Chapter 4Decision Support and Artificial Intelligence: Brainpower for Your Business

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

STUDENT LEARNING OUTCOMES1. Compare and contrast decision support

systems and geographic information systems.

2. Define expert systems and describe the types of problem to which they are applicable.

3. Define neural networks and fuzzy logic and the use of these AI tools.

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STUDENT LEARNING OUTCOMES4. Define genetic algorithms and list the

concepts on which they are based and the types of problems they solve.

5. Describe the four types of agent-based technologies.

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AN NFL TEAM NEEDS MORE THAN ATHLETIC ABILITY The Patriots football team is a very

successful one The team uses a decision support system to

analyze the opposition’s game The software breaks down the game day

video into plays and player actions With this information the Patriots can better

formulate their strategy

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AN NFL TEAM NEEDS MORE THAN ATHLETIC ABILITY1. DSS with predictive analytics used to gain

the advantage in other sports? Choose a sport and explain how that might work.

2. Would allowing coaches to have laptops on the field change the game appreciably?

3. What other aspect of football could be improved by decision support systems?

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INTRODUCTION

Phases of decision making1. Intelligence – find or recognize a problem, need,

or opportunity

2. Design – consider possible ways of solving the problem

3. Choice – weigh the merits of each solution

4. Implementation – carry out the solution

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Four Phases of Decision Making

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Types of Decisions You Face

Structured decision – processing a certain information in a specified way so that you will always get the right answer

Nonstructured decision – one for which there may be several “right” answers, without a sure way to get the right answer

Recurring decision – happens repeatedly Nonrecurring (ad hoc) decision – one you

make infrequently

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Types of Decisions You Face

EASIESTEASIEST

MOST MOST DIFFICULTDIFFICULT

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CHAPTER ORGANIZATION

1. Decision Support Systems Learning outcome #1

2. Geographic Information Systems Learning outcome #1

3. Expert Systems Learning outcome #2

4. Neural Networks and Fuzzy Logic Learning outcome #3

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CHAPTER ORGANIZATION

5. Genetic Algorithms Learning outcome #4

6. Intelligent Agents Learning outcome #5

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DECISION SUPPORT SYSTEMS

Decision support system (DSS) – a highly flexible and interactive system that is designed to support decision making when the problem is not structured

Decision support systems help you analyze, but you must know how to solve the problem, and how to use the results of the analysis

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Alliance between You and a DSS

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Components of a DSS

Model management component – consists of both the DSS models and the model management system

Data management component – stores and maintains the information that you want your DSS to use

User interface management component – allows you to communicate with the DSS

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Components of a DSS

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Predictive Analytics

Analytics (predictive analytics) – highly computational process of measuring and predicting customer behavior/attitudes

Uses combination of statistics, probability, ops management methods, AI tools, data mining, and predictive modeling

Types Text – natural language analysis Content – audio, video, graphical Web – Web traffic analysis

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GEOGRAPHIC INFORMATION SYSTEMS Geographic information system (GIS) –

DSS designed specifically to analyze spatial information

Spatial information is any information in map form

Businesses use GIS software to analyze information, generate business intelligence, and make decisions

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Zillow GIS Software for Denver

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ARTIFICIAL INTELLIGENCE

DSSs and GISs support decision making; you are still completely in charge

Artificial intelligence, the science of making machines imitate human thinking and behavior, can replace human decision making in some instances Expert systems Neural networks (and fuzzy logic) Genetic algorithms Intelligent agents (or agent-based technologies)

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EXPERT SYSTEMS

Expert (knowledge-based) system – an artificial intelligence system that applies reasoning capabilities to reach a conclusion

Used for Diagnostic problems (what’s wrong?) Prescriptive problems (what to do?)

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Traffic Light Expert System

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What Expert Systems Can and Can’t Do An expert system can

Reduce errors Improve customer service Reduce cost

An expert system can’t Use common sense Automate all processes

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NEURAL NETWORKS AND FUZZY LOGIC Neural network (artificial neural network or

ANN) – an artificial intelligence system that is capable of finding and differentiating patterns

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Neural Networks Can…

Learn and adjust to new circumstances on their own

Take part in massive parallel processing Function without complete information Cope with huge volumes of information Analyze nonlinear relationships

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Fuzzy Logic

Fuzzy logic – a mathematical method of handling imprecise or subjective information

Used to make ambiguous information such as “short” usable in computer systems

Applications Google’s search engine Washing machines Antilock breaks

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GENETIC ALGORITHMS

Genetic algorithm – an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem

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Evolutionary Principles of Genetic Algorithms1. Selection – or survival of the fittest or giving

preference to better outcomes

2. Crossover – combining portions of good outcomes to create even better outcomes

3. Mutation – randomly trying combinations and evaluating the success of each

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Genetic Algorithms Can…

Take thousands or even millions of possible solutions and combine and recombine them until it finds the optimal solution

Work in environments where no model of how to find the right solution exists

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INTELLIGENT AGENTS

Intelligent agent – software that assists you, or acts on your behalf, in performing repetitive computer-related tasks

Types Information agents Monitoring-and-surveillance or predictive agents Data-mining agents User or personal agents

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Information Agents

Information Agents – intelligent agents that search for information of some kind and bring it back

Ex: Buyer agent or shopping bot – an intelligent agent on a Web site that helps you, the customer, find products and services you want

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Monitoring-and-Surveillance Agents Monitoring-and-surveillance (predictive)

agents – intelligent agents that constantly observe and report on some entity of interest, a network, or manufacturing equipment, for example

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Data-Mining Agents

Data-mining agent – operates in a data warehouse discovering information

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User Agents

User or personal agent – intelligent agent that takes action on your behalf

Examples: Prioritize e-mail Act as gaming partner Assemble customized news reports Fill out forms for you “Discuss” topics with you

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MULTI-AGENT SYSTEMS AND AGENT-BASED MODELING Biomimicry – learning from ecosystems

and adapting their characteristics to human and organizational situations

Used to1. Learn how people-based systems behave

2. Predict how they will behave under certain circumstances

3. Improve human systems to make them more efficient and effective

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Agent-Based Modeling

Agent-based modeling – a way of simulating human organizations using multiple intelligent agents, each of which follows a set of simple rules and can adapt to changing conditions

Multi-agent system – groups of intelligent agents have the ability to work independently and to interact with each other

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Business Applications

Southwest Airlines – cargo routing P&G – supply network optimization Air Liquide America – reduce production and

distribution costs Merck – distributing anti-AIDS drugs in Africa Ford – balance production costs & consumer

demands Edison Chouest – deploy service and supply

vessels

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Swarm Intelligence

Swarm (collective) intelligence – the collective behavior of groups of simple agents that are capable of devising solutions to problems as they arise, eventually learning to coherent global patterns

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Characteristics of Swarm Intelligence Flexibility – adaptable to change Robustness – tasks are completed even if

some individuals are removed Decentralization – each individual has a

simple job to do

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