Neural Appl

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CHAPTER 16
Neural Computing Applications,
and Advanced Artificial Intelligent
Systems and Applications
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Neural Computing Applications,
and Advanced Artificial Intelligent
Systems and Applications
Several Real-World Applications of ANN Technology
Advanced AI Systems
Genetic Algorithms
Fuzzy Logic
Qualitative Reasoning
Integration (Hybrids)
Decision Support Systems and Intelligent Systems, EfraimTurban and J ay E. Aronson
6th ed, Copyright 2001, Prentice Hall, Upper Saddle River, NJ
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Areas of ANN Applications:
An Overview
Representative Business ANN Applications
Accounting
Finance
Human Resources
Management
Marketing
Operations
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Accounting
Identify tax fraud
Enhance auditing by finding irregularities
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Finance
Signatures and bank note verifications
Mortgage underwriting
Foreign exchange rate forecasting
Country risk rating
Bankruptcy prediction
Customer credit scoring
Credit card approval and fraud detection
Stock and commodity selection and trading
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Finance 2
Credit card profitability
Forecasting economic turning points
Bond rating and trading
Pricing initial public offerings
Loan approvals
Economic and financial forecasting
Risk management
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Human Resources
Predicting employees performance and behavior
Determining personnel resource requirements
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Management
Corporate merger prediction
Country risk rating
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Marketing
Consumer spending pattern classification
Customers characteristics
Sales forecasts
Data mining
Airline fare management
Direct mail optimization
Targeted marketing
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Operations
Airline crew scheduling
Predicting airline seat demand
Vehicle routing
Assembly and packaged goods inspection
Quality control
Matching jobs to candidates
Production/job scheduling
Factory process control
Many More
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Credit Approval
with Neural Networks
Increases loan processor productivity by 25 to
35% over other computerized tools
Also detects credit card fraud
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The ANN Method
Data from the application and into a database
Preprocess applications manually
Neural network trained in advance with many
good and bad risk cases
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Neural Network Credit Authorizer
Construction Process
Step 1: Collect data
Step 2: Separate data into training and test sets
Step 3: Transform data into network inputs
Step 4: Select, train, and test network
Step 5: Deploy developed network application
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Bankruptcy Prediction
with Neural Networks
Concept Phase
Paradigm: Three-layer network, back-propagation
Training data: Small set of well-known financial ratios
Data available on bankruptcy outcomes
Supervised network
Training time not to be a problem
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Application Design
Five Input Nodes
X1: Working capital/total assets
X2: Retained earnings/total assets
X3: Earnings before interest and taxes/total assets
X4: Market value of equity/total debt
X5: Sales/total assets
Single Output Node: Final classification for each firm
Bankruptcy or
Nonbankruptcy
Development Tool: NeuroShell
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Development
Three-layer network with backpropagation (Figure 16.3)
Continuous valued input
Single output node: 0 = bankrupt, 1 = not bankrupt
Training
Data Set: 129 firms
Training Set: 74 firms; 38 bankrupt, 36 not
Ratios computed and stored in input files for:
The neural network
A conventional discriminant analysis program
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Architecture of the Bankruptcy Prediction
Neural Network
(Figure 16.3)
X1
Bankrupt 0
Not bankrupt 1
X2
X3
X4
X5
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Parameters
Learning threshold
Learning rate
Momentum
Testing
Two Ways
Test data set: 27 bankrupt firms, 28 nonbankrupt firms
Comparison with discriminant analysis
The neural network correctly predicted:
81.5 percent bankrupt cases
82.1 percent nonbankrupt cases
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ANN did better predicting 22 out of the 27 actual cases
Discriminant analysis predicted only 16 correctly
Error Analysis
Five bankrupt firms misclassified by both methods
Similar for nonbankrupt firms
Neural network at least as good as conventional
Accuracy of about 80 percent is usually acceptable for
neural network applications
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Stock Market Prediction System with
Modular Neural Networks
Accurate Stock Market Prediction - Complex Problem
Several Mathematical Models - Disappointing Results
Fujitsu and Nikko Securities: TOPIX Buying and Selling
Prediction System
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Input: Several technical and economic indexes
Several modular neural networks relate past
indexes, and buy/sell timing
Prediction system
Modular neural networks
Very accurate
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Network Architecture
(Figure 16.4)
Network Model: 3 layers, standard sigmoid function,
continuous output [0, 1]
High-speed Supplementary Learning Algorithm
Training Data
Data Selection
Training Data
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Preprocessing: Input Indexes - Converted into spatial
patterns, preprocessed to regularize them
Moving Simulation Prediction Method (Figure 16.5)
Result of Simulations
Simulation for Buying and Selling Stocks
Example (Figure 16.6)
Excellent Profit
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Integrated ANNs and
Expert Systems
1. Resource Requirements Advisor
Advises users on database systems resource requirements
Predicts the time and effort to finish a database project
ES shell AUBREY and neural network tool NeuroShell
ES supported data collection
ANN used for data evaluation
ES final analysis
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2. Personnel Resource Requirements Advisor
Project personnel resource requirements for maintaining
networks or workstations at NASA
Rule-based ES determines the final resource projections
ANN provides project completion times for services requested
(Figure 16.7)
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3. Diagnostic System for an Airline
Singapore Airlines
Assists technicians in diagnosing avionics equipment
INSIDE (Inertial Navigation System Interactive Diagnostic Expert)
Designed to reduce the diagnostic time
(Figure 16.8)
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4. Manufacturing Product Liability
United Technologies Carrier
Two ES + ANN
Patterns fed into multilayer feedforward ANN
Integrated with a database into an Automatic Early Warning
System (AEWS)
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5. Oil Refinery Production Scheduling and
Environmental Control
Citgo Petroleum Corporation
Lower costs
Improved safety
Higher product quality
Higher yields
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Genetic Algorithms
Goal (evolutionary algorithms): Demonstrate self-
organization and adaptation by exposure to the
environment
System learns to adapt to changes.
Example 1: Vector Game
Random trial and error
Genetic algorithm solution
Process (Figure 16.9)
Example: the game of MasterMind
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Genetic Algorithm
Definition and Process
Genetic algorithm: "an iterative procedure maintaining a
population of structures that are candidate solutions to
specific domain challenges (Grefenstette [1982])
Each candidate solution is called a chromosome
Chromosomes can copy themselves, mate, and mutate
Use specific genetic operators - reproduction, crossover
and mutation
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Primary Operators of
Most Genetic Algorithms
Reproduction
Crossover
Mutation
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Genetic Algorithm Operators
1 0 1 0 1 1 1
1 1 0 0 0 1 1
Parent 1
Parent 2
1 0 1 0 0 1 1
1 1 0 0 1 1 0
Mutation
Child 1
Child 2
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GA Example: The Knapsack Problem
Item: 1 2 3 4 5 6 7
Benefit: 5 8 3 2 7 9 4
Weight: 7 8 4 10 4 6 4
Knapsack holds a maximum of 22 pounds
Fill it to get the maximum benefit
Solutions take the form of a string of 1s
Solution: 1 1 0 0 1 0 0
Means choose items 1, 2, 5. Weight = 21, Benefit = 20
Evolver solution in Figure 16.10
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Genetic Algorithms
Applications and Software
Type of machine learning
Set of efficient, domain-independent search
heuristics for a broad spectrum of applications
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Genetic Algorithm Application Areas
Dynamic process control
Induction of rule optimization
Discovering new connectivity topologies
Simulating biological models of behavior and evolution
Complex design of engineering structures
Pattern recognition
Scheduling
Transportation
Layout and circuit design
Telecommunication
Graph-based problems
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Business Applications
Channel 4 Television (England) to schedule commercials
Driver scheduling in a public transportation system
Jobshop scheduling
Assignment of destinations to sources
Trading stocks
Productivity in whisky-making is increased
Often genetic algorithm hybrids with other AI methods
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Representative Commercial Packages
Evolver (Excel spreadsheet add-in)
Genetic Algorithm User Interface (GAUI)
OOGA (Object-Oriented GA for industrial use)
XperRule Genasys (ES shell with an embedded genetic
algorithm)
Sugal Genetic Algorithm Simulator
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Optimization Algorithms
Via neural computing sometimes
Genetic algorithms and their derivatives can optimize
(or nearly optimize) complex problems
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Fuzzy Logic
Fuzzy logic deals with uncertainty
Uses the mathematical theory of fuzzy sets
Simulates the process of normal human reasoning
Allows the computer to behave less precisely and
logically
Decision making involves gray areas and the term maybe
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Fuzzy Logic Advantages
Provides flexibility
Provides options
Frees the imagination
More forgiving
Allows for observation
Shortens system development time
Increases the system's maintainability
Uses less expensive hardware
Handles control or decision-making problems not
easily defined by mathematical models
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Fuzzy Logic Example:
What is Tall?
In-Class Exercise
Proportion
Height Voted for
510 0.05
511 0.10
6 0.60
61 0.15
62 0.10
Jack is 6 feet tall
Probability theory - cumulative probability
There is a 75 percent chance that Jack is tall
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Fuzzy logic - Jack's degree of membership within the
set of tall people is 0.75
We are not completely sure whether he is tall or not
Fuzzy logic - We agree that Jack is more or less tall
Membership Function
< Jack, 0.75 Tall >
Knowledge-based system approach: Jack is tall
(CF = .75)
Belief functions
Can use fuzzy logic in rule-based systems
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Membership Functions in Fuzzy Sets
(Figure 16.11)
Short Medium Tall
Membership
Height in inches (1 inch = 2.54 cm)
0.5
1.0
64 74
69
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Fuzzy Logic Applications and
Software
Difficult to apply when people provide evidence
Used in consumer products that have sensors
Air conditioners
Cameras
Dishwashers
Microwaves
Toasters
Special software packages
Controls applications
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Examples of Fuzzy Logic
Example 1: Strategic planning
STRATASSIST - fuzzy expert system that helps small- to
medium-sized firms plan strategically for a single product
Example 2: Fuzziness in real estate
Example 3: A fuzzy bond evaluation system
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Fuzzy Logic Software
Fuzzy Inference Development Environment
(FIDE)
Z Search
HyperLogic Corporation demos
Others
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Qualitative Reasoning (QR)
Means of representing and making inferences using
general, physical knowledge about the world
QR is a model-based procedure that consequently
incorporates deep knowledge about a problem
domain
Typical QR Logic
If you touch a kettle full of boiling water on a stove, you
will burn yourself
If you throw an object off a building, it will go down
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But
No specific knowledge about boiling temperature, just
that it is really hot!
No specific information about the building or object,
unless you are the object, or you are trying to catch it
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Main goal of QR: To represent common sense
knowledge about the physical world, and the underlying
abstractions used in quantitative models (objects fall)
Given such knowledge and appropriate reasoning
methods, an ES could make predictions and diagnoses,
and explain the behavior of physical systems
qualitatively, even when exact quantitative descriptions
are unavailable or intractable
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Qualitative Reasoning
Relevant behavior is modeled
Temporal and spatial qualities in decision making are
represented effectively
Applies common sense mathematical rules to variables
and functions
There are structure rules and behavior rules
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Some Real-World QR Applications
Nuclear plant fault diagnoses
Business processes
Financial markets
Economic systems
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Intelligent Systems Integration
Combine
Neural Computing
Expert Systems
Genetic Algorithms
Fuzzy Logic
Example: International investment management--
stock selection
Fuzzy Logic and ANN (FuzzyNet) to forecast the
expected returns from stocks, cash, bonds, and other
assets to determine the optimal allocation of assets
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Global markets
Integrated network architecture of the system
(Figure 16.12)
Technologies
Expert system (rule-based) for country and stock selection
Neural network for forecasting
Fuzzy logic for assessing factors without reliable data
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FuzzyNet Architecture
(Figure 16.12)
Membership Function Generator (MFG)
Fuzzy Information Processor (FIP)
Back-propagation Neural Network (BPN)
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Data Mining and Knowledge
Discovery in Databases (KDD)
Hidden value in data
Knowledge Discovery in Databases (KDD)
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The KDD Process
Start with Raw Data and Do
1. Selection to produce target the appropriate data
which undergoes
2. Preprocessing to filter the data in preparation for
3. Transformation so that
4. Data Mining can identify patterns that go through
5. Interpretation and Evaluation resulting in
knowledge
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Data Mining
Find kernels of value in raw data ore
Theoretical advances
Knowledge discovery in textual databases
Methods based on statistics, cluster analysis, discriminant
analysis, fuzzy logic, genetic algorithms, and neural networks
Ideal for data mining
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AI Methods and Data Mining
for Search
Neural Networks
Expert Systems
Rule Induction
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Data Mining Applications Areas
Marketing
Investment
Fraud detection
Manufacturing
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Information Overload
Data mining methods can sift through soft
information to identify relationships automatically
Intelligent agents
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Important KDD and
Data Mining Challenges
Dealing with larger databases
Working with higher dimensionalities of data
Overfitting--modeling noise rather than data patterns
Assessing statistical significance of results
Working with constantly changing data and knowledge
Continue
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Working through missing and noisy data
Determining complex relationships between fields
Making patterns more understandable to humans
Providing better user interaction and prior knowledge
about the data
Providing integration with other systems

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