MGT300 Chapter 9 – Enabling the Organization-Decision Making

Decision Making 

•  Reasons for Growth of Decision Making Information System

-     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

-     People must make decisions quickly > Time is of the essence and people simply do not have time to sift through all the information manually

-    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

-      People must protect the corporate asset of organizational information > Information systems offer the security required to ensure organizational information remains safe.

•   Model – A simplified representation or abstraction of reality

•   IT systems in an enterprise

Transaction Processing System

• Moving up through the organizational pyramid users move from requiring transactional information to analytical information

•  Transaction processing system – the basic business system that serves the operational level (analysis) 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

Decision support systems

• Decision support system (DSS) – models information to support managers and business professionals during the decision-making process

1.  Three quantitative models used by DSSs include;      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 outputs

What-if analysis

Goal-seeking analysis

Executive information system 

• Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization
•  Most EISs offering the following capabilities;

1. Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information
2. Drill-down – enables users to get details, and details of information
3. Slice-and-dice – looks at information from different perspectives

•   Interaction between a TPS and an EIS

•   Interaction between a TPS and a DSS

•  Digital dashboard – integrates information from multiple components and presents it in a united display

Artificial intelligence (AI)

•  The ultimate goal of AI is the ability to build a system that can mimic human intelligence
•  Intelligent system – various commercial applications of artificial intelligence
•  Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
• Four most common categories of AI include;

1. Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
2. Neural network – attempts to emulate the way the human brain works > Fuzzy logic – a mathematical method of handling imprecise or subjective information
3. Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem
4. Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

Data Mining

• Data-mining software includes many forms of AI such as neutral networks and expert systems