1. Management Information Systems by Prof. Park Kyung-Hye Chapter 10 (11th Week) Decision Support and Expert Systems 10

2. Objectives Decision Support and Expert Systems List and explain the phases in decision making Articulate the difference between structured and unstructured decision making Describe the typical software components that decision support systems and expert systems comprise Give examples of how decision support systems and expert systems are used in various domains Describe the typical elements and uses of geographic information systems 2

3. Decision Support 3 Success of an organization largely depends on the quality of decisions made by employees There are large amounts of information Computer-based systems can help when: Decision Support and Expert Systems There is a lot of processing involved Decision support systems (DSSs) Two types of decision support aids: Expert systems (ESs) Provide single optimal solution or set of solutions Applications today may combine both types

4. Decision Support (continued) 4 Decision support modules today may be part of larger enterprise applications Decision Support and Expert Systems Are also called business analysis tools or business intelligence applications Are designed to streamline the decision-making process Data warehouses and online processing (OLAP) technologies have enhanced the ability to use data for decision making

5. The Decision-Making Process 5 A decision must be made whenever more than one possible action is available Decision Support and Expert Systems It can be difficult to make decisions when many reasonable alternatives are present In business, there may be dozens, hundreds, or even millions of different courses of actions available to achieve a desired result Decision making is a three-phase process: collect facts, beliefs, and ideas design the method for considering the collected data, to reduce the alternatives to a manageable number select an alternative from the remaining choices

6. The Decision-Making Process (continued) 6 Decision Support and Expert Systems

7. The Decision-Making Process (continued) 7 Businesses collect data internally within the organization and externally from outside sources Decision Support and Expert Systems Model: a representation of reality, such as: Map: represents a geographical area Tabletop representation of a building Mathematical equations representing relationships among variables Managers either choose universal models or design their own models

8. Structured and Unstructured Problems 8 Structured problem: one in which an optimal solution can be reached through a single set of steps Decision Support and Expert Systems Algorithm: a sequence of steps to complete a task Parameters: categories of data that are considered in an algorithm Most mathematical and physical problems are structured, but many business problems are not Unstructured problem: one for which there is no algorithm that leads to an optimal solution May not be enough information May be a large number of potential factors

9. Structured and Unstructured Problems (continued) 9 Unstructuredness is closely related to uncertainty Decision Support and Expert Systems Examples of unstructured problems include: Weather prediction Stock market prediction Semistructured problem: one that is neither fully structured nor totally unstructured Professionals encounter semistructured problems almost daily in many different industries The goal is to choose the one alternative that will bring about the best outcome

10. Structured and Unstructured Problems (continued) 10 Decision Support and Expert Systems

11. Structured and Unstructured Problems (continued) 11 Decision Support and Expert Systems

12. Decision Support Systems 12 Decision support system (DSS): a computer-based information system designed to help knowledge workers select one of many alternative solutions to a problem Decision Support and Expert Systems Advantages of DSSs include: Help increase market share Help reduce costs Help increase profitability Help enhance product quality

13. Decision Support Systems (continued) 13 Decision Support and Expert Systems Most DSSs consist of three components: Data management module Model management module Dialog module These components help users: Enter a request in a convenient manner Search vast amounts of data Process the data through desired models View the results in a desired format

14. Decision Support Systems (continued) 14 Decision Support and Expert Systems

15. The Data & Model Management Module 15 Decision Support and Expert Systems Data management module Accesses the data a database or data warehouse that provides data for the intelligence phase Many DSSs are intertwined with other organizational systems, including data warehouses, data marts, and ERP systems Provides a means to select data by specified criteria Model management module turns data into useful information May offer a fixed model, a dynamically modified model, or a collection of models Dynamically modified model: one that is automatically adjusted based on changing relationships among variables

16. The Data & Model Management Module(continued) 16 Decision Support and Expert Systems Model management module (continued) A sequence of events or a pattern of behavior can become a useful model Models are often based on mathematical research Patterns or models may be unique to a certain industry, such as: ATM placement Truck route planning Airline ticket pricing Car rental pricing A linear regression model is a general statistical model that is often used Gives a best-fit linear relationship between two variables

17. The Data & Model Management Module(continued) 17 Decision Support and Expert Systems Model management module (continued)

18. The Data & Model Management Module(continued) 18 Decision Support and Expert Systems Model management module (continued)

19. The Data & Model Management Module(continued) 19 Decision Support and Expert Systems Model management module (continued) A linear relationship can be translated into a program in a DSS The actual data points rarely lie directly on the regression line, illustrating the uncertainty Regression models are not necessarily always straight lines; they may be curves Models often describe relationships between more than two variables Some DSSs simulate physical environments

20. The Dialog Module 20 Decision Support and Expert Systems part of a DSS that allows user interaction with the program Prompts the user to select a model and data to process Allows the user to change parameters and view the results of the changes (“what if” analysis) Displays the results of the analysis in textual, tabular, or graphical format Many DSSs are available through the Internet

21. Sensitivity Analysis Decision Support and Expert Systems 21 An outcome is often affected by more than one parameter, but changes to parameter values usually affect outcomes differently It is important to determine which parameters have the most effect on the outcome Sensitivity analysis: tests the degree to which the outcome goal grows with each factor Indicates the relative sensitivity of the outcome to changes in a parameter If a small change in a parameter causes a significant change to the outcome, the sensitivity of the outcome to the parameter is high

22. Sensitivity Analysis (continued) Decision Support and Expert Systems 22 If the outcome is affected very little by a large change in a parameter, the sensitivity of the outcome to the parameter is low Sensitivity analysis is also called what if analysis Can perform sensitivity analysis on multiple parameters simultaneously

23. Decision Support Systems in Action Decision Support and Expert Systems 23 DSSs can be used on demand or integrated into a scheme that enforces corporate policy DSSs help maintain standard criteria in decision making throughout the organization Automated decision production is becoming very popular The only labor required is for data entry

24. Decision Support Systems in Action (cont.) Decision Support and Expert Systems 24

25. Decision Support Systems in Action (cont.) Decision Support and Expert Systems 25 DSSs are used in many industries: to forecast the number of patrons, the amount of ingredients to purchase, etc. Food production and retailing allows farmers to make decisions about how to control s pecific pests, and for picking farm locations Agriculture tax helper applications such as TurboTax and TaxCut Tax planning

26. Decision Support Systems in Action (cont.) Decision Support and Expert Systems 26 DSSs are used in many industries(continued): to analyze shopper behavior, and to design Web sites based on page usage Web site planning and adjustment to maximize revenue from airline trips or lodging Yield management to determine loan amounts, and to qualify customers based on credit history Financial services to allow employees to make decisions about their benefits Benefits selection

27. Decision Support Systems in Action (cont.) Decision Support and Expert Systems 27

28. Decision Support Systems in Action (continued) Decision Support and Expert Systems 28

29. Expert Systems Decision Support and Expert Systems 29 Expert system (ES): emulates the knowledge of a human expert Solves problems Makes decisions in a relatively narrow domain Domain: a specific area of knowledge Purpose is to replicate the unstructured and undocumented knowledge of experts, and make that expertise available to novices Neural network: a program that emulates how the human brain works

30. Expert Systems (continued) Decision Support and Expert Systems 30

31. Expert Systems (continued) Decision Support and Expert Systems 31 ESs are part of artificial intelligence (AI) research A collection of facts and the relationships among them Built as a series of IF-THEN rules AI focuses on methods and technologies that emulate how humans learn and solve problems Knowledge base: used by an ES Uses an inference engine Inference engine: software that combines data input by the user with the data relationships

32. Expert Systems (continued) Decision Support and Expert Systems 32

33. Expert Systems (continued) Decision Support and Expert Systems 33 Neural networks: used by more sophisticated ESs to mimic the way a human brain learns Constructed with a set of rules, but then it refines itself based on its decision success rate Very effective for detecting fraud Intelligent agent: software that is dormant until it detects a certain event, and then performs a prescribed action There are also case-based ESs Especially useful in medical decision making

34. Expert Systems in Action Decision Support and Expert Systems 34 ESs have been implemented in many industries: Medical diagnosis Help doctors with the diagnosis of symptoms and treatment advice Can help enhance the accuracy of Alzheimer’s disease diagnosis Medical management Help discern which treatments patient should receive Help with administrative decisions Telephone network maintenance Used to help diagnose and fix network failures

35. Expert Systems in Action (continued) Decision Support and Expert Systems 35 ESs have been implemented in many industries(cont.):

36. Expert Systems in Action (continued) Decision Support and Expert Systems 36 ESs have been implemented in many industries(cont.): Credit evaluation Used to approve credit card charges Used to analyze financial reports submitted with credit applications Detection of insider securities trading Help prevent trading of stocks based on private information by analyzing the stock’s history Local loan officers may periodically update the knowledge base to customize it for current loan policy

37. Expert Systems in Action (continued) Decision Support and Expert Systems 37 ESs have been implemented in many industries(cont.): Detection of common metals Help nonexperts identify common metals and alloys outside laboratories Irrigation and pest management Provide recommendations on irrigation, application of fungicides, and likelihood of pest conditions Based on results of simple chemical tests and other information available at the scene Can significantly improve crop yields

38. Expert Systems in Action (continued) Decision Support and Expert Systems 38 ESs have been implemented in many industries(cont.): Diagnosis and prediction of mechanical failure Diagnose cause of component failure Can provide a set of instructions for fixing the problem Help companies know when to replace components before a failure occurs

39. Expert Systems in Action (continued) Decision Support and Expert Systems 39

40. Group Decision Support Systems Decision Support and Expert Systems 40 Group decision support system (GDSS) Also called a group intelligence system, collaborative system, or simply a group system Facilitates the contribution of ideas, brainstorming, and choosing promising solutions Typically allows participants to define a problem, contribute ideas, then vote on the decision GDSSs help structure the decision-making process while allowing participants to remain anonymous

41. Group Decision Support Systems (cont.) Decision Support and Expert Systems 41

42. Geographic Information Systems Decision Support and Expert Systems 42 Geographic information system (GIS): a decision aid for map-related decisions Processes location data to aid in decision making GISs are used to help: Find shortest paths for deliveries or school bus routes City planning for police coverage and health care resources Find oil drilling locations Locate suitable outdoor recreation sites Businesses determine locations for service kiosks

43. Geographic Information Systems (cont.) Decision Support and Expert Systems 43

44. Geographic Information Systems (cont.) Decision Support and Expert Systems 44 A typical GIS consists of three components: A database of quantitative and qualitative data A database of maps A program that displays information on maps Web technology helps promote the use of GISs: Examples: Google Earth, MapQuest, Yahoo Maps HTML and XML support the presentation of marked maps Used to aid sales and government work

45. Geographic Information Systems (cont.) Decision Support and Expert Systems 45

46. Summary 46 Decision aids include decision support systems, expert systems, group decision support systems, and geographic information systems Three major phases of decision-making process: intelligence, design, and choice Two types of problems: unstructured and structured Most DSSs have three components: data management module, model management module, and dialog module Sensitivity analysis measures how parameters affect results, and allow “what if” analysis Spreadsheets allow users to create DSSs without expertise Expert systems are designed to emulate the knowledge of an expert, using artificial intelligence techniques Decision Support and Expert Systems

47. Summary (continued) 47 Neural network software may be integrated into an expert system to emulate learning Expert systems are used in narrow domains where decisions are unstructured Geographic information systems are used when decisions involve locations and routes Computerized decision aids may overlook important circumstances, leading to inaccuracies or unfairness to individuals Decision Support and Expert Systems