BIG DATA ANALYTICS

Learning Outcomes
Upon completion of the course participants should be able to:
1. Demonstrate good understanding of how big data
technologies impact business processes and key management
functions
2. Demonstrate basic knowledge of full data analytics lifecycle
and key tasks in each phase
3. Recognize situations where different modelling and business
analytics techniques could contribute value in business
decision-making
4. Evaluate the suitability of statistical methods for types of
business decisions, for example decision trees, logistic
regression, and time series analysis
Learning Outcomes
5. Evaluate and apply suitable data mining, AI and
machine learning techniques to specific business
problems/domains, for example
a. Sentiment analysis and text mining to customer
reviews for marketing decisions
b. Social network analysis for organizational change
c. Context analysis of financial transactions for risk
and/or fraud detection
6. Plan and execute a small business data analysis
project from problem definition to testing and
operationalization of the proposed analytical model
Syllabus
1. Introduction: Big data analytics, data-analytical
thinking and business analytics.
2. Basic Methods– Linear Regression, Decision Trees,
Logistic regression, Clustering, Time Series
3. Basic Tools: Using MS-Excel, R-Studio, Microsoft BI
and Weka software
4. Exploratory Data Analysis and Data Visualization
- Mid-term project launch
5. Data Analytics Life Cycle. Introducing the data
analytics case analysis template
6. Data Analytics Life Cycle. Introducing the data
analytics case analysis template
7. Group Presentation and Discussion
Syllabus (Cont.)
9. Data Mining and Predictive Modelling –
Unsupervised Learning and Supervised Learning
10. Model Evaluation and Performance
11. Case Study 1: Sentiment Analysis and applications to
Marketing
12. Case Study 2: Context analysis (time-series analysis)
for fraud detection in financial transactions
13. Case Study 3: Social Network Analysis for people
and organizational change
14. Group Presentation and Discussion I
15. Group Presentation and Discussion II
Text Books
1. Introduction:
The World of
Data
What is Business Analytics?
Analytics is the use of:
data,
information technology,
statistical analysis,
quantitative methods, and
mathematical or computer-based models
to help managers gain improved insight about their
business operations and make better, fact-based
decisions.
Copyright © 2013 Pearson
1-11 Education, Inc. publishing
as Prentice Hall
Business Analytics Applications
 Management of customer relationships
 Financial and marketing activities
 Supply chain management
 Human resource planning
 Pricing decisions
 Sport team game strategies

1-12 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Importance of Business Analytics
 There is a strong relationship of BA with:
- profitability of businesses
- revenue of businesses
- shareholder return
 BA enhances understanding of data
 BA is vital for businesses to remain competitive
 BA enables creation of informative reports

1-13 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Evolution of Business Analytics

 Operations research
 Management science
 Business intelligence
 Decision support systems
 Personal computer software

1-14 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Scope of Business Analytics

 Descriptive analytics
- uses data to understand past and present
 Predictive analytics
- analyzes past performance
 Prescriptive analytics
- uses optimization techniques

Copyright ©
2013 Pearson
Education,
1-15
Inc.
publishing as
Prentice Hall
 Scope of Business Analytics
Example 1.1 Retail Markdown Decisions
 Most department stores clear seasonal inventory by reducing
prices.
 The question is:
When to reduce the price and by how much?
 Descriptive analytics: examine historical data for similar
products (prices, units sold, advertising, …)
 Predictive analytics: predict sales based on price
 Prescriptive analytics: find the best sets of pricing and
advertising to maximize sales revenue
Copyright ©
2013 Pearson
Education,
1-16
Inc.
publishing as
Prentice Hall
Scope of Business Analytics
Analytics in Practice:
Harrah’s Entertainment
Harrah’s owns numerous hotels and casinos
Uses analytics to:
- forecast demand for rooms
- segment customers by gaming activities
Uses prescriptive models to:
- set room rates
- allocate rooms
- offer perks and rewards to customers
Copyright ©
2013 Pearson
Education,
1-17
Inc.
publishing as
Prentice Hall
Data for Business Analytics
 DATA
- collected facts and figures
 DATABASE
- collection of computer files containing data
 INFORMATION
- comes from analyzing data

Copyright ©
2013 Pearson
Education,
1-18
Inc.
publishing as
Prentice Hall
Examples of using DATA in business:
 Annual reports
 Accounting audits
 Financial profitability analysis
 Economic trends
 Marketing research
 Operations management performance
 Human resource measurements

Copyright ©
2013 Pearson
Education,
1-19
Inc.
publishing as
Prentice Hall
Decision Models

Model:
 An abstraction or representation of a real system,
idea, or object
 Captures the most important features
 Can be a written or verbal description, a visual
display, a mathematical formula, or a spreadsheet
representation

Copyright ©
2013 Pearson
Education,
1-20
Inc.
publishing as
Prentice Hall
 Decision Models
Example 1.4 Three Forms of a Model

The sales of a new produce, such as a first-generation iPad or

3D television, often follow a common pattern.
• Sales might grow at an increasing rate over time as
positive customer feedback spreads.
(See the S-shaped curve on the following slide.)
• A mathematical model of the S-curve can be identified; for
example, S = aebect, where S is sales, t is time, e is the base
of natural logarithms, and a, b and c are constants.

Copyright © 2013 Pearson Education, Inc.

publishing as Prentice Hall

1-23
Decision Models

Copyright ©
2013 Pearson
Education, Figure 1.3
1-22
Inc.
publishing as
Prentice Hall
Decision Models

Nature of Decision Models

Figure 1.4

Copyright ©
2013 Pearson
Education,
1-23
Inc.
publishing as
Prentice Hall
Decision Models

Example 1.5 A Sales-Promotion Model

In the grocery industry, managers typically need to know
how best to use pricing, coupons and advertising
strategies to influence sales.
Using Business Analytics, a grocer can develop a model
that predicts sales using price, coupons and advertising.

Copyright ©
2013 Pearson
Education,
1-24
Inc.
publishing as
Prentice Hall
Decision Models

Sales = 500 – 0.05(price) + 30(coupons)

+0.08(advertising) + 0.25(price)(advertising)
Copyright ©
2013 Pearson
Education,
1-25
Inc.
publishing as
Prentice Hall
 Decision Models
Descriptive Decision Models
 Simply tell “what is” and describe relationships
 Do not tell managers what to do

Example 1.6 An Influence Diagram for Total Cost

Influence Diagrams visually show

how various model elements
relate to one another.

Copyright ©
2013 Pearson
Education, Figure 1.5
1-26
Inc.
publishing as
Prentice Hall
 Decision Models

Example 1.7 A Mathematical Model for Total Cost

TC = F +VQ

TC is Total Cost
F is Fixed cost
V is Variable unit cost
Q is Quantity produced
Figure 1.6 Copyright ©
2013 Pearson
Education,
1-27
Inc.
publishing as
Prentice Hall
Decision Models
Example 1.8 A Break-even Decision Model
TC(manufacturing) = $50,000 + $125*Q
TC(outsourcing) = $175*Q
Breakeven Point:
Set TC(manufacturing)
= TC(outsourcing)
Solve for Q = 1000 units

Figure 1.7

Copyright ©
2013 Pearson
Education,
1-28
Inc.
publishing as
Prentice Hall
Decision Models

 Predictive Decision Models often incorporate uncertainty to help managers

analyze risk.
 Aim to predict what will happen in the future.
 Uncertainty is imperfect knowledge of what will happen in the future.
 Risk is associated with the consequences of what actually happens.

Copyright ©
2013 Pearson
Education,
1-29
Inc.
publishing as
Prentice Hall
Decision Models
Prescriptive Decision Models help decision makers identify
the best solution.
 Optimization - finding values of decision variables that
minimize (or maximize) something such as cost (or profit).
 Objective function - the equation that minimizes (or
maximizes) the quantity of interest.
 Constraints - limitations or restrictions.
 Optimal solution - values of the decision variables at the
minimum (or maximum) point.

Copyright ©
2013 Pearson
Education,
1-30
Inc.
publishing as
Prentice Hall
Decision Models
Example 1.11 A Pricing Model
 A firm wishes to determine the best pricing for one of its
products in order to maximize revenue.
 Analysts determined the following model:
Sales = -2.9485(price) + 3240.9
Total revenue = (price)(sales)
 Identify the price that maximizes total revenue, subject
to any constraints that might exist.

Copyright ©
2013 Pearson
Education,
1-31
Inc.
publishing as
Prentice Hall
Decision Models
 Deterministic prescriptive models have inputs that are
known with certainty.
 Stochastic prescriptive models have one or more inputs
that are not known with certainty.
 Algorithms are systematic procedures used to find optimal
solutions to decision models.
 Search algorithms are used for complex problems to find a
good solution without guaranteeing an optimal solution.

Copyright ©
2013 Pearson
Education,
1-32
Inc.
publishing as
Prentice Hall
Problem Solving and Decision Making
 BA represents only a portion of the overall problem
solving and decision making process.
 Six steps in the problem solving process
1. Recognizing the problem
2. Defining the problem
3. Structuring the problem
4. Analyzing the problem
5. Interpreting results and making a decision
6. Implementing the solution
Copyright ©
2013 Pearson
Education,
1-33
Inc.
publishing as
Prentice Hall
Additional Resources:
1. https://www.slideshare.net/GhulamImaduddin1/big-
data-analytics-58553692
2. https://www.slideshare.net/balaiyer/big-data-business-
analytics-understanding-the-marketspace
3. http://www.people.vcu.edu/~randrews/648/Evans2012sl
ides/Evans_Analytics1e_ppt_01.pptx