AI in SCM - Day 1 & 2

Artificial Intelligence in
Supply Chain Management

CourseSlides v 1.0
For LBSIM - PGDM
Dr. Pratul Sharma

Ph.D. IIT Delhi
ITIL® Expert, PRINCE2®, PMP, CSM, 6 Sigma
Chief Mentor Vedang Software
Let us know each other
 NAINI MITTAL
 ELVIN JOSE
 AAKASH SHARMA • Name

 ESHA APRAJIT • Background
• Family
 NAVDEEP • Ambition
 SNEHA JAISWAL • Hobby
 Rahul Raina
Company Confidential
Know your Instructor
 More than 2 decades with industry
– Software Development
– Project Management
– Delivery Management
– Training & Knowledge Management
– Process Unification
– Human Resource Management and
– Infrastructure Management
 Providing training & consulting for past 10 years
– IT Service Management (ITIL®)
– Project Management (PMP®, PRINCE2®, Agile)
– Human Resource Management (Balanced Score Card)
– Process Management (Lean Manufacturing)
 Organizations
– NIIT, Network Programs, GrapeCity, Birlasoft, ThinkSmart Bahrain,
Sapura, Malaysia, EaglesEye Mauritius etc
 Website
– www.vedangsoftware.com
Let us Discuss
 Industry today
 Machine (Computer Aided) Dependence
 Scaling Up
 Product Industry versus Service Industry

 Service – Story of a little boy
 Projects versus Operations

 Industry Best Practices
 Blooms Taxonomy
Industry Today
Industry Today?
 IT / ITES  Retail
– BPO / KPO / LPO / CRO – Malls, Multiplexes everywhere
 Banking / Finance / Insurance  Real Estate / Construction
– Plastic Money / Virtual Money – Boom Everywhere, increasing
– Overflowing FDIs / NRIs, HNIs property rates
becoming VCs  Media / Fashion / Textile
 FMCG – Do our parents know Job Titles like
– Packed Food, New Products, New RJ, VJ?
Concepts  Aviation
 Education – 5 Years ago what was Aviation?
– More than 2000 professional colleges  Hospitality / Hotels
only in India today – No one thought of Event
 Tourism Management earlier?
– Growing day by day – Today people outsource their
 Manufacturing / Auto marriage
– Core engineering, branches like Civil,  Medical
Mechanical, Electronics all are shining – Need of the time
back  Medical Tourism
 Telecom – Medical aid is very costly there
– Leading world players in domestic  And New things like Online betting
markets and many more
– Everyone owns a cellphone, millions of – Have you seen the movie Luck?
users, connected networks
Machine Dependence of Businesses
Manual Single-function Integrated applications Composite applications
processes applications* **
Manufacture to inventory
Order to cash
Procure to pay
CRM CRM
CIM
SCM SCM
AR
AP
ERP ERP
GL
<1970 1970s to early 90s Present to 2015+

Early 90s to present
*CIM = Customer Inventory Management, AR = Accounts Receivable, AP = Accounts Payable, GL = General Ledger
**CRM = Customer Relationship Management, SCM = Supply Chain Management, ERP = Enterprise Resource Planning
7
Growing Business Dependence
 Local grocery shop

– PC application for bill printing
 Super-Market, Mall
– IT used for billing
 Banks – IT down = Business down (can
trudge on)
 IT is the only business – i.e. Amazon
 Where does AI fit in?
8
Scaling up..
 Up-scaling an operation produces an entirely
different class of problems which have nothing to
do with the core issues
– Consider organizing a meeting of
• 2 CEOs
• 10 CEOs
• 250 CEOs
• …
• 10000 CEOs…
– There is a difference between running a small grocery
shop and a retail chain
9
Products versus Services
 Let’s learn from a little boy

– This is the story of a small boy who called up
the lady of a house offering to clean her
garden at half of the price of what the current
gardener was charging
• She said No..
– The boy insisted again, she again said No
• The boy pleaded again but finally hung up…
10
Let’s learn from a little boy…
 Owner of the departmental store from where the
boy called, offered job to the boy, thinking that
the poor boy was in dire need
– Boy said, “No Sir, thank you”..
 The owner was surprised and asked why the
boy was begging for the cleaning job from that
lady if he did not need one.
– Boy said, “Sir, I work for the same lady, I was just
checking the quality of my services to her”…
The owner of departmental store was stunned…
11
Projects versus Operations
 Traditional Projects (PMBOK, PRINCE2)
– Definite Start Definite End
– Golden Triangle Concept
– Temporary
 Agile Projects (SCRUM Methodology)
– Changes during late development
• How will you make online shopping platform like
Flipkart?
 Operations (ITIL)
– Ongoing, Business as Usual
Bloom’s Taxonomy
 6 Levels of knowledge
– 6 Create
– 5 Synthesis
– 4 Application*
– 3 Analysis
– 2 Comprehension
– 1 Knowledge
 Maximum Scope of this course
Discussion Summary
 Industry today
 Machine (Computer Aided) Dependence
 Scaling Up
 Product Industry versus Service Industry

 Service – Story of a little boy
 Projects versus Operations

 Industry Best Practices
 Blooms Taxonomy
Course Introduction
 Course Title
– Artificial Intelligence in Supply Chain
Management
• Organizations are increasingly digitizing their supply
chains to differentiate and drive revenue growth
generating massive amounts of data.
• How to analyze this data, gain a better understanding
of what affects what, what can happen in future
• Benefits:
– Future prediction, time to market, Agility, dealing with risks /
uncertainty.
Learning Goals Defined
 CO1: The fundamentals of Artificial intelligence and its
current use in the various industrial applications
 CO2: The importance and application of Artificial Intelligence
in Supply Chain Management Industry and the current
practices of the industry.
 CO3: To understand machine learning and deep learning as
a process to detect patterns, learn to make predictions and
make recommendations by finding hidden insights in data.
 CO4: To understand AI as mechanism track and predict
possible supply chain disruptions based on inputs and
correlations across multiple data sources
Assessment
Specific Assessment Weight Learning Outcomes to be
Method (flexible) Assessed
CO-1 CO-2 CO-3 CO-4

Class Assignment
10%    
Term Project
15%    
Case Study 10%    
Quiz 5%  
Mid Term Examination
20 %    
End Term Examination 40%    
Evaluation
End Term Examination:
40 marks
Mid Term Exam :
20 Marks
Internal Assessment *:
40 Marks
*Components
Class Assignments/Exercises :
10 Marks
Term Project (presentation /viva –voce) :
15 Marks
Quiz/ class participation :
05 Marks
Case Study :
10 Marks
Let’s make up the teams
Name Your Team
Discuss and Decide
• Team Punch Line
• Working Style
(Participative, Rotating
Leadership, Autocratic)
• Team Norms (F S N P)
CO 1:
 The fundamentals of Artificial intelligence

and its current use in the various industrial
applications
Before getting in:
 How do the humans learn?
– From unknown incompetence to unknown
competence
 Difference between Human and Machine?
 Reinforced Learning?
– Elephant mindset
– Stuck Shark
 How does a computer game work?
– Chess?
– Mario? Doom? PubG?
CO 1: Back to the class
 The fundamentals of Artificial intelligence and its
current use in the various industrial applications
– Advanced search
– Constraint satisfaction problems
– Knowledge representation and reasoning
• Non-standard logics
• Uncertain and probabilistic reasoning (Bayesian networks, fuzzy
sets).
• Foundations of semantic web: semantic networks and
description logics.
– Rules systems: use and efficient implementation.
– Planning systems.
CO 1: Advanced Search
 Artificial Intelligence is the study of building agents that
act rationally.
 Most of the time, these agents perform some kind of search
algorithm in the background in order to achieve their tasks.
 A search problem consists of:
– A State Space. Set of all possible states where you can be.
– A Start State. The state from where the search begins.
– A Goal Test. A function that looks at the current state returns
whether or not it is the goal state.
 The Solution to a search problem is a sequence of
actions, called the plan that transforms the start state to
the goal state.
 This plan is achieved through search algorithms
CO 1: Advanced Search
 How does a generic searching algorithm work?
CO 1: Constraint Satisfaction Problems
 The process of finding a solution to a set of

constraints that impose conditions that the
variables must satisfy. ...
 Constraint propagation methods are also used in
conjunction with search to make a given problem
simpler to solve.
– For a layman it’s Hit and Trial
CO 1: Constraint Satisfaction Problems
 Examples
CO 1: Knowledge Representation and
Reasoning
 The field of artificial intelligence (AI) dedicated to

representing information in a form that a computer
system can utilize to solve complex tasks such
as diagnosing a medical condition or having a
dialog in a natural language
• Non-standard logics
• Uncertain and probabilistic reasoning (Bayesian networks, fuzzy
sets).
• Foundations of semantic web: semantic networks and
description logics.
Reasoning
 Non-standard logics
– Non-classical logics (sometimes alternative
logics) are formal systems that differ in a
significant way from standard logical
systems such as propositional and predicate
logic.
– There are several ways in which this is done,
including by way of extensions, deviations, and
variations. The aim of these departures is to make
it possible to construct different models of logical
consequence and logical truth.
Reasoning
 Non-standard logics
– Philosophical logic is understood to encompass and
focus on non-classical logics.
– In addition, some parts of theoretical computer
science can be thought of as using non-classical
reasoning, although this varies according to the subject
area.
• For example, the basic Boolean functions (e.g. AND, OR, NOT,
etc) in computer science are very much classical in nature, as is
clearly the case given the fact that they can be fully described by
classical truth tables. However, in contrast, some computerized
proof methods may not use classical logic in the reasoning
process.
Reasoning
 Non-standard logics examples
– Computability logic, Many-valued logic
– Three-valued logic, by Jan Łukasiewicz,
– Fuzzy logic, Intuitionistic logic rejects the law of the excluded middle
, double negation elimination, and part of De Morgan's laws;
– Linear logic rejects idempotency of entailment
– Modal logic extends classical logic with non-truth-functional ("modal")
operators.
– Paraconsistent logic (e.g., relevance logic) rejects the
principle of explosion, and has a close relation to dialetheism;
– Quantum logic, Relevance logic, linear logic, and
non-monotonic logic reject monotonicity of entailment;
– Non-reflexive logic (also known as "Schrödinger logics") rejects or
restricts the law of identity;[3]
Source: https://en.wikipedia.org/wiki/Non-classical_logic
Reasoning
 Uncertain and Probabilistic Reasoning

– Probabilistic reasoning is a way of knowledge
representation where we apply the concept
of probability to indicate the uncertainty in knowledge.
– We use probability in probabilistic reasoning because
it provides a way to handle the uncertainty
Reasoning
 Bayesian Network
– Bayesian networks are a widely-used class of
probabilistic graphical models.
– They consist of two parts:
• The structure is a directed acyclic graph (DAG) that
expresses conditional independencies and
dependencies among random variables associated
with nodes.
• The parameters consist of conditional probability
distributions associated with each node.
Reasoning
– A Bayesian network is a compact, flexible and
interpretable representation of a joint probability
distribution.
Reasoning
– It is also an useful tool in knowledge discovery as
directed acyclic graphs allow representing causal
relations between variables.
Reasoning
 Fuzzy Logic / Fuzzy Sets

– The term fuzzy refers to things which are not
clear or are vague. It’s not true or false always
– Fuzzy logic provides a valuable flexibility for
reasoning.
– In this way, we can consider the inaccuracies
and uncertainties of any situation.
Reasoning
 Fuzzy Logic / Fuzzy Sets
– In Boolean system
• True = 1 and False = 0
– In Fuzzy system
• Intermediate values - Partially true / partially false.
Reasoning
 Fuzzy Control
– A technique to embody human-like thinking into a control
system.
– It may not be designed to give accurate reasoning but
acceptable reasoning.
– It can emulate human deductive thinking, i.e. the process
people use to infer conclusions from what they know.
– Any uncertainties can be easily dealt with the help of
fuzzy logic
 Refer: https://www.youtube.com/watch?v=wqOd4qiCGDs
 Refer: https://manualzz.com/doc/1563754/fuzzy-logic-washing-machines
Reasoning
 Foundations of Semantic Web

– The Semantic Web is based on the idea of a common
and minimal language to enable large quantities of
existing data to be analyzed and processed.
– This triggers the need to develop the database
foundations of this basic language, which is the
Resource Description Framework (RDF).
Reasoning
 Semantic Networks
– A semantic network, or frame network is a knowledge
base that represents semantic relations between
concepts in a network.
– This is often used as a form of knowledge representation.
– It is a directed or undirected graph consisting of vertices,
which represent concepts, and edges, which
represent semantic relations between concepts, mapping
or connecting semantic fields.
– Typical standardized semantic networks are expressed
as semantic triples.
– Semantic networks are used in natural language
processing applications such as semantic parsing
and word-sense disambiguation.
Reasoning
 Semantic Networks
Reasoning
 Description Logic
– Description logics (DL) are a family of
formal knowledge representation languages. Many DLs
are more expressive than propositional logic* but less
expressive than first-order logic*.
– DL assists in the codification of biomedical knowledge
through Web Ontology Language.
Reasoning
 Rule Systems
– In computer science, a rule-based system is a set of "if-then"
statements that uses a set of assertions, to which rules on how to
act upon those assertions are created.
– In software development, rule-based systems can be used to
create software that will provide an answer to a problem in place
of a human expert.
– These systems may also be called an expert systems
– A classic example of a rule-based system is the domain-
specific expert system that uses rules to make deductions or
choices.
– For example, an expert system might help a doctor choose the
correct diagnosis based on a cluster of symptoms, or select
tactical moves to play a game.
Reasoning
 Planning Systems
– The planning in Artificial Intelligence is
about the decision making tasks performed by
the robots or computer programs to achieve a
specific goal.
– The execution of planning is about choosing a
sequence of actions with a high likelihood to
complete the specific task.

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AI in SCM - Day 1 & 2

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Artificial Intelligence in

Supply Chain Management

Dr. Pratul Sharma

 AAKASH SHARMA • Name

 Product Industry versus Service Industry

 Projects versus Operations

<1970 1970s to early 90s Present to 2015+

 Local grocery shop

 Let’s learn from a little boy

 Maximum Scope of this course

 Product Industry versus Service Industry

 Projects versus Operations

CO-1 CO-2 CO-3 CO-4

 The fundamentals of Artificial intelligence

 The process of finding a solution to a set of

 The field of artificial intelligence (AI) dedicated to

 Uncertain and Probabilistic Reasoning

 Fuzzy Logic / Fuzzy Sets

 Foundations of Semantic Web

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