1. Intelligent Information Systems and Problem Solving WAES2105 Course Introduction Lecturer: Md Nor Ridzuan Daud

2. 2 Artificial Intelligence Behavior by a machine that, if performed by a human being, would be considered intelligent. “…study of how to make computers do things at which, at the moment, people are better” (Rich and Knight,1991) Theory of how the human mind works (Mark Fox) Decision Support Systems and Intelligent Systems, Efraim Turban and Jay E. Aronson 6th ed, Copyright 2001, Prentice Hall, Upper Saddle River, NJ

3. 3 AI Objectives Make machines smarter (primary goal) Understand what intelligence is (Nobel Laureate purpose) Make machines more useful (entrepreneurial purpose) (Winston and Prendergast, 1984) Decision Support Systems and Intelligent Systems, Efraim Turban and Jay E. Aronson 6th ed, Copyright 2001, Prentice Hall, Upper Saddle River, NJ

4. 4 Signs of Intelligence Learn or understand from experience Make sense out of ambiguous or contradictory messages Respond quickly and successfully to new situations Use reasoning to solve problems Decision Support Systems and Intelligent Systems, Efraim Turban and Jay E. Aronson 6th ed, Copyright 2001, Prentice Hall, Upper Saddle River, NJ

5. 5 More Signs of Intelligence Understand and infer in ordinary, rational ways Apply knowledge to manipulate the environment Think and reason Recognize the relative importance of different elements in a situation Decision Support Systems and Intelligent Systems, Efraim Turban and Jay E. Aronson 6th ed, Copyright 2001, Prentice Hall, Upper Saddle River, NJ

6. What is data? Data is representation of facts, concepts, or instructions in a formalized manner suitable for communication, interpretation, or processing by humans or by automatic means. Data inside an organization could be: originated from internal operations (e.g. transaction receipt) originated from external entities such as suppliers or customers (e.g. purchase order)

7. What is an information? Information is data that has been processed into a form that is meaningful to the recipient and is of real perceived value in current or prospective decisions (Davis & Olson, 1985).

8. What is information technology? All forms of technology applied to processing, storing, and transmitting information in electronic form. Physical equipments – fax, computers, PDAs, scanners etc. Information systems – organized procedures that process and/or communicate information. Information system processed data to turn into an information. Human will interpret the information to suit their needs. The style of presentation is important to drive the right interpretation.

9. From information to knowledge Knowledge is a strategic resource for many organizations. Knowledge = information plus know-how (Kogut and Zender, 1992) Knowledge is more than an information that one understand the best way to use the information in solving a particular problem, deals with a product or service or make contribution using his/her knowledge to an organization. Knowledge is built over the years. Anderson Consulting has 45,000 employees and most of them use their knowledge to earn income. Types of knowledge:  Tacit (understood indirectly) – riding bicycle  Explicit (clear and exact) – formal education

10. Organizationa l setting Cognitive style of decision maker Personal and situational factors Decisio n problem Information Interpretation and Use 1. Decision problem – the nature of the problem. Which problem dominates the others ? Which problem has higher urgency than the others? e.g. Bank decision for merging with stock brokerage firm compare to lease additional office space. How do people interpret information?

11. 2. Organization setting – culture of the organization in approaching problems. Over the years, employees will be influenced the way they think/decide by the corporate culture. 3. Personal & situational factors – people interpret information or make decision based on their position and portfolios. Finance executive look at financial problems or sales executive look at sales problems. 4. Cognitive style – two types of decision makers which are analytical and heuristics. Analytical will look at qualitative information and heuristic will look at concepts and intuitive.

12. Deductive – use a generic model to decide on specific problem. The generic model is used repetitively over time. Inductive – make a general observation on several situations and determine a generic model to represent. The generic model is used repetitively over time. Model of interpreting the information generic modelproblem decision observation/discovergeneric model

13. Types of decisions Strategic Planning  develops objectives and long term planning  requires substantial investment and effort Managerial Control  concern the use of resources in organization to achieve overall target. For example, an accountant tries to determine the reason for a difference between actual and budgeted costs. Operational control  decision covers day-to-day problems. What item should be produced today?

14. Examples of operation, tactics and strategy in different sectors SectorOperationsTacticsStrategy Production Machine settings Worker schedule Maintenance schedule Rearrange work area Schedule new products Change inventory method New factory New products New industry Accounting Categorize assets Assign expenses Produce reports Inventory evaluation Depreciation method Finance short/long term New GL system Debt vs equity International taxes Marketing Reward salesperson Survey customers Monitor promotions Determine pricing Promotional campaigns Select marketing media Monitor competitors New products New markets

15. Operation, Tactics and Strategy Operation day to day well spell-out generate data or work on data more structured Tactics leader position like manager short-term planning i.e. less than a year diagnostic situations narrow outlook Strategy long term broader aspects of decision affect the company’s direction

16. Examples of decisions that need support Market planning and research : Pricing decision for each customer. The decision is based on shipping patterns recognized by statistical tools used to analyze data collected daily. This can provide competitive advantage because discounts can be offered to valuable customers, yet large profits can be realized. Operation and strategic planning: Decision whether computer hub satellite network needs to be expanded after monitoring, analyzing and reporting on subtle market trends. Sales support: Support for top management by generating daily sales summaries and details by region, division, salesperson and product. The reports identify lost business, rescued business and new business and they can be generated on demand beside the periodic report. The special report are customized and comparisons and trends can be provided to managers.