Chapter 10 Decision Support Systems James A. O'Brien, and George Marakas. Management Information Systems with MlSource 2007, 8" ed. Boston, MA: McGraw-Hill, Inc., 2007. ISBN: 13 9780073323091i Decision Support in Business = Companies are investing in data-driven decision support application frameworks to help them respond to Changing market conditions Customer needs = This is accomplished by several types of Management information Decision support Other information systems Chapter 10 Decision Support Systems 2“a A Levels of Managerial Decision Making Decision Structure Information Characteristics Unstructured Ad Hoc Unscheduled Summarized Infrequent Forward Looking External Wide Scope Semistructured Prespecitied Scheduled Detailed Frequent Historical Internal Narrow Focus Structured pF Chapter 10 Decision Support Systems 3EE 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= Information products made more valuable by their attributes, characteristics, or qualities Information that is outdated, inaccurate, or hard to understand has much less value = Information has three dimensions Time Content Form Chapter 10 Decision Support Systems— A Attributes of Information QualityEL 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 Chapter 10 Decision Support Systems= Decision Support Systems Provide information about the performance of the organization Periodic, exception, demand, and push reports and responses Prespecified, fixed format Information produced by extraction and manipulation of business data Chapter 10 Decision Support Systems Provide information and techniques to analyze specific problems Interactive inquiries and responses ‘Ad hoc, flexible, and adaptable format Information produced by analytical modeling of business dataTT Decision Support Trends = The emerging class of applications focuses on Personalized decision support Modeling Information retrieval Data warehousing What-if scenarios Reporting Chapter 10 Decision Support Systems 8am Business Intelligence Applications Chapter 10 Decision Support Systems 9a 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 Chapter 10 Decision Support Systems 10a o DSS Components ee Data Marts and Other Databases Chapter 10 Decision Support SystemsEL 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 Chapter 10 Decision Support SystemsTE 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 Chapter 10 Decision Support Systems Ba 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 Chapter 10 Decision Support Systems 4=I a 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 Chapter 10 Decision Support Systems 16a 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 Chapter 10 Decision Support Systems 16i 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 Chapter 10 Decision Support Systems wI Es Geographic Information Systems ™ 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 Chapter 10 Decision Support Systemsa Data Visualization Systems = Represents complex data using interactive, three-dimensional graphical forms (charts, graphs, maps) = Helps users interactively sort, subdivide, combine, and organize data while it is in its graphical form Chapter 10 Decision Support Systemsa 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 = 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 Chapter 10 Decision Support Systems 20a 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 Chapter 10 Decision Support Systems 21an CO EE “Analysis of Customer Demographics Chapter 10 Decision Support Systems 2a 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 Chapter 10 Decision Support Systems 23.a Executive Information Systems = Combines many features of MIS and DSS = Provide top executives with immediate and easy access to information = Identify factors that are critical to accomplishing strategic objectives (critical success factors) = So popular that it has been expanded to managers, analysis, and other knowledge workers Chapter 10 Decision Support SystemsEL Features of an EIS = Information presented in forms tailored to the preferences of the executives using the system Customizable graphical user interfaces Exception reports Trend analysis Drill down capability Chapter 10 Decision Support Systems 25T_T Enterprise Information Portals = An EIP is a Web-based interface and integration of MIS, DSS, EIS, and other technologies Available to all intranet users and select extranet users Provides access to a variety of internal and external business applications and services Typically tailored or personalized to the user or groups of users Often has a digital dashboard Also called enterprise knowledge portals Chapter 10 Decision Support Systems 26- a Dashboard npc ee sc innilaiaiani (eles eases » ae! Chapter 10 Leaision Support Systems “arrs Enterprise = 2 — ata Information a Pes [ Universalintoriace Components eos = Portal —————E————— a Components a Dynamic Profing Operational Anaiyc Datla Business Invane's——Intamat Databases Databases Warehouse Applications Extranets Web Chapter 10 Decision Support Systems 28CC EE Enterprise Knowledge Portal Portal sorver with knowiedge management Y engineerver component + Automaticalycravis (searches) stuctured orunstructured data sources Community work areas * Categorizes searched data, tags, and hyperlinks information + Automaticaly builds user profiles based on activity Data Sources ERP ‘CRM, ‘Other Database} [Database) [pat Chapter 10 Decision Support Systems 29: a Case 2 Automated Decision Making = Automated decision making has been slow to materialize Early applications were just solutions looking for problems, contributing little to improved organizational performance = A new generation of Al applications Easier to create and manage Decision making triggered without human intervention Can translate decisions into action quickly, accurately, and efficiently Chapter 10 Decision Support Systems 30: a Case 2 Automated Decision Making ® Alis best suited for Decisions that must be made quickly and frequently, using electronic data Highly structured decision criteria High-quality data = Common users of Al Transportation industry Hotels Investment firms and lenders Chapter 10 Decision Support Systems aI Es Case Study Questions = Why did some previous attempts to use artificial intelligence technologies fail? What key differences of the new Al-based applications versus the old cause the authors to declare that automated decision making is coming of age? = What types of decisions are best suited for automated decision making? = What role do humans plan in automated decision-making applications? What are some of the challenges faced by managers where automated decision-making systems are being used? What solutions are needed to meet such challenges? Chapter 10 Decision Support Systems 32a Artificial Intelligence (Al) ® Alisa 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 Chapter 10 Decision Support Systems 33,a 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 Respond quickly and successfully to new situations Recognize the relative importance of elements in a situation Handle ambiguous, incomplete, or erroneous information Chapter 10 Decision Support Systems 4CC EE Domains of Artificial Intelligence ® Expert Systems ™ Learning Systems @ Fuzzy Logic = Genetic Algorithms ™ Neural Networks = Intelligent Agents Chapter 10 Decision Support Systems ® Visual Perception = Tactility = Dexterity = Locomotion = Navigation ™ Natural Languages = Speech Recognition ™ Multisensory Interfaces ™ Virtual Reality 35.a Cognitive Science = Applications in the cognitive science of Al 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 Chapter 10 Decision Support Systems 36Ee Robotics = Al, 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 Chapter 10 Decision Support Systems 7ee Natural Interfaces = Major thrusts in the area of Al and the development of natural interfaces Natural languages Speech recognition Virtual reality = Involves research and development in Linguistics Psychology Computer science Other disciplines Chapter 10 Decision Support Systemsa Latest Commercial Applications of Al ™ 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 Chapter 10 Decision Support SystemsT_T Latest Commercial Applications of Al = 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 Chapter 10 Decision Support Systemsa 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 Chapter 10 Decision Support Systems aa Components of an Expert System ™ Knowledge Base Facts about a specific subject area Heuristics that express the reasoning procedures of an expert (rules of thumb) = Software Resources An inference engine processes the knowledge and recommends a course of action User interface programs communicate with the end user Explanation programs explain the reasoning process to the end user Chapter 10 Decision Support Systems 42” Components of an Expert System ‘el The Expert System Expert System Softwar |} at a a statin Expert System Development Chapter 10 Decision Support SystemsOe Methods of Knowledge Representation ™ Case-Based Knowledge organized in the form of cases Cases are examples of past performance, occurrences, and experiences = Frame-Based Knowledge organized in a hierarchy or network of frames A frame is a collection of knowledge about an entity, consisting of a complex package of data values describing its attributes Chapter 10 Decision Support Systems 44Oe Methods of Knowledge Representation = Object-Based Knowledge represented as a network of objects An object is a data element that includes both data and the methods or processes that act on those data = Rule-Based Knowledge represented in the form of rules and statements of fact Rules are statements that typically take the form of a premise and a conclusion (If, Then) Chapter 10 Decision Support Systems 45i Expert System Application Categories = Decision Management Loan portfolio analysis Employee performance evaluation Insurance underwriting = Diagnostic/Troubleshooting Equipment calibration Help desk operations Medical diagnosis Software debugging Chapter 10 Decision Support SystemsA Es Expert System Application Categories = Design/Configuration Computer option installation Manufacturability studies Communications networks = Selection/Classification Material selection Delinquent account identification Information classification Suspect identification = Process Monitoring/Control Chapter 10 Decision Support SystemsTT Expert System Application Categories = Process Monitoring/Control Machine control (including robotics) Inventory control Production monitoring Chemical testing Chapter 10 Decision Support Systemsi 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 Chapter 10 Decision Support Systemsa 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 Chapter 10 Decision Support Systems 60a 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 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 Chapter 10 Decision Support Systems 51TT Development Tool = Expert System Shell The easiest way to develop an expert system A software package consisting of an expert system without its knowledge base Has an inference engine and user interface programs Chapter 10 Decision Support Systems 92a Knowledge Engineering = A knowledge engineer Works with experts to capture the knowledge (facts and rules of thumb) they possess Builds the knowledge base, and if necessary, the rest of the expert system Performs a role similar to that of systems analysts in conventional information systems development Chapter 10 Decision Support Systems 53,ee 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 Chapter 10 Decision Support Systems 54a 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 Chapter 10 Decision Support Systems 95.Example of Fuzzy Logic Rules and Query Fuzzy Logic Rules Fuzzy Logic SQL Query Risk should be acceptable | Select companies if debt-equity is very high from financials then risk is positively increased Where revenues are very large It income is increasing and pe_ratio is acceptable then risk is somewhat decreased and profits are high to very high I cash reserves are low to very low ‘and (income/employee tot) is reasonable then risk is very increased IPE ratio good then riskis generally decreased 56 Chapter 10 Decision Support Systemsa Genetic Algorithms = Genetic algorithm software Uses Darwinian, randomizing, and other mathematical functions Simulates an evolutionary process, yielding increasingly better solutions to a problem Being uses to model a variety of scientific, technical, and business processes Especially useful for situations in which thousands of solutions are possible Chapter 10 Decision Support Systems 97a 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 Chapter 10 Decision Support Systemsa Typical VR Applications ™ Current applications of virtual reality Computer-aided design Medical diagnostics and treatment Scientific experimentation Flight simulation Product demonstrations Employee training Entertainment Chapter 10 Decision Support Systems 99a 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 Chapter 10 Decision Support Systems 60a User Interface Agents Interface Tutors — observe user computer operations, correct user mistakes, provide hints/advice on efficient software use Presentation Agents — show information in a variety of forms/media based on user preferences Network Navigation Agents — discover paths to information, provide ways to view it based on user preferences Role-Playing — play what-if games and other roles to help users understand information and make better decisions Chapter 10 Decision Support Systems 6a Information Management Agents Search Agents — help users find files and databases, search for information, and suggest and find new types of information products, media, resources Information Brokers — provide commercial services to discover and develop information resources that fit business or personal needs Information Filters — Receive, find, filter, discard, save, forward, and notify users about products received or desired, including e-mail, voice mail, and other information media Chapter 10 Decision Support Systems 62I Case 3 Centralized Business Intelligence = A reinventing-the-wheel approach to business intelligence implementations can result in High development costs High support costs Incompatible business intelligence systems = Amore strategic approach Standardize on fewer business intelligence tools Make them available throughout the organization, even before projects are lanned Chapter 10 Decision Support Systems 63ee Case 3 Centralized Business Intelligence = About 10 percent of the 2,000 largest companies have a business intelligence competency center Centralized or virtual Part of the IT department or independent = Cost reduction is often the driving force behind creating competency centers and consolidating business intelligence systems Despite the potential savings, funding for creating and running a BI center can be an issue Chapter 10 Decision Support Systems 64a Case Study Questions = What is business intelligence? Why are business intelligence systems such a popular business application of IT? = What is the business value of the various BI applications discussed in the case? = Is the business intelligence system an MIS or a DSS? Chapter 10 Decision Support Systems 65a Case 4 Robots, the Common Denominator = In early 2004, 22 patients underwent complex laparoscopic operations The operations included colon cancer procedures and hernia repairs The primary surgeon was 250 miles away A three-armed robot was used to perform the procedures "Left arm, right arm, camera arm Chapter 10 Decision Support Systems 66a Case 4 Robots, the Common Denominator = Automakers heavily use robotics Ford has a completely wireless assembly factory It also have a completely automated body shop BMW has two wireless plants in Europe and is setting one up in the U.S. Vehicle tracking and material replenishment are automated as well Chapter 10 Decision Support Systems ora Case Study Questions = What is the current and future business value of robotics? = Would you be comfortable with a robot performing surgery on you? = The robotics being used by Ford Motor Co. are contributing to a streamlining of its supply chain What other applications of robots can you envision to improve supply chain management beyond those described in the case? Chapter 10 Decision Support Systems 68