Business Analytics Lecture 2 1

Lecture 2

 Syllabus Overview

 Introduction to Business Analytics

 Objectives of Business Analytics

Business Analytics Lecture 2 2

Executive Summary

 Strategic Intent: Develop solutions to leading edge problems for Lab partners through
research that brings together data, modeling and analysis to achieve industry leading
improvements in business performance.
 Cross Industry: Oil/Gas, Retail, Financial Services, Government, Insurance, Airlines,
Industrial Equipment, Software
 Global footprint: NA, EU, Asia, LA

Inventory,
Supply Chain Price Personalized Transportation & Online Resources Supply Chain Sales
Resiliency Optimization Offering Procurement Allocation Digitization Forecasts
Optimization
Business Analytics Lecture 2 3

Course Overview

o Demo Software
 MS Excel with a Solver
XLMiner: Add-in to Excel
o Optional Textbook
Data Mining for Business Intelligence: Concepts, Techniques,
and Applications in Microsoft Office Excel with XLMiner.
Shmueli, Patel, and Bruce. 2nd Edition; 2010
Business Analytics: Methods, Models, and Decisions. Evans.
2012.
An Introduction to Statistical Learning: with Applications in R.
James. 2013.
o Occasional Supplemental Readings
Business Analytics Lecture 2 4

Expectations
 Come to class prepared

 Complete homework and review relative to the solution sheet

 Follow the syllabus

Business Analytics Lecture 2 5

Supply Chain Digitization

Supply Chain Single, Unified Smart S&OP Smart Execution

Segmentation View of Demand

Digitization / Analytics / Automation

Business Analytics Lecture 2 6

Business Analytics

 Increased computing power and the explosion of

data are changing the way organizations capture
data, analyze information, and make decisions
 Business Analytics is a scientific method
associated with using extensive data to identify
models that drive decisions and actions
 Applied in Operations, Marketing, Finance, and
Strategic Planning, among other functions
Business Analytics Lecture 2 7

Decision Modeling

Decision Modeling = use of mathematical

methods to improve or optimize decision
making
Business Analytics Lecture 2 8

Decision Modeling Process

Decision Model =
Formulate problem Mathematical
Real-World
Description of Decision
System
Problem

Implement Yes Computer

decision Solution

More analysis
needed?
No Interpret
output
Business Analytics Lecture 2 9

Course Objectives

 Learn the concept of “Smart” Modeling and Decision Making

 Learn to apply analytic tools to business problems

 Build and solve “desktop” decision models using Excel tools.

 Gain insights into better decision making, common fallacies and

pitfalls.
 identify opportunities for creating value using business
analytics

 Understand the decision modeling process; where it can be

applied; how to critically evaluate the technology and how to
estimate the value created.
Business Analytics Lecture 2 10

Are you a good decision maker?

The next couple of questions will help you examine the type of a
decision maker you are.

Please read each question in the handout and answer them as if

you are a decision maker in each situation.

Do not think too hard.

Let’s go with our (spontaneous) gut!

Business Analytics Lecture 2 11

Are you a good decision maker?

Write down your choices for 4 questions.

Go with your first instinct and move on.

No research, web browsing, asking, etc.

Especially, no wiki!!!
Business Intelligence and Analytics

Prescriptive How do you make it happen?

Optimization, Planning

Predictive What will happen?

Forecasts, Machine Learning, Simulation
Value

Diagnostic
Why did it happen?
Queries, Data Mining, Statistical Analysis

Descriptive
What Happened?
Reports, Alerts, Mapping

Difficulty
12
John Snow’s Diagnostic Analysis
• In 1854 Cholera struck England once again.

• At the time, water was supplied to London by two water companies.

• One of these companies pulled its water out of the Thames River
upstream while the second pulled its water from the river downstream
from the city.

• John Snow, in investigating the epidemic, began plotting the location of

deaths related to Cholera.

13
 John Snow’s Diagnostic Analysis

Water
Pump

Officials followed Snow's advice to remove the handle of the Broad Street Pump
that supplied the water to this neighborhood; the epidemic was contained. 14
Business Intelligence and Analytics

Prescriptive How do you make it happen?

Optimization, Planning

Predictive What will happen?

Forecasts, Machine Learning, Simulation
Value

Diagnostic
Why did it happen?
Queries, Data Mining, Statistical Analysis

Descriptive
What Happened?
Reports, Alerts, Mapping

Difficulty
15