This document provides an overview of management decision support and intelligent systems. It discusses how managers use resources like people, money, materials and time to achieve organizational goals. It also describes various decision making frameworks and technologies that support decision making processes at different levels of an organization. These include management information systems, decision support systems, executive information systems, group decision support systems and intelligent systems like expert systems and neural networks.

1. Chapter 12
Management Decision
Support 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 System
DSSs are computer-based information systems
that provide interactive information support to
managers and business professionals during the
decision-making process.
DSSs use Analytical Models, Specialized
Databases, A decision maker’s own insights &
judgment & An interactive, computer based
modeling process to support the making of
semi-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 Control
Type of Operational Control Managerial Control Strategic Planning
Decision:
Structured Accounts Budget analysis, Investments,
(Programmed) receivable, accounts short-term warehouse locations,
payable, order entry forecasting, distribution centers
personnel reports
Semistructured Production Credit evaluation, Mergers and
scheduling, budget preparation, acquisitions, new
inventory control project scheduling, product planning,
rewards systems compensation, QA, HR
policy planning
Unstructured 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
Processes
Type of Decision Technology Support Needed
Structured MIS, Management Science
(Programmed) Models, Transaction Processing
Semistructured DSS, KMS, GSS, CRM, SCM
Unstructured GSS, KMS, ES, Neural networks
(Unprogrammed)
16

17. Technology Support Based on Anthony’s
Taxonomy
Type of Control
Operational Managerial Strategic
Control Control Planning
Technology MIS, Management GSS, CRM,
Support Management Science, DSS, EIS, ES, neural
Needed Science ES, EIS, SCM, networks, KMS
CRM, GSS,
SCM
17

18. The DSS Focuses on Semi structured
Problems
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 solving
information 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

26. 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

27. 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

28. Time/Place Framework
• Time
– synchronous
– asynchronous
• Place
– same place
– different place

29. 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

30. Databases
Model base GDSS processor GDSS software
Access to the internet Dialogue External database External
and corporate intranet, manager access databases
networks, and other
computer system
Users

31. 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

32. GDSS Alternatives
high
Decision frequency
Local area Wide area
decision network decision network
Decision
Teleconferencing
room
low
close distant
Location of group members

33. 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

35. 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

36. 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

37. 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

38. 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

39. ESS
• It is a comprehensive support system that
goes beyond EIS to include analysis
support, communications, office
automation and intelligence support.
Chapter 12 39

40. 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

41. 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

42. 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

43. 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

44. 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

45. Knowledge & AI
• Knowledge consists of
– Facts
– Concepts
– Theories
– Heuristic methods
– Procedures
– Relationships Chapter 12 45

46. 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

47. 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

48. Benefits of AI
• Increases productivity of performing tasks.
• Summarizing of information
• Interpretation of information
• Rule-based systems to automated
decision making.
Chapter 12 48

49. 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

50. Intelligent Agents
• Applications
– Personal assistant devices
– E-mails
– News filtering
– Distribution appointment handling
– Web applets for e-commerce
– Information gathering
Chapter 12 50

51. Intelligent Systems (cont’d)
Chapter 12 51

52. Expert Systems
Expert systems (ESs) are attempts to mimic human
experts.
It is decision-making software that can reach a
level of performance comparable to a human
expert in some specialized and usually narrow
problem area.
The idea is simple: expertise is transferred from an
expert or other source of expertise to the computer.
Chapter 12 52

53. -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

54. 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 and
Increased quality
reduce error rates.
Capture and dissemination of Expertise from anywhere in the world can
scarce expertise be obtained and used.
Sensors can collect information that an
Operation in hazardous
ES interprets, enabling human workers to
environments
avoid hot, humid, or toxic environments.
ESs can increase the productivity of help
Accessibility to knowledge and
– desk employee, or even automate this
help desks
function.
ESs do not become tired or bored, call in
Reliability sick or go on strike. They consistently pay
attention to details.
Chapter 12 54

55. Benefits of EX
Benefits Description
Even with answer of ‘ don’t know ‘ an ES
Ability to work with incomplete or
can produce an answer, though it may
uncertain information
not be a definite one.
The explanation facility of an ES can
Provision of training serve as a teaching device and
knowledge base for novices.
ESs allow the integration of expert
Enhancement of decision- making judgment into analysis (e.g., diagnosis of
and problem-solving capabilities machine malfunction and even medical
diagnosis).
ESs usually can make faster decision
Decreased decision-making time
than humans working alone.
ESs can quickly diagnose faster decisions
Reduce downtime
than humans and prescribe repairs.
Chapter 12 55

56. 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

57. 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

58. 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

59. 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