Enabling the Organization- Decision Making

Decision Making

• reasons for the growth of decision making information system
• people need to analyze large amounts of information
• people must make decision quickly
• people must apply sophisticated analysis techniques, such as modelling and forecasting, to make good decision
• people must protect the corporate asset of organizational information
• model- a simplified representation of abstraction of reality
• IT system in an enterprise
• moving up through the organizational pyramid users move from requiring transactional information to analytical 

Transaction Processing System

• transaction processing system - the basic business system that serves the operational level (analysis) in an organization
• online transaction processing (OLTP) - the capturer of transaction and event information using technology to (1)process 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
• 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 

Executive Information System

• executive information system (EIS) - a specialize DSS that supports senior level executives within the organization
• most EIS 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 perspective
• digital dashboard - integrates information from multiple components and presents it in a unified display

Artificial Intelligence (AI)

• intelligent system - various commercial applications of artificial intelligence systems
• artificial intelligence (AI) - stimulates human intelligence such as the ability to reason and learn
• advantages : can check info on competitor
• the ultimate goal of AI is teh ability to build a system that can mimic human intelligence
• four most common categories of AI include:
1. expert system - computerized advisory programs that initiate 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 aigorithm - 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
• multi-agent systems
• agent-based modelling

Data Mining

• data mining software includes many forms of AI such as neural networks and expert 
• common forms of data mining analysis capabilities:
• cluster analysis
• cluster analysis is a technique used to divide an information set into mutually exclusive groups such that the members of each group are so close together as possible ti 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   
• association detection
• association detection reveals the degree to which variables are related and the nature and frequency of these relationship in the information
• market basket analysis - analyzes such items as Web sites and checkout scanner information to detect customer's buying behavior and predict future behavior by identifying affinities among customers' choices of products and services
• statistical analysis
• statistical analysis performs such function 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