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Information and Decision

Support Systems
Principles and Learning Objectives
• Good decision-making and problem-solving
skills are the key to developing effective
information and decision support systems.

– Define the stages of decision making.


– Discuss the importance of implementation and
monitoring in problem solving.
Principles and Learning Objectives

• The management information system (MIS)


must provide the right information to the right
person in the right fashion at the right time.

– Define the term MIS and clearly distinguish the


difference between a TPS and an MIS.
– Discuss information systems in the functional areas of
business organizations.
Principles and Learning Objectives

• Decision support systems (DSSs) are used


when the problems are more unstructured.

– List and discuss important characteristics of DSSs


that give them the potential to be effective
management support tools.

– Identify and describe the basic components of a DSS.


Principles and Learning Objectives

• Specialized support systems, such as group


decision support systems (GDSSs) and
executive support systems (ESSs), use the
overall approach of a DSS in situations such as
group and executive decision making.

– State the goals of a GDSS and identify the characteristics that


distinguish it from a DSS.
– Identify the fundamental uses of an ESS and list the
characteristics of such a system.
Decision Making and
Problem Solving
Decision Making as a Component of
Problem Solving
Programmed versus Nonprogrammed
Decisions

• Programmed decisions
– Structured situations with well defined relationships
– Quantifiable
– Management information system
– Easy to computerize

• Nonprogrammed decisions
– Rules and relationships not defined
– Problem is not routine
– Not easily quantifiable
Problem Solving Approaches

• Optimization: find the best solution


• Satisficing: find a good solution
• Heuristics: rules of thumb
An Overview of Management
Information Systems
Inputs to an MIS
Outputs of an MIS
Outputs of an MIS
Developing Effective Reports
Characteristics of an MIS

• Fixed format, standard reports


• Hard-copy or soft-copy reports
• Uses internal data
• User-developed reports
• Users must request formal reports from IS
department
Functional Aspects of the
MIS
Functional Aspects of an MIS
Financial MIS
Manufacturing MIS

• Design engineering

• Process control
– Computer-assisted manufacturing (CAM)
– Computer-integrated manufacturing (CIM)
– Flexible manufacturing system

• Quality control and testing


Overview of a Manufacturing MIS
Marketing MIS
Product Pricing
Product Pricing
Human Resource MIS
Other MIS

• Accounting management information systems


• Geographic information systems (GIS)
An Overview of Decision
Support Systems
Characteristics of Decision Support
Systems

• Handle large amounts of data from various


sources
• Provide report and presentation flexibility
• Offer both textual and graphical orientation
• Support drill down analysis
Characteristics of a DSS

• Perform complex, sophisticated analysis

• Optimization, satisficing, heuristics


– Simulation
– What-if analysis
– Goal-seeking analysis
Characteristics of a DSS
Capabilities of a DSS

• Support all problem-solving phases


• Support different decision frequencies
• Support different problem structures
• Support various decision-making levels
Selected DSS Applications
Support for Various Decision-Making
Levels
Comparison of DSSs and MISs
Comparison of DSSs and MISs
Components of a DSS
Components of a DSS
The Model Base

• Financial models
– Cash flow
– Internal rate of return

• Statistical analysis models


– Summary statistics
– Trend projections
– Hypothesis testing

• Graphical models
• Project management models
The Model Base
Data-driven versus Model-driven
DSS
• Data-driven DSS - primarily performs qualitative
analysis based on the company’s databases

• Model-driven DSS - primarily performs


mathematical or quantitative analysis
Group Decision Support
Systems
Group Decision Support System
Characteristics of a GDSS
• Special design
• Ease of use
• Flexibility
• Decision-making support
• Anonymous input
• Reduction of negative group behavior
• Parallel communication
• Automated record keeping
GDSS Alternatives
The Decision Room
Executive Support Systems
Executive Support Systems
Executive Support Systems (ESS) in
Perspective

• Tailored to individual executives


• Easy to use
• Drill down capabilities
• Support need for external data
• Can help when uncertainty is high
• Future-oriented
• Linked to value-added processes
Capabilities of an ESS

• Support for defining an overall vision


• Support for strategic planning
• Support for strategic organizing & staffing
• Support for strategic control
• Support for crisis management
Summary
• Management information system - an integrated
collection of people, procedures, databases, and devices
that provide managers and decision-makers with
information to help achieve organizational goals

• Decision-making phase: includes intelligence, design,


and choice

• Problem solving: also includes implementation and


monitoring

• Decision approaches: optimization, satisficing, and


heuristic
Summary
• Decision support system (DSS) - an organized
collection of people, procedures, software, databases,
and devices working to support managerial decision
making

• Group decision support system (GDSS) - also called a


computerized collaborative work system, consists of
most of the elements in a DSS, plus software needed to
provide effective support in group decision-making
settings

• Executive support systems (ESSs) - specialized


decision support systems designed to meet the needs of
senior management
Specialized Business
Information Systems
Principles and Learning Objectives
• Artificial intelligence systems form a broad and diverse set of
systems that can replicate human decision making for certain
types of well-defined problems.

– Define the term artificial intelligence and state the objective of


developing artificial intelligence systems.

– List the characteristics of intelligent behavior and compare the


performance of natural and artificial intelligence systems for each of
these characteristics.

– Identify the major components of the artificial intelligence field and


provide one example of each type of system.
Principles and Learning Objectives
• Expert systems can enable a novice to perform at the
level of an expert but must be developed and maintained
very carefully.

– List the characteristics and basic components of expert systems.


– Identify at least three factors to consider in evaluating the
development of an expert system.
– Outline and briefly explain the steps for developing an expert
system.
– Identify the benefits associated with the use of expert systems.
Principles and Learning Objectives
• Virtual reality systems have the potential to reshape the
interface between people and information technology by
offering new ways to communicate information
creatively.

– Define the term virtual reality and provide three examples of


virtual reality applications.

• Special-purpose systems can help organizations and


individuals achieve their goals.

– Discuss examples of special-purpose systems for organizational


and individual use.
An Overview of Artificial
Intelligence
The Nature of Intelligence

• Learn from experience & apply the knowledge


• Handle complex situations
• Solve problems when important information is
missing
• Determine what is important
The Nature of Intelligence

• React quickly & correctly to new situations


• Understand visual images
• Process & manipulate symbols
• Be creative & imaginative
• Use heuristics
The Difference Between Natural and
Artificial Intelligence
The Major Branches of Artificial
Intelligence
An Overview of Expert
Systems
Characteristics of an Expert System

• Can explain their reasoning or suggested decisions


• Can display “intelligent” behavior
• Can draw conclusions from complex relationships
• Can provide portable knowledge
• Can deal with uncertainty
• Not widely used or tested
Characteristics of an Expert System

• Limited to relatively narrow problems


• Cannot readily deal with “mixed” knowledge
• Possibility of error
• Cannot refine its own knowledge
• May have high development costs
• Raise legal and ethical concerns
Capabilities of an Expert Systems

• Strategic goal setting


• Planning
• Design
• Decision-making
• Quality control and monitoring
• Diagnosis
Capabilities of Expert Systems
When to Use Expert Systems

• High payoff
• Preserve scarce expertise
• Distribute expertise
• Provide more consistency than humans
• Faster solutions than humans
• Training expertise
Components of an Expert System
Knowledge Base

• Assembling human experts


• The use of fuzzy logic
• The use of rules
• The use of cases
Knowledge Base
The Use of Rules
The Knowledge Acquisition Facility
Components of an Expert System

• The explanation facility


• The knowledge acquisition facility
• The user interface
Expert Systems Development
Participants in Developing and Using
Expert Systems

• Domain expert
• Knowledge engineer
• Knowledge user
Participants in Developing and Using
Expert Systems
Domain Experts

• Recognize the real problem


• Develop a general framework for problem solving
• Formulate theories about the situation
• Develop and use general rules to solve a problem
• Know when to break the rules or general principles
• Solve problems quickly and efficiently
Expert Systems Development Tools and
Techniques
Expert Systems Development Tools and
Techniques
Expert Systems Development
Alternatives
Applications of Expert Systems and
Artificial Intelligence

• Credit granting and loan analysis


• Stock picking
• Catching cheats and terrorists
• Budgeting
Virtual Reality
Virtual Reality
• Enables one or more users to move and react in a
computer-simulated environment

• Immersive virtual reality - user becomes fully


immersed in an artificial, three-dimensional world that is
completely generated by a computer

• Virtual reality system - enables one or more users to


move and react in a computer-simulated environment
Useful Applications

• Medicine – used to link stroke patients to


physical therapists

• Education and training – used by military for


aircraft maintenance

• Entertainment
– Star Wars Episode II: Attack of the Clones
Useful Applications

• Real Estate Marketing and Tourism


– Used to increase real estate sales
– Virtual reality tour of the White House
Summary
• Artificial intelligence - used to describe computers with ability to
mimic or duplicate functions of the human brain

• Intelligent behavior - includes the ability to learn from experience

• Expert systems - can explain their reasoning (or suggested


decisions) and display intelligent behavior

• Virtual reality systems - enables one or more users to move and


react in a computer-simulated environment

• Special-purpose systems - assist organizations and individuals in


new and exciting ways. For example, Segway