CHAPTER 4 DECISION SUPPORT AND ARTIFICIAL INTELLIGENCE Brainpower for Your Business

AN NFL TEAM NEEDS MORE THAN ATHLETIC ABILITY The Patriots football team is a very successful one The Patriots football team is a very successful one The team uses a decision support system to analyze the opposition’s game The team uses a decision support system to analyze the opposition’s game The software breaks down the game day video into plays and player actions The software breaks down the game day video into plays and player actions With this information the Patriots can better formulate their strategy With this information the Patriots can better formulate their strategy

INTRODUCTION Computer-aided decision support Computer-aided decision support

DECISIONS, DECISIONS, DECISIONS Phases of decision making Phases of decision making Intelligence Intelligence Design Design Choice Choice Implementation Implementation

Four Phases of Decision Making

Types of Decisions Structured decision Structured decision Semi-Structured decision Semi-Structured decision Nonstructured decision Nonstructured decision

What Job Do I Take?

Types of Decisions You Face Recurring decision Recurring decision Nonrecurring (ad hoc) decision Nonrecurring (ad hoc) decision

DECISION SUPPORT SYSTEMS Decision support system (DSS) Decision support system (DSS) Help you analyze, but you must know how to solve the problem, and how to use the results of the analysis Help you analyze, but you must know how to solve the problem, and how to use the results of the analysis

Alliance between You and a DSS

Components of a DSS Model management component Model management component Data management component Data management component User interface management component User interface management component

Components of a DSS

GEOGRAPHIC INFORMATION SYSTEMS Geographic information system (GIS) Geographic information system (GIS) Spatial information is any information in map form Spatial information is any information in map form Used to analyze information, generate business intelligence, and make decisions Used to analyze information, generate business intelligence, and make decisions

Zillow GIS Software for Denver

ARTIFICIAL INTELLIGENCE Artificial intelligence (AI) Artificial intelligence (AI) Types of AI systems used in business Types of AI systems used in business 1. Expert systems 2. Neural networks 3. Genetic algorithms 4. Intelligent agents AI systems deliver the conclusion (rather than helping you analyze the options) AI systems deliver the conclusion (rather than helping you analyze the options)

EXPERT SYSTEMS Expert (knowledge-based) system Expert (knowledge-based) system Used for Used for Diagnostic problems (what’s wrong?) Diagnostic problems (what’s wrong?) Prescriptive problems (what to do?) Prescriptive problems (what to do?)

Traffic Light Expert System

Components of an Expert System 1. Information Types Domain expertise Domain expertise “Why?” information “Why?” information Problem facts Problem facts 2. People Domain expert Domain expert Knowledge engineer Knowledge engineer Knowledge worker Knowledge worker

Components of an Expert System 3. IT Components Knowledge acquisition Knowledge acquisition Explanation module Explanation module User interface User interface Inference engine Inference engine Knowledge base Knowledge base

Developing and Using an Expert System

What Expert Systems Can and Can’t Do An expert system can An expert system can Reduce errors Reduce errors Improve customer service Improve customer service Reduce cost Reduce cost An expert system can’t An expert system can’t Use common sense Use common sense Automate all processes Automate all processes

NEURAL NETWORKS Neural network (artificial neural network or ANN) Neural network (artificial neural network or ANN)

The Layers of a Neural Network

Neural Networks Can… Learn and adjust to new circumstances on their own Learn and adjust to new circumstances on their own Take part in massive parallel processing Take part in massive parallel processing Function without complete information Function without complete information Cope with huge volumes of information Cope with huge volumes of information Analyze nonlinear relationships Analyze nonlinear relationships

Fuzzy Logic Fuzzy logic – a mathematical method of handling imprecise or subjective information Fuzzy logic – a mathematical method of handling imprecise or subjective information Used to make ambiguous information such as “short” usable in computer systems Used to make ambiguous information such as “short” usable in computer systems Applications Applications Google’s search engine Google’s search engine Washing machines Washing machines Antilock breaks Antilock breaks

GENETIC ALGORITHMS Genetic algorithm Genetic algorithm Takes thousands or even millions of possible solutions, combining and recombining them until it finds the optimal solution Takes thousands or even millions of possible solutions, combining and recombining them until it finds the optimal solution Work in environments where no model of how to find the right solution exists Work in environments where no model of how to find the right solution exists

INTELLIGENT AGENTS Intelligent agent Intelligent agent Information agents Information agents Monitoring-and-surveillance or predictive agents Monitoring-and-surveillance or predictive agents Data-mining agents Data-mining agents User or personal agents User or personal agents

4-28 Management Information Systems for the Information Age Copyright 2004 The McGraw-Hill Companies, Inc. All rights reserved In Class Team Activity A music owner wants to keep enough hot CDs in stock, so as not to lose sales and disappoint customers. CDs that are not sold for some time, go on the sale table, and are sold at below cost, if they sell at all. She wants to design a DSS to try and predict how many copies of each future CD she should order, and for how long she should keep them on a rack, before putting them on sale. As Strategic Consultants to her, our team needs to list some of the considerations that would go into such a system. What kind of DSS should she use? Hint: Some examples: how often does her customers base change, previous sales of particular types of music with her customer base