1. Chapter 4 DECISION SUPPORT AND ARTIFICIAL INTELLIGENCE
Brainpower for Your Business

2. Types of Systems Transaction Processing Systems(TPS)
Systems used to process and collect data on day to day transactions (core business activity)
Transaction - An exchange or trade, as of ideas, money, goods, etc
Management Information Systems (MIS)
Use data from TPS to help with day to day management and short term strategies.
Executive Information Systems (EIS)
Uses data from the MIS (and other sources) to assist in strategic decision-making

3. 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
Recurring decision – happens repeatedly
Nonrecurring (ad hoc) decision – one you make infrequently

4. Types of Decisions You Face
EASIEST
MOST DIFFICULT

5. Business Decisions
Business decisions often relate to solving specific problems. These types of decisions consist of four phases.
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

6. Four Phases of Problem Solving

7. 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

8. You and a DSS

9. Components of a DSS Model Data management User interface management
Consists of both the DSS models and the model management system
A model is representation of something (e.g. we all operate on some model of how the world “works”)
Data management
Stores and maintains the information that you want your DSS to use
User interface management
Allows you to communicate with the DSS

10. Components of a DSS

11. Types of Decision Support Systems
Try to identify the base model that each of the following system is based upon

12. 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

13. Zillow GIS Software for Denver

14. ARTIFICIAL INTELLIGENCE
DSSs and GISs support decision making; you are still completely in charge
Artificial intelligence, the science of making machines imitate human thinking and behavior, can replace human decision making in some instances
Expert systems
Neural networks (and fuzzy logic)
Genetic algorithms
Intelligent agents (or agent-based technologies)

15. EXPERT SYSTEMS (AI)
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?)

16. Traffic Light Expert System

17. 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

18. NEURAL NETWORKS AND FUZZY LOGIC (AI)
Neural network (artificial neural network or ANN) – an artificial intelligence system that is capable of finding and differentiating patterns

19. 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

20. Fuzzy Logic
Fuzzy logic – a mathematical method of handling imprecise or subjective information
Used to make ambiguous information such as “short” usable in computer systems
Applications
Google’s search engine
Washing machines
Antilock breaks

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

22. Evolutionary Principles of Genetic Algorithms
Selection – or survival of the fittest or giving preference to better outcomes
Crossover – combining portions of good outcomes to create even better outcomes
Mutation – randomly trying combinations and evaluating the success of each

23. Genetic Algorithms Can…
Take thousands or even millions of possible solutions and combine and recombine them until it finds the optimal solution
Work in environments where no model of how to find the right solution exists

24. INTELLIGENT AGENTS (AI)
Intelligent agent – software that assists you, or acts on your behalf, in performing repetitive computer-related tasks
Types
Information agents
intelligent agents that search for information of some kind and bring it back
Monitoring-and-surveillance or predictive agents
intelligent agents that constantly observe and report on something of interest, such as a network or manufacturing equipment
Data-mining agents
operates in a data warehouse discovering information
User or personal agents
takes action on your behalf such as prioritizing , acting as gaming partner, assembling customized news reports, and filling out forms for you

25. Other types of AI based Models
Biomimicry – learning from ecosystems and adapting their characteristics to human and organizational situations
Used to
Learn how people-based systems behave
Predict how they will behave under certain circumstances
Improve human systems to make them more efficient and effective

26. Agent-Based Modeling
Agent-based modeling – a way of simulating human organizations using multiple intelligent agents, each of which follows a set of simple rules and can adapt to changing conditions
Multi-agent system – groups of intelligent agents have the ability to work independently and to interact with each other

27. Swarm Intelligence
Swarm (collective) intelligence – the collective behavior of groups of simple agents that are capable of devising solutions to problems as they arise, eventually leading to coherent global patterns
Distinguishing characteristics are:
Flexibility – adaptable to change
Robustness – tasks are completed even if some individuals are removed
Decentralization – each individual has a simple job to do