Business Analytics – 2 Marks with Answer

1. What is Descriptive Analytics?

Descriptive analytics is the most common and fundamental form of analyticsthat companies
use. Every part of the business can use descriptive analytics to keeptabs on operational
performance and monitor trends. Examples of descriptiveanalytics include KPIs such as year-
on-year percentage sales growth, revenue percustomer and the average time customers take
to pay bills. The products of descriptiveanalytics appear in financial statements, other reports,
dashboards and presentations.

2. List out the functions of descriptive analytics?

1)

Company's Current Performance:

descriptive analytics helps businesses keeptrack of critical metrics involving individuals,
groups and teams, and the companyas a whole.
For example
, descriptive analytics can show how a specific sales repis doing this quarter or which of the
rep's products sells the most.2)

Business's Historical Trends:

Descriptive analytics gathers information overlong periods, and that accumulated
information can be used to track the company'sprogress by comparing the metrics for
different periods.
For example
, thecorporate bean counters can track sales or expenses by comparing the results ofvarious
quarters, calculating revenue growth by percentages, and rendering theresults on easy-to-read
charts.3)

Company's Strong and Weak Points:

Descriptive analytics gives professionalsthe tools to compare the performances of various
business groups using metricslike employee-generated revenue or expenses as a percentage
of revenue. It willalso compare these results with known industry averages or published
results fromother business. These comparisons help companies see where they're doing
welland where they need to improve.

3. Types of Descriptive Analytics?

1)

Measures of Frequency2)

Measures of Central Tendency3)

Measures of Dispersion4)

Measures of Position

4. Techniques for Descriptive Analytics?

Data aggregation and data mining are two techniques used in descriptiveanalysis to churn out
historical data. In Data aggregation, data is first collected andthen sorted in order to make
the datasets more manageable.

5. Steps involved in Descriptive Analytics

1)

State the Business Metrics2)

Identify the Data Required3)

Extract and Prepare the Data4)

Analyse the Data5)

Present the Data

6.

Advantages of Descriptive Analytics

This type of analysis is considered as a better method for collectinginformation that describes
relationships as natural and exhibits the world as it [Link] reason makes this analysis
very real and close to humanity as all the trends aremade after research about the real-life
behaviour of the data.
7.

Data Visualisation
Data visualisation refers to technologies that support visualisation andsometimes
interpretation of data and information at several points along the dataprocessing chain. It
includes digital images, GIS, graphical user interfaces, graphs,virtual reality, dimensional
presentations, videos, and animation. Visual tools can helpto identify relationship such as
trends. Data visualisation is easier to implement whenthe necessary data are in a
data warehouse or, better yet, in a multidimensional specialdatabase or server.8.

What is population?
9.

What is sampling?
Sampling is a process in which the fixed numbers of observations are
takenrandomly from a larger population.
10.

List out the characteristics of good sample design

1)

True Representative2)

Free from Bias3)

Accurate4)

Comprehensive5)

Approachable6)

Good Size7)

Feasible8)

Goal Orientation9)

Practical10)

Economical
11.

Advantages of Sampling
1)

Saves Time, Money and Effort2)

More Effective3)

Faster and Cheaper4)

More Accurate5)

Gives More Comprehensive Information

12.

Disadvantages of Sampling
1)

Biased Selection2)

Difficulty in Selection3)

Specialised Knowledge Needed4)

Problem of Cooperation5)

Less Accuracy6)

Limited Nature

13.

Sampling Methods
Thus, sample designs are basically of two types, viz., probability sampling andnon-
probability sampling as shown in figure below:
14.

Sample Random Sampling

This is the most famous and simple method of sampling where each unit of thepopulation is
equally probable of getting included in the sample. Let us consider thatthe size of the
population is 'N' from which n units are to be selected at random for asample such that ncn
sample has the probability of being selected equally. Simplerandom sampling says that:
15.

Systematic Sampling
After the selection of one unit at random from the universe the other units areselected
systematically at a specified interval of time. This method is applicable whenthe size of the
population is finite and on the basis of any system the units of theuniverse are arranged such
as alphabetic arrangement, numerical arrangement, orgeographical arrangements.
16.

Stratified Random Sampling

In the Stratified Random Sampling, the sample is selected from differenthomogeneous strata
or parts of a universe of heterogeneous universe as a whole. Thesummary of this sampling
procedure is as follows.
17.

Cluster Sampling
According to this method there is further noticeable sub-division of theuniverse into clusters.
Simple random sampling is performed and clusters are drawnaccordingly constituting a
sample of all the units belonging to the selected [Link] example, if we have to conduct a
survey in the city of Mumbai, then the city maybe divided into, say, 40 blocks and out of these 40
blocks, 5 blocks can be picked upby random sampling and the people in these five blocks are
interviewed to give theiropinion on a particular issue. The clusters chosen should be small
in size, i.e., more orless the same number of sample units should be there in each cluster. This
method isused in the collection of data about some common traits of the population.
18.

Multi-Stage Sampling
Modification of cluster sampling is multi-stage sampling where in clustersampling, a sample
is constituted by all the units selected in a cluster but in multi-stage sampling where in cluster
sampling the selection of the sample units is in two,three, four stages. Firstly , the universe is
divided into first-stage sample units andthen further sub-divided into second stage sampling
is performed in the same way.
For example
, in an urban survey first stage sampling fourth stage sampling is will beof selection of towns
and then for each selected as samples of third-stage sampling.
19.

Area Sampling
The area sampling is a form of multi-stage sampling in which maps instead oflists or registers
is used as 'sampling frame' . It is commonly used in those countrieswhich do not have proper
sampling frame like a population list. For geographic sub-divisions, 'clusters sampling' is the
other name of 'area sampling' . The cluster of unitsbased non geographical area is the primary
sampling units known as 'cluster designs'
which are famous as area sampling. The positive and negative features of clustersampling
area also applicable to area sampling.
20.

Non-Probability Sampling Methods

Non-probability sampling is that type of sampling procedure which does nothave any ground
for estimating the probability that whether or not each item in thepopulation has been
included in the sample. There are different names of non-probability sampling such as
deliberate sampling, purposive sampling and judgementsampling. In this type of sampling,
the researcher deliberately selects items for thesample and the choice of researcher regarding
the item is provided more weightage. Inother words, under non-probability sampling the
organiser of the inquiry purposivelychooses specific units of the universe to constitute a
sample on the basis that the smallportion selected by him, out of a huge one is typical or
representative of the wholeuniverse. The various non-probability sampling designs are:
21.

Convenience Sampling
On the basis of convenience and approachability, the choice of the samplingunits by the
researcher, is known as 'convenience sampling' . Samples that are selectedaccidentally are
called 'accidental samples' . Because of the selection procedure (unitsare selected from their
actual place) it is called as 'sample of the man in the street' .Due to their accessibility ,
samples units are selected.
For example
, by adding thenew product in the nearby suitable shops, the potential of the product is tested.
This isaccomplished by observing the purchasing and selling report of the product.
22.

Purposive Sampling
A non-probability sample which follows certain norms is called purposivesampling.
Purposive sampling is basically of two types
1)

Judgement Sampling
The study which is based on the parameters of population, where the units areselected by a
researcher or some other expert on his/her judgement, is called'judgement sampling'. This
technique of sampling is appropriate in the situationwhere the study of the population is
difficult to locate or there are members whoare comparatively better than other for an
interview in terms of knowledge orinterest.
2)

Quota Sampling
Quota sampling is the most commonly used non-probability sample designs,which is most
comprehensively used in consumer surveys. Principle ofstratification is also used by this
sampling method. In stratified random samplingthe researcher begins by building strata. The
common bases for stratification in
consumer surveys are demographic, e.g., age, gender, income and so [Link]
stratification is generally used, e.g., gender-wise age groups.
23.
Snowball Sampling
In panel sampling a group of participants are selected initially by randomsampling method
and the same group is asked for the same information repeatednumber of times during that
period of time. This sample is semi-permanent wheremembers are included repeatedly for
iterative studies. In this sampling, there is afacility of selecting and contacting samples that fit
i getting high response rate, evenby mail.
24.

Sampling Distribution
When the characteristic of the desired sample is limited then the special non-probability
method is applicable. In this method, it is difficult to locate therespondents because it will be
very costly. Depending on the referrals of the initialsubjects sampling generates additional
subjects. Though this technique is biased andunable to represent a good cross-section from
the population but dramatically itreduces the search cost.
25.

Factors Influencing Sample Size

The following points should be taken care of while deciding the sample size:1)

Size of Universe:
It has been: It has been observed and statistically proven thatthe sample size should be large
so that it can represent the whole targetpopulation. If the universe size is large and
heterogeneous then the researchershould take large sample size and vice versa.2)

Availability of Resources:
The researcher needs a lot of resources to completethe task of research. These resources.
Resources can be money, time, experts orany other variable. If the resources are easily
available than the sample size can belarge otherwise smaller sample would be appropriate.
26.

Estimation

When a researcher makes inferences about a population then this process isknown as
estimation. The inferences are concluded on the basis of information
obtained from the sample. A statistic is any measurable quantity that is concludesfrom a data
sample (e.g. the average). For a given variable it is a stochastic [Link] it is vary
from sample to sample.
27.

Estimator and Estimate

A sample statistic is used when one makes an estimate of a populationparameter. This sample
statistic is the 'estimator'.
28.

Characteristics of Estimation
The specific value of the sample statistic used to estimate a populationparameter is known as
'point estimate'.
Point estimation
 manages the task ofselecting a particular sample value which is an estimate for a population
[Link] estimation of some population parameter is shown in
figure 3.14
. Thepopulation parameter of interest might be the mean, variance, standard
deviation,proportion or any other characteristic of the population. Collection of random
sampleto estimate the value of an unknown population parameter typically comprises of
'n'observations of the variable of interest. The estimator of the population parameter is
afunction of these sample observations.
29.

Point Estimation
The fixed interval of scores where the population's mean or some other parameter isexpected
to fall when that parameter is to be estimated from the given sample data isknown as 'interval
estimation' .
30.

Internal
31.

Important teams related to probability Distribution

32.

Types of Probability Distribution

The various types of Probability Distributions are as shown in figure below:
Bin Binomial DistributionPoisson Distribution

Uniform Probability

DistributionExponential ProbabilityDistributionNormal ProbabilityDistributionStudent's

DistributionChi-Square DistributionF Distribution
33.

Discrete Probability Distribution

In a probability distribution of a random variable X, in which X can only takethe values of
distribution when its random variable is a discrete variable. Thefollowing examples illustrate
discrete probability distributions:i)

A car can have only 0,1,2,3 or 4 flat tyres.

ii)

A bookshop has only 0,1,2,3,4 or 5 copies of a particular title in stockiii)

The number of employees absent on a given day is 0,1,2,3

34.

Continuous Probability Distribution

The probability distribution of a random variable is called continuousProbability Distribution
if the given random variable is continuous. Continuousvariables contain very large number of
outcomes (which are in fact uncountable) butdiscrete variables contain finite number of
outcome values. In continuous randomvariables, the probability of a single outcome will be
close to zero since the totalprobability '1' is divided among a very large number of outcomes.
For continuousrandom variables, calculation of probability for a single value may not be
[Link] examples that will clarify the difference between discrete and
continuousvariables are
35.

Analysis of descriptive analytics

Step 1) State the Business MetricsStep 2) Identify the Data RequiredStep 3) Extract and
Prepare the DataStep 4) Analyze the DataStep 5) Present the Data

unit-4Two Marks1.

Predictive Analytics
Predictive analytics is an area of data mining that deals with extractinginformation from data
using it to predict trends and behaviour patterns. Often theunknown event of interest is in the
future, but predictive analytics can be appliedto any type of unknown, whether it be in the
past, present or future. For example,identifying suspects after a crime has been committed, or
credit card fraud as itoccurs.
2.

Procedure involved in predictive Analytics

Figure 4.2 shows the basic steps involved in the predictive analytics process, whichare
describe below:
3.

Advantages of Predictive Analytics

1)

Detecting Fraud

2)

Optimising Marketing Campaigns

3)

Improving Operations

4)

Reducing Risk

4.

Application of Predictive Analytics

1)
Banking and Financial Services

2)

Oil, Gas and Utilities

3)

Health Insurance

4)

Retail

5)

Governments and the Public Sector

6)

Manufacturing

5.

Principles of Predictive Models

1)

Definition and Support Principles

i)

Principle of Similarity

ii)

Principle of Extensibility

iii)

Principle of Robustness

iv)

Principle of Fault Tolerance

v)

Principle of Ease of Control

vi)

Principle of Completeness

2)

Interference Principles

i)

Lack of Knowledge Principle

ii)

Lack of Concern Principle

iii)

Lack of Definition Principle

iv)

Lack of Engineering Principlev)

Lack of Responsibility Principle

6.

Types of Predictive Models

Predictive modelling means developing models that can be used to forecast orpredict future
events. In business analytics, models can be developed based on logicor data.
7.

Single-Period Purchase Decisions

Single-Period purchase decisions are the one-time purchase decisions that are oftenrequired
to be made in the event of uncertain demand. There occur many situations inwhich
companies have to make a single time decision.
8.

Multiple Time Period Models

Multiple time period models accommodate multiple and even infinitely many [Link]
these models, several issues have to be assessed:1)

How to define assets in an multi-period model,

2)

How to model inter-temporal preferences,3)

What market completeness means in this environment,4)

How the infinite horizon may the sensible definition of a budget constraint, and5)

How the infinite horizon may affect pricing.

9.

Overbooking Decisions
Overbooking occurs when a firm with constrained capacity sells more units ofinventory than
they have available. Overbooking is applicable in industries with thefollowing
characteristics:1)

Capacity (or supply)is constrained and perishable, and bookings are accepted forfuture use.2)

Customers are allowed to cancel or no-show3)

The cost of denying service to a customer with a booking is relatively low.

10.

Retail Pricing Markdowns Model

Most department stores and fashion clear their seasonal inventory by reducing [Link] key
question they face is what prices should they set and when should they setthem to meet
inventory goals and maximise revenue? For example, suppose that astore has 1000 summer
tees of a certain style that go on sale April 1 and wants to seeall of them by the end of June.
11.

Modeling relationship and treads in Data

A chain of departments stores is introducing a new brand of bathing suit for Rs.70 .The prime
selling season is 50 days during the late spring and early summer; afterthat, the store has a
clearance sale around July 4 and marks down the price by 70% (toRs.21.00), typically selling
any remaining inventory at the clearance price.
12.

Data Mining
In technical terms, the process of identifying the various trends and correlationsamong the
number of fields in huge relational database is known as data mining.
13.

Need for Data Mining

1)

Operational2)

Decisional3)

Informational4)

Specific Applications
14.

Components of Data Mining

The various components of a typical data mining system are described in figure 4.12and
explained as below:
Graphical User InterfacePattern EvaluationDatabase or Data WarehouseServerData Mining
EngineKnowledgeBase

15.

Data Mining methodologies

Data mining is an ideal Predictive analytics tool used in the BA process. Some of the
sametools used in the descriptive analytics step are used in the predictive step but are
employed toestablish a model (either based on logical connections or quantitative formulas)
that may beuseful in predicting the future. Several computer-based methodologies are explained
below:Data Mining MethodologiesSummarisationAssociationClassificationClusteringTrend
Analysis
16.

Data Mining Techniques

The various methods of data mining are explained as below:Data mining TechniquesCluster
AnalysisNeural NetworksData VisualisationInductionOnline Analytical Processing
17.

Induction
A database can be seen as the storage of huge data but the most vital part of this is
theinformation which can be retrieved from it. There are primarily two methods for
interfacewhich are discussed below:i)

The method of concluding the information which is a logical outcome of theinformation

stored in the database is known as deduction. For example, in tworelational tables, a joint
operator is implemented where the first table is associatedwith the employees and
different divisions and second table includes the departmentsand managers which in turn deduce a
relationship between the managers andemployees.
18.

Neural Networks
Neural network can be seen as one of the method of computing. It mainly deals withthe
development of various mathematical structures having the capability of learning. Thevarious
academic investigations related to modelling of the nervous system learning gavebirth to
these methods. The task of concluding the relevant and meaningful information fromthe
incomplete or complicated data is accomplished quite remarkably through neuralnetworks.
19.

Data Visualisation
The more informative and spontaneous knowledge about the data can be obtained by theanalyst through
data visualisation and this can be implemented along with the data mining.
The analyst can concentrate on certain trends and patterns with the help of data mining
andvisualisation helps in detailed exploration of [Link] can be a huge collection of data
and this volume of data in a database can overpowerthe visualisation but the data exploration
can be supported along with data mining.
20.

Data Mining Process

1)

Data collection2)

Feature Extraction and Data Cleaning3)

Analytical Processing and Algorithms

21.

Advantages of Data Mining

1)

Automated Forecasting of Trends and Behaviours2)

Automated Determination of Earlier Unknown Trends3)

Extensive Depth and Breadth of Database

22.

Disadvantages of Data Mining

1)

Privacy2)

Security3)

Misuse of Information/Inaccurate Information

23.

Applications of Data Mining

1)

Retail/Marketing2)
Banking3)

Insurance and Health Care4)

Transportation5)

Medicine
24.

Challenges of Data Mining

1)

Security and Social Challenges2)

User Interface3)

Mining Methodology Challenges4)

Complex Data5)

Performance
unit-5Prescriptive Analytics
1.

Prescriptive Analytics
It is focus on achieving the best possible outcome by going beyond the forecast toactually
determine the optimal decision to make For example, this would help an organisationanswer
how best to allocate capital, people, and facilities to achieve business results such asreduced
time or cost, or increased return on investment. Prescriptive analytics leverageoptimisation
methods to obtain their prescriptive results.
2.

Prescriptive Analytics Techniques

1)

Simulation Optimisation:
Simulation optimisation combines the use of probability andstatistics to model uncertainty
with optimisation techniques to find good decisions inhighly complex and highly uncertain
settings.2)

Decision Analysis:
The techniques of decision analysis can be used to develop anoptimal strategy when a decision-maker
is fared with several decision alternatives anduncertain set of future events. Decision analysis
also employs utility theory, whichassigns valued to outcomes based on the decision-maker's
attitude toward risk, loss, andother factors.
3.

Applications of Prescriptive Analytics

1)
Banking Financial Services and Insurance (BFSI)
2)

Healthcare3)

Online Learning4)

Transportation and Travel5)

Supply Chain and Logistics6)

Manufacturing7)

Marketing and Sales

4.

Benefits of Prescriptive Analytics

5.

Challenges with Prescriptive Analytics

1)

Difficult to Define a Fitness Function2)

Human Bias in Models3)

Complex Constraints
6.

Types of Prescriptive Modeling

The listing of prescriptive analytic methods and models below is but a small groupingof
many operations research, decision science, and management science methodologies thatare
applied in this step of the BA process.

7.

Linear Programming
A general-purpose modelling methodology is applied to multi-constrained,multivariable
problems when an optimal solution is sought. It is ideal for complex andlarge-scale problems
when limited resources are being allocated to multiple [Link] include allocating
advertising budgets to differing media, allocating human
and technology resources to product production, and optimising blends of mixingingredients
to minimise costs of food products.
8.

Integer Programming
This is the same as LP, but it permits decision variables to be integer [Link]
include allocating stocks to portfolios, allocating personnel to jobs, andallocating types of
crops to farm lands.
9.

Non-Linear Optimisation
A large class of methodologies and algorithms is used to analyse and solve foroptimal or
near-optimal solutions when the behaviour of the data is [Link] include solving
for optimised allocations of human, technology, andsystems whose data appears to form a
cost or profit function that is quadratic, cubic,or nonlinear in some way.
10.

Decision Analysis
A set of methodologies, models, or principles is used to analyse and guidedecision-making
when multiple choices face the decision maker in differing decisionenvironments (e.g.,
certainly, risk, and uncertainty). Examples include selecting onefrom a set of computer
systems, trucks, or site locations for a service facility.
11.

Case Studies
A learning aid provides practical experience by offering real or hypotheticalcase studies of
real-world applications of BA.
For example
, case studies can simulate the issues and challenges in an actual problemsetting. This kind of
simulation can prep decision makers to anticipate and prepare forwhat has been predicted to
occur by the predicted analytics step in the BA process.
For example,
a case study discussion on how to cope with organisation growth mightprovide a useful
decision-making environment for a firm whose analytics havepredicted growth in the near
future.
12.

Simulation
This methodology can be used in prescriptive analysis in situations where parametersare
probabilistic, non-linear, or just too complex to use with other optimisationmodels that
require deterministic or linear behaviour.