SAVITRIBAI PHULE PUNE UNIVERSITY

School of Open Learning

(Distance Education Program)
MANAGEMENT INFORMATION
SYSTEMS
MBA. First Year
Semester-2
CR 26
UNIT 5 DECISION SUPPORT SYSTEMS

 Discuss the Decision Support System and

Transaction Processing System
 Explain the Executive Information
System and its benefits
 Describe the components of Expert
System
 State the meaning and domain of
artificial intelligence
GROUP DECISION SUPPORT SYSTEMS
In small organizations and start-ups, major decisions are taken by
individuals. But in large organizations, decisions are taken collectively by
a group that may consist of individuals geographically apart. Information
systems that help group and organizational decision-making are referred
to as group decision support system or GDSS.

Definition of GDSS
A GDSS is usually a Web-enabled system that helps geographically
distributed managers to interact in real time. It provides an interactive
GUI so that inputs from individuals are seen by everybody in the group
and every additional input takes the group closer to the decision. GDSS
are used for non-structural decision-making. Non-structural decisions
require judgement as there is no set procedure or algorithm for solving
non-routine problems. GDSS use tools, such as videoconferencing to
facilitate group discussions and group decision-making.
Tools only facilitate communication but it is up to the convener and participants to
hold the meeting in a productive manner. Here are some guidelines:
1. The agenda for the meeting should be circulated to the participants in advance
along with background/reference material, if any. Pre-planning is required to
help participants come prepared for the meeting.
2. A positive tone is required in the meeting where ideas are freely generated and
discussed. The objective is to create an atmosphere where participants feel free
to express themselves.
3. The convener should be able to integrate relevant ideas and suggestions in real
time to progress towards the solution.
4. At the end of the meeting, a document should be created to record the
proceedings of the meeting. This document becomes a reference for future and
for absentees, if any.
5. GDSS are used for making qualitative decisions. These days, a lot of emphasis
is laid on making decisions as quantitatively as possible. Even qualitative data
are supported by available data indirectly. Real-time access to data and preplanning
help in avoiding situations where decisions are deferred due to lack of
data. An information system and networked environment makes it easy to access
the data in real time.
Characteristics of GDSS
A GDSS consists of hardware/network, software tools and people. Hardware and networking
are required to facilitate videoconferencing. Software is required to drive the hardware so that
the communication can actually take place. In addition, application software is required to
manage the contents of the meeting. Most of us have used online chatting tools. Just visualize
an important meeting happening in a similar manner. We will need software that can capture
and organize the contents of the meeting. There are various tools in the market, each
designed with a specific purpose.
List some of the tools here:
Videoconferencing: There are many Indian and multinational companies that provide
videoconferencing facilities. One can purchase hardware and software and set up.

Electronic brainstorming tools: Brainstorming refers to a decisions-making process

where every participant contributes ideas and the convener consolidates them to arrive
at a decision. The simplest form of brainstorming is when the problem is communicated
to the participants by the convener and they send their responses back to the convener.
He then consolidates all the ideas and sends the report to all participants. The process
may need repeating and may be time-consuming. There are software that help the user
generate ideas. The user starts with some idea and the software uses its database to
generate related ideas.
How GDSS Supports Meetings
GDSS are a division of electronic support systems that are intended to assist
meetings and work groups. They are also known as electronic meeting
system or Groupware.

These may be LAN or Web-based systems which facilitate brainstorming, idea

generation, organization, prioritization, decision-making and action planning
among the participants of a meeting. Some of the known GDSS are
TeamFocus from IBM, GroupSystems, Grouputer, Meetingworks and
Facilitate.com.
By using GDSS, a meeting can be hosted in a single room or over the Internet
or any network. Most GDSS need a meeting facilitator who helps set the
agenda of the meeting. However, there are a few GDSS who can work as a
stand-alone system.
The participants of the meeting may be at:
 Different locations and different time
 Same location and different time
 Different locations and same hour
 Same location and the same hour
EXECUTIVE INFORMATION SYSTEMS OR EXECUTIVE SUPPORT SYSTEMS
An executive support system (ESS)—an extension of MIS, is a computer-
based information system that helps in decision-making at the top-level
of organization. The decisions taken with the help of ESS are non-routine
decisions that affect the entire organization and thus, require judgment
and insight.

As compared to DSSs, the ESSs offer more general computing

capabilities, better telecommunications, and efficient display options.
They use the advanced graphics software to display the critical
information in form of charts or graphs that help senior executives to
solve a wide range of problems. To make effective decisions, they use
summarized internal data from MIS and DSS as well as data from
external sources about events like new tax laws, new competitors, etc.
They filter, compress, and track data of high importance and make it
available to the strategic-level managers.
ESSs help to monitor performance, track activities of
competitors, identify opportunities, and forecast
trends. They also assist senior managers in
answering the following questions.

 What business should we do?

 How are our competitors doing the business?
 Which units can be sold and which new units to be
bought?
The Role of Executive Support Systems in the Organizations
•Contemporary organizations emphasize the use of ESS at all organizational levels, so
as to enable executives and subordinates at different levels to look at the same data in
the same way. An ESS provides various analytical and online-data display tools which
helps managers to select, access, and modify data according to their requirements.
•The use of ESS helps to overcome the problem of data overload that is common
in paper reports, since using ESS the data can be filtered and viewed in a graphical
format.
•In addition, ESS’s online analytical processing (OLAP) tools can examine the
data closely to provide lower level of details from summary of data, which helps the
executives in analyzing the data more accurately.
•In traditional organizations with large number of incompatible systems, bringing
data together and converting incompatible data into meaningful information was a
major challenge.
•Today’s managers need information on current market trends, competitor
information, stock market information, and so on. Data from external sources (like
Web) are therefore made available to managers through ESS.
•Nowadays, ESS is designed in such a way that managers can use them easily
without much experience. A major requirement of executives is the information to
detect problems that indicates strategic threats.
Benefits of the Executive Support Systems
The various benefits of using executive support systems are as follows:
 Flexible to use: The system provides data and tools to the managers without
addressing specific problems or imposing solutions. Using the system, the
executives can shape the problem and find solution according to the requirement.
 Better clarity: The use of graphics helps the user to look at more data in less
time with greater clarity.
 Speed up decision-making: The use of analysis tool helps the executives to
evaluate, compare and highlight trends in less time which speeds up the decision
making process.
 Enhance the quality of analysis: The ability of an ESS to look at summary
data very closely enhances the quality of analysis.
 Monitor Performance: These systems helps organization to monitor the firm
wide performance against any changes in external environment. Moreover, the
executives can also check performance in their own areas of responsibility.
 Quick action: The availability of the data at the right time results in required
actions being taken quickly. Problems can be handled before they become too
destructive and opportunities can also be identified earlier.
 Decentralized decision-making: The information provided at lower levels
allows managers to efficiently monitor activities of lower units reporting to them.
That very monitoring ability facilitates decision-making to be decentralized and
to take place at lower operating levels.
Executive Support Systems and the Digital Firm
Executive support systems are widely used in organizations for
improving the management’s decision-making capabilities.
Some important ESS applications that help in gathering information for
business intelligence and observing corporate business performance
are as follows:
For evaluating performance: ESS helps to monitor the performance of
the senior managers and summarize the reports in the form of digital
dashboard. Digital dashboard presents this key information on a single
screen in the form of charts and graphs.
For enterprise-wide reporting and analysis: Nowadays, application
vendors offer enterprise-wide ESS that is capable of analyzing the
operational data and thus, presenting the management a whole
picture of the firm’s performance. The enterprise-wide reporting
capabilities of these systems enable organizations to
establish new performance standards including activity-based costing.
Activity based costing is a budgeting and analysis model that
determines the processes, resources, and the costs involved while
EXPERT SYSTEMS AND KNOWLEDGE BASED EXPERT SYSTEMS
Expert system is a computer based information system that performs a
task that would otherwise be performed by a human expert. It is the
most common and practical implementation of artificial intelligence,
which serves at knowledge level of an organization. The system is
basically designed to model the problem-solving ability of a human
expert. It possesses four main characteristics of a human expert, which
are as follows:
 Knowledge: It models the knowledge of human expert, both in terms
of content and structure.
 Reasoning: It consists of various procedures and control structures,
which process the knowledge in the same way as a human expert does.
 Conclusions: The system must give the conclusions, which are
consistent to the findings of a human expert.
 Explanations: The system must explain the answers similar to that of a
human expert. That is, it should give appropriate explanations about
‘why’ and ‘how’ it has arrived at a particular conclusion or result.
Expert systems are mainly used in applications that require
judgment and inference based on incomplete data. These
systems are particularly good at extracting the best solution
from the list of options because they have knowledge of
several experts.

Organizations are using expert systems to capture the

problem-solving skills of human experts to either assist the
expert or use them in those situations where the expert is
lacking. Expert systems technology is finding its applications in
a number of diverse areas such as science, engineering,
business, medicine.
Components of Expert System
An expert system is built around a rule base/knowledge base that incorporates
knowledge, algorithms, and heuristic rules. Creation of a rule base is a three step
process: first, the expertise of a human expert is captured, which is then encoded by a
knowledge engineer, and finally entered in knowledge base through a knowledge
acquisition facility .
 Knowledge base: Knowledge base of an expert system consists of facts about
a specific subject area and the heuristics that forms the core of an expert
system. The knowledge is acquired from the human expert, which is encoded
in the knowledge base using one of the several knowledge representation
techniques.

The most common representation is rule-based representation. In this, an

IFTHEN type structure is used, where the IF part relates one known information
to the other, and THEN part contains the conclusion obtained from the
information in the IF part. Each such structure forms a rule. For example, a rule
could be IF temperature is high THEN ice-cream sales are high.
 Inference engine: Inference engine extracts information and relationship
from the knowledge base and provides expert advice to the end users.
 Explanation facility: It allows the user to understand the concepts that how
the inference engine of the expert system has arrived to certain conclusion or
result.
 User interface: The user accesses the expert system through user interface. It
allows communication between the end users and the expert system.
 Knowledge acquisition facility: It is not a part of an expert system, but a set
of software tools that help in creating a knowledge base.
Applications of Expert System
Expert systems find its applications in many diverse areas such as chemistry, science,
engineering, agriculture, medicine, etc. Some of applications are discussed as follows:
 Agriculture: In the area of agriculture, expert systems are used for providing
their expertise in various fields of agriculture like crop management, insect control
for raising the productivity of crop.
 Chemistry: In the area of chemistry, expert systems are used for providing assistance to the
laboratory technicians throughout the given experiments for planning and monitoring the
experiments and also in interpreting test data.
 Geology: Expert systems have been applied to the problem of exploration. Expert systems
can aid a geophysicist in the interpretation of survey data.
 Space technology: In the area of space technology, expert systems are used for diagnosing
system problems, planning mission objectives and also used for controlling spacecraft
functions.
 Medicine: The expert system can assist a physician in diagnosing medical problems of a
patient or help in the interpretation of medical test results.
 Engineering: In the area of engineering, expert systems are used for wide range of
applications like designing, diagnostics. It is either used for assisting an engineer in a task or
replacing human operator of a control process.
 Computer science: Configuring computer systems which meet customer defined
specifications, or diagnosing faults in a given system, can be a difficult and time consuming
task, therefore expert systems are used for diagnosing various computer systems. It is also
used for designing computer systems.
Benefits of Expert System
There are several benefits of an expert system. Some of them are listed below:
• It reduces the dependencies upon one expert.
• It eliminates errors and reduces inconsistencies.
•It can give appropriate explanations to its conclusions and decisions.
•It holds and maintains significant level of information.
•An expert system can be multi-user expert system that can serve multiple users
simultaneously.
• It provides improved customer service.
Limitations of Expert System
Despite of several applications and benefits of expert systems, they have several
limitations also, which are discussed as follows:
•They have high development cost and are difficult to maintain.
•They are not able to make creative responses as humans do.
•They are not adaptable to changing environment unless knowledge base is
changed.
•Knowledge base may contain errors that lead to wrong decisions.
• It lacks common sense which may need in some decision making.
ARTIFICIAL INTELLIGENCE
Artificial intelligence technologies have started playing important role in the business world.
AI technologies can help in distribution and retrieval of information, economic
forecasting, manufacturing units, project scheduling, training, etc.

What is Artificial Intelligence?

Artificial Intelligence (AI) is a branch of computer science that deals with the study and
creation of computer systems that exhibit some form of intelligence. Intelligence can be
defined as the ability to acquire, retrieve, and use knowledge in a meaningful way. It includes
both raw and refined knowledge and the ability to memorize, recall facts, and express
emotions. Research in AI has focused primarily on the following components of intelligence:
 Learning: It is the process of acquiring knowledge, skills, experience or values by study,
experience or training.
 Reasoning: It refers to the ability of drawing conclusions that are appropriate to the
situation in hand.
 Understanding: It refers to the identification of the significance, interpretation, or
explanation for certain data or information. Simply put, it is the ability to employ knowledge.
 Creativity: It is the ability to generate new ideas or to conceive new perspectives on existing
ideas. The creativity process involves producing ideas, which are original and potentially
useful.
 Intuition: It is the inner knowledge, without rational processes and without being aware of
how we know. Essentially, intuition is an uncanny sixth sense that tells people that whether
they are right.
Domain Areas of AI
Various domain areas where AI is currently being used include:
 Game Playing: The greatest advancements in AI have been achieved in the field of
game playing. For example, computer chess programs are now capable of beating
humans. In May 1997, an IBM super computer called Deep Blue defeated the world
chess champion Garry Kasparov.
 Speech Recognition: Computer speech recognition has reached a practical level for
limited purposes. For example, airline organizations have replaced keyboard for
flight information by a system using speech recognition of flight numbers and city
names.
 Understanding Natural Language: Just getting a sequence of words into a computer
is not enough, and even parsing sentences are not enough. The computer has to be
provided with an understanding of the context of the text, and this is presently
possible only for very limited systems.
 Computer Vision: The world is composed of three-dimensional objects, but
the inputs to the human eye and computer’s cameras are two-dimensional. Some
useful programs can work solely in two dimensions, but full computer vision
requires partial three-dimensional information. At present, there are only limited
ways of representing three-dimensional information directly, and they are not as
good as what humans evidently use.
 Expert Systems: Computers are programmed to make decisions in real-life
situations. For example, some expert systems help doctors diagnose diseases
based on patient’s symptoms. One of the first expert systems was MYCIN,
which diagnosed bacterial infections of the blood and suggested treatments.
This system performed better than medical students or practicing doctors.
 Heuristic Classification: A heuristic is a way of trying to discover something
or an idea embedded in a program. An example is advising whether to accept
a proposed credit card purchase. Information is available about the owner of
the credit card, his record of payment and also about the item he is buying
and about the establishment from which he is buying it (for example,
whether there have been previous credit card frauds at this establishment).
 Neural Networks: Computers are programmed to simulate intelligence by
attempting to reproduce the types of physical connections that occur in
human brains. Neural computing systems mimic the brain through a network
of highly interconnected, processing elements, which give them learning
capabilities and enable them to recognise, and to understand subtle or
complex patterns.