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  • 1. Chapter 12Management DecisionSupport and Intelligent Systems Chapter 12 1
  • 2. Managers and Decision Making• Management: – Is a process by which organizational goals are achieved through the use of resources : • People • Money • Energy • Materials • Space • Time Chapter 12 2
  • 3. Managers and Decision Making• Resources are Inputs.• Attainment of the goals is Output of the process.• Managers undertake many activities as per; – Their position in the organization – The type & size of the organization – Organizational policies and culture – Personalities of he himself. Chapter 12 3
  • 4. Mintzberg’s classification• Interpersonal – Figurehead, leader, liaison• Informational – Monitor, disseminator, spokesperson• Decisional – Entrepreneur, problem solver, allocator, negotiator. Chapter 12 4
  • 5. Decision making & Problem Solving• Decision: – Refers to a choice made between two or more alternatives. – It is diverse in nature – Made continuously by individuals & groups – Classified by organization as • Problem solving • Opportunity exploiting Chapter 12 5
  • 6. Computerized Decision Aids• Basic ????? – Why do managers need the support of IT in making decisions? – Can the manager’s job be fully automated? – What IT aids are available to support managers? – How are the information needs of managers determined? Chapter 12 6
  • 7. Decision Process Chapter 12 7
  • 8. Decision Complexity Chapter 12 8
  • 9. Modeling and Models• A model ( in decision making) is a simplified representation, or abstraction of reality.• With modeling, one can perform virtual experiments and an analysis on a model of reality, rather than on reality itself. Chapter 12 9
  • 10. Benefits of modeling• Low cost• Allows simulation compression time• Manipulation much easier• Lowers cost of making errors• Better deal with uncertainty• Allows analysis & comparison of large, infinite alternatives through mathematical models• Enhances & reinforce learning & support training Chapter 12 10
  • 11. Chapter 12 11
  • 12. Decision Support SystemDSSs are computer-based information systemsthat provide interactive information support tomanagers and business professionals during thedecision-making process.DSSs use Analytical Models, SpecializedDatabases, A decision maker’s own insights &judgment & An interactive, computer basedmodeling process to support the making ofsemi-structured business decisions. 12
  • 13. Concept• Gory and Scott-Morton coined the phrase ‘DSS’ in 1971, about ten years after MIS became popular• Structured problems could be solved by algorithms and decision rules• Unstructured problems have no structure• Semi structured problems have structured and unstructured phases 13
  • 14. Factors Affecting Decision-Making• New technologies and better information distribution have resulted in more alternatives for management.• Complex operations have increased the costs of errors, causing a chain reaction throughout the organization.• Rapidly changing global economies and markets are producing greater uncertainty and requiring faster response in order to maintain competitive advantages.• Increasing governmental regulation coupled with political destabilization have caused great uncertainty. 14
  • 15. Decision Support Frameworks Type of ControlType of Operational Control Managerial Control Strategic PlanningDecision:Structured Accounts Budget analysis, Investments,(Programmed) receivable, accounts short-term warehouse locations, payable, order entry forecasting, distribution centers personnel reportsSemistructured Production Credit evaluation, Mergers and scheduling, budget preparation, acquisitions, new inventory control project scheduling, product planning, rewards systems compensation, QA, HR policy planningUnstructured Buying software, Negotiations, R&D planning,(Unprogrammed) approving loans, recruitment, technology help desk hardware development, social purchasing responsibility plans 15
  • 16. Technologies for Decision-Making ProcessesType of Decision Technology Support NeededStructured MIS, Management Science(Programmed) Models, Transaction ProcessingSemistructured DSS, KMS, GSS, CRM, SCMUnstructured GSS, KMS, ES, Neural networks(Unprogrammed) 16
  • 17. Technology Support Based on Anthony’s Taxonomy Type of Control Operational Managerial Strategic Control Control PlanningTechnology MIS, Management GSS, CRM,Support Management Science, DSS, EIS, ES, neuralNeeded Science ES, EIS, SCM, networks, KMS CRM, GSS, SCM 17
  • 18. The DSS Focuses on Semi structuredProblems Computer Manager + Computer Manager Solution (DSS) Solution Solution Structured Semi structured Unstructured DEGREE OF PROBLEM STRUCTURE 18
  • 19. DSS Types• The least degree of problem-solving support comes from retrieval of information elements• More support comes from retrieving information files• Still more support comes from reports from multiple files 19
  • 20. DSS Types (continued)• Even more support from systems that can estimate decision consequences• More support from systems that can propose decisions• And the most support comes from systems that can make decisions 20
  • 21. DSS Types Degree of Problem Retrieve Analyze Prepare Estimate Propose Make solvinginformation entire files reports decision decisions decisions elements from consequences support multiple files Degree of Little Much complexity of the problem-solving system 21
  • 22. Characteristics and Capabilities of DSSs• Sensitivity analysis is the study of the impact that changes in one (or more) parts of a model have on other parts.• What-if analysis is the study of the impact of a change in the assumptions (input data) on the proposed solution.• Goal-seeking analysis is the study that attempts to find the value of the inputs necessary to achieve a desired level of output. Chapter 12 22
  • 23. Structure and Components of DSSs• Data management subsystem contain all the data that flow from several sources.• Model management subsystem contains completed models and the building blocks necessary to develop DSS applications.• User interface covers all aspects of the communications between a user and the DSS.• Users are the persons faced with the problem or decision that the DSS is designed to support.• Knowledge-based subsystems provide the required expertise for solving some aspects of the problem. Chapter 12 23
  • 24. DSS Process Chapter 12 24
  • 25. Group Decision Support Systems• a DSS whose design, structure, and usage reflect the way in which people cooperate to make a particular decision or type of decision• an interactive, computer-based system which facilitates the solution of unstructured problems by a set of decision makers working together as a group
  • 26. GDSS• consisting of a set of software, hardware, language components, and procedures that support a group of people engaged in a decision-related meeting Chapter 12 27
  • 27. Time/Place Framework• Time – synchronous – asynchronous• Place – same place – different place
  • 28. Time/Place Framework• Same Time/Same Place – decision room• Same Time/Different Place – telephone conferencing, video conferencing• Different Time/Same Place – project/team rooms, shared offices• Different Time/Different Place – email, workflow management systems
  • 29. Databases Model base GDSS processor GDSS software Access to the internet Dialogue External database Externaland corporate intranet, manager access databases networks, and other computer system Users
  • 30. Components of a GDSS and GDSS Software• Database• Model base• Dialogue manager• Communication capability• Special software (also called GroupWare)• E.g., Lotus Notes – people located around the world work on the same project, documents, and files, efficiently and at the same time
  • 31. GDSS Alternatives highDecision frequency Local area Wide area decision network decision network Decision Teleconferencing room low close distant Location of group members
  • 32. Decision Room• Decision Room – For decision makers located in the same geographic area or building – Use of computing devices, special software, networking capabilities, display equipment, and a session leader – Collect, coordinate, and feed back organized information to help a group make a decision – Combines face-to-face verbal interaction with technology-aided formalization
  • 33. Benefits of GDSS• supports parallel generation of ideas• supports larger groups• rapid and easy access to external information• parallel computer discussion• anonymous input• automatic documentation of the group meetings
  • 34. Organizational Decision Support System (ODSS)• Organizational Decision Support System (ODSS) is a DSS that focuses on an organizational task or activity involving a sequence of operations and decision makers Chapter 12 36
  • 35. ODSS provides– It affects several organizational units or corporate problems;– It cuts across organizational functions or hierarchical layers;– It involves computer-based and (usually) communications technologies. Chapter 12 37
  • 36. Executive Information (Support) Systems• Executive information system (EIS) also known as an executive support system (ESS), is a computer-based technology designed specifically for the information needs of top executives Chapter 12 38
  • 37. ESS• It is a comprehensive support system that goes beyond EIS to include analysis support, communications, office automation and intelligence support. Chapter 12 39
  • 38. ESS provides– Rapid access to timely information;– Direct access to management reports;– Very user friendly and supported by graphics.– Exception reporting – reporting of only the results that deviate from a set of standards.– Drill down reporting – investigating information in increasing detail.– Easily connected within online information services and e-mail.– Include analysis support, communications, office automation and intelligence support. Chapter 12 40
  • 39. Intelligent Support Systems• Intelligent systems describes AI.• AI= Artificial Intelligence – Involves studying of thought process of human. – Deals with representing those processes via machines. Chapter 12 41
  • 40. Overview of AI• Artificial intelligence (AI) – Computers with the ability to mimic or duplicate the functions of the human brain• Artificial intelligence systems – The people, procedures, hardware, software, data, and knowledge needed to develop computer systems and machines that demonstrate the characteristics of intelligence
  • 41. Intelligent Behavior– Learn from experience– Apply knowledge acquired from experience– Handle complex situations– Solve problems when important information is missing– Determine what is important Chapter 12 43
  • 42. Intelligent Behavior– React quickly and correctly to a new situation– Understand visual images– Process and manipulate symbols– Be creative and imaginative– Use heuristics Chapter 12 44
  • 43. Knowledge & AI• Knowledge consists of – Facts – Concepts – Theories – Heuristic methods – Procedures – Relationships Chapter 12 45
  • 44. Knowledge & AI• It is organized and analyzed information.• The above information is made understandable and applicable to problem solving or decision making.• Knowledge base: collection of knowledge related to a specific problem to be used in an intelligent system is organized and stored in a KB. Chapter 12 46
  • 45. Benefits of AI• Makes computers easier to use• Wide availability of knowledge• Significantly increases the speed of problem solving procedures (psps).• Increases consistency of psps. Chapter 12 47
  • 46. Benefits of AI• Increases productivity of performing tasks.• Summarizing of information• Interpretation of information• Rule-based systems to automated decision making. Chapter 12 48
  • 47. Intelligent Agents• Small programs that reside on computers to conduct certain task automatically.• IA runs in the background, monitors the environment.• IA reacts to certain trigger conditions.• Includes rule-based expert systems, case- base reasoning. Chapter 12 49
  • 48. Intelligent Agents• Applications – Personal assistant devices – E-mails – News filtering – Distribution appointment handling – Web applets for e-commerce – Information gathering Chapter 12 50
  • 49. Intelligent Systems (cont’d) Chapter 12 51
  • 50. Expert SystemsExpert systems (ESs) are attempts to mimic humanexperts.It is decision-making software that can reach alevel of performance comparable to a humanexpert in some specialized and usually narrowproblem area.The idea is simple: expertise is transferred from anexpert or other source of expertise to the computer. Chapter 12 52
  • 51. -cont… The transfer of expertise from an expert to a computer and then to the user involves four activities: Knowledge acquisition (from experts or other sources) Knowledge representation (organized as rules or frames in the computer) Knowledge inferencing is performed in a component called the inference engine of the ES and results in the recommendation. Knowledge transfer to the user (the Chapter 12 53
  • 52. The Benefits of Expert Systems Benefit Description ESs can configure for each custom order.Increased output and productivity Increasing production capabilities ESs can provide consistent advise andIncreased quality reduce error rates.Capture and dissemination of Expertise from anywhere in the world canscarce expertise be obtained and used. Sensors can collect information that anOperation in hazardous ES interprets, enabling human workers toenvironments avoid hot, humid, or toxic environments. ESs can increase the productivity of helpAccessibility to knowledge and – desk employee, or even automate thishelp desks function. ESs do not become tired or bored, call inReliability sick or go on strike. They consistently pay attention to details. Chapter 12 54
  • 53. Benefits of EXBenefits Description Even with answer of ‘ don’t know ‘ an ESAbility to work with incomplete or can produce an answer, though it mayuncertain information not be a definite one. The explanation facility of an ES canProvision of training serve as a teaching device and knowledge base for novices. ESs allow the integration of expertEnhancement of decision- making judgment into analysis (e.g., diagnosis ofand problem-solving capabilities machine malfunction and even medical diagnosis). ESs usually can make faster decisionDecreased decision-making time than humans working alone. ESs can quickly diagnose faster decisionsReduce downtime than humans and prescribe repairs. Chapter 12 55
  • 54. Limitations of ES• Not widely used or tested• Limited to relatively narrow problems• Cannot readily deal with “mixed” knowledge• Possibility of error• Cannot refine own knowledge base• Difficult to maintain• May have high development costs• Raise legal and ethical concerns
  • 55. Natural Language Processing & Voice Technologies• Natural language processing (NLP): Communicating with a computer in English or whatever language you may speak.• Natural language understanding/speech (voice) recognition: The ability of a computer to comprehend instructions given in ordinary language, via the keyboard or by voice.• Natural language generation/voice synthesis: Technology that enables computers to produce ordinary language, by “voice” or on the screen, so that people can understand computers more easily. Chapter 12 57
  • 56. Neural Networks• Neural networks are a system of programs and data structures that approximates the operation of the human brain.• Neural networks are particularly good at recognizing subtle, hidden, and newly emerging patterns within complex data as well as interpreting incomplete inputs. Chapter 12 58
  • 57. Fuzzy Logic• Fuzzy logic deals with the uncertainties by simulating the process of human reasoning, allowing the computer to behave less precisely and logically than conventional computers do. – Involves decision in gray areas. – Uses creative decision-making processes. Chapter 12 59