Introduction

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Text books
• Camm, J. D., Cochran, J. J., Fry, M. J., Ohlmann, J. W., & Anderson, D.
R. (2015). Essentials of business analytics. Cengage Learning.
• Keller, G. (2011). Statistics for Management and Economics,
Abbreviated. Cengage Learning.

Software
• Microsoft Excel , XLMiner add-in.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Use of data

• Three developments make the explosive growth in the

use of analytical methods in business applications:
• Technological advances produce incredible amounts of
data for businesses.
• Ongoing research has resulted in numerous
methodological developments.
• Explosion in computing power and storage capability.

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Analytics Job Trend According to Indeed.com

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Decision Making
Decision making can be defined as the following
process:
1.Identify and define the problem
2.Determine the criteria that will be used to evaluate
alternative solutions
3.Determine the set of alternative solutions
4.Evaluate the alternatives
5.Choose an alternative

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Decision Making
Why did you choose FTU for your bachelorship?
- I love the name of the school.
- It stays close to my home.
- My sister studied there.
- …. → SO NAIVE
- 90% of the graduates get job within one year of graduation.
80% can earn money before their graduation.
90% male students have girlfriends during uni-time
70% female students are married by a rich man
@#$%^& …→ Good rationale

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Business Analytics Defined

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Business Analytics Defined
Business analytics:
• Scientific process of transforming data into insight for making
better decisions
• Used for data-driven or fact-based decision making, which is often
seen as more objective than other alternatives for decision making

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Business Analytics Defined
Tools of business analytics can aid decision making by:
• Creating insights from data
• Improving our ability to more accurately forecast for planning
• Helping us quantify risk
• Yielding better alternatives through analysis and optimization

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A Categorization on Analytical
Methods and Models
Descriptive Analytics
Predictive Analytics
Prescriptive Analytics

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A Categorization of Analytical Methods and
Models
• Descriptive analytics: Encompasses the set of techniques
that describes what has happened in the past; examples:
• Data queries (a request for information with certain characteristics
from a database)
• Descriptive statistics
• Data visualization
• Data-mining techniques
• Basic what-if spreadsheet models

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A Categorization of Analytical Methods and
Models
• Predictive analytics: Consists of techniques that use models
constructed from past data to predict the future or identify the
impact of one variable on another.
• Techniques used in Predictive Analytics:
• Linear regression
• Time series analysis
• Data mining
• Simulation

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A Categorization of Analytical Methods and
Models
Prescriptive Analytics: Indicates a best course of action to take
• Optimization models: Models that give the best decision subject to
constraints of the situation
• Simulation optimization: Combines the use of probability and statistics to
model uncertainty with optimization techniques to find good decisions in
highly complex and highly uncertain
• Decision analysis: Used to develop an optimal strategy when a decision
maker is faced with several decision alternatives and an uncertain set of
future events

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Figure 1.3:
The Spectrum of Business Analytics

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.