1. II Information Systems Technology Ross Malaga 8 "Part II Using Information Systems“ Copyright © 2005 Prentice Hall, Inc. 8-1 Using Information Systems for Decision Making

2. Copyright © 2005 Prentice Hall, Inc. 8-2 LEARNING GOALS Discuss the problems associated with management decision making. Explain the decision-making process. Describe decision support systems. Explain how group decision support systems work. Describe executive information systems. Discuss artificial intelligence technologies and their applications.

3. Copyright © 2005 Prentice Hall, Inc. 8-3 Expansion is on the horizon. –Three new studios –Five new franchises –Many difficult decisions Meredith – Needs help making strategic decisions Suzanne – Where to locate the new studios? Leda – How to evaluate potential franchisees? Mitch – Scheduling and routing sales appointments Julia – Purchase or lease new buildings? Miriam – Where should we focus our marketing resources? Rachel – How do I maintain the right inventory at the right price? Jim – Needs help with hiring decisions Using Information Systems for Decision Making

4. Copyright © 2005 Prentice Hall, Inc. 8-4 Decision Making Today Business decisions are increasingly difficult to make –Dramatic increase in the internal business data available to managers –Managers must keep current on vast amounts of data resources on the Internet –Globalization –The speed of commerce –The increased number of business choices available –Group decision making Teams may include members from many companies Members may have different backgrounds and opinions Difficult to reach consensus

5. Copyright © 2005 Prentice Hall, Inc. 8-5 Roadblocks to Good Decision Making Human cognition –Our mental ability to comprehend and understand something Human perception –Difficulty isolating problems –Tend to think of only narrow range of possible solution Human bias –Tendency to shape responses based on stereotypes, memory, and current position

6. Copyright © 2005 Prentice Hall, Inc. 8-6 How to Overcome the Roadblocks Decision support systems (DSS) are one tool –A computer-based system that supports and improves human decision making –Helps analyze complex problems –Process vast amounts of analytical data Group decision support systems (GDSS) –Tool for supporting team decision making Executive information system (EIS) –Computer-based system that supports the decision-making processes of senior managers

7. Copyright © 2005 Prentice Hall, Inc. 8-7 The Decision-Making Process Simon’s model of the decision-making process –Intelligence –Design –Choice

8. Copyright © 2005 Prentice Hall, Inc. 8-8 Intelligence Phase Scan the environment for a problem. Determine if decision-maker can solve the problem. –Within scope of influence Fully define the problem by gathering more information about the problem.

9. Copyright © 2005 Prentice Hall, Inc. 8-9 Design Phase Develop a model of the problem. –Determine type of model. –Verify model. Develop and analyze potential solutions.

10. Copyright © 2005 Prentice Hall, Inc. 8-10 Choice Phase Select the solution to implement. –More detailed analysis of selected solutions might be needed. –Verify initial conditions. –Analyze proposed solution against real-world constraints.

11. Copyright © 2005 Prentice Hall, Inc. 8-11 Problem Structure Structured problems –We know the proper procedures Unstructured problems –We do not know the how to approach any of the 3 phases Semi-structured problems

12. Copyright © 2005 Prentice Hall, Inc. 8-12 Decision Support Systems Major components –Data management system Internal and external data sources –Model management system Typically mathematical in nature –User interface How the people interact with the DSS Data visualization is the key –Graphs –Charts –Geographic information systems (GIS)

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14. Copyright © 2005 Prentice Hall, Inc. 8-14 Modeling Tools and Techniques Simulation –Computerized model of the problem –Used to examine proposed solutions and their impact Sensitivity analysis –Determine how changes in one part of the model influence other parts of the model What-if analysis –Manipulate variables to see what would happen in given scenarios Goal-seeking analysis –Work backward from desired outcome

15. Copyright © 2005 Prentice Hall, Inc. 8-15 Groups Decision Support Systems Having multiple participants in the decision process adds potential problems –Production blocking –Evaluation apprehension –Social loafing –Group think GDSS tools contain special tools to overcome these problems

16. Copyright © 2005 Prentice Hall, Inc. 8-16 GDSS Tools Brainstorming tools Commenter tools Categorizing tools Idea-ranking tools Electronic-voting tools Group facilitator

17. Copyright © 2005 Prentice Hall, Inc. 8-17 Executive Information Systems Computer-based tool that specifically helps top-level management make strategic decisions –Processes both internal and external data –Presents data in summary form –Drill-down is a key feature – gives the manager the ability to see more details when needed

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19. Copyright © 2005 Prentice Hall, Inc. 8-19 Artificial Intelligence (AI) Field of study that explores the development of computer systems that behave like humans –Strong AI – create a computer that can think like a human –Weak AI – develop computers and programs that employ thinkinglike features

20. Copyright © 2005 Prentice Hall, Inc. 8-20

21. Copyright © 2005 Prentice Hall, Inc. 8-21 Expert Systems AI systems that codify human expertise in a computer system –Main goal is to transfer knowledge from one person to another –Wide range of subject areas Medical diagnosis Computer purchasing Whale watching –Knowledge engineer elicits the expertise from the expert and encodes it in the expert system

22. Copyright © 2005 Prentice Hall, Inc. 8-22 Expert Systems Components Knowledge base Inference engine User interface Explanation system

23. Copyright © 2005 Prentice Hall, Inc. 8-23 Other Artificial Intelligence Technologies Neural networks – use software to simulate the neural working of the human brain Intelligent agents (bots) – autonomously handle tasks for humans and act on user’s behalf Genetic algorithms – Computer instructions that create a population of thousands on potential solutions and evolves the population toward better solutions Fuzzy logic – a way to get computers to come closer to the ability to see fine distinctions, not just ones and zeros

24. Copyright © 2005 Prentice Hall, Inc. 8-24 A Neural Network

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26. Copyright © 2005 Prentice Hall, Inc. 8-26 Bead Bar Consultant How Decision-Making Technologies Affect the Bead Bar. –Meredith – EIS looks to provide needed support and a reality check on previous decisions –Suzanne – GIS help to determine new studio locations –Leda – Develop a DSS to evaluate franchise applicants –Mitch – Use genetic algorithms to solve the sales appointment problem –Julia – Use Excel to perform What-if and goal-seeking analyses –Miriam – Use expert system to determine the best marketing media –Rachel – Intelligent agents to search for best pricing –Jim – Expert system to assist employees in selecting best combination of benefits options

27. Copyright © 2005 Prentice Hall, Inc. 8-27 Learning Goals Summary In this chapter you have learned: The problems associated with management decision making The decision-making process How to describe decision support systems How group decision support systems work How to describe executive information systems About artificial intelligence technologies and their applications