Chapter I : Decision Support Systems

I) Decision Making

Decisions A decision is just a choice from among a set of alternatives

Decision Making implies the existence of a minimum of a following four factors :

1. There must be a problem.
Decision Making 2. There must be a decision maker.
3. There must be a need to solve the problem.
4. There must be alternative solutions to the problem.

Rational Decision Process: Intelligence / Design / Choice

→ Find problems
Intelligence
→ Define the problem: Causes, goals, constraints

Design Create, invent, and devise possible solutions

Choice Analyze alternatives Choose Implement

Review Assess the results Revise, as required

II) A Framework for Decision Making

→ Decision makers deal with a wide range of problems from structured ones to unstructured ones. That is why the decision
making processes fall along a continuum that ranges from highly structured (sometimes called programmed) to highly
unstructured (non programmed) decisions.

Definition of the Problem Problem is a gap between the actual and the desired states

Structured vs Unstructured Problems

- Routine and repetitive with standard solution

-Well defined decision making procedure
- Given a well-defined set of input, a well defined set of output is defined → Examples of
Structured Problems
structured problems are accounting, equation resolution, budget analysis, telephone
connection, etc.
For example: Converting a unit of measure between its English and metric equivalents,

- Lack of structure if:

● actual or desired state unknown;
● set of transformations unknown.
Unstructured Problems
-In other words:
● objectives not clear;
● alternatives not clear;
 ● effect of actions on outcomes not clear.
– All phases of decision making process are unstructured
– Not well defined input, output set and procedures
Example: Improving Tunisia Economy

- Has some structured aspect

- Some of the inputs or outputs or procedures are not well defined
Semi-structured Problems
Example: weather forecasting; economic planning; intrusion detection analysis; which
stock will yield the highest return by the end of the year… etc

III) Decision Analysis of Few Alternatives

Investment example: → One goal: maximize the yield after one year
Decision Tables Yield depends on the status of the economy (the state of nature)
◦ Solid growth ◦ Stagnation ◦ Inflation

(see rest of the slides 6-7)

Chapter II: Decision Making, Modeling, and Support

I) Decision Making

→ Decision Making implies the existence of a minimum of the following four factors :
1. There must be a problem.
2. There must be a decision maker.
3. There must be a need to solve the problem.
4. There must be alternative solutions to the problem.

Decisions

-The managers or decision makers rely on decision models The key word in this definition is knowledge. Therefore,
to come up with the best decisions. for this definition to be valid we suppose that the
-These models rely on decision theory. procedure of knowledge acquisition is active; that is the
→ From my experience in industry and R&D, I define the learning process is continuous on time. We refer to
decision as a set of knowledge based on analytical knowledge acquisition in this case as acquiring
techniques to help decision makers choose among a set of knowledge from all available sources.
alternatives in light of their possible consequences.

Models

→To make a decision on complex problems, the DM may The models may be classified into three distinct categories
develop analytical models. based on the structure and function of the models.
The complexity is related to three reasons: They are:
1. lack of perfect information about elements and system ● Descriptive (Simulation) models
interactions ● Prescription (Optimization) models
2. uncertainty about the nature of systems inputs ● Reasoning models
3.and conflicting and/or changing goals and objectives on
the part of one or more decision makers.

Descriptive (Simulation) models

→ These are models that attempt to describe important features of the system and the interactions among those features.
These models allow the decision-maker to "test" ideas and strategies and to watch what happens to the system model. By
testing different policies, one might converge on a "good" decision strategy.

Prescription (Optimization) models

These models are structured to capture important aspects of the problem environment, but are not intended to show
dynamically how the system functions. These models are solved and the resulting solution represents a policy or decision
strategy that is "optimal" with respect to the assumptions that were made during the construction of the model.

Reasoning models (intelligent knowledge based systems)

These models are built on the premise that machines can be programmed to make decisions which, if a human
consistently made the same decisions, it would be concluded that the person was an expert or had special knowledge
about the domain (or area) of interest that gave him/her key insights as to its structure or function.
→ These models are built to aid a decision maker in making decisions related to unstructured problems or to aid a
non-expert who must make decisions that are better made by an expert.

The Benefits of Models:

● Manipulating a model is much easier than manipulating a real system.
● Models enable the compression of time.
● The cost of modeling analysis is much lower than the cost of a similar experiment conducted on a real system.
● The business environment involves considerable uncertainty
● Mathematical models enable the analysis of a very large, sometimes infinite, number of possible solutions.
● The cost of making mistakes during a trial-and-error experiment is much lower when models are used than real
systems.
● Models enhance and reinforce learning and training

Chapter III: Decision Support Systems Development

The Concept of DSS: Formel Definition of DSS:
Decision support systems couple the intellectual resources A Decision Support System (DSS) refers to a
of individuals with the capabilities of the computer to computerized system that assists decision makers by
improve the quality of decisions. It is a computer-based combining data, sophisticated analytical models and
support system for management decision makers who deal tools, and user-friendly software into a powerful system
with semi-structured problems. to solve semistructured and unstructured problems.
Broadly speaking, a DSS is just a computer system that
helps you make a decision.

A Generic DSS…

Database : Data Processor and Analytical Methods: User Interface : Communication

-Files Management : Mathematical Language;
-Records -Data definition; Programming Presentation Language.
-Data elements -Data manipulation; Queuing Theory
-External data -Data integrity; Reliability and
-Internal data -Access Control; Quality Control
-Concurrency Control; Simulation
-Transaction Recovery. Inventory Theory
Forecasting
Heuristics
Expert Systems

DSS Benefits DSS Limitations

-Facilitating more effective decisions -Lack of human talents and intelligence
-Extending the decision makers ability to tackle large-scale, -Inadequate understanding of task or user
time consuming,complex problems -Inadequate modeling of “reality”
-Shortening the time for making a decision -Inadequate understanding of human information
-Improve reliability and consistency processing constraints
-Promoting learning & exploration -Narrow scope;
-Increasing organizational control

DSS Development Process:

Decision Support Systems are usually designed to handle complex situations, and not many are available off the shelf.
Instead, DSS must be custom-designed, developed, and implemented for each application.

The Traditional Systems Development Life Cycle (SDLC) (Waterfall)

This method called waterfall method or SDLC consists of four fundamental phases – planning, analysis, design, and
implementation.
The method is a cycle because it is possible to return to any phase from any other. However ideally, it is to follow each
phase in order. All projects must go through these phases:

Each phase consists of a series of steps, which rely on

techniques that produce deliverables.
The four fundamental SDLC phases are:
● Planning,
● Analysis,
● Design, and
● Implementation.

Planning -Why Build the System? Analysis - Who, What, When, Where?

Step Deliverable Step Deliverable

1. Identify business value System request Feasibility 6. Analyze problem Analysis plan
2. Analyze feasibility study 7. Gather Information
3. Develop work plan Work plan information Process model
4. Staff project Staffing plan 8. Model process(es) Data model
5. Control and direct Project charter 9. Model data
project Project management tools
CASE tool
 Standards list
Project binders / files Risk
assessment

Design -How Will the System Work? Implementation -System Delivery

Step Deliverable Step Deliverable

10. Design physical system Design plan 15. Construction Test plan,
11. Design architecture Architecture design, 16. Installation Programs
12. Design interface Infrastructure design Documentation
13. Design database and Interface design Conversion plan
files Data storage design Training plan
14. Design program(s) Program design

Skills for Project Management Project Management (PM)

Many DSS development projects are large-scale systems. ● Team leader must have good PM skills
Such systems are developed by teams. The team leader, in ● Major reason for IS development failures-bad
this case, must have good project management skills. These PM skills
skills are needed for the success of the project. The PM ● Lower success rates for large companies
should have: ● Better PM skills needed
a good technology and business knowledge,
● good judgment skills,
● good negotiation skills,
● good communication skills, and
● an organization spirit.

DSS vs Business Intelligence

DSS application → A DSS program built for a specific purpose (e.g., a scheduling system for a specific company)
Business Intelligence (BI) → A conceptual framework for decision support. It combines architecture, databases (or data
warehouses), analytical tools, and applications.
The goal of Business Intelligence (BI) is to provide managers with information about the business in time to allow them
to make decisions that can solve problems and take advantage of opportunities. In other words, Business Intelligence
allows managers to manage better.

DSS Characteristics and Capabilities

The key characteristics and capabilities of DSS:
-Support for decision makers, mainly in semi-structured and unstructured situations, by bringing together human
judgment and computerized information
-Support for all managerial levels, ranging from top executives to line managers
-Support for individuals as well as groups
-Support for interdependent and/or sequential decisions
-Support in all phases of the decision making process
-Support for a variety of decision-making processes and styles
-DSS are flexible, so users can add, delete, combine, change, or rearrange basic elements; DSS can be readily modified to
solve other, similar problems
-User-friendliness, strong graphical capabilities, and a natural language interactive human–machine interface can
greatly increase the effectiveness of DSS
-Improved effectiveness of decision making
-The decision maker has complete control over all steps of the decision-making process in solving a problem
-End users are able to develop and modify simple systems by themselves
-Models are generally utilized to analyze decision-making situations
-Access is provided to a variety of data sources, formats, and types
-Can be employed as a standalone tool used by an individual decision maker in one location or distributed throughout an
organization and in several organizations along the supply chain
-Can be integrated with other DSS and/or applications, and it can be distributed internally and externally, using
networking and Web technologies.

The User
The person faced with a decision that a DSS is designed to support is called the user, the manager, or the decision maker
Management Support Systems (MSS) has two broad classes of users: managers and staff specialists:
-Staff specialists use the system much more frequently than manager and tend to be more detail-oriented
-Staff analysts are often intermediaries between managers and the MSS
-Expert tool user → A person who is skilled in the application of one or more types of specialized problem-solving tools
-Business (system) analysts → An individual whose job is to analyze business processes and the support they receive (or
need) from information technology
-Facilitators (in a GSS) → A person who plans, organizes, and electronically controls a group in a collaborative computing
environment

Chapter V: Modeling and Analysis

Management Support Systems Modeling (DSS)
→DSS computer-based systems are supposed to be used by, or at least to support, managers.
→DSS Modeling is a key element in most DSS

Current Modeling Issues:

1) Problem identification and The problem to be solved must be understood and everyone involved should share
environmental analysis the same frame of understanding. A decision maker needs to identify the
(information collection): organizational culture and the corporate decision-making processes.

Identification of a model’s variables is critical Identification of relationships

2) Variable identification:
among variables

More information leads to better prediction. This form of predictive analytics is

3) Forecasting/predicting: essential for construction and manipulating models, because when a decision is
implemented the results will occur in the future.

A DSS can include several models, each of which represents a different part of the
4) Multiple models:
decision-making problem. For example, a supply chain Decision Support Systems
 may include a location model to locate distribution centers, a product-strategy
model, a demand forecasting-model, and a risk simulation model.

These models can be classified into categories.

There are about 6 categories: Each category may have several representative techniques.
Each technique can be applied to either a static or a dynamic model, which can be constructed under assumed
environments of certainty, uncertainty, or risk.

Category Objective Techniques

1.Optimization of problems Find the best solution from a small number of Decision tables, decision trees,
with few alternatives alternatives analytic hierarchy process

Find the best solution from a large number of Linear and other mathematical
2.Optimization via algorithm alternatives using a step-by-step process programming models, networks
models

3.Optimization via an analytic Find the best solution in one step using a Some inventory models
formula formula

Find a good enough solution by experimenting Several types of simulation

4.Simulation
with a dynamic model of the system.

Find a good enough solution using Heuristic programming and expert

5.Heuristics
“common-sense” rules systems

Predict future occurrences, what-if analysis, … Forecasting, Markov chains,

6.Predictive and other models
financial, …

Static Analysis Dynamic Analysis

◦Single snapshot of the situation ◦ Dynamic models

◦Single interval ◦ Evaluate scenarios that change over time
◦Steady state ◦ Time dependent
◦ Represents trends and patterns over time
◦ More realistic: Extends static models

Structure of Mathematical Models for Decision Support:

Quantitative Models: Mathematically links decision variables, Non-Quantitative Models (Qualitative) Captures
uncontrollable variables, and result variables Decision symbolic relationships between decision variables,
variables describe alternative choices. Uncontrollable variables uncontrollable variables and result variables
are outside decision-maker’s control Result variables are
dependent on chosen combination of decision variables and
uncontrollable variables
Area: Financial Investment Area: Manufacturing
Decision Variables: investment alternatives and amounts Decision Variables: What and how much to produce,
Result Variables: total profit, risk, rate of return on investment inventory levels
(ROI) Result Variables: total cost, profit Uncontrollable Variables
Uncontrollable Variables and Parameters: Inflation rate, prime and Parameters: technology, materials prices
rate, competition

Decision Environment
Decision situations are often classified on the basis of what the decision makers know (or believes) about the forecast
results. The DM knowledge is classified into 3 categories, ranging from complete knowledge to complete ignorance:
Certainty, Risk, Uncertainty

● Assume complete knowledge

Certainty Models ● All potential outcomes are known
● May yield optimal solution

● Several outcomes for each decision

Uncertainty ● Probability of each outcome is unknown
● Knowledge would lead to less uncertainty

● Probability of each of several outcomes occurring

Risk analysis (probabilistic decision making)
● Level of uncertainty => Risk (expected value)

To deal with certainty, risk, and uncertainty, you

may use an influence diagram.
An influence diagram provides a visual
communication to the model builder. It is
Graphical representations of a model. It is
effectively “Model of a model”.

Influence Diagram
-Framework for expressing DSS model relationships:
🟥 Rectangle = a decision variable
🔴 🕳️
Circle = uncontrollable or intermediate variable Oval = result (outcome) variable: intermediate or final
-Variables are connected with arrows ➡️
indicates the direction of influence (relationship).
 Optimization via Mathematical Programming

A family of tools designed to help solve managerial problems in which the

Mathematical Programming decision maker must allocate scarce resources among competing activities to
optimize a measurable goal

Optimal solution: The best possible Linear programming (LP): A mathematical model for the optimal solution of
solution to a modeled problem resource allocation problems. All the relationships are linear

1. Limited quantity of economic resources

2. Resources are used in the production of products or services 3. Two or more
LP Problem Characteristics
ways (solutions, programs) to use the resources
4. Each activity (product or service) yields a return in terms of the goal
5. Allocation is usually restricted by constraints

-Identify the
● Decision variables
● Objective function
Linear Programming Steps
● Objective function coefficients
-Constraints : Capacities / Demands
-Represent the model Run the model and observe the results

Sensitivity, What-if, and Goal Seeking Analysis Heuristic Programming

-Sensitivity: -Cuts the search space
● Assesses impact of change in inputs on outputs -Gets satisfactory solutions more quickly and less
● Eliminates or reduces variables expensively
● Can be automatic or trial and error -Finds good enough feasible solutions to very complex
-What-if problems
● Assesses solutions based on changes in variables or -Heuristics can be
assumptions (scenario analysis) ◦ Quantitative
-Goal seeking ◦ Qualitative (in ES)
● Backwards approach, starts with goal -Traveling Salesman Problem
● Determines values of inputs needed to achieve goal
● Example is break-even point determination

When to Use Heuristics

When to Use Heuristics

◦ Inexact or limited input data
◦ Complex reality
◦ Reliable, exact algorithm not available
◦ Computation time excessive
◦ For making quick decisions
Limitations of Heuristics
◦Cannot guarantee an optimal solution

Simulation

Simulation Major Characteristics of Simulation

Technique for conducting experiments with a ● Imitates reality and capture its richness
computer on a comprehensive model of the ● Technique for conducting experiments
behavior of a system ● Descriptive, not normative tool
Frequently used in DSS tools ● Often to “solve” very complex problems
Simulation is normally used only when a problem is too complex
to be treated using numerical optimization techniques
 Advantages of Simulation Limitations of Simulation
-The theory is fairly straightforward Cannot guarantee an optimal solution
-Great deal of time compression Slow and costly construction process
-Experiment with different alternatives Cannot transfer solutions and inferences to solve other problems
-The model reflects manager’s perspective (problem specific)
-Can handle wide variety of problem types So easy to explain/sell to managers, may lead overlooking
-Can include the real complexities of problems analytical solutions
-Produces important performance measures Software may require special skills
-Often it is the only DSS modeling tool for
non-structured problems

Simulation Methodology Simulation Types

Model real systems and conduct repetitive → Stochastic vs. Deterministic Simulation
experiments. Steps: ◦ In stochastic simulations: We use distributions (Discrete or
1. Define problem Continuous probability distributions)
2. Construct simulation model → Time-dependent vs. Time-independent Simulation
3. Test and validate model → Discrete event vs. Continuous simulation
4. Design experiments → Steady State vs. Transient Simulation
5. Conduct experiments → Simulation Implementation
6. Evaluate results ◦ Visual simulation
7. Implement solution ◦ Object-oriented simulation

Visual Interactive Modeling (VIM) / Visual Interactive Simulation (VIS)

● Visual interactive modeling (VIM) Also called
◦ Visual interactive problem solving
◦ Visual interactive modeling
◦ Visual interactive simulation
● Uses computer graphics to present the impact of different management decisions
● Often integrated with GIS
● Users perform sensitivity analysis
● Static or a dynamic (animation) systems

Chapter VI: Knowledge Management

Introduction to Knowledge Management

Knowledge management (KM) is the systematic and active management of ideas, information, and knowledge residing in an
organization's employees. The goal of KM is to capture, store, maintain, and deliver useful knowledge in a meaningful form to
anyone who needs it anyplace and anytime within an organization.
Knowledge is
● information that is contextual, relevant, and actionable
● understanding, awareness, or familiarity acquired through education or experience
● anything that has been learned, perceived, discovered, inferred, or understood. In a knowledge management system,
 “knowledge is information in action”
● Knowledge is different from data and information.
● Data are facts, measurements, statistics.
● Information is organized or processed data that is timely and accurate.
Example: A map that gives detailed driving directions from one location to another could be considered data. An
up-to-the-minute traffic bulletin along the freeway that indicates a traffic slowdown due to construction several kilometers
ahead could be considered information.
Awareness of an alternative, back-road route could be considered knowledge.

Characteristics of knowledge Knowledge-based economy

◦ Extraordinary leverage and increasing returns. Knowledge The economic shift from natural resources to intellectual
is not subject to diminishing returns. When it is used, it is assets
not decreased (depleted), rather it is increased (improved). Its Explicit and tacit knowledge :
consumers can add to it, thus increasing its value. ◦ Explicit (leaky) knowledge → Knowledge that deals with
◦ Fragmentation, leakage and the need to refresh. As objective, rational, and technical material (data, policies,
knowledge grows, it branches and fragments. Knowledge is procedures, software, documents, etc.)
dynamic. It is information in action. Thus an organization ◦ Easily documented, transferred, taught and learned
must continually refresh its knowledge base to maintain it as ◦ Example: knowledge of major customers in a region.
a source of competitive advantage. Tacit (embedded) knowledge → Knowledge that is usually in
◦ Uncertain value. It is difficult to estimate the impact of an the domain of subjective, cognitive, and experiential learning
investment in knowledge. There are too many intangible ◦ It is highly personal and hard to formalize
aspects that can not be easily quantified. ◦ Hard to document, transfer, teach and learn
◦ Uncertain value of sharing. It is difficult to estimate the ◦ Involves a lot of human interpretation
value of sharing one’s knowledge or even who will benefit ◦ Examples: Best means of dealing with specific customers.
from it. Surgery skills.

Knowledge management systems (KMS)

A system that facilitates knowledge management by ensuring knowledge flow from the person(s) who know to the person(s)
who need to know throughout the organization; knowledge evolves and grows during the process

Organizational Learning and Transformation

Learning organization Organizational learning
An organization capable of learning from its past ◦ Development of new knowledge and insights that have the
experience, implying the existence of an organizational potential to influence organization’s behavior
memory and a means to save, represent, and share it ◦ The process of capturing knowledge and making it available
through its personnel enterprise-wide
Organizational memory ◦ Need to establish corporate memory
Repository of what the organization “knows ◦ Modern IT helps…
◦ People issues are the most important!

Why people don’t like to share knowledge: ◦ Differences in experience and education levels
◦ Lack of time to share knowledge and time to identify ◦ Lack of contact time and interaction between knowledge sources
colleagues in need of specific knowledge and recipients
◦ Fear that sharing may jeopardize one’s job security ◦ Poor verbal/written communication and interpersonal skills
◦ Low awareness and realization of the value and benefit of ◦ Age, gender, cultural and ethical defenses
the knowledge others possess ◦ Lack of a social network
◦ Dominance in sharing explicit over tacit knowledge ◦ Ownership of intellectual property
◦ Use of a strong hierarchy, position-based status, and ◦ Lack of trust in people because they may misuse knowledge or
formal power take unjust credit for it
◦ Insufficient capture, evaluation, feedback, ◦ Perceived lack of accuracy/credibility of knowledge
communication, and tolerance of past mistakes

Knowledge Management Activities

Knowledge management initiatives and activities
→ Most knowledge management initiatives have one of three aims:
1. To make knowledge visible (hypertext, maps, etc.)
2. To develop a knowledge-intensive culture
3. To build a knowledge infrastructure

-Knowledge creation is the generation of new insights, -Knowledge sharing

ideas, or routines ◦ Knowledge sharing is the willful explication of one person’s
Four modes of knowledge creation: ideas, insights, experiences to another individual either via an
◦ Socialization: refers to the conversion of tacit intermediary or directly
knowledge to new tacit knowledge through social ◦ In many organizations, information and knowledge are not
interactions and shared experience among organization considered organizational resources to be shared but
members (mentoring). individual competitive weapons to be kept private
◦ Externalization: refers to converting tacit knowledge to -Knowledge seeking
new explicit knowledge (producing a written document ◦ Knowledge seeking (knowledge sourcing) is the search for
describing the procedures used in solving a particular and use of internal organizational knowledge
client’s problem). ◦ Lack of time or lack of reward may hinder the sharing of
◦ Internalization: refers to the creation of new tacit knowledge or knowledge seeking
knowledge from explicit knowledge (obtaining a novel
insight through reading a document).
◦ Combination

Approaches to Knowledge Management

-Process approach to knowledge management attempts to codify organizational knowledge through formalized controls,
processes and technologies
→ The process approach frequently involves the use of IT, such as intranets, data warehousing, knowledge repositories,
decision support tools to enhance the quality and speed of knowledge creation and distribution in the organization.
-Practice approach focuses on building the social environments or communities of practice necessary to facilitate the
sharing of tacit understanding
This approach is typically adopted by companies that provide highly customized solutions to unique problems. For these
firms, knowledge is shared mostly through person-to-person contact.
-Hybrid approaches to knowledge management
◦ The practice approach is used so that a repository stores only explicit knowledge that is relatively easy to document
◦ Tacit knowledge initially stored in the repository is contact information about experts and their areas of expertise
◦ Increasing the amount of tacit knowledge over time eventually leads to the attainment of a true process approach

Knowledge Management - A Demand Led Business

Activity
Supply-driven vs. demand-driven KM
DIKAR: Data-Information-knowledge-Action-Results
RAKID: Results-Action-Knowledge-Information-Data

-Best practices → In an organization, the best methods for solving problems.

They are the activities and methods that the most effective organizations use to operate and manage various functions.
Chevron, for example, recognizes four levels of best practices:
1. A good idea that is not yet proven but makes intuitive sense.
2. A good practice, an implemented technique, a methodology, a procedure, or a process that has improved business results.
3. A local best practice, a best approach for all or a large part of the organization based on analysis of hard data. In other
words, the scope within the organization of the best practice is identified: Can it be used in a single department or
geographical region, or can it be used across the organization or anywhere in between?
4. An industry best practice, similar to the third level but using hard data from industry.
These are often stored in the knowledge repository of a knowledge management system.
-Knowledge repository is the actual storage location of knowledge in a knowledge management system. Similar in nature
to a database, but generally text oriented

Information Technology (IT) in Knowledge Management

The KMS cycle
◦ KMS usually follow a six-step cycle:
1. Create knowledge
2. Capture knowledge
3. Refine knowledge
4. Store knowledge
5. Manage knowledge
6. Disseminate knowledge

Components of KMS Artificial intelligence

◦ KMS are developed using three sets of core technologies: ◦ AI methods used in KMS:
1. Communication ● Assist in and enhance searching knowledge
2. Collaboration ● Help for knowledge representation (e.g., ES)
3. Storage and retrieval ● Help establish knowledge profiles of individuals and
◦ Technologies that support KM groups
● Artificial intelligence ● Help determine the relative importance of
● Intelligent agents knowledge when it is contributed to and accessed
 ● Knowledge discovery in databases from the knowledge repository
● Extensible Markup Language (XML)

AI methods used in KMS: Intelligent agents

● Scan email, documents, and databases to perform ◦ Intelligent agents are software systems that learn how
knowledge discovery, determine meaningful users work and provide assistance in their daily tasks
relationships and rules ◦ They are used to elicit and identify knowledge
● Identify patterns in data (usually through neural ◦ Combined with enterprise knowledge portal to proactively
networks and other data mining techniques) disseminate knowledge
● Forecast future results by using data/knowledge
● Provide advice directly from knowledge by using
neural networks or expert systems
● Provide a natural language

Knowledge discovery in databases (KDD)

A machine learning process that performs rule induction, or a related procedure to establish (or create) knowledge from
large databases
-Extensible Markup Language (XML)
◦ XML enables standardized representations of data structures so that data can be processed appropriately by
heterogeneous information systems without case-by-case programming or human intervention
-Web 2.0
◦ The evolution of the Web from statically disseminating information to collaboratively creating and sharing information

KM System Implementation
Knowledge management products and vendors Software development companies / vendors
◦ Knowware ◦ Electronic document management (EDM)
Technology tools (software/hardware products) that support A method for processing documents electronically,
knowledge management including capture, storage, retrieval, manipulation, and
◦ Software development companies / vendors presentation
● Collaborative computing tools Knowledge servers ◦ Content management systems (CMS)
● Enterprise knowledge portals (EKP) An electronic document management system that produces
● An electronic doorway into a knowledge dynamic versions of documents, and automatically
management system… maintains the current set for use at the enterprise level

Software development tools Integration of KMS with other business information

◦ Knowledge harvesting tools systems
◦ Search engines ◦ With DSS/BI Systems
◦ Knowledge management suites ◦ With AI
◦ Knowledge management consulting firms ◦ With databases and information systems
◦ Knowledge managementASPs ◦ With CRM systems
◦ With SCM systems
◦ With corporate intranets and extranets

Roles of People in Knowledge Management

Chief knowledge officer (CKO) Skills required of a CKO include:

The person in charge of a knowledge management effort in ● Interpersonal communication skills
an organization ● Leadership skills
● Sets KM strategic priorities ● Business acumen
● Establishes a repository of best practices ◦ Gains a ● Strategic thinking
commitment from senior executives ● Collaboration skills
● Teaches information seekers how to better elicit it ● The ability to institute effective educational
● Creates a process for managing intellectual assets programs
● Obtain customer satisfaction information ● An understanding of IT and its role in advancing
● Globalizes knowledge management knowledge management

The CEO, other chief officers, and managers

◦ The CEO is responsible for championing a knowledge management effort
◦ The officers make available the resources needed to get the job done
● CFO ensures that the financial resources are available
● COO ensures that people begin to embed knowledge management practices into their daily work processes
● CIO ensures IT resources are available
◦ Managers also support the KM efforts by providing access to sources of knowledge

Ensuring the Success of Knowledge Management Efforts

Useful applications of KMS
◦ Finding experts electronically and using expert location systems
Expert location systems (know-who)
→ Interactive computerized systems that help employees find and connect with colleagues who have expertise required for
specific problems—whether they are across the county or across the room—in order to solve specific, critical business
problems in seconds

Knowledge management valuation Nonfinancial metrics for knowledge management

Financial metrics for knowledge management valuation valuation—new ways to view capital when evaluating
● Focus knowledge management projects on specific intangibles:
business problems that can be easily quantified ● Customer goodwill
● When the problems are solved, the value and ● External relationship capital
benefits of the system become apparent ● Structural capital
● Human capital
● Social capital
● Environmental capital

Causes of knowledge management failure

◦ The effort mainly relies on technology and does not address whether the proposed system will meet the needs and
objectives of the organization and its individuals
◦ Lack of emphasis on human aspects
◦ Lack of commitment
◦ Failure to provide reasonable incentive for people to use the system…

Factors that lead to knowledge management success

◦ A link to a firm’s economic value, to demonstrate financial viability and maintain executive sponsorship
◦ A technical and organizational infrastructure on which to build
◦ A standard, flexible knowledge structure to match the way the organization performs work and uses knowledge
◦ A knowledge-friendly culture that leads directly to user support
◦ A clear purpose and language, to encourage users to buy into the system
◦ A change in motivational practices, to create a culture of sharing
◦ Multiple channels for knowledge transfer
◦ A significant process orientation and valuation to make a knowledge management effort worthwhile
◦ Nontrivial motivational methods to encourage users to contribute and use knowledge
◦ Senior management support

Last words on KM
-Knowledge is an intellectual asset IT is “just” an important enabler
-Proper management of knowledge is a necessary ingredient for success
Key issues:
◦ Organizational culture ◦ Executive sponsorship ◦ Measurement of success

Chapter VII: Artificial Intelligence and Expert Systems

Artificial Intelligence (AI)

Artificial intelligence (AI) AI Objectives
→ A subfield of computer science, concerned with -Make machines smarter (primary goal)
symbolic reasoning and problem solving, -Understand what intelligence is
AI has many definitions… -Make machines more intelligent and useful
◦ Behavior by a machine that, if performed by a Signs of intelligence:
human being, would be considered intelligent ◦ Learn or understand from experience
◦ “…study of how to make computers do things at ◦ Make sense out of ambiguous situations ◦ Respond
which, at the moment, people are better quickly to new situations
◦ Theory of how the human mind works ◦ Use reasoning to solve problems
◦ Apply knowledge to manipulate the environment

Test for Intelligence AI Concepts

Turing Test for Intelligence: Reasoning:
A computer can be considered to be smart only when ◦ Inferencing from facts and rules using heuristics
a human interviewer, “conversing” with both an or other search approaches
unseen human being and an unseen computer, can
not determine which is which. Pattern Matching:
- Alan Turing ◦ Attempt to describe and match objects, events, or
Evolution of artificial intelligence : processes in terms of their qualitative features and
logical and computational relationships

Knowledge Base:
Artificial vs. Natural Intelligence The AI Field:
Advantages of AI -AI is many different sciences and technologies
● More permanent -It is a collection of concepts and ideas
● Ease of duplication and dissemination ◦ Linguistics ◦ Psychology ◦ Philosophy ◦ Computer
● Less expensive Science ◦ Electrical Engineering ◦ Mechanics ◦
● Consistent and thorough Hydraulics ◦ Physics ◦ Optics ◦ Management and
● Can be documented Organization Theory ◦ Chemistry…
● Can execute certain tasks much faster ◦Statistics Mathematics ◦Management Science
● Can perform certain tasks better than many ◦Management Information Systems ◦Computer
people hardware and software Commercial, Government
Advantages of Biological Natural Intelligence ◦Military Organizations
● Is truly creative → AI provides the scientific foundation for many
● Can use sensory input directly and creatively commercial technologies
● Can apply experience in different situations

AI Areas AI is often transparent in many commercial

-Major… products:
◦ Expert Systems
◦ Natural Language Processing -Anti-lock Braking Systems (ABS)
◦ Speech Understanding -Automatic Transmissions
◦ Robotics and Sensory Systems -Video Camcorders
◦ Computer Vision and Scene Recognition -Appliances
◦ Intelligent Computer-Aided Instruction ◦ Washers, Toasters, Stoves
◦ Automated Programming -Help Desk Software
◦ Neural Computing Game Playing -Subway Control…
Additional…
◦ Game Playing, Language Translation
◦ Fuzzy Logic, Genetic Algorithms
◦ Intelligent Software Agents

AI Support for Decision Making Using A I in Decision Making:

AI can … -Issues & factors:
◦ Solve complex problems that people have not been ◦ The nature of the decision [routine vs non-routine]
able to solve. ◦ The method of support / technologies used
◦ Make much faster decisions. → Expert systems, recommender systems
◦ Find relevant information, even in large data → Deep learning, pattern recognition, biometrics
sources, very fast. recognition
◦ Make complex calculations rapidly. ◦ Cos-benefit and risk analysis
◦ Conduct complex comparisons and evaluations in ◦ Using business rules
real time ◦ AI algorithms
◦ Speed

AI Support for Decision-Making Process: Intelligent & Automated Decision Support:

AI support in problem identification -Automated decision making (since 1970s)
AI support in generating or finding alternative -Common examples:
solutions ◦ Small loan approvals
AI support in selecting a solution ◦ Initial screening of job applicants
AI support in implementing the solution ◦ Simple restocking
AI can (and should) play a role in each and every step ◦ Prices of products and services (when and how to
in the decision making process change them)
◦ Product recommendation (e.g., at Amazon.com)

AI Applications in Accounting AI in Human Resource Management

-AI in big accounting firms ◦Recruitment – talent acquisition
-AI in small accounting firms ◦Training –A I facilitates training Performance
◦ Solve complex billing problems (especially in assessment (evaluation)
healthcare) Claim processing and reimbursement ◦Retention –eliminating attrition
◦ Real estate contracts, risk analysis … → Predicting attrition way ahead of time to
◦ AI provides cheaper and better data-driven support ◦ eliminate loss of talent
Generates needed insights from data analysis ◦Using chatbots for supporting H R M
◦ Frees time of accountants for more complex tasks
◦ Machine learning is often used for prediction
-AI will improve and automate accounting tasks but at
the same time will take away some accounting jobs.

AI Applications in Financial Services (1 of 2) AI Applications in Financial Services (2 of 2)

-Diverse use of A I, in banking and insurance. -Application of A I uses in Banking
-Examples of A I use in general financial services: ◦ Employee surveillance.
● ◦ Extreme personalization (e.g., chatbots, ◦ Tax preparation/filing .
personal assistants, etc.) ◦ Automated customer service; answering customer
● Shifting customer behavior both online and in inquiries in real-time.
branches See Rainbird Co. ar rainbirf.ai as a company that
● Facilitating trust in digital identity, provides such services (using I B M Watson).
revolutionizing payments ◦ Automated online support for paying bills and
● Sharing economic activities (e.g., account inquiries.
person-to-person loans) ◦ Fraud detection and anti–money-laundering
● Offering financial services 24/7 and globally activities; also improving customer experience.
-Banking can also use AI for … ◦ Victual banking assist
● Face recognition (safer online banking), help
customers with smart investment decisions,
prevent money laundering, …
 -Insurance – mostly in issuing policies and handling
claims

AI in Marketing, Advertising, & C R M AI in Production-Operation Management

One of the richest areas for A I applications: → AI in manufacturing
1. Product and personal recommendations ◦ Automation for compliance and cost reduction
2. Smart search engines ◦ React quicker and more effectively (agility) →
3. Fraud and data breaches detection Implementation model
4. Social semantics ◦ Streamlining processes, smart outsourcing, work
5. Website design automation, improving customer experience
6. Producer pricing → Intelligent factories
7. Predictive customer service → Logistic and transportation
8. … many more in the book … ◦ Example: D H L supply-chain

Expert Systems (ES)

Expert Systems (ES): Important Concepts in ES:
-Is a computer program that attempts to imitate expert’s Expert → A human being who has developed a high level
reasoning processes and knowledge in solving specific problems of proficiency in making judgments in a specific domain
Most Popular Applied AI Technology Expertise → The set of capabilities that underlines the
● Enhance Productivity performance of human experts, including:
● Augment Work Forces ● extensive domain knowledge,
-Works best with narrow problem areas/tasks ● heuristic rules that simplify and improve
-Expert systems do not replace experts, but approaches to problem solving,
● Make their knowledge and experience more widely ● compiled forms of behavior that afford great
available, and thus economy in a skilled performance
● Permit non-experts to work better

Important Concepts in ES: (2) Structures of Expert Systems

-Experts
◦ Degrees or levels of expertise
◦ Nonexperts outnumber experts often by 100 to 1
-Transferring Expertise
◦ From expert to computer to nonexperts via acquisition,
representation, inferencing, transfer Inferencing
◦Knowledge = Facts + Procedures (Rules)
◦Reasoning/thinking performed by a computer
-Rules (IF … THEN …)
-Explanation Capability (Why? How?)

Conceptual Architecture of a Typical Expert Systems: The Human Element in ES:

-Expert
→ Has the special knowledge, judgment, experience and
methods to give advice and solve problems
-Knowledge Engineer
 →Helps the expert(s) structure the problem area by
interpreting and integrating human answers to
questions, drawing analogies, posing counter examples,
and enlightening conceptual difficulties
-User
-Others → System Analyst, Builder, Support Staff, …

Structure of ES: -Knowledge base → A collection of facts, rules, and

Three major components in ES are: procedures organized into schemas. The assembly of all
● Knowledge base the information and knowledge about a specific field of
● Inference engine interest
● User interface -Blackboard (working memory) → An area of working
ES may also contain: memory set aside for the description of a current
● Knowledge acquisition subsystem problem and for recording intermediate results in an
● Blackboard (workplace) expert system
● Explanation subsystem (justifier) -Explanation subsystem (justifier) → The component of
● Knowledge refining system an expert system that can explain the system’s reasoning
and justify its conclusions
-Structure of ES Knowledge acquisition (KA) → The extraction
and formulation of knowledge derived from various sources,
especially from experts (elicitation)

Knowledge Engineering (KE) The Knowledge Engineering Process

-A set of intensive activities encompassing the acquisition of

knowledge from human experts (and other information sources)
and converting this knowledge into a repository (commonly
called a knowledge base)

-The primary goal of KE is

◦ to help experts articulate how they do what they do, and
◦ to document this knowledge in a reusable form

Major Categories of Knowledge in ES How ES Work: Inference Mechanisms

-Declarative Knowledge
● Descriptive representation of knowledge that relates to a Knowledge representation and organization
specific object. ◦ Expert knowledge must be represented in a
● Shallow - Expressed in a factual statements computer-understandable format and organized
● Important in the initial stage of knowledge acquisition properly in the knowledge base
-Procedural Knowledge ◦ Different ways of representing human knowledge
 ● Considers the manner in which things work under include:
different sets of circumstances ● Production rules (*)
● Includes step-by-step sequences and how-to types of ● Semantic networks
instructions ● Logic statements
-Meta Knowledge
● Knowledge about knowledge

How ES Work: Inference Mechanisms Inferencing with Rules: Forward and Backward
-Inference is the process of chaining multiple rules together Chaining:
based on available data -Firing a rule:
◦ Forward chaining →A data-driven search in a rule-based system ◦ When all of the rule's hypotheses (the “if parts”) are
If the premise clauses match the situation, then the process satisfied, a rule said to be FIRED
attempts to assert the conclusion ◦ Inference engine checks every rule in the knowledge
◦ Backward chaining → A goal-driven search in a rule-based base in a forward or backward direction to find rules
system It begins with the action clause of a rule and works that can be FIRED
backward through a chain of rules in an attempt to find a ◦ Continues until no more rules can fire, or until a goal is
verifiable set of condition clauses achieved

Backward Chaining Forward Chaining

Goal-driven: Start from a potential conclusion (hypothesis), then Data-driven: Start from available information as it
seek evidence that supports (or contradicts with) it becomes available, then try to draw conclusions. Which
Often involves formulating and testing intermediate hypotheses one to Use?
(or sub-hypotheses) ◦ If all facts available up front - forward chaining
◦ Diagnostic problems - backward chaining

Inferencing Issues Inferencing with Uncertainty Theory of Certainty

-How do we choose between BC and FC : (Certainty Factors)
◦ Follow how a domain expert solves the problem
If the expert first collect data then infer from it => Forward -Certainty Factors and Beliefs
Chaining -Uncertainty is represented as a Degree of Belief
If the expert starts with a hypothetical solution and then -Express the Measure of Belief
attempts to find facts to prove it => Backward Chaining -How to -Manipulate degrees of belief while using
handle conflicting rules: knowledge-based systems
IF A & B THEN C -Certainty Factors (CF) express belief in an event based
IF X THEN C on evidence (or the expert's assessment)
1. Establish a goal and stop firing rules when goal is ◦ 1.0 or 100 = absolute truth (complete confidence)
achieved ◦ 0 = certain falsehood
2. Fire the rule with the highest priority -CFs are NOT probabilities
3. Fire the most specific rule -CFs need not sum to 100
4. Fire the rule that uses the data most recently entered
Inferencing with Uncertainty Combining Certainty Factors
Combining Several Certainty Factors in One Rule where parts are combined using AND and OR logical operators

AND IF inflation is high, CF = 50 percent, (A),

AND unemployment rate is above 7, CF = 70 percent, (B), AND bond prices decline, CF = 100 percent, (C) THEN
stock prices decline CF(A, B, and C) = Minimum[CF(A), CF(B), CF(C)] =>
◦ The CF for “stock prices to decline” = 50 percent
◦ The chain is as strong as its weakest link

OR IF inflation is low, CF = 70 percent, (A),

OR bond prices are high, CF = 85 percent, (B) THEN stock prices will be high
CF(A, B) = Maximum[CF(A), CF(B)] =>
◦ The CF for “stock prices to be high” = 85 percent
◦ Notice that in OR only one IF premise needs to be true

Combining two or more rules

◦ Example:
-R1: IF the inflation rate is less than 5 percent, THEN stock market prices go up (CF = 0.7)
-R2: IF unemployment level is less than 7 percent,
THEN stock market prices go up (CF = 0.6)
◦ Inflation rate = 4 percent and the unemployment level = 6.5 percent
◦ Combined Effect CF(R1,R2) = CF(R1) + CF(R2)[1 - CF(R1)]; or CF(R1,R2) = CF(R1) + CF(R2) - CF(R1) CF(R2)
Given CF(R1) = 0.7 AND CF(R2) = 0.6, then: CF(R1,R2) = 0.7 + 0.6(1 - 0.7) = 0.7 + 0.6(0.3) = 0.88
-Expert System tells us that there is an 88 percent chance that stock prices will increase
-For a third rule to be added CF(R1,R2,R3) = CF(R1,R2) + CF(R3) [1 - CF(R1,R2)]
R3: IF bond price increases THEN stock prices go up (CF = 0.85)
Assuming all rules are true in their IF part, the chance that stock prices will go up is:
CF(R1,R2,R3) = 0.88 + 0.85 (1 - 0.88) = 0.982

Inferencing with Uncertainty Certainty Factors - Example

Rules R1: IF blood test result is yes THEN the disease is malaria (CF 0.8)
R2: IF living in malaria zone THEN the disease is malaria (CF 0.5)
R3: IF bit by a flying bug THEN the disease is malaria (CF 0.3)
Questions: What is the CF for having malaria (as its calculated by ES), if
1. The first two rules are considered to be true ?
2. All three rules are considered to be true?

Answer 1
1. CF(R1, R2) = CF(R1) + CF(R2) * (1 – CF(R1) = 0.8 + 0.5 * (1 - 0.8) = 0.8 – 0.1 = 0.9
2. CF(R1, R2, R3) = CF(R1, R2) + CF(R3) * (1 - CF(R1, R2)) = 0.9 + 0.3 * (1 - 0.9) = 0.9 – 0.03 = 0.93
Answer 2
1. CF(R1, R2) = CF(R1) + CF(R2) – (CF(R1) * CF(R2)) = 0.8 + 0.5 – (0.8 * 0.5) = 1.3 – 0.4 = 0.9
2. CF(R1, R2, R3) = CF(R1, R2) + CF(R3) – (CF(R1, R2) * CF(R3)) = 0.9 + 0.3 – (0.9 * 0.3) = 1.2 – 0.27 = 0.93

Explanation as a Metaknowledge Two Basic Explanations:

-Explanation
-Why Explanations -Why is a fact requested?
 ● Human experts justify and explain their actions … so -How Explanations -To determine how a certain
should ES conclusion or recommendation was reached
● Explanation: an attempt by an ES to clarify reasoning, ◦ Some simple systems - only at the final
recommendations, other actions (asking a question) conclusion
● Explanation facility = Justifier ◦ Most complex systems provide the chain of rules used to reach
-Explanation Purposes… the conclusion
● Make the system more intelligible -Explanation is essential in ES
● Uncover shortcomings of the knowledge bases -Used for training and evaluation
(debugging)
● Explain unanticipated situations How ES Work: Inference Mechanisms
● Satisfy users’ psychological and/or social needs Development process of ES
● Clarify the assumptions underlying the system's ◦ A typical process for developing ES includes:
operations ● Knowledge acquisition
● Conduct sensitivity analyses ● Knowledge representation
● Selection of development tools
● System prototyping
● Evaluation Improvement /Maintenance

Development of ES
-Defining the nature and scope of the problem
● Rule-based ES are appropriate when the nature of the problem is qualitative, knowledge is explicit, and experts are
available to solve the problem effectively and provide their knowledge
-Identifying proper experts
◦ A proper expert should have a thorough understanding of:
● Problem-solving knowledge
● The role of ES and decision support technology
● Good communication skills
-Acquiring knowledge
● Knowledge engineer: An AI specialist responsible for the technical side of developing an expert system. The
knowledge engineer works closely with the domain expert to capture the expert’s knowledge
● Knowledge engineering (KE): The engineering discipline in which knowledge is integrated into computer systems to
solve complex problems normally requiring a high level of human expertise
-Selecting the building tools
➔ General-purpose development environment
➔ Expert system shell (e.g., ExSys or Corvid)… A computer program that facilitates relatively easy implementation of a
specific expert system
➔ Choosing an ES development tool
◦ Consider the cost benefits
◦ Consider the functionality and flexibility of the tool
◦ Consider the tool's compatibility with the existing information infrastructure
◦ Consider the reliability of and support from the vendor
-Coding (implementing) the system
● The major concern at this stage is whether the coding (or implementation) process is properly managed to avoid
errors…
● Assessment of an expert system:
→ valuation / Verification/ Validation
Development of ES - Validation and Verification of the ES:
● Evaluation
→ Assess an expert system's overall value
→ Analyze whether the system would be usable, efficient and cost-effective
● Validation
→ Deals with the performance of the system (compared to the expert's)
→ Was the “right” system built (acceptable level of accuracy?)
● Verification
→ Was the system built "right"? ◦ Was the system correctly implemented to specifications?

Problem Areas Addressed by ES ES Benefits

● Interpretation systems ● Capture Scarce Expertise
● Prediction systems ● Increased Productivity and Quality
● Diagnostic systems ● Decreased Decision Making Time
● Repair systems ● Reduced Downtime via Diagnosis
● Design systems ● Easier Equipment Operation
● Planning systems ● Elimination of Expensive Equipment
● Monitoring systems ● Ability to Solve Complex Problems
● Debugging systems ● Knowledge Transfer to Remote Locations
● Instruction systems ● Integration of Several Experts' Opinions
● Control systems, … ● Can Work with Uncertain Information .etc

Problems and Limitations of ES: ES Success Factors

● Knowledge is not always readily available Most Critical Factors
● Expertise can be hard to extract from humans ◦ Having a Champion in Management
◦ Fear of sharing expertise ◦ User Involvement and Training
◦ Conflicts arise in dealing with multiple experts ◦ Justification of the Importance of the Problem
● ES work well only in a narrow domain of knowledge ◦ Good Project Management
● Experts’ vocabulary often highly technical Plus
● Knowledge engineers are rare and expensive ◦ The level of knowledge must be sufficiently high
● Lack of trust by end-users ◦ There must be (at least) one cooperative expert
● ES sometimes produce incorrect recommendations … ◦ The problem must be mostly qualitative
more … ◦ The problem must be sufficiently narrow in scope
◦ The ES shell must be high quality, with friendly user
interface, and naturally store and manipulate the
knowledge

Longevity of Commercial ES:

● Only about 1/3 survived more than five years
● Generally ES failed due to managerial issues
◦ Lack of system acceptance by users
◦ Inability to retain developers
◦ Problems in transitioning from development to maintenance (lack of refinement)
◦ Shifts in organizational priorities
● Proper management of ES development and