BMN-512: Data Mining and Business Intelligence
Lecture 1: Introduction
Prof. Ramesh Anbanandam Ph. D
Associate Professor, Operations Management and Decision Science
Department of Management Studies
Joint Faculty, Center for Excellence in Transportation Systems (CTRANS)
Indian Institute of Technology Roorkee
Roorkee 247 667, Uttarakhand, India
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Reference Book
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Relative weightage of marks for grading
Classwork / Tutorial / MTE ETE
Assignment / Quiz / any
other class activity
25% 25% 50%
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Agenda
Why Are There So
What Is Business What Is Data Data Mining and Terminology and
Big Data Data Science Many Different
Analytics? Mining? Related Terms Notation
Methods?
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What Is Business Analytics?
• Business Analytics (BA) is the practice and art of bringing quantitative data
to bear on decision-making.
• The term means different things to different organizations.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Think….
• What is the significance of analytics in helping [Link]
newspapers transition to a digital world?
• How does a newspaper in India use analytics to
determine the popularity of different images on its
homepage?
• What can the choice of images (cats, dogs, or
monkeys) on a newspaper's homepage tell us about
the readership's preferences?
• How does the Washington Post use analytics to
cater to its highly influential audience?
• Why might defence contractors be particularly
interested in advertising in the Washington Post?
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Think….
• What kinds of data does the Washington Post track to optimize its online
advertisements?
• How can tracking readers by time of day, location, and subscription information
benefit a newspaper's advertising strategy?
• What is the potential impact of targeted advertisements on a small, specific
group, such as members of the House and Senate Armed Services Committees?
• How might the ability to focus advertisements on a small group of individuals
influence the effectiveness of the advertising campaigns?
• What ethical considerations are involved in using analytics to track and target
specific readers for advertisements?
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Business Analytics
• Business Analytics, or more generically, analytics, include a range of data
analysis methods.
• Many powerful applications involve little more than counting, rule-
checking, and basic arithmetic.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Business Intelligence (BI)
• Business intelligence (BI) refers to data visualization and reporting to
understand “what happened and what is happening.”
• This uses charts, tables, and dashboards to display, examine, and explore
data.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Business Intelligence (BI)
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Business Analytics
• Business Analytics now typically includes BI and sophisticated data
analysis methods, such as statistical models and data mining algorithms
for exploring data, quantifying and explaining relationships between
measurements, and predicting new records.
• Methods like regression models are used to describe and quantify “on
average” relationships (e.g., between advertising and sales), to predict
new records (e.g., whether a new patient will react positively to a
medication), and to forecast future values (e.g., next week’s web traffic).
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Who uses predictive analytics?
• Credit scoring
• Future purchases
• Tax evasion
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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What Is Data Mining?
• Data mining refers to business analytics methods that go beyond counts,
descriptive techniques, reporting, and methods based on business rules.
• This course focuses mostly on the more advanced data analytics tools.
• Specifically, it includes statistical and machine-learning methods that
inform decision-making, often in an automated fashion.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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What Is Data Mining?
• Prediction is typically an important component, often at the individual
level.
• Rather than “What is the relationship between advertising and sales,” we
might be interested in “What specific advertisement, or recommended
product, should be shown to a given online shopper at this moment?”
• Or we might be interested in clustering customers into different
“personas” that receive different marketing treatment, then assigning
each new prospect to one of these personas.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Data Mining and Related Terms
• Predictive analytics, predictive modelling, and machine learning
• Difference between the fields of statistics and machine learning
• The emphasis that classical statistics places on inference (determining
whether a pattern or interesting result might have happened by chance in
our sample) is absent from data mining.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Overfitting
• In comparison to statistics, data mining deals with large datasets in an open-
ended fashion, making it impossible to put strict limits around the question
being addressed that inference would require.
• As a result, the general approach to data mining is vulnerable to the danger
of overfitting, where a model fits so closely to the available sample of data
that it describes not merely structural characteristics of the data but
random peculiarities as well. In engineering terms, the model is fitting the
noise, not just the signal.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Big Data
• four Vs—
• volume,
• velocity,
• variety, and
• veracity
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Data Science
• Data science is a mix of statistics, machine learning, math, programming,
business, and IT skills.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Data Science
• The ubiquity, size, value, and importance of Big Data has given rise to a
new profession: the data scientist.
• Data science is a mix of skills in statistics, machine learning, math,
programming, business, and IT.
• The term itself is thus broader than the other concepts we discussed
above, and it is a rare individual who combines deep skills in all the
constituent areas
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Why Are There So Many Different Methods?
• In this course or any other resource on data mining, you'll encounter a
rich array of methods for prediction and classification, each with its
unique approach and application.
• You might ask yourself why they coexist and whether some are better than
others.
• The answer is that each method has advantages and disadvantages.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Why Are There So Many Different Methods?
• The usefulness of a method can depend on factors such as the size of the
dataset, the types of patterns that exist in the data, whether the data
meet some underlying assumptions of the method, how noisy the data
are, and the particular goal of the analysis.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Two methods for separating owners from nonowners
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Terminology and Notation
• Algorithm: A specific procedure used to implement a particular data
mining technique: classification tree, discriminant analysis, and the like.
• Categorical Variable: A variable that takes on one of several fixed values;
for example, a flight could be on time, delayed, or cancelled.
• Dependent Variable
• Estimation
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Terminology and Notation
• Supervised Learning
– The process of providing an algorithm (logistic regression, regression
tree, etc.) with records in which an output variable of interest is known
and the algorithm “learns” how to predict this value with new records
where the output is unknown
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Terminology and Notation
• Test Data (or Test Set): The portion of the data used only at the
end of the model building and selection process to assess how
well the final model might
• Perform on new data.
• Training Data (or Training Set): The data portion used to fit a
model.
• Unsupervised Learning: An analysis in which one attempts to
learn patterns in the data other than predicting an output value of
interest.
Why Are There So
What Is Data Data Mining and Terminology and
What Is Business Analytics? Big Data Data Science Many Different
Mining? Related Terms Notation
Methods?
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Thank you
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