Fluent Essays

End-of-Chapter Application Case: Coors Improves Beer Flavors with Neural Networks Pg. 284 (Textbook Attached) Why is beer flavor important to Coors’ profitability? What is the objective of the neural network used at Coors? Why were the results of Coors’ neural network initially poor, and what was done to improve the results? What benefits might Coors derive if this project is successful? What modifications would you make to improve the results of beer flavor prediction? Writing Requirements APA format BUSINESS INTELLIGENCE AND ANALYTICS RAMESH SHARDA DURSUN DELEN EFRAIM TURBAN TENTH EDITION .• TENTH EDITION BUSINESS INTELLIGENCE AND ANALYTICS: SYSTEMS FOR DECISION SUPPORT Ramesh Sharda Oklahoma State University Dursun Delen Oklahoma State University Efraim Turban University of Hawaii With contributions by J.E.Aronson Tbe University of Georgia Ting-Peng Liang National Sun Yat-sen University David King ]DA Software Group, Inc. PEARSON Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editor in Chief: Stephanie Wall Executive Editor: Bob Horan Program Manager Team Lead: Ashley Santora Program Manager: Denise Vaughn Executive Marketing Manager: Anne Fahlgren Project Manager Team Lead: Judy Leale Project Manager: Tom Benfatti Operations Specialist: Michelle Klein Creative Director: Jayne Conte Cover Designer: Suzanne Behnke Digital Production Project Manager: Lisa Rinaldi Full-Service Project Management: George Jacob, Integra Software Solutions. Printer/Binder: Edwards Brothers Malloy-Jackson Road Cover Printer: Lehigh/Phoenix-Hagerstown Text Font: Garamond Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Microsoft and/ or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use , data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services. The documents and related graphics contained herein could include technical inaccuracies or typographical errors. Changes are periodically added to the information here in. Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/ or the program(s) described herein at any time. Partial screen shots may be viewed in full within the software version specified. Microsoft® Windows®, and Microsoft Office® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. Copyright© 2015, 2011, 2007 by Pearson Education, Inc., One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. Many of the designations by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printe d in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Turban, Efraim. [Decision support and expert system,) Business intelligence and analytics: systems for decision support/Ramesh Sharda , Oklahoma State University, Dursun Delen , Oklahoma State University, Efraim Turban, University of Hawaii; With contributions by J. E. Aronson, The University of Georgia, Ting-Peng Liang, National Sun Yat-sen University, David King, JOA Software Group, Inc.-Tenth edition. pages cm ISBN-13: 978-0-13-305090-5 ISBN-10: 0-13-305090-4 1. Management-Data processing. 2. Decision support systems. 3. Expert systems (Compute r science) 4. Business intelligence. I. Title . HD30.2.T87 2014 658.4'03801 l-dc23 10 9 8 7 6 5 4 3 2 1 PEARSON 2013028826 ISBN 10: 0-13-305090-4 ISBN 13: 978-0-13-305090-5 BRIEF CONTENTS Preface xxi About the Authors xxix PART I Decision Making and Analytics: An Overview 1 Chapter 1 An Overview of Business Intelligence, Analytics, and Decision Support 2 Chapter 2 Foundations and Technologies for Decision Making 37 PART II Descriptive Analytics 77 Chapter 3 Data Warehousing 78 Chapter 4 Business Reporting, Visual Analytics, and Business Performance Management 135 PART Ill Predictive Analytics 185 Chapter 5 Data Mining 186 Chapter 6 Techniques for Predictive Modeling 243 Chapter 7 Text Analytics, Text Mining, and Sentiment Analysis 288 Chapter 8 Web Analytics, Web Mining, and Social Analytics 338 PART IV Prescriptive Analytics 391 Chapter 9 Model-Based Decision Making: Optimization and Multi- Criteria Systems 392 Chapter 10 Modeling and Analysis: Heuristic Search Methods and Simulation 435 Chapter 11 Automated Decision Systems and Expert Systems 469 Chapter 12 Knowledge Management and Collaborative Systems 507 PART V Big Data and Future Directions for Business Analytics 541 Chapter 13 Big Data and Analytics 542 Chapter 14 Business Analytics: Emerging Trends and Future Impacts 592 Glossary 634 Index 648 iii iv CONTENTS Preface xxi About the Authors xxix Part I Decision Making and Analytics: An Overview 1 Chapter 1 An Overview of Business Intelligence, Analytics, and Decision Support 2 1.1 Opening Vignette: Magpie Sensing Employs Analytics to Manage a Vaccine Supply Chain Effectively and Safely 3 1.2 Changing Business Environments and Computerized Decision Support 5 The Business Pressures-Responses-Support Model 5 1.3 Managerial Decision Making 7 The Nature of Managers' Work 7 The Decision-Making Process 8 1.4 Information Systems Support for Decision Making 9 1.5 An Early Framework for Computerized Decision Support 11 The Gorry and Scott-Morton Classical Framework 11 Computer Support for Structured Decisions 12 Computer Support for Unstructured Decisions 13 Computer Support for Semistructured Problems 13 1.6 The Concept of Decision Support Systems (DSS) 13 DSS as an Umbrella Term 13 Evolution of DSS into Business Intelligence 14 1.7 A Framework for Business Intelligence (Bl) 14 Definitions of Bl 14 A Brief History of Bl 14 The Architecture of Bl 15 Styles of Bl 15 The Origins and Drivers of Bl 16 A Multimedia Exercise in Business Intelligence 16 ~ APPLICATION CASE 1.1 Sabre Helps Its Clients Through Dashboards and Analytics 17 The DSS-BI Connection 18 1.8 Business Analytics Overview 19 Descriptive Analytics 20 ~ APPLICATION CASE 1.2 Eliminating Inefficiencies at Seattle Children's Hospital 21 ~ APPLICATION CASE 1.3 Analysis at the Speed of Thought 22 Predictive Analytics 22 ~ APPLICATION CASE 1.4 Moneybal/: Analytics in Sports and Movies 23 ~ APPLICATION CASE 1.5 Analyzing Athletic Injuries 24 Prescriptive Analytics 24 ~ APPLICATION CASE 1.6 Industrial and Commercial Bank of China (ICBC) Employs Models to Reconfigure Its Branch Network 25 Analytics Applied to Different Domains 26 Analytics or Data Science? 26 1.9 Brief Introduction to Big Data Analytics 27 What Is Big Data? 27 ~ APPLICATION CASE 1.7 Gilt Groupe's Flash Sales Streamlined by Big Data Analytics 29 1.10 Plan of the Book 29 Part I: Business Analytics: An Overview 29 Part II: Descriptive Analytics 30 Part Ill: Predictive Analytics 30 Part IV: Prescriptive Analytics 31 Part V: Big Data and Future Directions for Business Analytics 31 1.11 Resources, Links, and the Teradata University Network Connection 31 Resources and Links 31 Vendors, Products, and Demos 31 Periodicals 31 The Teradata University Network Connection 32 The Book's Web Site 32 Chapter Highlights 32 • Key Terms 33 Questions for Discussion 33 • Exercises 33 ~ END-OF-CHAPTER APPLICATION CASE Nationwide Insurance Used Bl to Enhance Customer Service 34 References 35 Chapter 2 Foundations and Technologies for Decision Making 37 2.1 Opening Vignette: Decision Modeling at HP Using Spreadsheets 38 2.2 Decision Making: Introduction and Definitions 40 Characteristics of Decision Making 40 A Working Definition of Decision Making 41 Decision-Making Disciplines 41 Decision Style and Decision Makers 41 2.3 Phases of the Decision-Making Process 42 2.4 Decision Making: The Intelligence Phase 44 Problem (or Opportunity) Identification 45 ~ APPLICATION CASE 2.1 Making Elevators Go Faster! 45 Problem Classification 46 Problem Decomposition 46 Problem Ownership 46 Conte nts v vi Contents 2.5 Decision Making: The Design Phase 47 Models 47 Mathematical (Quantitative) Models 47 The Benefits of Models 4 7 Selection of a Principle of Choice 48 Normative Models 49 Suboptimization 49 Descriptive Models 50 Good Enough, or Satisficing 51 Developing (Generating) Alternatives 52 Measuring Outcomes 53 Risk 53 Scenarios 54 Possible Scenarios 54 Errors in Decision Making 54 2.6 Decision Making: The Choice Phase 55 2.7 Decision Making: The Implementation Phase 55 2.8 How Decisions Are Supported 56 Support for the Intelligence Phase 56 Support for the Design Phase 5 7 Support for the Choice Phase 58 Support for the Implementation Phase 58 2.9 Decision Support Systems: Capabilities 59 A DSS Application 59 2.10 DSS Classifications 61 The AIS SIGDSS Classification for DSS 61 Other DSS Categories 63 Custom-Made Systems Versus Ready-Made Systems 63 2.11 Components of Decision Support Systems 64 The Data Management Subsystem 65 The Model Management Subsystem 65 ~ APPLICATION CASE 2.2 Station Casinos Wins by Building Customer Relationships Using Its Data 66 ~ APPLICATION CASE 2.3 SNAP DSS Helps OneNet Make Telecommunications Rate Decisions 68 The User Interface Subsystem 68 The Knowledge-Based Management Subsystem 69 ~ APPLICATION CASE 2.4 From a Game Winner to a Doctor! 70 Chapter Highlights 72 • Key Terms 73 Questions for Discussion 73 • Exercises 74 ~ END-OF-CHAPTER APPLICATION CASE Logistics Optimization in a Major Shipping Company (CSAV) 74 References 75 Part II Descriptive Analytics 77 Chapter 3 Data Warehousing 78 3.1 Opening Vignette: Isle of Capri Casinos Is Winning with Enterprise Data Warehouse 79 3.2 Data Warehousing Definitions and Concepts 81 What Is a Data Warehouse? 81 A Historical Perspective to Data Warehousing 81 Characteristics of Data Warehousing 83 Data Marts 84 Operational Data Stores 84 Enterprise Data Warehouses (EDW) 85 Metadata 85 ~ APPLICATION CASE 3.1 A Better Data Plan: Well-Established TELCOs Leverage Data Warehousing and Analytics to Stay on Top in a Competitive Industry 85 3.3 Data Warehousing Process Overview 87 ~ APPLICATION CASE 3.2 Data Warehousing Helps MultiCare Save More Lives 88 3.4 Data Warehousing Architectures 90 Alternative Data Warehousing Architectures 93 Which Architecture Is the Best? 96 3.5 Data Integration and the Extraction, Transformation, and Load (ETL) Processes 97 Data Integration 98 ~ APPLICATION CASE 3.3 BP Lubricants Achieves BIGS Success 98 Extraction, Transfonnation, and Load 100 3.6 Data Warehouse Development 102 ~ APPLICATION CASE 3.4 Things Go Better with Coke's Data Warehouse 103 Data Warehouse Development Approaches 103 ~ APPLICATION CASE 3.5 Starwood Hotels & Resorts Manages Hotel Profitability with Data Warehousing 106 Additional Data Warehouse Development Considerations 107 Representation of Data in Data Warehouse 108 Analysis of Data in the Data Warehouse 109 OLAP Versus OLTP 110 OLAP Operations 11 0 3.7 Data Warehousing Implementation Issues 113 ~ APPLICATION CASE 3.6 EDW Helps Connect State Agencies in Michigan 115 Massive Data Warehouses and Scalability 116 3.8 Real-Time Data Warehousing 117 ~ APPLICATION CASE 3.7 Egg Pie Fries the Competition in Near Real Time 118 Conte nts vii viii Conte nts 3.9 Data Warehouse Administration, Security Issues, and Future Trends 121 The Future of Data Warehousing 123 3.10 Resources, Links, and the Teradata University Network Connection 126 Resources and Links 126 Cases 126 Vendors, Products, and Demos 127 Periodicals 127 Additional References 127 The Teradata University Network (TUN) Connection 127 Chapter Highlights 128 • Key Terms 128 Questions for Discussion 128 • Exercises 129 .... END-OF-CHAPTER APPLICATION CASE Continental Airlines Flies High with Its Real-Time Data Warehouse 131 References 132 Chapter 4 Business Reporting, Visual Analytics, and Business Performance Management 135 4.1 Opening Vignette:Self-Service Reporting Environment Saves Millions for Corporate Customers 136 4.2 Business Reporting Definitions and Concepts 139 What Is a Business Report? 140 ..,. APPLICATION CASE 4.1 Delta Lloyd Group Ensures Accuracy and Efficiency in Financial Reporting 141 Components of the Business Reporting System 143 .... APPLICATION CASE 4.2 Flood of Paper Ends at FEMA 144 4.3 Data and Information Visualization 145 ..,. APPLICATION CASE 4.3 Tableau Saves Blastrac Thousands of Dollars with Simplified Information Sharing 146 A Brief History of Data Visualization 147 .... APPLICATION CASE 4.4 TIBCO Spotfire Provides Dana-Farber Cancer Institute with Unprecedented Insight into Cancer Vaccine Clinical Trials 149 4.4 Different Types of Charts and Graphs 150 Basic Charts and Graphs 150 Specialized Charts and Graphs 151 4.5 The Emergence of Data Visualization and Visual Analytics 154 Visual Analytics 156 High-Powered Visual Analytics Environments 158 4.6 Performance Dashboards 160 .... APPLICATION CASE 4.5 Dallas Cowboys Score Big with Tableau and Teknion 161 Dashboard Design 162 ~ APPLICATION CASE 4.6 Saudi Telecom Company Excels with Information Visualization 163 What to Look For in a Dashboard 164 Best Practices in Dashboard Design 165 Benchmark Key Performance Indicators with Industry Standards 165 Wrap the Dashboard Metrics with Contextual Metadata 165 Validate the Dashboard Design by a Usability Specialist 165 Prioritize and Rank Alerts/Exceptions Streamed to the Dashboard 165 Enrich Dashboard with Business Users' Comments 165 Present Information in Three Different Levels 166 Pick the Right Visual Construct Using Dashboard Design Principles 166 Provide for Guided Analytics 166 4.7 Business Performance Management 166 Closed-Loop BPM Cycle 167 ~ APPLICATION CASE 4.7 IBM Cognos Express Helps Mace for Faster and Better Business Reporting 169 4.8 Performance Measurement 170 Key Performance Indicator (KPI) 171 Performance Measurement System 172 4.9 Balanced Scorecards 172 The Four Perspectives 173 The Meaning of Balance in BSC 17 4 Dashboards Versus Scorecards 174 4.10 Six Sigma as a Performance Measurement System 175 The DMAIC Performance Model 176 Balanced Scorecard Versus Six Sigma 176 Effective Performance Measurement 1 77 ~ APPLICATION CASE 4.8 Expedia.com's Customer Satisfaction Scorecard 178 Chapter Highlights 179 • Key Terms 180 Questions for Discussion 181 • Exercises 181 ~ END-OF-CHAPTER APPLICATION CASE Smart Business Reporting Helps Healthcare Providers Deliver Better Care 182 References 184 Part Ill Predictive Analytics 185 Chapter 5 Data Mining 186 5.1 Opening Vignette: Cabela's Reels in More Customers with Advanced Analytics and Data Mining 187 5.2 Data Mining Concepts and Applications 189 ~ APPLICATION CASE 5.1 Smarter Insurance: Infinity P&C Improves Customer Service and Combats Fraud with Predictive Analytics 191 Conte nts ix x Conte nts Definitions, Characteristics, and Benefits 192 ..,. APPLICATION CASE 5.2 Harnessing Analytics to Combat Crime: Predictive Analytics Helps Memphis Police Department Pinpoint Crime and Focus Police Resources 196 How Data Mining Works 197 Data Mining Versus Statistics 200 5.3 Data Mining Applications 201 .... APPLICATION CASE 5.3 A Mine on Terrorist Funding 203 5.4 Data Mining Process 204 Step 1: Business Understanding 205 Step 2: Data Understanding 205 Step 3: Data Preparation 206 Step 4: Model Building 208 .... APPLICATION CASE 5.4 Data Mining in Cancer Research 210 Step 5: Testing and Evaluation 211 Step 6: Deployment 211 Other Data Mining Standardized Processes and Methodologies 212 5.5 Data Mining Methods 214 Classification 214 Estimating the True Accuracy of Classification Models 215 Cluster Analysis for Data Mining 220 ..,. APPLICATION CASE 5.5 2degrees Gets a 1275 Percent Boost in Churn Identification 221 Association Rule Mining 224 5.6 Data Mining Software Tools 228 .... APPLICATION CASE 5.6 Data Mining Goes to Hollywood: Predicting Financial Success of Movies 231 5.7 Data Mining Privacy Issues, Myths, and Blunders 234 Data Mining and Privacy Issues 234 .... APPLICATION CASE 5.7 Predicting Customer Buying Patterns-The Target Story 235 Data Mining Myths and Blunders 236 Chapter Highlights 237 • Key Terms 238 Questions for Discussion 238 • Exercises 239 .... END-OF-CHAPTER APPLICATION CASE Macys.com Enhances Its Customers' Shopping Experience with Analytics 241 References 241 Chapter 6 Techniques for Predictive Modeling 243 6.1 Opening Vignette: Predictive Modeling Helps Better Understand and Manage Complex Medical Procedures 244 6.2 Basic Concepts of Neural Networks 247 Biological and Artificial Neural Networks 248 ..,. APPLICATION CASE 6.1 Neural Networks Are Helping to Save Lives in the Mining Industry 250 Elements of ANN 251 Network Information Processing 2 52 Neural Network Architectures 254 ~ APPLICATION CASE 6.2 Predictive Modeling Is Powering the Power Generators 256 6.3 Developing Neural Network-Based Systems 258 The General ANN Learning Process 259 Backpropagation 260 6.4 Illuminating the Black Box of ANN with Sensitivity Analysis 262 ~ APPLICATION CASE 6.3 Sensitivity Analysis Reveals Injury Severity Factors in Traffic Accidents 264 6.5 Support Vector Machines 265 ~ APPLICATION CASE 6.4 Managing Student Retention with Predictive Modeling 266 Mathematical Formulation of SVMs 270 Primal Form 271 Dual Form 271 Soft Margin 271 Nonlinear Classification 272 Kernel Trick 272 6.6 A Process-Based Approach to the Use of SVM 273 Support Vector Machines Versus Artificial Neural Networks 274 6.7 Nearest Neighbor Method for Prediction 275 Similarity Measure: The Distance Metric 276 Parameter Selection 277 ~ APPLICATION CASE 6.5 Efficient Image Recognition and Categorization with kNN 278 Chapter Highlights 280 • Key Terms 280 Questions for Discussion 281 • Exercises 281 ~ END-OF-CHAPTER APPLICATION CASE Coors Improves Beer Flavors with Neural Networks 284 References 285 Chapter 7 Text Analytics, Text Mining, and Sentiment Analysis 288 7.1 Opening Vignette: Machine Versus Men on Jeopardy!: The Story of Watson 289 7.2 Text Analytics and Text Mining Concepts and Definitions 291 ~ APPLICATION CASE 7.1 Text Mining for Patent Analysis 295 7.3 Natural Language Processing 296 ~ APPLICATION CASE 7.2 Text Mining Improves Hong Kong Government's Ability to Anticipate and Address Public Complaints 298 7.4 Text Mining Applications 300 Marketing Applications 301 Security Applications 301 ~ APPLICATION CASE 7.3 Mining for Lies 302 Biomedical Applications 304 Conte nts xi xii Conte nts Academic Applications 305 .... APPLICATION CASE 7.4 Text Mining and Sentiment Analysis Help Improve Customer Service Performance 306 7.5 Text Mining Process 307 Task 1: Establish the Corpus 308 Task 2: Create the Term-Document Matrix 309 Task 3: Extract the Knowledge 312 ..,. APPLICATION CASE 7.5 Research Literature Survey with Text Mining 314 7.6 Text Mining Tools 317 Commercial Software Tools 317 Free Software Tools 317 ..,. APPLICATION CASE 7.6 A Potpourri ofText Mining Case Synopses 318 7.7 Sentiment Analysis Overview 319 ..,. APPLICATION CASE 7.7 Whirlpool Achieves Customer Loyalty and Product Success with Text Analytics 321 7.8 Sentiment Analysis Applications 323 7.9 Sentiment Analysis Process 325 Methods for Polarity Identification 326 Using a Lexicon 327 Using a Collection of Training Documents 328 Identifying Semantic Orientation of Sentences and Phrases 328 Identifying Semantic Orientation of Document 328 7.10 Sentiment Analysis and Speech Analytics 329 How Is It Done? 329 ..,. APPLICATION CASE 7.8 Cutting Through the Confusion: Blue Cross Blue Shield of North Carolina Uses Nexidia's Speech Analytics to Ease Member Experience in Healthcare 331 Chapter Highlights 333 • Key Terms 333 Questions for Discussion 334 • Exercises 334 .... END-OF-CHAPTER APPLICATION CASE BBVA Seamlessly Monitors and Improves Its Online Reputation 335 References 336 Chapter 8 Web Analytics, Web Mining, and Social Analytics 338 8.1 Opening Vignette: Security First Insurance Deepens Connection with Policyholders 339 8.2 Web Mining Overview 341 8.3 Web Content and Web Structure Mining 344 .... APPLICATION CASE 8.1 Identifying Extremist Groups with Web Link and Content Analysis 346 8.4 Search Engines 347 Anatomy of a Search Engine 347 1. Development Cycle 348 Web Crawler 348 Document Indexer 348 2. Response Cycle 349 Query Analyzer 349 Document Matcher/Ranker 349 How Does Google Do It? 351 ~ APPLICATION CASE 8.2 IGN Increases Search Traffic by 1500 Percent 353 8.5 Search Engine Optimization 354 Methods for Search Engine Optimization 355 ~ APPLICATION CASE 8.3 Understanding Why Customers Abandon Shopping Carts Results in $10 Million Sales Increase 357 8.6 Web Usage Mining (Web Analytics) 358 Web Analytics Technologies 359 ~ APPLICATION CASE 8.4 Allegro Boosts Online Click-Through Rates by 500 Percent with Web Analysis 360 Web Analytics Metrics 362 Web Site Usability 362 Traffic Sources 363 Visitor Profiles 364 Conversion Statistics 364 8.7 Web Analytics Maturity Model and Web Analytics Tools 366 Web Analytics Tools 368 Putting It All Together-A Web Site Optimization Ecosystem 370 A Framework for Voice of the Customer Strategy 372 8.8 Social Analytics and Social Network Analysis 373 Social Network Analysis 374 Social Network Analysis Metrics 375 ~ APPLICATION CASE 8.5 Social Network Analysis Helps Telecommunication Firms 375 Connections 376 Distributions 376 Segmentation 377 8.9 Social Media Definitions and Concepts 377 How Do People Use Social Media? 378 ~ APPLICATION CASE 8.6 Measuring the Impact of Social Media at Lollapalooza 379 8.10 Social Media Analytics 380 Measuring the Social Media Impact 381 Best Practices in Social Media Analytics 381 ~ APPLICATION CASE 8.7 eHarmony Uses Social Media to Help Take the Mystery Out of Online Dating 383 Social Media Analytics Tools and Vendors 384 Chapter Highlights 386 • Key Terms 387 Questions for Discussion 387 • Exercises 388 ~ END-OF-CHAPTER APPLICATION CASE Keeping Students on Track with Web and Predictive Analytics 388 References 390 Conte nts xiii xiv Contents Part IV Prescriptive Analytics 391 Chapter 9 Model-Based Decision Making: Optimization and Multi-Criteria Systems 392 9.1 Opening Vignette: Midwest ISO Saves Billions by Better Planning of Power Plant Operations and Capacity Planning 393 9.2 Decision Support Systems Modeling 394 ~ APPLICATION CASE 9.1 Optimal Transport for ExxonMobil Downstream Through a DSS 395 Current Modeling Issues 396 ~ APPLICATION CASE 9.2 Forecasting/Predictive Analytics Proves to Be a Good Gamble for Harrah's Cherokee Casino and Hotel 397 9.3 Structure of Mathematical Models for Decision Support 399 The Components of Decision Support Mathematical Models 399 The Structure of Mathematical Models 401 9.4 Certainty, Uncertainty, and Risk 401 Decision Making Under Certainty 402 Decision Making Under Uncertainty 402 Decision Making Under Risk (Risk Analysis) 402 ~ APPLICATION CASE 9.3 American Airlines Uses Should-Cost Modeling to Assess the Uncertainty of Bids for Shipment Routes 403 9.5 Decision Modeling with Spreadsheets 404 ~ APPLICATION CASE 9.4 Showcase Scheduling at Fred Astaire East Side Dance Studio 404 9.6 Mathematical Programming Optimization 407 ~ APPLICATION CASE 9.5 Spreadsheet Model Helps Assign Medical Residents 407 Mathematical Programming 408 Linear Programming 408 Modeling in LP: An Example 409 Implementation 414 9.7 Multiple Goals, Sensitivity Analysis, What-If Analysis, and Goal Seeking 416 Multiple Goals 416 Sensitivity Analysis 417 What-If Analysis 418 Goal Seeking 418 9.8 Decision Analysis with Decision Tables and Decision Trees 420 Decision Tables 420 Decision Trees 422 9.9 Multi-Criteria Decision Making With Pairwise Comparisons 423 The Analytic Hierarchy Process 423 ~ APPLICATION CASE 9.6 U.S. HUD Saves the House by Using AHP for Selecting IT Projects 423 Tutorial on Applying Analytic Hierarchy Process Using Web-HIPRE 425 Chapter Highlights 429 • Key Terms 430 Questions for Discussion 430 • Exercises 430 ~ END-OF-CHAPTER APPLICATION CASE Pre-Positioning of Emergency Items for CARE International 433 References 434 Chapter 10 Modeling and Analysis: Heuristic Search Methods and Simulation 435 10.1 Opening Vignette: System Dynamics Allows Fluor Corporation to Better Plan for Project and Change Management 436 10.2 Problem-Solving Search Methods 437 Analytical Techniques 438 Algorithms 438 Blind Searching 439 Heuristic Searching 439 ~ APPLICATION CASE 10.1 Chilean Government Uses Heuristics to Make Decisions on School Lunch Providers 439 10.3 Genetic Algorithms and Developing GA Applications 441 Example: The Vector Game 441 Terminology of Genetic Algorithms 443 How Do Genetic Algorithms Work? 443 Limitations of Genetic Algorithms 445 Genetic Algorithm Applications 445 10.4 Simulation 446 ~ APPLICATION CASE 10.2 Improving Maintenance Decision Making in the Finnish Air Force Through Simulation 446 ~ APPLICATION CASE 10.3 Simulating Effects of Hepatitis B Interventions 447 Major Characteristics of Simulation 448 Advantages of Simulation 449 Disadvantages of Simulation 450 The Methodology of Simulation 450 Simulation Types 451 Monte Carlo Simulation 452 Discrete Event Simulation 453 10.5 Visual Interactive Simulation 453 Conventional Simulation Inadequacies 453 Visual Interactive Simulation 453 Visual Interactive Models and DSS 454 ~ APPLICATION CASE 10.4 Improving Job-Shop Scheduling Decisions Through RFID: A Simulation-Based Assessment 454 Simulation Software 457 Conte nts xv xvi Contents 10.6 System Dynamics Modeling 458 10.7 Agent-Based Modeling 461 ~ APPLICATION CASE 10.5 Agent-Based Simulation Helps Analyze Spread of a Pandemic Outbreak 463 Chapter Highlights 464 • Key Terms 464 Questions for Discussion 465 • Exercises 465 ~ END-OF-CHAPTER APPLICATION CASE HP Applies Management Science Modeling to Optimize Its Supply Chain and Wins a Major Award 465 References 467 Chapter 11 Automated Decision Systems and Expert Systems 469 11.1 Opening Vignette: I nterContinental Hotel Group Uses Decision Rules for Optimal Hotel Room Rates 470 11.2 Automated Decision Systems 471 ~ APPLICATION CASE 11.1 Giant Food Stores Prices the Entire Store 472 11.3 The Artificial Intelligence Field 475 11.4 Basic Concepts of Expert Systems 477 Experts 477 Expertise 478 Features of ES 478 ~ APPLICATION CASE 11.2 Expert System Helps in Identifying Sport Talents 480 11.5 Applications of Expert Systems 480 ~ APPLICATION CASE 11.3 Expert System Aids in Identification of Chemical, Biological, and Radiological Agents 481 Classical Applications of ES 481 Newer Applications of ES 482 Areas for ES Applications 483 11.6 Structure of Expert Systems 484 Knowledge Acquisition Subsystem 484 Knowledge Base 485 Inference Engine 485 User Interface 485 Blackboard (Workplace) 485 Explanation Subsystem (Justifier) 486 Knowledge-Refining System 486 ~ APPLICATION CASE 11.4 Diagnosing Heart Diseases by Signal Processing 486 11.7 Knowledge Engineering 487 Knowledge Acquisition 488 Knowledge Verification and Validation 490 Knowledge Representation 490 Inferencing 491 Explanation and Justification 496 11.8 Problem Areas Suitable for Expert Systems 497 11.9 Development of Expert Systems 498 Defining the Nature and Scope of the Problem 499 Identifying Proper Experts 499 Acquiring Knowledge 499 Selecting the Building Tools 499 Coding the System 501 Evaluating the System 501 .... APPLICATION CASE 11.5 Clinical Decision Support System for Tendon Injuries 501 …