ANALYTICS, DATA SCIENCE, &
ARTIFICIAL INTELLIGENCE
SYSTEMS FOR DECISION SUPPORT
E L E V E N T H E D I T I O N
Ramesh Sharda
Oklahoma State University
Dursun Delen
Oklahoma State University
Efraim Tu
an
University of Hawaii
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iii
Preface xxv
About the Authors xxxiv
PART I Introduction to Analytics and AI 1
Chapter 1 Overview of Business Intelligence, Analytics,
Data Science, and Artificial Intelligence: Systems
for Decision Support 2
Chapter 2 Artificial Intelligence: Concepts, Drivers, Major
Technologies, and Business Applications 73
Chapter 3 Nature of Data, Statistical Modeling, and
Visualization 117
PART II Predictive Analytics/Machine Learning 193
Chapter 4 Data Mining Process, Methods, and Algorithms 194
Chapter 5 Machine-Learning Techniques for Predictive
Analytics 251
Chapter 6 Deep Learning and Cognitive Computing 315
Chapter 7 Text Mining, Sentiment Analysis, and Social
Analytics 388
PART III Prescriptive Analytics and Big Data 459
Chapter 8 Prescriptive Analytics: Optimization and
Simulation 460
Chapter 9 Big Data, Cloud Computing, and Location Analytics:
Concepts and Tools 509
PART IV Robotics, Social Networks, AI and IoT 579
Chapter 10 Robotics: Industrial and Consumer Applications 580
Chapter 11 Group Decision Making, Collaborative Systems, and
AI Support 610
Chapter 12 Knowledge Systems: Expert Systems, Recommenders,
Chatbots, Virtual Personal Assistants, and Robo
Advisors 648
Chapter 13 The Internet of Things as a Platform for Intelligent
Applications 687
PART V Caveats of Analytics and AI 725
Chapter 14 Implementation Issues: From Ethics and Privacy to
Organizational and Societal Impacts 726
Glossary 770
Index 785
BRIEF CONTENTS
iv
CONTENTS
Preface xxv
About the Authors xxxiv
PART I Introduction to Analytics and AI 1
Chapter 1 Overview of Business Intelligence, Analytics, Data
Science, and Artificial Intelligence: Systems for Decision
Support 2
1.1 Opening Vignette: How Intelligent Systems Work for
KONE Elevators and Escalators Company 3
1.2 Changing Business Environments and Evolving Needs for
Decision Support and Analytics 5
Decision-Making Process 6
The Influence of the External and Internal Environments on the Process 6
Data and Its Analysis in Decision Making 7
Technologies for Data Analysis and Decision Support 7
1.3 Decision-Making Processes and Computerized Decision
Support Framework 9
Simon’s Process: Intelligence, Design, and Choice 9
The Intelligence Phase: Problem (or Opportunity) Identification 10
0 APPLICATION CASE 1.1 Making Elevators Go Faster! 11
The Design Phase 12
The Choice Phase 13
The Implementation Phase 13
The Classical Decision Support System Framework 14
A DSS Application 16
Components of a Decision Support System 18
The Data Management Subsystem 18
The Model Management Subsystem 19
0 APPLICATION CASE 1.2 SNAP DSS Helps OneNet Make
Telecommunications Rate Decisions 20
The User Interface Subsystem 20
The Knowledge-Based Management Subsystem 21
1.4 Evolution of Computerized Decision Support to Business
Intelligence/Analytics/Data Science 22
A Framework for Business Intelligence 25
The Architecture of BI 25
The Origins and Drivers of BI 26
Data Warehouse as a Foundation for Business Intelligence 27
Transaction Processing versus Analytic Processing 27
A Multimedia Exercise in Business Intelligence 28
Contents v
1.5 Analytics Overview 30
Descriptive Analytics 32
0 APPLICATION CASE 1.3 Silvaris Increases Business with Visual
Analysis and Real-Time Reporting Capabilities 32
0 APPLICATION CASE 1.4 Siemens Reduces Cost with the Use of Data
Visualization 33
Predictive Analytics 33
0 APPLICATION CASE 1.5 Analyzing Athletic Injuries 34
Prescriptive Analytics 34
0 APPLICATION CASE 1.6 A Specialty Steel Bar Company Uses Analytics
to Determine Available-to-Promise Dates 35
1.6 Analytics Examples in Selected Domains 38
Sports Analytics—An Exciting Frontier for Learning and Understanding
Applications of Analytics 38
Analytics Applications in Healthcare—Humana Examples 43
0 APPLICATION CASE 1.7 Image Analysis Helps Estimate Plant Cover 50
1.7 Artificial Intelligence Overview 52
What Is Artificial Intelligence? 52
The Major Benefits of AI 52
The Landscape of AI 52
0 APPLICATION CASE 1.8 AI Increases Passengers’ Comfort and
Security in Airports and Borders 54
The Three Flavors of AI Decisions 55
Autonomous AI 55
Societal Impacts 56
0 APPLICATION CASE 1.9 Robots Took the Job of Camel-Racing Jockeys
for Societal Benefits 58
1.8 Convergence of Analytics and AI 59
Major Differences between Analytics and AI 59
Why Combine Intelligent Systems? 60
How Convergence Can Help? 60
Big Data Is Empowering AI Technologies 60
The Convergence of AI and the IoT 61
The Convergence with Blockchain and Other Technologies 62
0 APPLICATION CASE 1.10 Amazon Go Is Open for Business 62
IBM and Microsoft Support for Intelligent Systems Convergence 63
1.9 Overview of the Analytics Ecosystem 63
1.10 Plan of the Book 65
1.11 Resources, Links, and the Teradata University Network
Connection 66
Resources and Links 66
Vendors, Products, and Demos 66
Periodicals 67
The Teradata University Network Connection 67
vi Contents
The Book’s Web Site 67
Chapter Highlights 67 • Key Terms 68
Questions for Discussion 68 • Exercises 69
References 70
Chapter 2 Artificial Intelligence: Concepts, Drivers, Major
Technologies, and Business Applications 73
2.1 Opening Vignette: INRIX Solves Transportation
Problems 74
2.2 Introduction to Artificial Intelligence 76
Definitions 76
Major Characteristics of AI Machines 77
Major Elements of AI 77
AI Applications 78
Major Goals of AI 78
Drivers of AI 79
Benefits of AI 79
Some Limitations of AI Machines 81
Three Flavors of AI Decisions 81
Artificial Brain 82
2.3 Human and Computer Intelligence 83
What Is Intelligence? 83
How Intelligent Is AI? 84
Measuring AI 85
0 APPLICATION CASE 2.1 How Smart Can a Vacuum Cleaner Be? 86
2.4 Major AI Technologies and Some Derivatives 87
Intelligent Agents 87
Machine Learning 88
0 APPLICATION CASE 2.2 How Machine Learning Is Improving Work
in Business 89
Machine and Computer Vision 90
Robotic Systems 91
Natural Language Processing 92
Knowledge and Expert Systems and Recommenders 93
Chatbots 94
Emerging AI Technologies 94
2.5 AI Support for Decision Making 95
Some Issues and Factors in Using AI in Decision Making 96
AI Support of the Decision-Making Process 96
Automated Decision Making 97
0 APPLICATION CASE 2.3 How Companies Solve Real-World Problems
Using Google’s Machine-Learning Tools 97
Conclusion 98
Contents vii
2.6 AI Applications in Accounting 99
AI in Accounting: An Overview 99
AI in Big Accounting Companies 100
Accounting Applications in Small Firms 100
0 APPLICATION CASE 2.4 How EY, Deloitte, and PwC Are Using AI 100
Job of Accountants 101
2.7 AI Applications in Financial Services 101
AI Activities in Financial Services 101
AI in Banking: An Overview 101
Illustrative AI Applications in Banking 102
Insurance Services 103
0 APPLICATION CASE 2.5 US Bank Customer Recognition and
Services 104
2.8 AI in Human Resource Management (HRM) 105
AI in HRM: An Overview 105
AI in Onboarding 105
0 APPLICATION CASE 2.6 How Alexander Mann Solutions (AMS) Is
Using AI to Support the Recruiting Process 106
Introducing AI to HRM Operations 106
2.9 AI in Marketing, Advertising, and CRM 107
Overview of Major Applications 107
AI Marketing Assistants in Action 108
Customer Experiences and CRM 108
0 APPLICATION CASE 2.7 Kraft Foods