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"Part II Using Information Systems“
II
8
Using Information
Systems for
Decision Making
Information Systems Technology
Ross Malaga
Copyright © 2005 Prentice Hall, Inc.
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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.
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Using Information Systems for
Decision Making
• 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
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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
• Unstructured problems
• 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
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Production blocking
Evaluation apprehension
Social loafing
Group think
• GDSS tools contain special tools to
overcome these problems
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GDSS Tools
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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
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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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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:
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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
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