Assignment I

APPLICATION OF NEURAL NETWORKS IN MANAGEMENT

Submitted by: Swati Sharma (109525)

Submitted to:
Dr. Ritanjali Majhi Asst. professor SCHOOL OF MANAGEMENT NITW

NATIONAL INSTITUTE OF TECHNOLOGY, WARANGAL WARANGAL- 500604

NEURAL NETWORKS AND ITS APPLICATIONS IN MANAGEMENT

INTRODUCTION:An Artificial Neural Network (ANN) is an information processing paradigm that is inspired by the way biological nervous systems, such as the brain, process information. The key element of this paradigm is the novel structure of the information processing system. It is composed of a large number of highly interconnected processing elements (neurones) working together to solve specific problems. ANNs, like people, learn by example, i.e. whenever it experience anything new, it will update itself accordingly for future purpose. It is an adaptive system in which the data always flows through the learning phase. The original inspiration for the term Artificial Neural Network came from examination of central nervous systems and their neurons, axons, dendrites, and synapses, which constitute the processing element of biological nervous systems. In an artificial neural network, simple artificial nodes, variously called "neurons", "neurodes", "processing elements" (PEs) or "units", are connected together to form a network of nodes mimicking the biological neural networks hence the term "artificial neural network". APPLICATIONS IN MANAGEMENT:The neural network is exhaustively used in management practices. By the way of using Artificial Intelligence it benefits the mangers in the process of decision making, through enabling them to take decisions in a logical manner, using the available data and information. `The various areas of application of neural network are: 1. Active Portfolio Management: It uses a Feed Forward neural network which allocates the funds on various available securities complying with various constraints of the customer. The underlying return forecast are based on Error Correction Neural Network (ECNN), which utilizes the last model error as an auxiliary input to evaluate their own misspecification. 2. Disaster management:- The ANNs are playing a vital role in forecasting a highly nonlinear and vague data, natural disasters. E.g. we can collect the data of the disaster affected data to estimate and forecast the number of affected people and area beforehand going for a relief program. In the similar way we can collect the data to forecast the upcoming disaster for taking the preventive measures. 3. Risk Management: - With the help of Artificial Intelligence and Neural Network, we can assess the upcoming problems in the running process and can take the possible preventive measures to reduce the associated risk with any project and hence can improve the Return On Investment (ROI). 4. Asset Management : - The Neural Network enables us to manage our and optimal utilization of the available recourses of the organization. E.g. we can use the Probabilistic ANN for the process of resource allocation, by correctly forecasting demand and giving on time supply which ultimately results in an improved performance of entire system.

5. Connectivity management For Mobile Network:- A Neural Network based mobile computing can be used for maintaining connectivity in a mobile computing environment for maintaining user to user connectivity throughout the transaction. The neural networks are trained with respect to the status information to provide an intelligent decision for the connectivity management. It is observed that the intelligent decision by neural network has improved the performance of the system 6. Decision Making:- The blend of Artificial Intelligence with Neural Networks enables the user for taking various strategic and day to day decisions the business environment. It play an increasingly important role in financial applications for such tasks as pattern recognition, classification, and time series forecasting. E.g. the ANN acts as an enabling tool for evaluating credit applications to support loan decisions in the commercial banks with the help of a multi-layer feed-forward neural network with back propagation learning algorithm can be used to build up the proposed model.

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