LO5

Management Decision Support and

Intelligent Systems

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 Learning Objectives
• Describe the concepts of managerial, decision making, and computerized support for
decision making.
• Justify the role of modeling and models in decision making.
• Describe decision support systems (DSSs) and their benefits, and describe the DSS
structure.
• Describe the support to group (including virtual) decision making.
• Describe organizational DSS and executive support systems, and analyze their role in
management support.
• Describe artificial intelligence (AI) and list its benefits and characteristics.
• List the major commercial AI technologies
• Define an expert system and its components and describe its benefits and limitations.
• Describe natural language processing and compare it to speech understanding.
• Describe Artificial Neural Networks (ANNs), their characteristics and major applications.
Compare it to fuzzy logic and describe its role in hybrid intelligent systems.
• Describe the relationships between the Web, DSS, and intelligent system.
• Describe special decision support applications including the support of frontline
employees.

MSIS 5623 Chapter 11 2

 Management

Management is a process by which organizational goals (outputs) are

achieved through the use of corporate resources (inputs). These
organizational decisions (processes) are typically made by managers.

• A manager's role can be categorized into:

• Interpersonal - figurehead, leader, liaison
• Informational - monitor, disseminator, spokesperson
• Decisional - entrepreneur, problem solver, resource coordinator, and
negotiator

Information systems support all three roles especially

decisional.

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 Managers and Decision Making
A decision refers to a choice made between alternatives. Decision making in
organizations can be classified into two broad categories: problem solving
and opportunity exploitation.

• Why Managers Need the Support of Information Technology. It

is very difficult to make good decisions without valid, timely and
relevant information.
• Number of alternatives to be considered is increasing
• Many decisions are made under time pressure.
• Due to uncertainty in the decision environment, it is frequently necessary
to conduct a sophisticated analysis.
• It is often necessary to rapidly access remote information.

Can we make better decisions?

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 Management Support Systems

Discovery, communication and collaboration tools provide indirect support

to decision making, however there are several other information
technologies used to directly support decision making.

• Decision Support Systems (DSS) provide support primarily to

analytical, quantitative types of decisions.
• Executive (Enterprise) Support Systems (ESS) support the
informational roles of executives.
• Group Decision Support Systems supports managers and staff
working in groups.
• Intelligent Systems

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 Decision Process

Decision makers goes through a fairly systematic process.

Define Intelligence phase

the
“Process or Problem”
Develop Modeling phase
Alternative
Courses of Action
Select
The “Best”
One Choice phase
Review It

Act on it

Implementation
phase

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 Models – aiding decision making
A model (in decision making) is a simplified representation of reality.
Simplified because reality is too complex to copy exactly and much of the
processes complexity is irrelevant to a specific problem.
• The benefits of modeling in decision making are:
• The cost of virtual experimentation is much lower than the cost of
experimentation with a real system.
• Models allow for the simulated compression of time.
• Manipulating the model is much easier than manipulating the real system.
• The cost of mistakes are much lower in virtual experimentation.
• Modeling allows a manager to better deal with the uncertainty by introducing
“what-ifs” and calculating the risks involved in specific actions.
• Mathematical models allow the analysis and comparison of a very large number
of possible alternative solutions.
• Models enhance and reinforce learning and support training.

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 Models – Classifications
Representation by models can be done at various degrees of abstraction.
Models are thus classified into four groups according to their degree of
abstraction
• An Iconic or Scale model is a physical replica of a system.
• An Analog model does not look like the real system but
behaves like it.
• A Mathematical (Quantitative) model describes the system
with the aid of mathematics and is composed of three types of
variables (decision, uncontrollable and result)
• A Mental models provides a subjective description of how a
person thinks about a situation. The model includes beliefs,
assumptions, relationships and flows of work as perceived by
that individual.

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 Decision Complexity
Decision making ranges from simple to very complex decisions that fall along a
continuum that ranges from structured to unstructured. Structured processes refer to
routine & repetitive problems with standard solutions. While Unstructured are "fuzzy,"
complex problems with no clear-cut solutions.

Obj ect ive Pr obl em Inf or mat ion Oper at ion

Compl ex Mul t i
St r at egic Unst r uct ur ed Impor t ant Dimensional

Semi
Tact ical
st r uct ur ed OLAP

It s been Day t o Day

Oper at ional Repet it ive St r uct ur ed
done bef or e Repor t

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 Decision Support Systems

Decision support system (DSS) is a computer-based information system that

combines models and data in an attempt to solve semistructured and
unstructured problems with user involvement.

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 Decision Support Systems - Components

Every DSS consists of at least data management, user interface, model

management components, and the end users. A few also contain a
knowledge management component.

• A DSS data management subsystem contains all the data that flow from
several sources, and are extracted prior to their entry into a DSS database or
a data warehouse.
• A model management subsystem contains completed models (financial,
statistical, management science, or other quantitative models), and the
routines to develop DSSs applications.
• The user interface covers all aspects of the communications between a user
and the DSS.
• The Users. The person (manager, or the decision maker) faced with the
problem or decision that the DSS is designed to support
• A knowledge-based or intelligent subsystem provides the expertise for
solving some aspects of the problem, or the knowledge that can enhance the
operation of the other DSS components.
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 DSS Process
When user has a problem they evaluate it using this process.

Model

Data

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Group Decision Support Systems

The DSS methodology was initially designed to support individual decision

makers. However, decision making is frequently a shared process. Where a
group may be involved in making the decision. When a decision-making
group is supported electronically, the support is referred to as a group
decision support system (GDSS).

• Groups
• One-room group whose members are in one place
• Virtual group, whose members are in different locations

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Organizational Decision Support System

Organizational decision support system (ODSS) provide decision support for

the individual, group, and organization. It focuses on an organizational task
or activity involving a sequence of operations and decision makers.

• Major characteristics of an ODSS are:

• It affects several organizational units or corporate problems
• It cuts across organizational functions or hierarchical layers
• It involves computer-based technologies and communication
technologies.
• It often interacts or integrates with enterprise-wide information
systems.

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 Executive Information (Support) Systems

An executive information system (EIS), also known as an executive support

system (ESS), is a technology designed in response to the specific needs of
top-level managers and executives.
• EIS are:
• Very user friendly
• Is supported by graphics
• Provides the capabilities of exception reporting (reporting only the results that
deviate from a set standard)
• Provide drill down (investigating information in increasing detail).
• ESS goes beyond EIS to include:
• Analyse support
• Communications
• Office automation
• Intelligence support

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 ESS - Expansion continued

• ESS can be enhanced with:

• Multidimensional analysis and presentation
• Friendly data access
• User-friendly graphical interface
• Imaging capabilities
• Intranet access
• E-mail
• Internet access
• Modeling
• ESS goes beyond EIS to include:
• Analyse support
• Communications
• Office automation
• Intelligence support

Intelligent ESS saves an executive's time in conducting drill downs,

exceptions, or identifying trends by automating these activities .
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 Intelligent Support Systems (ISS)

Intelligent systems is a term that describes the various commercial

applications of artificial intelligence (AI). AI is concerned with studying the
thought processes of humans and representing those processes via machines
(computers, robots, and so on). It’s ultimate goal is to build machines that will
mimic human intelligence.

• AI applications can be extremely valuable:

• They can make computers easier to use.
• They make knowledge more widely available.
• They significantly increase the speed and consistency of some problem-solving
procedures.
• They handle problems that are difficult to solve by conventional computing and those
that have incomplete or unclear data.
• They increase the productivity of performing many tasks.
• They helps in handling information overload by summarizing or interpreting
information.
• They assist in searching through large amounts of data.
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 ISS - Artificial Intelligence
The development of machines that exhibit intelligent characteristics draws
upon several sciences and technologies, ranging from linguistics to
mathematics.

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Expert Systems (ES) – One type of ISS
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.

• 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 expert’s knowledge has been transferred to
users).

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Expert Systems (ES) – One type of ISS

Benefits:

MSIS 5623 Chapter 11 20

Expert Systems

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 Other Intelligent Systems
An expert system’s major objective is to provide expert advice. Other
intelligent systems can be used to solve problems or provide capabilities in
areas in which they excel.
Semantic Web. It is an extension of
the current Web, in which information is
given a well-defined meaning, based in
part on NLP, on XML presentation, and
new technologies such as resource
description framework (RDF).
Expert System

Neural Networks
Robotics

Artificial neural networks (ANNs) Cognitive/Learning

simulate massive parallel processes Natural
Language Science
that involve processing elements
interconnected in a network. Processing Visual & Auditory
Processing

AI Fuzzy logic deals with uncertainties by

simulating the process of human
reasoning, allowing the computer to
behave less precisely and logically than
conventional computers do.

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 Web-Based Management Support Systems

Deploying decision support capabilities on a global basis via the Web.

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 Simulation Systems

Simulation generally refers to a technique for conducting experiments (such

as "what-if") with a computer on a model of a management system. Because
DSS deals with semistructured or unstructured situations, it involves
complex reality, which may not be easily represented by optimization or
other standard models but can often be handled by simulation. Therefore,
simulation is one of the most frequently used tools of DSSs.

• Advantages of Simulation.
• Allows for inclusion of the real-life complexities of problems.
• Is descriptive.
• Can handle an extremely wide variation in problem types.
• Can show the effect of compressing time.
• Can be conducted from anywhere.

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 MANAGERIAL ISSUES

• Cost justification; intangible benefits. While some of the benefits of

management support systems are tangible, it is difficult to put a dollar value on the
intangible benefits of many such systems.
• Documenting personal DSS. Many employees develop their own DSSs to increase
their productivity and the quality of their work. It is advisable to have an inventory of
these DSSs and make certain that appropriate documentation and security measures
exist.
• Security. Decision support systems may contain extremely important information for
the livelihood of organizations. Taking appropriate security measures, especially in Web-
based distributed applications, is a must.
• Ready-made commercial DSSs. With the increased use of Web-based systems
and ASPs, it is possible to find more DSS applications sold off the shelf, frequently online.
The benefits of a purchased or leased DSS application sometimes make it advisable to
change business processes to fit a commercially available DSS.

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 MANAGERIAL ISSUES Continued

• Intelligent DSS. Introducing intelligent agents into a DSS application can greatly
increase its functionality.
• Organizational culture. The more people recognize the benefits of a DSS and the
more support is given to it by top management; the more the DSS will be used.
• Embedded technologies. Intelligent systems are expected to be embedded in at
least 20 percent of all IT applications in about 10 years. It is critical for any prudent
management to closely examine the technologies and their business applicability.
• Ethical issues. Corporations with management support systems may need to address
some serious ethical issues such as privacy and accountability.

MSIS 5623 Chapter 11 26