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Chapter 9 - Enabling The Organization - Decision Making

The document discusses decision making information systems including transaction processing systems, decision support systems, executive information systems, and artificial intelligence. It describes the growth of these systems and their capabilities like modeling, analysis, and data mining.

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Muhammad Hanif
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108 views33 pages

Chapter 9 - Enabling The Organization - Decision Making

The document discusses decision making information systems including transaction processing systems, decision support systems, executive information systems, and artificial intelligence. It describes the growth of these systems and their capabilities like modeling, analysis, and data mining.

Uploaded by

Muhammad Hanif
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Unit Three

Streaming Business
Operations

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, All Rights Reserved


Unit Three
• Chapter Nine – Enabling the Organization –
Decision Making

• Chapter Ten – Extending the Organization –


Supply Chain Management

• Chapter Eleven – Building a Customer-centric


Organization – Customer Relationship
Management

• Chapter Twelve – Integrating the Organization


from End to End – Enterprise Resource Planning 9-2
Unit Three
• Decision-enabling, problem-solving, and
opportunity-seizing systems

9-3
Chapter 9

Enabling the Organization


– Decision Making

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, All Rights Reserved


Learning Outcomes

9.1 Define the systems organizations use to


make decisions and gain competitive
advantages

9.2 Describe the three quantitative models


typically used by decision support systems

9.3 Describe the relationship between digital


dashboards and executive information
systems 9-5
Learning Outcomes

9.4 List and describe four types of artificial


intelligence systems

9.5 Describe three types of data-mining


analysis capabilities

9-6
Reasons for the growth of decision-
making information systems
1. People need to analyze large amounts of
information—Improvements in technology itself,
innovations in communication, and globalization
have resulted in a dramatic increase in the
alternatives and dimensions people need to
consider when making a decision or appraising an
opportunity.
2. 2. People must make decisions quickly—Time
is of the essence and people simply do not have
time to sift through all the information manually.
9-7
Reasons for the growth of decision-
making information systems
3. People must apply sophisticated analysis
techniques, such as modeling and forecasting, to
make good decisions—Information systems
substantially reduce the time required to perform
these sophisticated analysis techniques.

4.People must protect the corporate asset of


organizational information— Information systems
offer the security required to ensure organizational
information remains safe.
9-8
Decision Making
• Model – a simplified representation or
abstraction of reality
• IT systems in an enterprise

9-9
Transaction Processing Systems
• Moving up through the organizational pyramid users move
from requiring transactional information to analytical
information

9-10
Transaction Processing Systems
• Transaction processing system - the basic business
system that serves the operational level (analysts) in an
organization

• Online transaction processing (OLTP) – the capturing of


transaction and event information using technology to (1)
process the information according to defined business
rules, (2) store the information, (3) update existing
information to reflect the new information

• Online analytical processing (OLAP) – the manipulation


of information to create business intelligence in support of
strategic decision making
9-11
Decision Support Systems
• Decision support system (DSS) – models information to
support managers and business professionals during the
decision-making process

• Three quantitative models used by DSSs include:


1. Sensitivity analysis – the study of the impact that
changes in one (or more) parts of the model have on
other parts of the model
2. What-if analysis – checks the impact of a change in
an assumption on the proposed solution
3. Goal-seeking analysis – finds the inputs necessary to
achieve a goal such as a desired level of output
9-12
Decision Support Systems
• What-if analysis

9-13
Decision Support Systems
• Goal-seeking analysis

9-14
Decision Support Systems
• Interaction between a TPS and a DSS

9-15
Executive Information Systems
• Executive information system (EIS) – a
specialized DSS that supports senior level
executives within the organization

• Most EISs offering the following capabilities:


– Consolidation – involves the aggregation of
information and features simple roll-ups to complex
groupings of interrelated information
– Drill-down – enables users to get details, and details
of details, of information
– Slice-and-dice – looks at information from different
perspectives
9-16
Executive Information Systems
• Interaction between a TPS and an EIS

9-17
Executive Information Systems
• Digital dashboard – integrates information
from multiple components and presents it in a
unified display

9-18
Artificial Intelligence (AI)
• Intelligent system – various commercial
applications of artificial intelligence

• Artificial intelligence (AI) – simulates


human intelligence such as the ability to
reason and learn

9-19
Artificial Intelligence (AI)
• The ultimate goal of AI is the ability to build a
system that can mimic human intelligence

9-20
Artificial Intelligence (AI)

• Four most common categories of AI include:


1. Expert system – computerized advisory
programs that imitate the reasoning processes
of experts in solving difficult problems. Example
robot.
2. Neural Network – attempts to emulate the way
the human brain works. Example California police.
– Fuzzy logic – a mathematical method of handling
imprecise or subjective information

9-21
Artificial Intelligence (AI)
3. Genetic algorithm – an artificial intelligent
system that mimics the evolutionary, survival-of-
the-fittest process to generate increasingly better
solutions to a problem. Example to determine fiber
optic by telecommunication
4. Intelligent agent – special-purposed knowledge-
based information system that accomplishes
specific tasks on behalf of its users. Example Ford
Motor Co. Balance with cost and demands.
• Multi-agent systems
• Agent-based modeling
9-22
Data Mining
• Data-mining software includes many forms of
AI such as neural networks and expert
systems

9-23
Data Mining
• Common forms of data-mining analysis
capabilities include:
– Cluster analysis
– Association detection
– Statistical analysis

9-24
Cluster Analysis
• Cluster analysis – a technique used to divide
an information set into mutually exclusive
groups such that the members of each group
are as close together as possible to one
another and the different groups are as far
apart as possible

• CRM systems depend on cluster analysis to


segment customer information and identify
behavioral traits

9-25
Association Detection

• Association detection – reveals the


degree to which variables are related
and the nature and frequency of these
relationships in the information
– Market basket analysis – analyzes such
items as Web sites and checkout scanner
information to detect customers’ buying
behavior and predict future behavior by
identifying affinities among customers’
choices of products and services

9-26
Statistical Analysis

• Statistical analysis – performs such


functions as information correlations,
distributions, calculations, and variance
analysis
– Forecast – predictions made on the basis
of time-series information
– Time-series information – time-stamped
information collected at a particular
frequency
9-27
9-28
OPENING CASE STUDY QUESTIONS
Second Life
1. How could companies use Second Life to
enhance decision making for a new product
or service?

2. How could financial companies use neural


networks in Second Life to help their
businesses?

9-29
OPENING CASE STUDY QUESTIONS
Second Life
3. How could a company such as Nike use
decision support systems on Second Life to
help its business?

4. How could an apparel company use Second


Life to build a digital dashboard to monitor
virtual operations?

9-30
CHAPTER NINE CASE
DARPA Grand Challenge
• The DARPA Grand Challenge was designed
to leverage American ingenuity to develop
autonomous vehicle technologies that can be
used by the military

• With the goal of saving lives on the battlefield,


the DARPA Grand Challenge brings together
individuals and organizations from industry,
the R&D community, government, the armed
services, and academia, and includes
students, backyard inventors, and automotive
enthusiasts
9-31
Chapter Nine Case Questions
1. Describe how the DoD is using AI to
improve its operations and save lives

2. Explain why the DoD would use an


event, such as the DARPA Grand
Challenge, to further technological
innovation

9-32
Chapter Nine Case Questions
3. Describe how autonomous vehicles could be used
by organizations around the world to improve
business efficiency and effectiveness

4. The Ansari X is another technological innovation


competition focusing on spacecraft. To win the $10
million Ansari X Prize, a private spacecraft had to
be the first to carry the weight equivalent of three
people to an altitude of 62.14 miles twice within two
weeks. SpaceShipOne, a privately built spacecraft,
won the $10 million Ansari X Prize on October 4,
2004. Describe the potential business impacts of
the Ansari X competition 9-33

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