A scientific approach to decision-making referred to as
- Management Science
- Operations Research
- Decision Science
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.
“a process of transforming data into actions through analysis and insights in the context of organizational decision making and problem solving.” (Liberatore and Luo, 2010)
Business Cases… just a few
Marketing and Product development
- What advertisement mode to chose and how many ads
- Which product to manufacture
- What would be customer preferences
- Which product to advertise/recommend to the customer
- Which stocks to invest in
- Should we go ahead with the merger/acquisition decision or not
- How many employees to hire
- How many agents to be scheduled
- Amazon, Netflix, Facebook, LinkedIn, Google/YouTube
- As much as 75% of Netflix’s streaming video can be attributed to movie recommendation
- Identify segments of customers that behave similarly with regard to their interaction with the business
- Failure patterns of various types of equipment are predictable
- Prediction of service activities and agent requirements
Predictive medical diagnosis
the use of data to understand past and current business performance and make informed decisions
What happened? What is happening?
Statistical measures such as means and standard deviations,probability distributions
predict the future by examining historical data, detecting patterns or relationships in these data, and then extrapolating these relationships forward in time.
What will happen? Why will it happen?
Decision analysis and decision trees
identify the best alternatives to minimize or maximize some objective What should I do? Why should I do?
Integer programming, goal programming, and nonlinear programming
Database queries and analysis
Dashboards to report key performance measures
Spreadsheets and predictive models
Scenario and “what-if” analyses
Data and text mining
Social media, web, and text analytics
Models in Business Analytics
Model – an abstraction or representation of a real system, idea, or object.
- Captures the most important features
- A written or verbal description, a visual representation, a mathematical formula, or a spreadsheet.
Decision model – a logical or mathematical representation of a problem or business situation that can be used to understand,analyze, or facilitate making a decision.
- Data, which are assumed to be constant for purposes of the model.
- Uncontrollable variables, which are quantities that can change but cannot be directly controlled by the decision maker.
- Decision variables, which are controllable and can be selected at the discretion of the decision maker.
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