1. McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

2. McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. Decision Support Systems Chapter 10

3. 10-3 Levels of Managerial Decision Making

4. 10-4 Information Quality Information products made more valuable by their attributes, characteristics, or qualities Information that is outdated, inaccurate, or hard to understand has much less value Information has three dimensions Time Content Form

5. 10-5 Attributes of Information Quality

6. 10-6 Decision Structure Structured (operational) The procedures to follow when decision is needed can be specified in advance Unstructured (strategic) It is not possible to specify in advance most of the decision procedures to follow Semi-structured (tactical) Decision procedures can be pre-specified, but not enough to lead to the correct decision

7. 10-7 Decision Support Systems Decision support systems use the following to support the making of semi-structured business decisions Analytical models Specialized databases A decision-maker’s own insights and judgments An interactive, computer-based modeling process DSS systems are designed to be ad hoc, quick-response systems that are initiated and controlled by decision makers

8. 10-8 DSS Model Base Model Base A software component that consists of models used in computational and analytical routines that mathematically express relations among variables Spreadsheet Examples Linear programming Multiple regression forecasting Capital budgeting present value

9. 10-9 Applications of Statistics and Modeling Supply Chain: simulate and optimize supply chain flows, reduce inventory, reduce stock-outs Pricing: identify the price that maximizes yield or profit Product and Service Quality: detect quality problems early in order to minimize them Research and Development: improve quality, efficacy, and safety of products and services

10. 10-10 Management Information Systems The original type of information system that supported managerial decision making Produces information products that support many day-to-day decision-making needs Produces reports, display, and responses Satisfies needs of operational and tactical decision makers who face structured decisions

11. 10-11 Management Reporting Alternatives Periodic Scheduled Reports Prespecified format on a regular basis Exception Reports Reports about exceptional conditions May be produced regularly or when an exception occurs Demand Reports and Responses Information is available on demand Push Reporting Information is pushed to a networked computer

12. 10-12 Online Analytical Processing OLAP Enables managers and analysts to examine and manipulate large amounts of detailed and consolidated data from many perspectives Done interactively, in real time, with rapid response to queries

13. 10-13 Online Analytical Operations Consolidation Aggregation of data Example: data about sales offices rolled up to the district level Drill-Down Display underlying detail data Example: sales figures by individual product Slicing and Dicing Viewing database from different viewpoints Often performed along a time axis

14. 10-14 Geographic Information Systems GIS DSS uses geographic databases to construct and display maps and other graphic displays Supports decisions affecting the geographic distribution of people and other resources Often used with Global Positioning Systems (GPS) devices

15. 10-15 Using Decision Support Systems Using a decision support system involves an interactive analytical modeling process Decision makers are not demanding pre-specified information They are exploring possible alternatives What-If Analysis Observing how changes to selected variables affect other variables

16. 10-16 Using Decision Support Systems Sensitivity Analysis Observing how repeated changes to a single variable affect other variables Goal-seeking Analysis Making repeated changes to selected variables until a chosen variable reaches a target value Optimization Analysis Finding an optimum value for selected variables, given certain constraints

17. 10-17 Data Mining Provides decision support through knowledge discovery Analyzes vast stores of historical business data Looks for patterns, trends, and correlations Goal is to improve business performance Types of analysis Regression Decision tree Neural network Cluster detection Market basket analysis

18. 10-18 Market Basket Analysis One of the most common uses for data mining Determines what products customers purchase together with other products Results affect how companies Market products Place merchandise in the store Lay out catalogs and order forms Determine what new products to offer Customize solicitation phone calls

19. 10-19 Artificial Intelligence (AI) AI is a field of science and technology based on Computer science Biology Psychology Linguistics Mathematics Engineering The goal is to develop computers than can simulate the ability to think And see, hear, walk, talk, and feel as well

20. 10-20 Attributes of Intelligent Behavior Some of the attributes of intelligent behavior Think and reason Use reason to solve problems Learn or understand from experience Acquire and apply knowledge Exhibit creativity and imagination Deal with complex or perplexing situations

21. 10-21 Attributes of Intelligent Behavior Attributes of intelligent behavior (continued) Respond quickly and successfully to new situations Recognize the relative importance of elements in a situation Handle ambiguous, incomplete, or erroneous information

22. 10-22 Domains of Artificial Intelligence

23. 10-23 Cognitive Science Applications in the cognitive science of AI Expert systems Knowledge-based systems Adaptive learning systems Fuzzy logic systems Neural networks Genetic algorithm software Intelligent agents Focuses on how the human brain works and how humans think and learn

24. 10-24 Robotics AI, engineering, and physiology are the basic disciplines of robotics Produces robot machines with computer intelligence and humanlike physical capabilities This area include applications designed to give robots the powers of Sight or visual perception Touch Dexterity Locomotion Navigation

25. 10-25 Natural Interfaces Major thrusts in the area of AI and the development of natural interfaces Natural languages Speech recognition Virtual reality Involves research and development in Linguistics Psychology Computer science Other disciplines

26. 10-26 Latest Commercial Applications of AI Decision Support Helps capture the why as well as the what of engineered design and decision making Information Retrieval Distills tidal waves of information into simple presentations Natural language technology Database mining

27. 10-27 Latest Commercial Applications of AI Virtual Reality X-ray-like vision enabled by enhanced-reality visualization helps surgeons Automated animation and haptic interfaces allow users to interact with virtual objects Robotics Machine-vision inspections systems Cutting-edge robotics systems From micro robots and hands and legs, to cognitive and trainable modular vision systems

28. 10-28 Expert Systems An Expert System (ES) A knowledge-based information system Contain knowledge about a specific, complex application area Acts as an expert consultant to end users

29. 10-29 Benefits of Expert Systems Captures the expertise of an expert or group of experts in a computer-based information system Faster and more consistent than an expert Can contain knowledge of multiple experts Does not get tired or distracted Cannot be overworked or stressed Helps preserve and reproduce the knowledge of human experts

30. 10-30 Limitations of Expert Systems The major limitations of expert systems Limited focus Inability to learn Maintenance problems Development cost Can only solve specific types of problems in a limited domain of knowledge

31. 10-31 Developing Expert Systems Suitability Criteria for Expert Systems Domain: the domain or subject area of the problem is small and well-defined Expertise: a body of knowledge, techniques, and intuition is needed that only a few people possess Complexity: solving the problem is a complex task that requires logical inference processing

32. 10-32 Developing Expert Systems Suitability Criteria for Expert Systems Structure: the solution process must be able to cope with ill-structured, uncertain, missing, and conflicting data and a changing problem situation Availability: an expert exists who is articulate, cooperative, and supported by the management and end users involved in the development process

33. 10-33 Neural Networks Computing systems modeled after the brain’s mesh-like network of interconnected processing elements (neurons) Interconnected processors operate in parallel and interact with each other Allows the network to learn from the data it processes

34. 10-34 Fuzzy Logic Fuzzy logic Resembles human reasoning Allows for approximate values and inferences and incomplete or ambiguous data Uses terms such as “very high” instead of precise measures Used more often in Japan than in the U.S. Used in fuzzy process controllers used in subway trains, elevators, and cars

35. 10-35 Example of Fuzzy Logic Rules and Query

36. 10-36 Virtual Reality (VR) Virtual reality is a computer-simulated reality Fast-growing area of artificial intelligence Originated from efforts to build natural, realistic, multi-sensory human-computer interfaces Relies on multi-sensory input/output devices Creates a three-dimensional world through sight, sound, and touch Also called telepresence

37. 10-37 Typical VR Applications Current applications of virtual reality Computer-aided design Medical diagnostics and treatment Scientific experimentation Flight simulation Product demonstrations Employee training Entertainment

38. 10-38 Intelligent Agents A software surrogate for an end user or a process that fulfills a stated need or activity Uses built-in and learned knowledge base to make decisions and accomplish tasks in a way that fulfills the intentions of a user Also call software robots or bots