# Management 10

What is a decision? When does a person have to make a decision?
1. A decision is a solution to a problem, a diagnosis, or a commitment to an action. One has to make a decision when there is more than one solution to a problem.
Calculating a complex trajectory of spaceship to Mars is a structured problem, whereas diagnosing the cause of rash on a person’s skin is often unstructured. How so?
2. For the trajectory, scientist have proven algorithms. Although the calculation may be complex, it is structured. Diagnosis of rashes is unstructured; two or more rashes that look the same may be caused by very different reasons.
DSSs use models to process data. Explain what a model is Give an example that is not mentioned in the chapter.
3. A model is a graphical or mathematical description of a relationship among variables and/or a sequence of events. In a DSS, a model is usually a mathematical formula. An example is the relationship between the number of units produced and profitability at a large manufacturer of a product.
Many DSSs are not stand alone anymore, but are embedded in other ISs. What are those ISS?
4. Many DSSs are not part of enterprise ISs, such as SCM and CRM systems.
What is a sensitivity test? Give 3 ex.
5. A sensitivity test allows a decision maker to see what degree a result is affected by the change in a parameter of a factor. Examples include the following: (1) When a model has been developed for the relationships among several factors and the yield of a corn field, a farmer can use the DSS to increase the amount of a fertilizer and see by what rate the expected yield increases. He or she can then check and see if the cost of the extra fertilizer justifies the revenue from the extra yield. (2) When preparing a return-on-investment analysis, the preparers may want to see how a deviation from the estimated labor cost will impact the total cost. If the total cost is highly sensitive to the labor cost, and if this is the cost component the preparers are least confident about, management may decide that the risk is too high, and may not pursue the project. (3) When developing a model for acceptance of students for management, officers of the school may test the impact of reinforcement courses in mathematics on the chances of graduation. If the impact is small, they may drop the idea and accept only those who clearly fit the existing criteria. (4) In a model showing the relationships among several promotional initiatives and increase in sales, a retail chain may test the sensitivity of the increase in sales to each initiative and drop the ones that have little impact on the increase, especially if they are relatively expensive.
The airline and hospitality industries use DSSs for yield management. What is yield management, and what is the output of a yield management DSS?
6. Yield management – also called revenue management – is changing prices and determining how to price-discriminate based on demographics and other variables. DSSs use models that help optimize the revenue of a flight or a hotel room. The output is pricing that depends on a set of variables, such as how far in advance a flight ticket is purchased or how long a guest plans to stay at a hotel.
What is the purpose of an expert system? How can it serve as a competitve tool?
7. The purpose of an ES is to emulate the expertise of a human expert. Expertise is a competitive asset for any business, and by capturing it in software, the business can continue to use the expertise when the expert is no longer available.
Explain how expert systems can distribute expertse.
8. By availing the ES to many users either by copying it or through a network, all of them can make use of the expertise captured in the system.
How could an ED be used to detect probable fraud committed by a bank of employee?
9. ESs can be programmed to compare a set of transactions that an employee carries out and a set of transactions that typically indicate probable fraud. The system automatically tracks the employee behavior through interaction with disbursements (or other systems that allow electronic transfer of money) and compares them with the patterns it incorporates as rules. It reports probable fraud through a message on an officer’s computer monitor.
What is the advantage of combining ES and neural net technologies?
10. By combining expert system and neural net technologies, the developers can create an expert system that can learn from successes and failures. The system’s decision rules can then be refined to produce better decisions.
What is a GIS? What purpose does it serve?
11. A GIS (geographic information system) is any application that helps people make decisions in matters that involve locations and routes. The purpose is to provide, on the computer’s monitor, a map or aerial picture of the area in question and special symbols or colors that indicate information. Among other uses, GISs are used for visually communicating population densities, distribution of natural resources, and transportation routes. The visual communication helps managers make decisions on allocating resources to different zones and on optimizing transportation routes.
Name 3 major elements that are combined to make up a GIS
12. The two elements are a database of maps and a database of data related to the maps. Another way to answer the question: a database management system and a graphical rendition of information processed from the database.