowledge represented in rules
and statements of factRules: statements that typically take the form of
a premise and a conclusionSuch as, If (condition) then (conclusion)
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Expert System Benefits
Faster and more consistent than an expertCan have the knowledge of several expertsDoes not get tired or distracted by overwork or
stressHelps preserve and reproduce the knowledge
of experts
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Expert System Limitations
Limited focusInability to learnMaintenance problemsDevelopmental costsCan only solve specific types of problems in a
limited domain of knowledge
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Suitability Criteria for Expert Systems
Domain: subject area relatively small and limited to well-defined 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 ill-structured, uncertain, missing and conflicting data
Availability: an expert exists who is articulate and cooperative
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Development Tool
Expert System ShellSoftware package consisting of an expert system
without its knowledge baseHas inference engine and user interface
programs
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Knowledge Engineer
A 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 Networks
Computing systems modeled after the brain’s 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 Logic
Method 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 Algorithms
Software 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 Agents
A 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 user
Also called software robots or bots
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User Interface Agents
Interface 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 decisions
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Information Management Agents
Search 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 desired
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Case 3: Robots are the common denominator
Telerobotic-assisted medical proceduresFlexible automobile body shop with wireless
inventory replenishment
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Case Study Questions
1. What is the current and future business value of robotics?
2. Would you be comfortable with a robot performing surgery on you? Why or why not?
3. 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 Activity
1. 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 Activity
The 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?