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Chapter 4 Decision Support and Artificial Intelligence Brainpower for Your Business

Chapter 4 Decision Support and Artificial Intelligence Brainpower for Your Business. Chapter Map. Introduction. People make decisions all the time. In a business environment, managers regularly make complex decisions. IT?.

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Chapter 4 Decision Support and Artificial Intelligence Brainpower for Your Business

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  1. Chapter 4 Decision Support and Artificial Intelligence Brainpower for Your Business Management Information Systems for the Information AgeSecond Canadian Edition

  2. Chapter Map Management Information Systems for the Information AgeSecond Canadian Edition

  3. Introduction • People make decisions all the time. • In a business environment, managers regularly make complex decisions. IT? Whether you are running a hospital or a small retail business, information technology can help you make decision (while you are in the decision making process). Management Information Systems for the Information AgeSecond Canadian Edition

  4. Introduction Management Review  Future successes will be for those organizations that are “Big on brain and small of mass”. IT? Increase organizations knowledge and capability of using this knowledge via intelligent tools such as decision support systems and artificial intelligence software. Management Information Systems for the Information AgeSecond Canadian Edition

  5. Introduction The categories of computer-aided decision support. Decision Support Decision Support Systems Collaboration Systems Geographic Information Systems Artificial Intelligence Expert Systems Neural Networks Genetics Algorithms Intelligent Agents Management Information Systems for the Information AgeSecond Canadian Edition

  6. Decisions, Decisions, Decisions Management Information Systems for the Information AgeSecond Canadian Edition

  7. Decisions, Decisions, Decisions • People make decisions all the time. • Which job offer to take? • Which market to expand into? • Decisions include a number of criteria. • Some decisions include a small number of criteria • Other decision include a large number of criteria some of which are practically impossible to quantify. • When making decisions, one usually has alternatives. It is difficult to select the “best” alternative. Management Information Systems for the Information AgeSecond Canadian Edition

  8. Decisions, Decisions, Decisions Decision making is one of the most significant and important activities in business. This is why organizations spend tremendous amount of time and money to the decision making process. Management Information Systems for the Information AgeSecond Canadian Edition

  9. Decisions, Decisions, DecisionsHow You Make a Decision Figure 4.2Four phases of decision makingpage 135 Management Information Systems for the Information AgeSecond Canadian Edition

  10. Decisions, Decisions, DecisionsHow You Make A Decision Step 1: Intelligence Find or recognize aproblem, need, or opportunity. • This is the diagnostic phase of the decision making • Involves the detection and interpretation of signs • Consistent customer request for new feature or product • Threat of new competition • Declining sales • Rising costs • Offer from a company to handle your distribution needs Management Information Systems for the Information AgeSecond Canadian Edition

  11. Decisions, Decisions, DecisionsHow You Make A Decision Step 2: Design Consider ways to solve the problem, fill the need, or take advantage of an opportunity. This is the phase where you would study all possible solutions and develop those that are most interesting and feasible. Management Information Systems for the Information AgeSecond Canadian Edition

  12. Decisions, Decisions, DecisionsHow You Make A Decision Step 3: Choice Examine and weigh the merits of each solution, estimate the consequences of each, and choose the best one. • This is the prescriptive phase of the decision making. • In this stage a course of action is prescribed and this course of action could simply be to do nothing. • Selection of best solution requires selection criteria such as: • Cost • Ease of implementation • Staffing requirements • Timing Management Information Systems for the Information AgeSecond Canadian Edition

  13. Decisions, Decisions, DecisionsHow You Make A Decision Step 4: Implementation Carry out the chosen solution, monitor the results, and make adjustments as necessary. The implementation of final solution is seldom enough and will practically always need fine-tuning. Management Information Systems for the Information AgeSecond Canadian Edition

  14. Decisions, Decisions, DecisionsTypes of Decisions You Face Figure 4.3Viewing Structured Versus Nonstructured Decision Making as a Continuumpage 136 Management Information Systems for the Information AgeSecond Canadian Edition

  15. Decisions, Decisions, DecisionsTypes of Decisions You Face • If you want to decide which cheese to by then the criteria would be based on: • Expiry date • Price • If you have to decide which job offer is better to accept, then the criteria for your decision would be based on: • Salary • Intrinsic motivation • Location • Company • Position • Benefits • Many other criteria Management Information Systems for the Information AgeSecond Canadian Edition

  16. Decisions, Decisions, DecisionsTypes of Decisions You Face • In the cheese case, the criteria are pretty straight forward, hence the decision making is rather STRUCTURED. • In the case of the job offer, the criteria are many and most are not straight forward and are difficult to quantify, hence UN-STRUCTURED. Management Information Systems for the Information AgeSecond Canadian Edition

  17. Decisions, Decisions, DecisionsTypes of Decisions You Face Structured decision Processes information in a specified way so that you will always get the right answer. • Does not involve any “feel” into the process • Does not require intuition • These types of decision can be easily programmed • Fixed set of input • Same processing • Produce correct result Management Information Systems for the Information AgeSecond Canadian Edition

  18. Decisions, Decisions, DecisionsTypes of Decisions You Face Non-structured decision One for which there may be several “right” answers and there is no precise way to get a right answer. • No rules or criteria exist that guarantee you a good solution. • Examples • To introduce a new product line or not • To employ a new marketing campaign • To change the corporate image Management Information Systems for the Information AgeSecond Canadian Edition

  19. Decisions, Decisions, DecisionsTypes of Decisions You Face Recurring decision One that happens repeatedly, and often periodically. • Usually use the same set of rules each time. Management Information Systems for the Information AgeSecond Canadian Edition

  20. Decisions, Decisions, DecisionsTypes of Decisions You Face Nonrecurring decision One that you make infrequently. • Or ad-hoc decision • May have different criteria for determining the best solution each time • Example • Company merger Management Information Systems for the Information AgeSecond Canadian Edition

  21. Decision Support Systems Management Information Systems for the Information AgeSecond Canadian Edition

  22. Decision Support Systems Highly flexible and interactive IT system that is designed to support decision making when the problem is notstructured. Management Information Systems for the Information AgeSecond Canadian Edition

  23. Decision Support Systems • A DSS is an alliance between • you, • the decision maker and • specialized support provided by IT Management Information Systems for the Information AgeSecond Canadian Edition

  24. Decision Support Systems • A DSS brings • Speed • Vast amounts of information • Sophisticated processing capabilities To Help YOU Create information USEFUL to make a DECISION Management Information Systems for the Information AgeSecond Canadian Edition

  25. Decision Support Systems • You bring the know-how in the form of • Experience • Intuition • Judgment • Knowledge of relevant factors • You must know the right kind of questions to ask and how to process the information so you may get useful answers from the IT. Management Information Systems for the Information AgeSecond Canadian Edition

  26. Decision Support Systems Figure 4.4The Alliance Between You and a Decision Support Systempage 137 Management Information Systems for the Information AgeSecond Canadian Edition

  27. Decision Support Systems Components of a Decision Support System • A typical DSS has three components: • Model management • Data management • User interface management Management Information Systems for the Information AgeSecond Canadian Edition

  28. Decision Support Systems Components of a Decision Support System Figure 4.5Components of a Decision Support System page 138 Management Information Systems for the Information AgeSecond Canadian Edition

  29. Decision Support Systems Components of a Decision Support System How do the components work together? • You tell the DSS using the user interface management component which model to use • The model is found in the model management component which you had instructed to use on a set of information found in the data management component • So the model • Requests the information from the data management component • Analyzes that information • Sends the results to the user interface management component, hence back to you Management Information Systems for the Information AgeSecond Canadian Edition

  30. Decision Support Systems Components of a Decision Support System The Model management Consists of both the DSS models and the DSS model management system. • A model is a representation of some event, fact or situation to represent variables and their relationships • The model you use in DSS depend on the decision you are making and consequently the kind of analysis you require such as: • What-if analysis • Optimization Management Information Systems for the Information AgeSecond Canadian Edition

  31. Decision Support Systems Components of a Decision Support System Data management Performs the function of storing and maintaining the information that you want your DSS to use. • It consists of both the DSS information and the DSS database management system • The information you use in your DSS comes from one or more of the three sources: • Organizational information • External information • Personal information Management Information Systems for the Information AgeSecond Canadian Edition

  32. Decision Support Systems Components of a Decision Support System User interface management Allows you to communicate with the DSS. • Consists of the user interface and the user interface management system • Allows you to combine your know-how with the storage and processing capabilities of the computer • Through it you enter • Information • Commands • Models • Best user interface uses your terminology and methods and is: • Flexible • Consistent • Simple • adaptable Management Information Systems for the Information AgeSecond Canadian Edition

  33. Collaboration Systems Management Information Systems for the Information AgeSecond Canadian Edition

  34. Collaboration system A system that is designed specifically to improve the performance of teams by supporting the sharing and flow of information. Management Information Systems for the Information AgeSecond Canadian Edition

  35. Figure 4.6Collaboration Software Connects Peoplepage 141 Management Information Systems for the Information AgeSecond Canadian Edition

  36. Collaboration System Collaboration software takes many forms with • Many combinations of features • Varying degrees of complexity Management Information Systems for the Information AgeSecond Canadian Edition

  37. Collaboration System Three types of collaboration systems are discussed in the book: • Enterprise-wide collaboration • Supply chain collaboration • Web-based collaboration Management Information Systems for the Information AgeSecond Canadian Edition

  38. Collaboration System Enterprise-wide Collaboration • Lotus Notes and Microsoft Exchange are types of integrated collaboration systems. Management Information Systems for the Information AgeSecond Canadian Edition

  39. Collaboration System Supply-Chain Collaboration • Supply chain management means working with your suppliers and distributors in all phases of planning, production, and distribution. Management Information Systems for the Information AgeSecond Canadian Edition

  40. Collaboration System Web-Based Collaboration • Web-based collaboration tools use the power of the Internet to enable people to work together effectively and efficiently. • The peer-to-peer file-sharing feature is combined with the ability to create and edit documents collaboratively, and to send and receive text and voice messages. Management Information Systems for the Information AgeSecond Canadian Edition

  41. Geographic Information Systems Management Information Systems for the Information AgeSecond Canadian Edition

  42. Geographic Information Systems Geographic information system (GIS) A decision support system designed to work with spatial information. Management Information Systems for the Information AgeSecond Canadian Edition

  43. Geographic Information Systems Spatial information Is any information that can be shown in map form, such as roads, the distribution of bald eagle populations, and the layout of electrical lines. Management Information Systems for the Information AgeSecond Canadian Edition

  44. Geographic Information Systems Figure 4.7Geographic Information Systemspage 144 Management Information Systems for the Information AgeSecond Canadian Edition

  45. Geographic Information Systems • Today GISs are helping businesses: • Identify the best site to locate a branch office • Target pockets of potential customers • Reposition promotions and advertising • Determine the optimal location of a new distribution outlet Management Information Systems for the Information AgeSecond Canadian Edition

  46. Geographic Information Systems Business Geography A new type of information created when businesses combine textual information with spatial information Management Information Systems for the Information AgeSecond Canadian Edition

  47. Artificial Intelligence Management Information Systems for the Information AgeSecond Canadian Edition

  48. Decision Support Artificial Intelligence Decision Support System Expert Systems Collaboration Systems Neural Networks Geographic Information Systems Genetic Algorithms Intelligent Agents Artificial Intelligence + Mimic human behavior in various ways Are IT systems that augment business brain power. = Management Information Systems for the Information AgeSecond Canadian Edition

  49. Artificial Intelligence Artificial intelligence (AI) The science of making machines imitate human thinking and behavior. Management Information Systems for the Information AgeSecond Canadian Edition

  50. Artificial Intelligence Robot A mechanical device equipped with simulated human senses and the capability of taking action on its own. Management Information Systems for the Information AgeSecond Canadian Edition

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