Lecture Management information systems (9/e) – Chapter 10: Supporting decision making

Supporting decision making. In this chapter students will be able to: Identify the changes taking place in the form and use of decision support in business, identify the role and reporting alternatives of management information systems, describe how online analytical processing can meet key information needs of managers,...

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1 Identify the changes taking place in the form

and use of decision support in business.

2 Identify the role and reporting alternatives of

management information systems.

3 Describe how online analytical processing can

meet key information needs of managers.

Learning Objectives

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Learning Objectives

4 Explain the decision support system concept

and how it differs from traditional management information systems.

5 Explain how the following information systems

can support the information needs of

executives, managers, and business

professionals:

• Executive information systems

• Enterprise information portals

• Knowledge management systems

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Learning Objectives

logic, genetic algorithms, virtual reality, and intelligent agents can be used in

business

systems can be used in business

decision-making situations

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Why Study Decision Support Systems?

e-business models, they are investing in new data-driven decision support

application frameworks that help them

respond rapidly to changing market

conditions and customer needs

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Case #1: Centralized Business Intelligence

Strategic Business Intelligence Approach:

• Standardize on fewer business-intelligence tools

and make them available throughout

organizations even before projects are planned

• Create dedicated groups called competency

centers to manage business-intelligence

projects and provide technical and analytical

expertise to other employees

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Competency Center Approaches:

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1 What is business intelligence? Why are

business-intelligence systems such a popular business application of IT?

2 What is the business value of the various BI

applications discussed in the case?

3 Is a business-intelligence system an MIS or a

DSS?

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Information, Decisions and Management

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Levels of Management Decision Making

• Strategic – group of executives develop overall organizational goals, strategies, policies, and

objectives as part of a strategic planning

process

• Tactical – managers and business professionals

in self-directed teams develop short- and

medium-range plans, schedules and budgets

and specify the policies, procedures and

business objectives for their subunits

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Information Quality

Definition:

characteristics, attributes, or qualities make the information more value

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Attributes of Information Quality

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• Unstructured – decision situations where it is

not possible to specify in advance most of the

decision procedures to follow

• Semi structured - decision procedures that can

be prespecified, but not enough to lead to a

definite recommended decision

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Decision Support Trends

focuses on personalized decision support, modeling, information retrieval, data

warehousing, what-if scenarios, and

reporting

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MIS vs DSS

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Business Intelligence

• Executive class

information delivery

and decision support

software tools used

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Decision Support Systems (DSS)

Definition:

• Computer-based information systems that

provide interactive information support to

managers and business professionals during

the decision-making process using the following

to make semi structured business decisions

• Analytical models

• Specialized databases

• A decision maker’s own insights and judgments

• An interactive, computer-based modeling process

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DSS Components

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Model Base

Definition:

models used in computational and

analytical routines that mathematically

express relationships among variables

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Decision Support System

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Management Information Systems (MIS)

Definition:

information products that support many of the day-to-day decision-making needs of managers and business professionals

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Management Reporting Alternatives

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Online Analytical Processing (OLAP)

Definition:

interactively examine and manipulate large amounts of detailed and

consolidated data from many perspectives

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Analytical Operations

• Consolidation – aggregation of data

• Drill-down – detail data that comprise

consolidated data

• Slice and Dice – ability to look at the

database from different viewpoints

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OLAP Technology

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Geographic Information Systems (GIS)

Definition:

construct and display maps and other

graphics displays that support decisions affecting the geographic distribution of

people and other resources

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Data Visualization Systems (DVS)

interactive three-dimensional graphical

forms such as charts, graphs, and maps

subdivide, combine, and organize data

while it is in its graphical form

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Using DSS

• What-if Analysis – end user makes

changes to variables, or relationships

among variables, and observes the

resulting changes in the values of other variables

• Sensitivity Analysis – value of only one

variable is changed repeatedly and the

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Using DSS

• Goal-Seeking – set a target value for a

variable and then repeatedly change

other variables until the target value is

until the best values for the target

variables are discovered

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Data Mining for Decision Support

• Data mining software analyzes the vast stores

of historical business data that have been

prepared for analysis in corporate data

warehouses, and tries to discover patterns,

trends, and correlations hidden in the data that can help a company improve its business

performance.

• Data mining software may perform regression,

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Market Basket Analysis (MBA)

Definition:

products customers purchase together

with other products

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Executive Information Systems (EIS)

Definition:

executives, managers, analysts, and

other knowledge workers with immediate and easy access to information about a

firm’s key factors that are critical to

accomplishing an organization’s strategic objectives

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Features of an EIS

the preferences of the executives using

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Enterprise Portals and Decision Support

Definition:

MIS, DSS, EIS, and other technologies

that gives all intranet users and selected extranet users access to a variety of

internal and external business

applications and services

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Enterprise Information Portal Components

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Knowledge Management Systems

Definition:

gather, organize, and share business

knowledge within an organization

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Enterprise Knowledge Portals

Definition:

• Entry to corporate intranets that serve as their

knowledge management systems

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Case #2: Business Value of AI

Artificial Intelligence Uses:

when preventative maintenance is needed

pharmaceutical research

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AI Benefits:

a deluge of data to uncover patterns and relationships that would elude an army of researchers

customer behaviors

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Challenges in AI Systems:

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technologies in business today? Use several examples from the case to

illustrate your answer

limitations of data mining for business intelligence? Use BankFinancial’s

experience to illustrate your answer

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institutions been leading users of AI

technologies like neural networks?

What are the benefits and limitations of this technology?

system technologies used in many

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data-10 - 43

Artificial Intelligence (AI)

Definition:

on disciplines such as computer science, biology, psychology, linguistics,

mathematics, and engineering

simulate the ability to think, as well as

see, hear, walk, talk, and feel

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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

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Domains of Artificial Intelligence

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Cognitive Science

Definition:

brain works and how humans think and

learn

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Robotics

Definition:

intelligence and computer controlled, humanlike physical capabilities

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Natural Interfaces

Definition:

recognition, and the development of

multisensory devices that use a variety of body movements to operate computers

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Expert Systems

Definition:

that uses its knowledge about a specific, complex application to act as an expert

consultant to end users

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Expert System Components

• Knowledge Base – facts about specific

subject area and heuristics that express the reasoning procedures of an expert

• Software Resources – inference engine and other programs refining knowledge

and communicating with users

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Methods of Knowledge Representation

• Case-Based – examples of past performance,

occurrences and experiences

• Frame-Based – hierarchy or network of entities consisting of a complex package of data values

• Object-Based – data and the methods or

processes that act on those data

• Rule-Based – rules and statements that typically take the form of a premise and a conclusion

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Expert System Benefits

• Faster and more consistent than an expert

• Can have the knowledge of several experts

• Does not get tired or distracted by overwork or

stress

• Helps preserve and reproduce the knowledge of

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Suitability Criteria for Expert Systems

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Knowledge Engineer

Definition:

capture the knowledge they posses

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Neural Networks

Definition:

brain’s mesh-like network of

interconnected processing elements,

called neurons

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Fuzzy Logic

Definition:

human reasoning since it allows for

approximate values and inferences and

incomplete or ambiguous data instead of relying only on crisp data

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Genetic Algorithms

Definition:

randomizing, and other mathematical

functions to simulate an evolutionary

process that can yield increasingly better solutions to a problem

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Virtual Reality (VR)

Definition:

multisensory input/output devices such as

a tracking headset with video goggles and stereo earphones, a data glove or

jumpsuit with fiber-optic sensors that track your body movements, and a walker that monitors the movement of your feet

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Intelligent Agents

Definition:

process that fulfills a stated need or

activity by using built-in and learned

knowledge base to make decisions and

accomplish tasks in a way that fulfills the intentions of a user

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User Interface Agents

• Interface Tutors – observe user computer

operations, correct user mistakes, and provide hints and advice on efficient software use

• Presentation – show information in a variety of forms and media based on user preferences

• Network Navigation – discover paths to

information

• Role-Playing – play what-if games and other

roles to help users understand information and make better decisions

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Information Management Agents

• Search Agents – help users find files and

databases, search for desired information, and suggest and find new types of information

products, media, and resources

• Information Brokers – provide commercial

services to discover and develop information

resources that fit the business or personal

needs of a user

• Information Filters

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Case #3: Agent-Based Modeling for SCM

• In Proctor & Gamble’s computer simulations,

software agents represent the individual

components of the supply systems, such as

trucks, drivers, stores, and so on

• The behavior of each agent is programmed via

rules that mimic actual behavior, such as,

“Dispatch this truck only when it is full”.

• The simulations let P&G perform what-if

analysis to test the impact of new logistics rules

on three key metrics: inventory levels,

transportation costs, and in-store-stock-outs.

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Change Areas:

intuitively, in order to improve the overall performance of the supply network

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1 Do you agree with Proctor & Gamble that a

supply chain should be called a supply

network? Why or why not?

2 What is the business value of agent-based

modeling? Use P&G and other companies in this case as examples.

3 Visit the website of NuTech Solutions How

does NuTech use AI techniques to help

companies gain “adaptive” business

intelligence? Give several examples from the website case studies.

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Case #4: Web-Based Tools

Web-based financial and analytical tools

to rapidly consolidate and present key

financial data on a daily, weekly, or

monthly basis

all divisions on the same system within

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multidimensional views of profit-and-loss data Such data can quickly be analyzed

by switching the columnar and row data,

and also bringing in different dimensions

or measures such as budget or prior year, then drilling down to get subsets of the

data

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limitations of Boehringer’s Web-based

financial analysis and reporting

systems?

and reporting systems are MIS tools?

DSS tools? Why?

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Boehringer be used for marketing and

other business analysis and reporting

applications? Visit the Cognos website

to help you answer

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