Guido Geerts, Sergio de Cesare, Semantic Reasoning with Refined REA-EO Primitives

1. Semantic Reasoning with Refined REA-EO Primitives
Guido L. Geerts – University of Delaware
Sergio de Cesare – Brunel University
CONFENIS 2012
6th International Conference on Research and
Practical Issues of Enterprise Information
Systems
Ghent, Belgium
September 20

2. The Resource-Event-Agent Enterprise Ontology (REA-EO)
REA-EO
STEREOTYPICAL BUSINESS PROCESS DEFINITION
Inside
accountable Agent
Economic stock-flow Economic
Resource Event Outside
participates
Agent
duality
BUSINESS PROCESS SPECIFICATION (INSTANTIATION)
WITH SEMANTIC (REA-EO) ANNOTATIONS
<<accountable>>
<<stock-flow>> <<Inside Agent>>
has
<< Economic with << Economic SalesPerson
Resource>> Event>> <<participates>>
Product Sale with
<<Outside Agent>>
<<duality>> <<participates>> Customer
applies-to with
<<stock-flow>>
<< Economic with <<Economic
Resource>> Event>>
Cash Cash Receipt <<Inside Agent>>
<<accountable>> Cashier
has

3. How to use the REA-EO Semantics (1)
Augmented Intensional Reasoning
(Geerts and McCarthy 2000)
DATABASE
value(customer,'0002',customer_name,'Grabski').
value(sale,'0001',sale_nr,'0001').
SEMANTIC ANNOTATIONS
rea(sale,event).
rea(customer,agent).
rea(product,resource).
CONCEPT DEFINITIONS
claim(Agent,AgentValue,Event,EventValue,FutureEvent):-
dualrel(Event,Dual,FutureEvent),
part(Event,Dual,DualValue,EventValue),
not relpart(Event, EventValue, Dual,FutureEvent,
FutureEventValue), control(Event,Control,Agent),
relpart(Event,EventValue,Control,Agent,AgentValue).
CONCEPT INSTANTIATIONS (Semantic Information Retrieval)
Agent AgentValue Event EventValue FutureEvent
Intension Extension Intension Extension Intension
customer '0001' cash_receipt '0002' sale
vendor '0001' purchase '0002' cash_disbursement
vendor '0001' purchase '0003' cash-disbursement

4. How to use the REA-EO Semantics (2)
Knowledge-Intensive Design
Definition of Modeling Rules in terms of REA-EO Semantics
(Geerts 1993; Rockwell and McCarthy 1999; Hruby 2006)
Economic Economic Economic
Event stock-flow Resource stock-flow Event
inflow outflow
“Each economic resource must participate in at least one inflow association and must participate in at
least one outflow association”
Economic Economic
Event duality Event
“Each economic event must be connected to another economic event, which affect resources in the
opposite way, by means of a duality association.”

5. How to use the REA-EO Semantics (3)
Operational Business Rules in terms of REA-EO Semantics
(Gailly and Geerts, 2012)
Economic Economic Economic
Event stock-flow Resource stock-flow Event
inflow outflow
“The participation of an Economic Resource instance in a stock-flow outflow association must be
preceded by the participation of the same instance in a stock-flow inflow association”
<< Economic <<Economic <<Economic
Event>> Resource>> Event>>
Purchase <<Sfi>> Product <<Sfo>> Sale
with with
“A specific product can’t be sold if it hasn’t been acquired (purchased) yet”

6. This Paper’s Research Question(s)
1) Should we refine the REA-EO
semantics? What problems can be
solved by such refined semantics?
2) Are we able to discover some
guidelines as part of the refinement
process (How)?

7. Overview of the Different Types of REA-EO Extensions
I. Three-Layer Architecture
(Geerts and McCarthy 2001)
Car
Cash Labor Labor
Payroll
Cash
Labor Maintained Car Used Car
Process Maintenance Revenue
Labor
Car
Labor Process Process
Labor Maintained Car Used
Cash Car
Cash
Acquisition
Used Car Used Car
Process
Car
Revenue
Rental Maintained
Customer
Agent Car
Labor Rental Used Car
Car
Give Car
Exchange
Take Cash
Receipt Cash
Used Car Cash
Customer Cashier
Accept Customer Contact Find Car & Provide Keys
Assess Customer Needs Check Out Car
Check Car File & Choose
Assess Insurance Options & Credit Return Car
Fill in Contract
Customer Pays Update Files

8. Overview of the Different Types of REA-EO Extensions
II. More Complete Specification of Business Processes
(Geerts and McCarthy 2000)
Resource
Event
typification Type
Agent
Commitment Image
reciprocal
Commitment Commitment
participation
reserves executes executes participation
{accountability --
internal agent}
Economic stock-flow Economic dual Economic Economic
Resource { inflow Event Event Agent
outflow }
linkage custody (resource – internal agent) association
description (resource – external agent)
Extended REA Framework responsibility (internal – internal)
(REA Enterprise Ontology) assignment (internal – external)
alliance (external – external)

9. Overview of the Different Types of REA-EO Extensions
III. REA-EO PRIMITIVE REFINEMENT
(Geerts and McCarthy 2000; HRUBY 2006)
Stock-Flow
Inflow Outflow
Take Production Give Use Consumption
Market Exchange Conversion Exchange
Use
Economic
Economic Give Economic Resource
Resource Event
Economic Duality Production
Economic Economic
Duality Event Event Event
Economic Take Economic
Resource Event Economic
Resource
Consumption
Conversion Exchange
Market Exchange Use
Machine
Finished Give
Sale Production
Good Production Duality Manufacturing Economic
Steps Process Event
Duality
Take Cash
Cash Ingredients
Receipt
Consumption

10. DSRM Activities Activity Description Knowledge Base
(A wide variety of) applications benefit from Literature Review.
Problem Identification and
(extended) semantics. Identify additional problems Practice: Problems solved by using
Motivation
that can be solved by using semantics semantics.
.
Literature Review.
Full understanding of current REA-EO
Define the Objectives of a Refined semantics should result in more and improved
primitives and the business practices,
Solution operational rules
modeling rules, and instance rules they can
support.
1) Stock-Flow Networks
2) Refined Specification (Taxonomy) of Stock-Flow
Scenario-driven ontological engineering.
Design and Development Semantics
Economic and Accounting Theory.
3) Ontology-Based Operational Rules
4) Refinement Process
Application of refined semantics and operational rules
Demonstration Business Process Analysis
to a number of business scenarios
Case Study
To what extent are the extended semantics and the
Evaluation Case Study
associated operational rules applicable.
Present the ideas and results to academics and
Communication Knowledge of the disciplinary culture.
managers.

11. STOCK-FLOW NETWORKS
Inflow Outflow
Economic Economic Economic
Event Resource Event
Economic Economic
Event Event
Economic Economic
Event Event
Inflow Outflow
Fixed
Buy Employ
Asset
Lease Sell
Dispose
Maintenance
Return

12. BUSINESS MODEL I
THE “BUSINESS ENTITY” BUYS AND SELLS VIDEOS (CDs)
TAKE Video GIVE
Buy Sale
(CD)
DUALITY DUALITY
Cash GIVE TAKE Cash
Cash
Disbursement Receipt

13. BUSINESS MODEL II
THE “BUSINESS ENTITY” BUYS AND SELLS VIDEOS (CDs)
CUSTOMERS CAN RETURN VIDEOS THAT DON’T WORK AND GET THEIR MONEY BACK
Return
TAKE
DUALITY
TAKE Video GIVE
Purchase Sale
(CD)
DUALITY DUALITY
GIVE TAKE Cash
Cash
Cash
Disbursement Receipt

14. BUSINESS MODEL II
With REFINED SEMANTICS
THE “BUSINESS ENTITY” BUYS AND SELLS VIDEOS (CDs)
CUSTOMERS CAN RETURN VIDEOS THAT DON’T WORK AND GET THEIR MONEY BACK
Return
TAKE-U-RETURN
TAKE Video GIVE
Purchase Sale
(CD)
1) DEPENDENCY EXISTS BETWEEN GIVE and TAKE-U-RETURN (BUSINESS MODELING)
2) COMPLIES WITH THE “A GIVE REQUIRES A TAKE” OPERATIONAL RULE.
3) OTHER (OPERATIONAL) RULES CAN BE DEFINED IN TERMS OF THE EXTENDED
SEMANTICS; SUCH AS:
a) A TAKE-U-RETURN MUST BE PRECEDED BY A GIVE.
b) A TAKE cannot be (immediately) followed by a TAKE-U-RETURN and vice versa.

15. BUSINESS MODEL III
With REFINED SEMANTICS
THE “BUSINESS ENTITY” NOW DECIDES TO BOTH SELL AND RENT CDs
Cash
DUALITY
Receipt
DUALITY
Return Rent
TAKE-W-RETURN GIVE-BORROW
TAKE Video GIVE
Purchase Sale
(CD)
1) DEPENDENCIES EXIST BETWEEN GIVE/TAKE and GIVE-BORROW/TAKE-W-RETURN (BUSINESS MODELING)
2) OTHER (OPERATIONAL) RULES CAN BE DEFINED IN TERMS OF THE EXTENDED SEMANTICS; SUCH AS:
a) Participation in a TAKE-W-RETURN association must be preceded by participation in a GIVE-
BORROW.
b) Participation in a GIVE association cannot be followed by participation in a TAKE-W-RETURN
association

16. REFINED TAXONOMIC DEFINITION OF THE STOCK-FLOW
ASSOCIATION
Stock-Flow
Inflow Outflow
Take Production Give Use Consumption
Take-Return Take-Borrow Give-Borrow Give-Return
Take-U- Take-W- Give-U- Give-W-
Return Return Return Return

17. CONCLUSIONS
Semantically Refined Stock-Flow Associations
1) Enable to express more complex “business modeling” dependencies
2) Enable to define more advanced operational rules
FUTURE RESEARCH
1) Work-In-Progress
2) Define full-blown stock-flow association taxonomy
3) Define additional instance and (business) modeling rules
4) Investigate stereotypical “Work-Flow” patterns for the different
stock-flow associations
5) Generalize the REFINEMENT PROCESS
6) Evaluation of the artifacts

18. Stock-Flow
Semantics
Reasoning
Questions?