669_Management Information System

1. Lecture 8
Decision Support and Expert Systems

2. Decision Support
• Success of an organization largely depends on the
quality of decisions made by employees
• Computer-based systems can help when:
– There are large amounts of information
– There is a lot of processing involved
• Two types of decision support aids:
– Decision support systems (DSSs)
– Expert systems (ESs)
• Applications today may combine both types
– Provide single optimal solution or set of solutions

3. The Decision-Making Process
• A decision must be made whenever more
than one possible action is available
• It can be difficult to make decisions when
many reasonable alternatives are present
– In business, there may be dozens, hundreds, or
even millions of different courses of actions
available to achieve a desired result

4. The Decision-Making Process
(continued)
• Decision making is a three-phase process:
– Intelligence phase: collect facts, beliefs, and ideas
– Design phase: design the method for considering
the collected data, to reduce the alternatives to a
manageable number
– Choice phase: select an alternative from the
remaining choices

5. The Decision-Making Process
(continued)

6. The Decision-Making Process
(continued)
• Businesses collect data internally within the
organization and externally from outside sources
• Model: a representation of reality, such as:
– Map: represents a geographical area
– Tabletop representation of a building
– Mathematical equations representing relationships
among variables
• Managers either choose universal models or
design their own models

7. Structured and Unstructured Problems
• Structured problem: one in which an optimal
solution can be reached through a single set of
steps
• Algorithm: a sequence of steps to complete a
task
• Parameters: categories of data that are
considered in an algorithm
• Most mathematical and physical problems are
structured, but many business problems are
not

8. Structured and Unstructured Problems
(continued)
• Unstructured problem: one for which there is
no algorithm that leads to an optimal solution
– May not be enough information
– May be a large number of potential factors
• Unstructuredness is closely related to
uncertainty
• Examples of unstructured problems include:
– Weather prediction
– Stock market prediction

9. Decision Support Systems
• Decision support system (DSS): a computer-
based information system designed to help
knowledge workers select one of many
alternative solutions to a problem
• Advantages of DSSs include:
– Help increase market share
– Help reduce costs
– Help increase profitability
– Help enhance product quality

10. Decision Support Systems (continued)
• Most DSSs consist of three components:
– Data management module
– Model management module
– Dialog module
• These components help users:
– Enter a request in a convenient manner
– Search vast amounts of data
– Process the data through desired models
– View the results in a desired format

12. The Data Management Module
• Data management module: a database or
data warehouse that provides data for the
intelligence phase
– Accesses the data
– Provides a means to select data by specified
criteria
• Many DSSs are intertwined with other
organizational systems, including data
warehouses, data marts, and ERP systems

13. The Model Management Module
• Model management module: turns data into useful
information
• May offer a fixed model, a dynamically modified model, or a
collection of models
– Dynamically modified model: one that is automatically
adjusted based on changing relationships among variables
• A sequence of events or a pattern of behavior can become a
useful model
• Models are often based on mathematical research

14. The Dialog Module
• Dialog module: part of a DSS that allows user
interaction with the program
– Prompts the user to select a model and data to
process
– Allows the user to change parameters and view
the results of the changes (“what if” analysis)
– Displays the results of the analysis in textual,
tabular, or graphical format
• Many DSSs are available through the Internet

15. Decision Support Systems in Action
• DSSs can be used on demand or integrated
into a scheme that enforces corporate policy
• DSSs help maintain standard criteria in
decision making throughout the organization
• Automated decision production is becoming
very popular
– The only labor required is for data entry

16. Decision Support Systems in Action
(continued)
• DSSs are used in many industries:
– Food production and retailing: to forecast the
number of patrons, the amount of ingredients to
purchase, etc.
– Agriculture: allows farmers to make decisions
about how to control specific pests, and for
picking farm locations
– Tax planning: tax helper applications such as
TurboTax and TaxCut

17. Decision Support Systems in Action
(continued)
• DSSs are used in many industries (continued):
– Web site planning and adjustment: to analyze
shopper behavior, and to design Web sites based
on page usage
– Yield management: to maximize revenue from
airline trips or lodging
– Financial services: to determine loan amounts,
and to qualify customers based on credit history
– Benefits selection: to allow employees to make
decisions about their benefits

18. Expert Systems
• Expert system (ES): emulates the knowledge
of a human expert
– Solves problems
– Makes decisions in a relatively narrow domain
• Domain: a specific area of knowledge
• Neural network: a program that emulates
how the human brain works

19. Expert Systems (continued)
• ESs are part of artificial intelligence (AI) research
• AI focuses on methods and technologies that emulate
how humans learn and solve problems
• Knowledge base: used by an ES
– A collection of facts and the relationships among
them
– Built as a series of IF-THEN rules
– Uses an inference engine
• Inference engine: software that combines data input by
the user with the data relationships

20. Expert Systems (continued)
• Neural networks: used by more sophisticated
ESs to mimic the way a human brain learns
– Constructed with a set of rules, but then it refines
itself based on its decision success rate
– Very effective for detecting fraud
• Intelligent agent: software that is dormant
until it detects a certain event, and then
performs a prescribed action

21. Expert Systems in Action
• ESs have been implemented in many
industries:
– Medical diagnosis:
• Help doctors with the diagnosis of symptoms and
treatment advice
• Can help enhance the accuracy of Alzheimer’s disease
diagnosis
– Medical management:
• Help discern which treatments patient should receive
• Help with administrative decisions
– Telephone network maintenance:
• Used to help diagnose and fix network failures

22. Expert Systems in Action (continued)
• ESs have been implemented in many industries
(continued):
– Credit evaluation:
• Used to approve credit card charges
• Used to analyze financial reports submitted with
credit applications
• Local loan officers may periodically update the
knowledge base to customize it for current loan
policy
– Detection of insider securities trading:
• Help prevent trading of stocks based on private
information by analyzing the stock’s history

23. Expert Systems in Action (continued)
• ESs have been implemented in many
industries (continued):
– Detection of common metals:
• Help nonexperts identify common metals and alloys
outside laboratories
• Based on results of simple chemical tests and other
information available at the scene
– Irrigation and pest management:
• Provide recommendations on irrigation, application of
fungicides, and likelihood of pest conditions
• Can significantly improve crop yields

24. Expert Systems in Action (continued)
• ESs have been implemented in many
industries (continued):
– Diagnosis and prediction of mechanical failure:
• Diagnose cause of component failure
• Can provide a set of instructions for fixing the problem
• Help companies know when to replace components
before a failure occurs

25. Geographic Information Systems
• Geographic information system (GIS): a decision aid for map-
related decisions
– Processes location data to aid in decision making
• GISs are used to help:
– Find shortest paths for deliveries or school bus routes
– City planning for police coverage and health care
resources
– Find oil drilling locations
– Locate suitable outdoor recreation sites
– Businesses determine locations for service kiosks