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Chapter 4: Decision Support Systems and Artificial Intelligence

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  1. Chapter 4:Decision Support Systemsand Artificial Intelligence Management Information Systemsfor the Information Age Brainpower for Your Business

  2. What Makes a Good Businessperson? • Your ability to… • Work with, motivate, and lead people • Identify and capitalize on opportunities • Recognize problems and devise solutions • Innovate, be creative, and think on the fringe • Make DECISIONS, DECISIONS, DECISIONS • Success is based on making good decisions: • IT can supplement human decision-making • IT can replace some human decision-making Chapter 4: Decision Support and AI

  3. How Do You Make Good Decisions? • Understand the Question! • I seek not to know the answers, but to understand the questions. Kwai Chang Caine. • Gather Good Information! • When you are educated, you'll believe only half of what you hear. When you are intelligent, you’ll know which half. Jerome Perryman. • Learn from Experience! • Experience teaches you to recognize a mistake when you've made it again. Woodrow Wilson. Chapter 4: Decision Support and AI

  4. Where Does IT Fit In? • The Role of IT in Decision-Making: • To increase an organization’s knowledgebase and their capability for using this knowledge via intelligent tools such as decision support systems and artificial intelligence software • Primary Categories of Computer-Aided Decision Support: Decision Support • Decision Support Systems • Performance Support Systems • Collaboration Systems • Geographic Information Systems Artificial Intelligence • Expert Systems • Neural Networks • Genetics Algorithms • Intelligent Agents Chapter 4: Decision Support and AI

  5. Four Phases of Decision-Making • Understand the similarity to other structured process models, such as: • Analysis • Design • Develop • Implement • Evaluate Chapter 4: Decision Support and AI

  6. Types of Decisions: Difficulty Level • Structured Decision • Set of steps that if followed in a particular way will always yield the correct answer • Doesn’t involve any feel or intuition • Easily programmed – inputs, processing, outputs • Non-Structured Decision • One for which there are no rules or criteria that will guarantee a good solution • Usually have several “right” answers • Both controllable and uncontrollable variables Chapter 4: Decision Support and AI

  7. Types of Decisions: Frequency • Recurring Decisions • One that happens repeatedly and, often, periodically (daily, monthly, annually) • Usually based on the same set of rules each time • Non-Recurring Decisions • Ad-hoc or one that you make infrequently • Usually based on different criteria for determining the best solution each time Chapter 4: Decision Support and AI

  8. Types of IT Brainpower • Decision Support Systems (DSS) • Group Decision Support Systems (GDSS) • Geographic Information Systems (GIS) • Artificial Intelligence Systems (AI) • Expert Systems • Neural Networks • Genetic Algorithms • Intelligent Agents Chapter 4: Decision Support and AI

  9. Decision Support Systems (DSS) Chapter 4: Decision Support and AI

  10. Decision Support Systems (DSS) 1/3 • A highly flexible and interactive IT system that is designed to support decision-making when the problem is not structured. • A DSS assists you in making a decision, as opposed to making the decision for you. Chapter 4: Decision Support and AI

  11. Decision Support Systems (DSS) 2/3 • Objective is to improve your effectiveness as a decision maker by providing useful and relevant information when and where you need it. • But you must know the right questions to ask! Chapter 4: Decision Support and AI

  12. Decision Support Systems (DSS) 3/3 • A DSS can help you… • Decide where to spend advertising dollars • Forecast market and sales trends • Analyze consumer behavior • Analyze drug interactions • Develop airline schedules • Price products Chapter 4: Decision Support and AI

  13. Components of a DSS • Data Management • allows you to store and access information • i.e., data warehouse or relational database • Model Management • allows you to store and access models • i.e., ANOVA or regression analysis • User Interface Management • allows you to easily manipulate, ask questions, and interpret responses of models • i.e., Microsoft Excel, SPSS, STORM, in-house Chapter 4: Decision Support and AI

  14. DSS Components Working Together You tell the DSS which model to use on what information Chapter 4: Decision Support and AI

  15. Choosing the Right DSS Model • A model is a representation of some event, fact or situation to represent variables and their relationships • The model you use in DSS depends on the decision you are making and, consequently, the kind of analysis you require • What-If Analysis • Optimization • Goal-Seeking • Statistical Analysis Chapter 4: Decision Support and AI

  16. Developing Your Own DSS 1.INTELLIGENCE • Do you need a DSS? • What should it do? • What information and models does it need? 2.DESIGN • What can you buy/build? 3.CHOICE • What will you buy/build? 4.IMPLEMENTATION • Build or install DSS • Learn, test, and evaluate the DSS Chapter 4: Decision Support and AI

  17. Group Decision Support Systems (GDSS) • Called “Collaboration Systems” in Haag and emphasizes sharing and flow of information • A type of decision support system that facilitates the formulation of and solution to problems by a team • A GDSS helps a team to generate ideas, identify strengths and weaknesses, choose an alternative, and reach a consensus Chapter 4: Decision Support and AI

  18. Why Use a GDSS? • A GDSS can help you… • Determine new product designs • Evaluate the impact of new competition • Analyze geographical differences • Formulate a strategic plan Chapter 4: Decision Support and AI

  19. Steps in Group Decision-Making • Brainstorming • Generate ideas • Issue Categorization and Analysis • Classify and organize the ideas • Ranking and Voting • Prioritize alternatives and reach consensus Chapter 4: Decision Support and AI

  20. People in Group Decision-Making • GDSS Team: • People united by a common goal and connected through information technology • GDSS Facilitator: • Non-technical role: run the meeting • Technical role: manage IT components Chapter 4: Decision Support and AI

  21. IT in Group Decision-Making • Groupware • Software than enables teams to share information and work collaboratively • DSS Capabilities • Software that enables team decision making, including voting and ranking • Telecommunications • Hardware and software that connects computers Chapter 4: Decision Support and AI

  22. Meetings Whenever and Wherever • Same-Time (Synchronous) Meetings • In the same room • In the same city • On the same planet • Different-Time (Asynchronous) Meetings • In the same city • On the same planet Chapter 4: Decision Support and AI

  23. Examples of Collaboration Systems • Enterprise-wide collaboration • Lotus Notes Groupware • Microsoft Exchange • Supply chain collaboration • Extranets and Internet Portals • Web-based collaboration • Websites, VPNs, virtual workspaces, intranets • Peer-to-peer collaboration • Groove Networks • MSN Messenger Chapter 4: Decision Support and AI

  24. Geographic Information Systems (GIS) • A type of decision support system that works with spatial information • Spatial information is any information that can be shown in map form, such as roads, the distribution of populations, and the layout of electrical or telecommunications lines • A GIS represents information thematically in overlapping layers, each of which shows a different aspect of the total picture Chapter 4: Decision Support and AI

  25. Examples of a GIS Chapter 4: Decision Support and AI

  26. Why Use a GIS? • Today GISs are helping businesses: • Identify the best site to locate a branch office • Target pockets of potential customers • Reposition promotions and advertising • Determine the optimal location of a new distribution outlet Chapter 4: Decision Support and AI

  27. Artificial Intelligence (AI) Chapter 4: Decision Support and AI

  28. Artificial Intelligence (AI) • Whereas DSS systems augment business brain power, Artificial Intelligence mimics or imitates human thinking and behavior • Robots are a form of AI: • Mechanical devices equipped with simulated human senses and the capability of taking action on its own • i.e., a robot lawn mower, called the LawnNibbler, cuts your lawn intelligently – avoiding dogs, kids, fences, and other obstacles Chapter 4: Decision Support and AI

  29. Is AI Really Being Used? • By financial analysts: • For managing assets and investing in stocks • By hospitals: • For scheduling staff and diagnosing illnesses • By credit card companies: • For detecting credit card fraud • By police and security organizations: • For predicting criminal behavior patterns Chapter 4: Decision Support and AI

  30. Types of AI Systems for Business • Expert Systems • Neural Networks • Genetic Algorithms • Intelligent Agents 70% of Top 500 Companies use AI as part of their Decision Support Chapter 4: Decision Support and AI

  31. Expert Systems • Also called “knowledge-based systems” or “performance support systems” • Captures human expertise and then applies reasoning capabilities to problems and offers advice in the form of a conclusion • Useful for: • Diagnostic or “what’s wrong” problems • Prescriptive or “what should we do” problems Chapter 4: Decision Support and AI

  32. Expert System vs. DSS • A DSS augments or assist you in making the decision, but you must know how to reason through the problem and proceed • An Expert System only requires that you input the facts and symptoms of the problem – it contains the know-how for solving the problem (based on human expertise) Visit Whale Watcher Chapter 4: Decision Support and AI

  33. People in an Expert System • Domain Expert • The person who knows how to solve the problem without the aid of IT • Sometimes called SMEs (subject matter experts) • Knowledge Engineer • The person who builds the expert system • Knowledge Worker • The person who uses the expert system to solve a problem Chapter 4: Decision Support and AI

  34. IT in an Expert System • Knowledgebase • Stores the rules of the expert system • Knowedge acquisition • Used to capture and enter the rules • Inference engine • Takes the problem facts and searches the knowledgebase for rules that fit • User interface • Used to run the consultation Chapter 4: Decision Support and AI

  35. What Expert Systems Can Do • Handle massive amounts of information • Reduce errors • Reduce costs • Improve customer service • Provide consistency in decision making • Maintain an organization’s knowledge asset Chapter 4: Decision Support and AI

  36. What Expert Systems Can’t Do • Handle all types of domain expertise • Solve problems other than those for which they are designed • Apply common sense or judgment to a problem Chapter 4: Decision Support and AI

  37. Neural Networks • A type of artificial intelligence system which is capable of learning because it’s patterned after the human brain • A neural network simulates the human ability to classify things based on the experience of seeing many examples; capable of differentiating patterns Visit 20 Questions Chapter 4: Decision Support and AI

  38. Examples of Neural Networks • PDA and Tablet PC handwriting recognition • Voice recognition systems like IBM ViaVoice and Dragon Naturally Speaking • In business, they are used in: • Securities trading • Credit-card fraud detection • Real estate appraisal • Evaluating loan applications • Target marketing Chapter 4: Decision Support and AI

  39. What Neural Networks Can Do • Neural networks can: • Learn by example • Adapt to new concepts and knowledge • Cope with huge volumes of information • Work without complete or structured information • Analyze nonlinear relationships in information • Recognize textual, visual, and auditory patterns • Most useful for identification, classification, and prediction when a vast amount of information is available Chapter 4: Decision Support and AI

  40. Types of Neural Networks • Self-organizing neural network • Finds patterns and relationships in vast amounts of data by itself (form of data mining) • i.e., credit-card fraud detection • Back-propagation neural network • A neural network that is trained by someone • i.e., voice recognition Chapter 4: Decision Support and AI

  41. Genetic Algorithms • An artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem • Systems that follow trial-and-error processes that optimize systems in such a way that they find the combination of inputs that give the best outputs Chapter 4: Decision Support and AI

  42. Applying Genetic Algorithms • They are used by business executives to help them decide which combination of projects a firm should invest in. • They are used by investment firms to help them in trading choices and associated decisions. • Used in the garment industry to help solve the problem of laying out pieces of the garment and cutting fabric to ensure as little waste as possible. • Used to determine the optimal configuration of fiber optic cable in a network that may include as many as 100,000 connection points Chapter 4: Decision Support and AI

  43. Concepts of Evolution in Genetic Algorithms • Selection • Survival of the fittest • Crossover • Combining portions of good outcomes in the hope of creating an even better outcome • Mutation • Randomly trying combinations and evaluating the success and/or failure of the outcome Chapter 4: Decision Support and AI

  44. Intelligent Agents • An artificial intelligence system that can move around your computer or network performing repetitive tasks independently, adapting itself to your preferences • An intelligent agent is like a travel agent in that it performs tasks that you stipulate Chapter 4: Decision Support and AI

  45. Types of Intelligent Agents • Four types of intelligent agents: • Buyer agents or shopping bots • User or personal agents • Monitoring-and-surveillance or predictive agents • Data-mining agents Chapter 4: Decision Support and AI

  46. In Summary (1/3) • Information Technology (IT) can help you be an effective decision maker by assisting you in decision-making tasks with: • Decision support systems (DSS) • Group decision support systems (GDSS) • Geographic information systems (GIS) Chapter 4: Decision Support and AI

  47. In Summary (2/3) • Information Technology (IT) can help you be an effective decision maker by performing tasks for you with AI using: • Expert systems • Neural networks • Genetic algorithms • Intelligent agents Chapter 4: Decision Support and AI

  48. In Summary (3/3) • To benefit from the decision support capabilities of Information Technology (IT) you must know: • The nature of the problem • What questions you want to ask • What type of decision support tools can help • How to apply the decision support tools to the problem • How to interpret the results Chapter 4: Decision Support and AI