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II
Copyright © 2005 Prentice Hall, Inc.
8-1
Information Systems TechnologyRoss Malaga
8
"Part II Using Information Systems“
Using InformationSystems for
Decision Making
Copyright © 2005 Prentice Hall, Inc.
8-2
LEARNING GOALS
• Discuss the problems associated with management decision making.
• Explain the decision-making process.• Describe decision support systems.• Explain how group decision support systems work.• Describe executive information systems.• Discuss artificial intelligence technologies and their
applications.
8-3Copyright © 2005 Prentice Hall, Inc.
• Expansion is on the horizon.– Three new studios– Five new franchises– Many difficult decisions
• Meredith – Needs help making strategic decisions• Suzanne – Where to locate the new studios?• Leda – How to evaluate potential franchisees?• Mitch – Scheduling and routing sales appointments• Julia – Purchase or lease new buildings?• Miriam – Where should we focus our marketing resources?• Rachel – How do I maintain the right inventory at the right price?• Jim – Needs help with hiring decisions
Using Information Systems for Decision Making
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Decision Making Today• Business decisions are increasingly difficult to make
– Dramatic increase in the internal business data available to managers
– Managers must keep current on vast amounts of data resources on the Internet
– Globalization– The speed of commerce– The increased number of business choices available– Group decision making
• Teams may include members from many companies• Members may have different backgrounds and opinions• Difficult to reach consensus
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Roadblocks to Good Decision Making
• Human cognition– Our mental ability to comprehend and understand
something
• Human perception– Difficulty isolating problems
– Tend to think of only narrow range of possible solution
• Human bias– Tendency to shape responses based on stereotypes,
memory, and current position
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How to Overcome the Roadblocks
• Decision support systems (DSS) are one tool– A computer-based system that supports and improves
human decision making– Helps analyze complex problems– Process vast amounts of analytical data
• Group decision support systems (GDSS)– Tool for supporting team decision making
• Executive information system (EIS)– Computer-based system that supports the decision-making
processes of senior managers
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The Decision-Making Process
• Simon’s model of the decision-making process– Intelligence– Design– Choice
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Intelligence Phase
• Scan the environment for a problem.
• Determine if decision-maker can solve the problem.– Within scope of influence
• Fully define the problem by gathering more information about the problem.
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Design Phase
• Develop a model of the problem.– Determine type of model.– Verify model.
• Develop and analyze potential solutions.
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Choice Phase
• Select the solution to implement.– More detailed analysis of selected solutions
might be needed.– Verify initial conditions.– Analyze proposed solution against real-world
constraints.
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Problem Structure
• Structured problems– We know the proper procedures
• Unstructured problems– We do not know the how to approach any of
the 3 phases
• Semi-structured problems
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Decision Support Systems
• Major components– Data management system
• Internal and external data sources
– Model management system• Typically mathematical in nature
– User interface• How the people interact with the DSS• Data visualization is the key
– Graphs– Charts– Geographic information systems (GIS)
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Modeling Tools and Techniques
• Simulation– Computerized model of the problem
– Used to examine proposed solutions and their impact• Sensitivity analysis
– Determine how changes in one part of the model influence other parts of the model
• What-if analysis– Manipulate variables to see what would happen in given
scenarios
• Goal-seeking analysis– Work backward from desired outcome
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Groups Decision Support Systems
• Having multiple participants in the decision process adds potential problems– Production blocking– Evaluation apprehension– Social loafing– Group think
• GDSS tools contain special tools to overcome these problems
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GDSS Tools
• Brainstorming tools
• Commenter tools
• Categorizing tools
• Idea-ranking tools
• Electronic-voting tools
• Group facilitator
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Executive Information Systems
• Computer-based tool that specifically helps top-level management make strategic decisions– Processes both internal and external data– Presents data in summary form– Drill-down is a key feature – gives the manager
the ability to see more details when needed
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Artificial Intelligence (AI)
• Field of study that explores the development of computer systems that behave like humans– Strong AI – create a computer that can think
like a human– Weak AI – develop computers and programs
that employ thinkinglike features
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Expert Systems
• AI systems that codify human expertise in a computer system– Main goal is to transfer knowledge from one person to
another
– Wide range of subject areas• Medical diagnosis
• Computer purchasing
• Whale watching
– Knowledge engineer elicits the expertise from the expert and encodes it in the expert system
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Expert Systems Components
• Knowledge base
• Inference engine
• User interface
• Explanation system
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Other Artificial Intelligence Technologies
• Neural networks – use software to simulate the neural working of the human brain
• Intelligent agents (bots) – autonomously handle tasks for humans and act on user’s behalf
• Genetic algorithms – Computer instructions that create a population of thousands on potential solutions and evolves the population toward better solutions
• Fuzzy logic – a way to get computers to come closer to the ability to see fine distinctions, not just ones and zeros
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A Neural Network
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8-26Copyright © 2005 Prentice Hall, Inc.
Bead Bar Consultant
• How Decision-Making Technologies Affect the Bead Bar.– Meredith – EIS looks to provide needed support and a reality
check on previous decisions– Suzanne – GIS help to determine new studio locations– Leda – Develop a DSS to evaluate franchise applicants– Mitch – Use genetic algorithms to solve the sales
appointment problem– Julia – Use Excel to perform What-if and goal-seeking
analyses– Miriam – Use expert system to determine the best marketing
media– Rachel – Intelligent agents to search for best pricing– Jim – Expert system to assist employees in selecting best
combination of benefits options
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Learning Goals Summary
In this chapter you have learned: The problems associated with management decision making The decision-making process How to describe decision support systems How group decision support systems work How to describe executive information systems About artificial intelligence technologies and their applications