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Maximizing Business Decisions: IT Brainpower Tools for Effective Decision Making

Explore how Information Technology (IT) complements human decision making by enhancing and supporting various decision-making processes, emphasizing the role of Decision Support Systems (DSS) and Artificial Intelligence (AI) in different business scenarios. Learn about structured and non-structured decisions, decision-making phases, and the capabilities of different IT tools in aiding strategic choices.

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Maximizing Business Decisions: IT Brainpower Tools for Effective Decision Making

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  1. CHAPTER 5 DECISION SUPPORT AND ARTIFICIAL INTELLIGENCE Brainpower for Your Business

  2. 5-2 Introduction The Survival of Your Business Depends on Effective Decision Making • IT can supplement human decision making • IT can (sometimes) replace human decision making

  3. Hennery Expert System

  4. 5-3 Introduction YOUR FOCUS IN THIS CHAPTER • Types of Decisions • The Decision-Making Process • IT Brainpower • How IT Brainpower Supports the Decision-Making Process

  5. 5-4 Types of Decisions TYPES OF DECISIONS YOU FACE • STRUCTURED DECISIONS - those with a set of steps that guarantee the correct solution. NONSTRUCTURED DECISIONS - those with no rules or criteria that guarantee a good solution. STRUCTURED DECISIONS NONSTRUCTURED DECISIONS Expand business to West of China Decide salary for a worker SOMEWHERE IN BETWEEN

  6. 5-5 Types of Decisions TYPES OF DECISIONS YOU FACE • RECURRING DECISIONS - those you make repeatedly, often periodically. • NONRECURRING DECISIONS - those you make infrequently, perhaps only once.

  7. 5-6 The Decision-Making Process PHASES OF THE DECISION-MAKING PROCESS 1. INTELLIGENCE -Find what to fix 2. DESIGN - Find fixes 3. CHOICE - Pick a fix 4. IMPLEMENTATION - Apply the fix See Figure 5.3

  8. 5-7 IT Brainpower TYPES OF IT BRAINPOWER • Decision Support Systems (DSS) • Group Decision Support Systems (GDSS) • Geographic Information Systems (GIS) • Artificial Intelligence Systems (AI) • Expert Systems • Neural Networks • Genetic Algorithms • Intelligent Agents

  9. 5-8 DSS A DECISION SUPPORT SYSTEM (DSS) is a highly flexible and interactive IT system that is designed to support decision making when the problem is not structured. A DSS assists you in making a decision, as opposed to making the decision for you. See Figure 5.4

  10. 5-9 DSS A DSS Can Help With Analysis Tasks Like • Deciding where to spend advertising dollars • Analyzing sales trend information • Analyzing drug interactions • Developing airline schedules • Pricing products

  11. 5-10 DSS A DSS Has Three Components • DATA MANAGEMENT - to allow you to store and access information. • MODEL MANAGEMENT - to allow you to store and access models. • USER INTERFACE MANAGEMENT - to allow you to easily manipulate information and models. See Figure 5.5

  12. 5-11 DSS STEPS IN DEVELOPING A DSS 1.INTELLIGENCE • Do you need a DSS? • What should it do? • What does it need? 2.DESIGN • What can you buy/build? 3.CHOICE • What will you buy/build? 4.IMPLEMENTATION • Build or install DSS • Learn, test, and evaluate the DSS Commercial Package DSS Generator:Excel,Quatro Pro Programming Language

  13. 5-12 GDSS A GROUP DECISION SUPPORT SYSTEM (GDSS) is a type of decision support system that facilitates the formulation of and solution to problems by a team. A GDSS helps a team to generate ideas, identify strengths and weaknesses, choose an alternative, and reach a consensus.

  14. 5-13 GDSS A GDSS Can Help With Team Tasks Like • Determining new product design • Evaluating the impact of new competition • Formulating a strategic plan

  15. 5-14 GDSS THE STEPS OF GROUP DECISION MAKING 1.Brainstorming - generate ideas 2.Issue Categorization and Analysis - classify ideas 3.Ranking and Voting - prioritize alternatives, reach consensus See Figure 5.9

  16. 5-15 GDSS PEOPLE IN A GDSS • Team: People united by a common goal • GDSS facilitator has two roles • Nontechnical: run the meeting • Technical: operate IT components

  17. 5-16 GDSS IT TOOLS IN A GDSS • Groupware - software than enables team work • DSS Capabilities - software that enables team decision making • Telecommunications - hardware and software that connect computers

  18. JoinNet Groupware Support Decision Making

  19. 5-17 GDSS MEETINGS WHEN AND WHERE YOU WANT TO BE • Same-Time (Synchronous) Meetings • In the same room • In the same city • On the same planet • Different-Time (Asynchronous) Meetings • In the same city • On the same planet

  20. 5-18 GDSS A GEOGRAPHIC INFORMATION SYSTEM (GIS) is a decision support system designed specifically to work with spatial information. A GIS represents information thematically in overlapping layers, each of which shows a different aspect of the total picture.

  21. 5-19 GDSS A GIS Can Help With Spatial Analysis Tasks Like • Identifying the best site to locate a branch office • Targeting pockets of potential customers • Repositioning promotions and advertising

  22. 5-20 AI ARTIFICIAL INTELLIGENCE (AI) is the science of making machines imitate human thinking and behavior. AI helps machines perform tasks that require complex and varying sets of steps such as retrieving debris from the ocean floor.

  23. AI SYSTEMS ARE USED IN • Finance analysis • hospital • government agencies • credit card companies • Robots are mechanical device equipped with simulated human senses and the capability of taking action on its own.

  24. 5-21 AI TYPES OF AI USED IN BUSINESS • EXPERT SYSTEMS • NEURAL NETWORKS • GENETIC ALGORITHMS • INTELLIGENT AGENTS 70% of the top 500 companies use AI as part of decision support.

  25. 5-22 Expert System AN EXPERT SYSTEM is an artificial intelligence system that applies reasoning capabilities to reach a conclusion. An expert system captures expertise from a human expert and applies it to a problem. Expert systems are excellent for diagnostic and prescriptive problems.

  26. 5-23 Expert System An Expert System Can Perform Diagnostic and Prescriptive Tasks Like • Auditing and tax planning • Diagnosing illnesses • Managing forest resources

  27. Hennery Expert System

  28. Hennery Expert System

  29. Hennery Expert System

  30. Paddyfield Expert System

  31. Paddyfield Management Expert System

  32. 5-24 Expert System COMPONENTS OF AN EXPERT SYSTEM • Information • People • IT Components How do these components fit together? See the traffic light example.

  33. 5-25 Expert System INFORMATION TYPES IN AN EXPERT SYSTEM • Domain Expertise - the set of steps that will solve the problem. • “Why”s Information - the information that explains the expert system‘s actions. • Problem Facts - specific information concerning the current problem.

  34. 5-26 Expert System PEOPLE IN AN EXPERT SYSTEM • Domain Expert - the person who knows how to solve the problem without the aid of IT. • Knowledge Engineer - the person who builds the expert system. • Knowledge Worker - the person who uses the expert system to solve a problem.

  35. 5-27 Expert System IT COMPONENTS IN AN EXPERT SYSTEM • KNOWLEDGE BASE - stores the domain expertise. • INFERENCE ENGINE - processes the domain expertise and your problem facts to reach a conclusion.

  36. RULES IN VP EXPERT RULE flu IF throat = sore AND temperature = high OR temperature = very_high THEN Diagnosis = flu BECAUSE "High temperature indicates a possible flu, and a sore throat would confirm it.";

  37. 5-28 Expert System IT COMPONENTS IN AN EXPERT SYSTEM • KNOWLEDGE ACQUISITION - used by the knowledge engineer to build the expert system. • USER INTERFACE- used to run a consultation. • EXPLANATION MODULE - stores the why information.

  38. 5-29 Expert System TO ACQUIRE AN EXPERT SYSTEM • Buy an off-the-shelf expert system • Use an expert system shell • Develop an expert system from scratch

  39. 5-30 Expert System WHAT EXPERT SYSTEMS CAN DO • Handle massive amounts of information • Reduce errors • Improve customer service • Provide consistency in decision making • Provide new information • Reduce costs

  40. 5-31 Expert System WHAT EXPERT SYSTEMS CAN’T DO • Handle all types of domain expertise • Solve problems other than those for which they are designed • Apply common sense or judgment to a problem

  41. 5-32 Neural Network A NEURAL NETWORK is an artificial intelligence system which is capable of learning because it‘s patterned after the human brain. A neural network simulates the human ability to classify things based on the experience of seeing many examples.

  42. 5-33 Neural Network A Neural Network Can Perform Pattern Recognition Tasks Like • Distinguishing different chemical compounds • Detecting anomalies in human tissue that may signify disease • Reading handwriting • Detecting fraud in credit card use NN works best on pattern-recognition problems for which a vast amount of historical information is available.

  43. 5-34 Genetic Algorithm A GENETIC ALGORITHM is an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest processes to generate increasingly better solutions to a problem. Genetic algorithms produce several generations of solutions, choosing the best of the current set for each new generation.

  44. 5-35 Genetic Algorithm A Genetic Algorithm Can Generate Lots of Solutions As In • Generating human faces based on a few known features. • Generating solutions to routing problems. • Generating stock portfolios.

  45. 5-36 Genetic Algorithm THE CONCEPTS OF EVOLUTION IN GENETIC ALGORITHMS • SELECTION - or survival of the fittest. The key is to give preference to better outcomes. • CROSSOVER - combining portions of good outcomes in the hope of creating an even better outcome. • MUTATION- randomly trying combinations and evaluating the success (or failure) of the outcome.

  46. 5-37 Intelligent Agent AN INTELLIGENT AGENT is an artificial intelligence system that can move around your computer or network performing repetitive tasks independently, adapting itself to your preferences. An intelligent agent is like a travel agent in that it performs tasks that you stipulate.

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