CHAPTER 9: ENABLING THE ORGANIZATION-DECISION MAKING

·         A model is a simplified representation or abstraction of reality

·         Primary reasons for growth of decision making information system

Reasons for growth decision making information system

1.       People need to analyze large amounts of information : improvement 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.

2.       People must make decisions quickly : time is the essence and people simply do not have time to shift through all the information manually

3.       People must apply sophisticated analysis technique such as modeling and forecasting to make good decision : information system substantially reduce the time required to perform these sophisticated analysis techniques

4.       People must protect the corporate asset of organizational information : information systems offer the security required to ensure organizational informational remains safe

·         Executives (executive information system (EIS)

·         Managers (decision support systems –DSS)

·         Analysts (transaction processing system – TPS)

·         Online transaction processing ( OLTP) is the capturing of transaction and event information using technology to:

o   Process the information according to defined business rules

o   Store the information

o   Update existing information to reflect the new information

·         A transaction processing system (TPS) is the basic business system that serves the operational level (analysts) in an organization.

·         Online analytical processing (OLAP) is the manipulation of information to create business intelligence in support of strategic decision making

·         A decision support system (DSS) models information to support managers and business professional during the decision making process

·         3 quantitative models are typically used by DSS:

o   Sensitivity analysis : is the study of the impact that changes in one (or more) parts of the model have on anther parts of the model. Users change the value of one variable repeatedly and observe the resulting changes in other variables.

o   What-if analysis : checks the impact of a change in an assumption on the proposed solution.

o   Goal-seeking analysis : finds the inputs necessary to achieve a goal such as a desired level of output. Instead of observing how changes in a variable affect other variables as in what-if analysis, goal-seeking analysis sets a target value ( a goal) for a variable and then repeatedly changes other variables until the target value is achieved.

·         Executive information systems (EIS) is a specialized DSS that supports senior-level executives within the organization:

o   Consolidation involves the aggregate of information and features simple roll ups to complex groupings of interrelated information. Many organizations track financial information at a regional level and then consolidate the information at single global level

o   Drill-down enables users to get details, and details of details of information. Viewing monthly, weekly, daily oe even hourly information represents drill-down capability

o   Slice and dice is the ability to look at information from different perspectives. One slice of information could display all product sales during a given promotion. Another slice could display a single product’s sales for all promotions.

·         Digital dashboard integrate information from multiple components and tailor the information to individual preferences

·         Intelligent systems are various commercial applications of artificial intelligence. Artificial intelligence (AI) stimulates human intelligence such as the ability to reason and learn

·         Expert systems are computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems

·         Neural networks also called artificial neural networks is a category of artificial intelligence that attempts to emulate the way the human brains works

·         A genetic algorithm is an artificial intelligence system that mimics the evolutionary, survival of the fittest process to generate increasingly better solutions to a problems

·         An intelligent agent is a special purpose knowledge based information system that accomplishes specific tasks on behalf of its users. Intelligent agents use their knowledge base to make decisions and accomplish tasks in a way that fulfills the intentions of a user

·         Data mining have common forms of data-mining:

o   Cluster analysis

o   Association detection

o   Statistical analysis