CHAPTER 4CHAPTER 4

ANALYTICS, DECISION ANALYTICS, DECISION SUPPORT, AND ARTIFICIAL SUPPORT, AND ARTIFICIAL

INTELLIGENCEINTELLIGENCE

Brainpower for Your BusinessBrainpower for Your Business

Opening Case:Opening Case:Online LearningOnline Learning

Notice the increase in online learning and the decrease in traditional enrollments.

Phases of Decision MakingPhases of Decision Making

IntelligenceIntelligence DesignDesign ChoiceChoice ImplementationImplementation

Types of DecisionsTypes of Decisions

Structured decisionStructured decision

Semi-Structured decisionSemi-Structured decision

Nonstructured decisionNonstructured decision

What Job Do I Take?What Job Do I Take?

Types of DecisionsTypes of Decisions

Recurring decisionRecurring decision

Nonrecurring (ad hoc) decisionNonrecurring (ad hoc) decision

Types of Decisions You FaceTypes of Decisions You Face

EASIEST

MOST DIFFICULT

Decision Support SystemsDecision Support Systems

Decision support system (DSS)Decision support system (DSS)

Helps you analyze, but you must Helps you analyze, but you must know how to solve the problem, and know how to solve the problem, and how to use the results of the analysishow to use the results of the analysis

Components of a DSSComponents of a DSS

Model management componentModel management component

Data management componentData management component

User interface management User interface management componentcomponent

Components of a DSSComponents of a DSS

Geographic Information Geographic Information SystemsSystems

Geographic information system (GIS)Geographic information system (GIS) https://

www.youtube.com/watch?v=rokWdaGc3u4 Spatial information is any information in Spatial information is any information in

map formmap form Used to analyze information, generate Used to analyze information, generate

business intelligence, and make decisionsbusiness intelligence, and make decisions

Google Earth as a GISGoogle Earth as a GIS

DATA-MINING TOOLS AND DATA-MINING TOOLS AND MODELSMODELS

Business need IT-based analytics Business need IT-based analytics toolstools Databases and DBMSsDatabases and DBMSs Query-and-reporting toolsQuery-and-reporting tools Multidimensional analysis toolsMultidimensional analysis tools Digital dashboardsDigital dashboards Statistical toolsStatistical tools GISsGISs Specialized analyticsSpecialized analytics Artificial intelligenceArtificial intelligence

Our focus

Data-Mining: Predictive Data-Mining: Predictive AnalyticsAnalytics

Predictive analytics Predictive analytics highly computational data-mining highly computational data-mining

technology that uses information technology that uses information and business intelligence to build a and business intelligence to build a predictive model for a given predictive model for a given business applicationbusiness application

Insurance, retail, healthcare, Insurance, retail, healthcare, travel, financial services, CRM, travel, financial services, CRM, SCM, credit scoring, etcSCM, credit scoring, etc

Data-Mining: Predictive Data-Mining: Predictive Analytics ExampleAnalytics Example

Prediction goalPrediction goal What customers are most likely to What customers are most likely to

respond to a social media campaign respond to a social media campaign within 30 days by purchasing at least 2 within 30 days by purchasing at least 2 products in the advertised product line?products in the advertised product line?

Prediction indicatorsPrediction indicators Frequency of purchasesFrequency of purchases Proximity of date of last purchaseProximity of date of last purchase Presence on Facebook and TwitterPresence on Facebook and Twitter Number of multiple-product purchasesNumber of multiple-product purchases

Data-Mining: Text AnalyticsData-Mining: Text Analytics

Text analytics Text analytics uses statistical, AI, and linguistic uses statistical, AI, and linguistic

technologies to convert textual technologies to convert textual information into structured information into structured informationinformation

Gaylord Hotels uses text Gaylord Hotels uses text analytics to make sense of analytics to make sense of customer satisfaction surveyscustomer satisfaction surveys

Data-Mining: Endless Data-Mining: Endless AnalyticsAnalytics

Web analytics Web analytics – understanding and – understanding and optimizing Web page usageoptimizing Web page usage Search engine optimization (SEO) Search engine optimization (SEO) – –

improving the visibility of Web site using improving the visibility of Web site using tags and key termstags and key terms

HR analytics HR analytics – analysis of human – analysis of human resource and talent management dataresource and talent management data

Marketing analyticsMarketing analytics – analysis of – analysis of marketing-related data to improve product marketing-related data to improve product placement, marketing mix, etcplacement, marketing mix, etc

Data-Mining: Endless Data-Mining: Endless AnalyticsAnalytics

CRM analytics CRM analytics – analysis of CRM data to – analysis of CRM data to improve sales force automation, customer improve sales force automation, customer service, and supportservice, and support

Social media analyticsSocial media analytics – analysis of social – analysis of social media data to better understand media data to better understand customer/organization interaction dynamicscustomer/organization interaction dynamics

Mobile analytics Mobile analytics – analysis of data related – analysis of data related to the use of mobile devices to support to the use of mobile devices to support mobile computing and mobile e-commerce mobile computing and mobile e-commerce (m-commerce)(m-commerce)

Artificial IntelligenceArtificial Intelligence Artificial intelligence (AI)Artificial intelligence (AI)

Types of AI systems used in businessTypes of AI systems used in business1.1. Expert systemsExpert systems

2.2. Neural networksNeural networks

3.3. Genetic algorithmsGenetic algorithms

4.4. Agent-based technologiesAgent-based technologies AI systems deliver the conclusion AI systems deliver the conclusion

(rather than helping you analyze the (rather than helping you analyze the options)options)

Expert SystemsExpert Systems

Expert (knowledge-based) Expert (knowledge-based) systemsystem

Used for Used for Diagnostic problems (what’s wrong?)Diagnostic problems (what’s wrong?) Prescriptive problems (what to do?)Prescriptive problems (what to do?)

Expert System Example: Expert System Example: Traffic LightTraffic Light

Expert System: ComponentsExpert System: Components1.1. Information TypesInformation Types

Problem facts Problem facts Domain expertiseDomain expertise ““Why?” informationWhy?” information

2.2. PeoplePeople Domain expertDomain expert Knowledge engineerKnowledge engineer Knowledge workerKnowledge worker

3.3. IT ComponentsIT Components Knowledge acquisitionKnowledge acquisition Knowledge base Knowledge base Inference engine Inference engine User interfaceUser interface Explanation module Explanation module

Expert System: ComponentsExpert System: Components

What Expert Systems Can and What Expert Systems Can and Can’t DoCan’t Do

An expert system canAn expert system can Reduce errorsReduce errors Improve customer serviceImprove customer service Reduce costReduce cost

An expert system can’tAn expert system can’t Use common senseUse common sense Automate all processes Automate all processes

Neural Networks and Fuzzy Neural Networks and Fuzzy LogicLogic

Neural network (NN) Neural network (NN)

(or artificial neural network (or artificial neural network (ANN))(ANN))

Learns through trainingLearns through training Finds patternsFinds patterns

The Layers of a Neural The Layers of a Neural Network Network

Neural Networks Can…Neural Networks Can…

Learn and adjust to new circumstances Learn and adjust to new circumstances on their ownon their own

Take part in massive parallel processingTake part in massive parallel processingFunction without complete informationFunction without complete informationCope with huge volumes of informationCope with huge volumes of informationAnalyze nonlinear relationships Analyze nonlinear relationships

Fuzzy LogicFuzzy Logic Fuzzy logicFuzzy logic

a mathematical method of handling imprecise a mathematical method of handling imprecise or subjective informationor subjective information

Used to make ambiguous information such Used to make ambiguous information such as “short” usable in computer systemsas “short” usable in computer systems

ApplicationsApplications Google’s search engineGoogle’s search engine Washing machinesWashing machines Antilock breaks Antilock breaks

Genetic AlgorithmsGenetic Algorithms

Genetic algorithm (GA)Genetic algorithm (GA)

Takes thousands or even millions of Takes thousands or even millions of possible solutions, combining and possible solutions, combining and recombining them until it finds the recombining them until it finds the optimal solutionoptimal solution

Work in environments where no model Work in environments where no model of how to find the right solution existsof how to find the right solution exists

Genetic Algorithm: ExamplesGenetic Algorithm: Examples

Staples – determine optimal Staples – determine optimal package design characteristicspackage design characteristics

Boeing – design aircraft parts Boeing – design aircraft parts such as fan bladessuch as fan blades

Many retailers – better manage Many retailers – better manage inventory and optimize display inventory and optimize display areasareas

Agent-Based TechnologiesAgent-Based Technologies

Intelligent AgentsIntelligent Agents

Multi-Agent SystemsMulti-Agent Systems

Intelligent AgentsIntelligent Agents

Intelligent agentIntelligent agent Information agents or shopping/buyer Information agents or shopping/buyer

agentsagents Monitoring-and-surveillance agentsMonitoring-and-surveillance agents User or personal agents User or personal agents Data-mining agents Data-mining agents

Multi-Agent SystemsMulti-Agent Systems

BiomimicryBiomimicry

Swarm (collective) IntelligenceSwarm (collective) Intelligence