The purpose of this paper is to review the use of knowledge-based systems and artificial intelligence (AI) in business. Part I of this paper provided a broad survey of the use of AI in business, summarizing the application of AI in a number of business domains. In addition, it also provided a summary of the use of different forms of knowledge representation in business applications. Part I has a large set of references, including a number of survey papers, focusing on AI in business. Part II of this paper consists of more detailed analysis of particular systems or issues affecting AI in business. It examines technical issues which are central to the construction of business AI systems, and it also examines the commercial contribution made by methods for the development of AI systems. In addition, part II looks at integration between AI and more traditional information systems. AI can be used to add value to many existing information systems, such as database management systems. Particular attention is given to the integration of AI with operations research, which is the one of the primary “competitors” of AI, providing an alternative set of support tools for decision making.

Business organizations are not concerned only with technology issues; there is also concern about the impact of AI on organizations. Further, the evaluation of AI often is based on an economic view of the world. Part II therefore investigates the organizational impact of AI, and the economics of AI, including issues such as value creation. The format of Part II is as follows: Section 8 analyses techniques for improving the performance of AI systems, thus maximizing economic return. Section 9 looks at different forms of uncertainty and ambiguity which must be dealt with by AI systems. It examines the contributions of fuzzy logic and numerical measures of certainty to handling these problems. Section 10 examines the usefulness of different approaches to knowledge acquisition in business situations, and investigates the benefits of methodological approaches to AI applications. It also looks at more recent AI programming techniques which eliminate the need for knowledge elicitation from an expert: neural networks, case-based reasoning and genetic algorithms are discussed. Sections 11 and 12 examine issues of integrating AI systems. Generally, the use of AI in business settings must ultimately be integrated with the broader base of corporate information systems. Section 11 looks at integration with information systems in general, and section 12 looks particularly at integration with operations research. Sections 13 and 14 review the organizational and economic impact of AI. Finally, section 15 provides a brief summary of part II.

The inheritance problem can be simply stated: for any instantiation of an inheritance network, say a specific hierarchy Γ, find a conclusion set for Γ. In other words, find out what is logically entailed by Γ. This can be done in two ways: either by defining a deductive or proof theoretic definition to determine what paths are entailed by a network; or by translating the individual links in the network to a more general nonmonotonic logic and using its model and proof theory to generate entailments that correspond to what one would expect from “viewing” the inheritance hierarchy. Two approaches to a solution to the inheritance problem structure this paper. The first is widely known as the “path-based” or “proof theoretic”, and the second, the “Model-based” or “model theoretic”. The two approaches result in both a different interpretation of default links as well as a variation in the entailment strategy for a solution to teh inheritance problem. In either case, the entailments produced need some intuitive interpretation, which can be either credulous or skeptical. The semantics of both skeptical and credulous inheritance reasoners are examined.

As the number and size of very large databases continues to grow rapidly, so does the need to make sense of them. This need is addressed by the field called knowledge Discovery in Databases (KDD), which combines approaches from machine learning, statistics, intelligent databases, and knowledge acquisition. KDD encompasses a number of different discovery methods, such as clustering, data summarization, learning classification rules, finding dependency networks, analysing changes, and detecting anomalies (Matheus et at., 1993).

Case-based reasoning (CBR) systems reason from experience: they solve new problems by retrieving relevant prior cases and adapting them to fit new situations. In 1988 the first case-based reasoning workshop, sponsored by DARPA, identified theoretical foundations and fundamental issues for case-based reasoning research. Since then, much investigation has examined the CBR process itself, the validity of CBR as a cognitive model, and the application of CBR technology. The results of that work include refinements in theories of the case-based reasoning process, psychological evidence for human case-based reasoning, and the fielding of over 100 CBR applications.

The first conference on Uncertainty in Artificial Intelligence was held in 1985 by a group of people who felt that their views on the use of probability theory were not receiving a fair hearing from the rest of the Al community. At the time, mainstream opinion held that computational complexity of, and the amount of data required by, probabilistic methods made them inappropriate for realistic applications. As a result, those who claimed that probability theory was an adequate, if not the only adequate, method of handling uncertainty received a somewhat frosty reception.

Production systems have successfully made the transition from a trendy research idea to a routinely used programming paradigm. An important cause of this transition has been the several orders of magnitude speedup in program execution achieved in the past few years by the combination of better match algorithms, efficient compilation techniques and faster hardware platforms.

Inductive Logic Programming (ILP) is an emerging research area at the intersection of machine learning, logic programming and software engineering. The first workshop on this topic was held in 1991 in Portugal (Muggleton, 1991). Subsequently, there was a workshop tied to the Future Generation Computer System Conference in Japan in 1992, and a third one in Bled, Slovenia, in April 1993 (Muggleton, 1993). Ideas related to ILP are also appearing in major AI and machine learning conferences and journals. Although European-based and mainly sponsored by ESPRIT, ILP aims at becoming equally represented elsewhere; for example, among researchers in America who are investigating relational learning and first order theory revision (see, for example, the papers in Birnbaum and Collins, 1991) and within the computational learning theory community. This year's IJCAI workshop on ILP is a first step in this direction, and includes recent work with a broader range of perspectives and techniques.

This article summarizes the author's perspective on the discussions that occurred at the Workshop on Explanation and Problem Solving held during the Thirteenth International Joint Conference on Artificial Intelligence*. Motivated by those discussions, the article argues for the promotion of expert system explanation from a secondary task, used mainly for communication, to a primary task that is tightly integrated with the domain problem solving of the expert system.