1. McGraw-Hill/Irwin ©2005 The McGraw-Hill Companies, All rights reserved ©2005 The McGraw-Hill Companies, All rights reserved McGraw-Hill/Irwin

2. McGraw-Hill/Irwin ©2005 The McGraw-Hill Companies, All rights reserved CHAPTER 4 DECISION SUPPORT AND ARTIFICIAL INTELLIGENCE Brainpower for Your Business DECISION SUPPORT AND ARTIFICIAL INTELLIGENCE Brainpower for Your Business

3. 4-3 OPENING CASE STUDY A DSS to Keep Auto Workers’ Health up and Costs down Providing the best health care at the lowest cost is a complex type of problem In 2002, GM spent $4.5 billion on workers’ health care Auto workers’ health care is the best in the world

4. 4-4 OPENING CASE STUDY GM uses a decision support system to find the best care at the best cost for its workers The company combines heath care information and worker productivity reports to analyze the workers’ needs Decision support can help business with all sorts of decisions

5. 4-5 STUDENT LEARNING OUTCOMES 1.Define decision support system, list its components, and identify the type of application it’s suited to 2.Define geographic information systems and state how they differ from other decision support systems

6. 4-6 STUDENT LEARNING OUTCOMES 3.Define artificial intelligence and list the different types that are used in businesses 4.Define expert systems and describe the types of problems to which they are applicable

7. 4-7 STUDENT LEARNING OUTCOMES 5.Define neural networks, their uses, and a major strength and weakness of these AI systems 6.Define genetic algorithms and list the concepts on which they are based and the types of problems they solve

8. 4-8 STUDENT LEARNING OUTCOMES 7.Define artificial agents and list the different types that are used in businesses

9. 4-9 INTRODUCTION Computer-aided decision support

10. 4-10 DECISIONS, DECISIONS, DECISIONS Phases of decision making –Intelligence – find or recognize a problem, need, or opportunity –Design – consider possible ways of solving the problem –Choice – weigh the merits of each solution –Implementation – carry out the solution

11. 4-11 Four Phases of Decision Making

12. 4-12 Types of Decisions You Face Structured decision – processing a certain information in a specified way so that you will always get the right answer Nonstructured decision – one for which there may be several “right” answers, without a sure way to get the right answer

13. 4-13 What Job Do I Take?

14. 4-14 Types of Decisions You Face Recurring decision – one that happens repeatedly Nonrecurring (ad hoc) decision – one you make infrequently

15. 4-15 DECISION SUPPORT SYSTEMS Decision support system (DSS) – a highly flexible and interactive system that is designed to support decision making when the problem is not structured Decision support systems help you analyze, but you must know how to solve the problem, and how to use the results of the analysis

16. 4-16 Alliance between You and a DSS

17. 4-17 Components of a DSS Model management component – consists of both the DSS models and the model management system Data management component – stores and maintains the information that you want your DSS to use User interface management component – allows you to communicate with the DSS

18. 4-18 Components of a DSS

19. 4-19 GEOGRAPHIC INFORMATION SYSTEMS Geographic information system (GIS) – DSS designed specifically to analyze spatial information Spatial information is any information in map form Businesses use GIS software to analyze information, generate business intelligence, and make decisions

20. 4-20 San Diego in GIS Software

21. 4-21 ARTIFICIAL INTELLIGENCE Artificial intelligence (AI) – the science of making machines imitate human thinking and behavior Robot – a mechanical device equipped with simulated human senses and the ability to take action on its own

22. 4-22 ARTIFICIAL INTELLIGENCE Types of AI systems used in business –Expert systems –Neural networks –Genetic algorithms –Intelligent agents AI systems deliver the conclusion (rather than helping you analyze the options)

23. 4-23 EXPERT SYSTEMS Expert (knowledge-based) system – an artificial intelligence system that applies reasoning capabilities to reach a conclusion Used for –Diagnostic problems (what’s wrong?) –Prescriptive problems (what to do?)

24. 4-24 Traffic Light Expert System

25. 4-25 Components of an Expert System 1.Information Types –Domain expertise – how to solve the problem –“Why?” information – explains the questions –Problem facts – the current situation 2.People –Domain expert – the expert in that field –Knowledge engineer – the computer expert –Knowledge worker – the user

26. 4-26 Components of an Expert System 3.IT Components Knowledge acquisition – used to enter rules Explanation module – where explanations are kept User interface – the part the user uses Inference engine – applies the logic Knowledge base – where rules are kept

27. 4-27 Developing and Using an Expert System

28. 4-28 What Expert Systems Can and Can’t Do An expert system can –Reduce errors –Improve customer service –Reduce cost An expert system can’t –Use common sense –Automate all processes

29. 4-29 NEURAL NETWORKS Neural network (artificial neural network or ANN) – an artificial intelligence system that is capable of finding and differentiating patterns

30. 4-30 The Layers of a Neural Network

31. 4-31 Neural Networks Can… Learn and adjust to new circumstances on their own Take part in massive parallel processing Function without complete information Cope with huge volumes of information Analyze nonlinear relationships

32. 4-32 GENETIC ALGORITHMS Genetic algorithm – an artificial intelligence system that mimics the evolutionary, survival- of-the-fittest process to generate increasingly better solutions to a problem

33. 4-33 Evolutionary Principles of Genetic Algorithms 1.Selection – or survival of the fittest or giving preference to better outcomes 2.Crossover – combining portion of good outcomes to create even better outcomes 3.Mutation – randomly trying combinations and evaluating the success of each

34. 4-34 Genetic Algorithms Can… Take thousands or even millions of possible solutions and combining and recombining them until it finds the optimal solution

35. 4-35 INTELLIGENT AGENTS Intelligent agent – software that assists you, or acts on your behalf, in performing repetitive computer-related tasks –Buyer agents or shopping bots –User or personal agents –Monitoring-and surveillance agents –Data-mining agents

36. 4-36 Buyer Agents Buyer agent or shopping bot – an intelligent agent on a Web sites that helps you, the customer, find products and services you want

37. 4-37 User Agents User agent or personal agent – intelligent agent that takes action on your behalf Examples: –Prioritize e-mail –Act as gaming partner –Assemble customized news reports –Fill out forms for you –“Discuss” topics with you

38. 4-38 Monitoring-and-Surveillance Agents Monitoring-and-surveillance (predictive) agents – intelligent agents that observe and report on equipment.

39. 4-39 Data-Mining Agents Data-mining agent – operates in a data warehouse discovering information

40. 4-40 CAN YOU… 1.Define decision support system, list its components, and identify the type of application it’s suited to 2.Define geographic information systems and state how they differ from other decision support systems

41. 4-41 CAN YOU … 3.Define artificial intelligence and list the different types that are used in businesses 4.Define expert systems and describe the types of problems to which they are applicable

42. 4-42 CAN YOU… 5.Define neural networks, their uses, and a major strength and weakness of these AI systems 6.Define genetic algorithms and list the concepts on which they are based and the types of problems they solve

43. 4-43 CAN YOU… 7.Define artificial agents and list the different types that are used in businesses

44. McGraw-Hill/Irwin ©2005 The McGraw-Hill Companies, All rights reserved CHAPTER 4 End of Chapter 4