ch.1 Flashcards
(34 cards)
3 elements spurred recent explosive growth in the use of analytical methods in business applications
- The tracking and storing of large amounts of data.
- Methodological developments to extract knowledge from data.
- An explosion in computing power.
Strategic decisions
involve higher-level issues concerned with the overall direction of the organization.
Define the organization’s overall goals and aspirations for the future.
Tactical decisions
concern how the organization should achieve the goals and objectives set by its strategy.
Usually the responsibility of midlevel management.
Operational decisions
affect how the firm is run from day to day.
The domain of operations managers, who are the closest to the customer.
5 steps that define the decision-making process
- Identify and define the problem.
- Determine the criteria that will be used to evaluate alternative solutions.
- Determine the set of alternative solutions.
- Evaluate the alternatives.
- Choose an alternative.
Rules of thumb
ex: you know that you will need to double the number of employees. You know it id the right decision, because it follows a pattern
What is business analytics
analytics is the scientific process of transforming data into insight for making better decisions.
The use of data-driven or fact-based decision making is often seen as more objective than other decision-making alternatives
T/F
T
Tools of business analytics can aid in decision making by
creating insights from data,
improving our ability to forecast for planning more accurately,
helping us quantify risk, and
yielding better alternatives through analysis and optimization.
Descriptive. analytics
encompasses the set of techniques that describes what has happened in the past
which ones do descriptive analytics techniques include
data queries
reports
descriptive statistics
data visualization (including data dashboards)
unsupervised learning techniques from data mining
basic spreadsheet models
A data query
requests information with certain characteristics from a database.
A report
resulting from a query may include descriptive statistics and data visualizations to find patterns or relationships in a large database
Data dashboards
dashboards are collections of tables, charts, maps, and summary statistics updated as new data becomes available.
Data mining
unsupervised learning techniques.
An unsupervised learning technique
a descriptive method that seeks to identify patterns in different types of data that are based on notions of
similarity (cluster analysis)
correlation (association rules)
Predictive analytics
consists of techniques that use models constructed from past data to predict the future or ascertain the impact of one variable on another.
Predictive analytics includes
linear regression and time series analysis,
data mining supervised learning techniques
A predictive model provides a forecast or prediction, not a decision.
Supervised learning techniques
techniques use past data to find patterns or relationships among data elements in a large database.
simulation
which involves using probability and statistics to construct a computer model to study the impact of uncertainty on a decision
Prescriptive analytics
indicates a course of action to take.
A prescriptive model is a predictive model combined with a rule.
Prescriptive models that rely on a rule or set of rules are often called rule-based models.
Examples of prescriptive analytics
- portfolio models in finance,
- supply network design models in operations, and
- price-markdown models in retailing.
optimization models
Models that give the best decision subject to the constraints of the situation
Simulation optimization
combines probability and statistics to model uncertainty with optimization techniques and find good decisions in highly complex and uncertain settings.
Decision analysis
used to develop an optimal strategy when a decision maker faces several decision alternatives and an uncertain set of future events
