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Predictive analytics
⚫ Its focuses on predicting and understanding what could happen in the future.
⚫ Analyzing past data patterns and trends by looking at historical data and customer
insights can predict what might happen
⚫ Predictive analytics is based on probabilities. Using a variety of techniques – such as
data mining, statistical modelling and machine learning algorithms (classification,
regression and clustering techniques)
BRAHMDEVDADA MANE INSTITUTE OF TECHNOLOGY, BELATI, SOLAPUR
⚫ Predictive analytics attempts to forecast possible future outcomes and the likelihood of
those events.
⚫ To make predictions, machine learning algorithms, for example, take existing data and
attempt to fill in the missing data with the best possible guesses
Advantage
⚫ Since predictive analysis is based on probabilities, it can never be completely accurate
– but it can act as a vital tool to forecast possible future events and inform effective
business strategy for the future. Predictive analytics can also improve many areas of a
business, including:
⚫ Efficiency, which could include inventory forecasting
⚫ Customer service, which can help a company gain a better understanding of who their
customers are and what they want in order to tailor recommendations
⚫ Fraud detection and prevention, which can help companies identify patterns and
changes
Risk reduction, which, in the finance industry, might mean improved candidate
screening
Disadvantage
⚫ This method of analysis relies on the existence of historical data, usually large amounts
of it
Applications
⚫ E-commerce – predicting customer preferences and recommending products to
customers based on past purchases and search history
⚫ Sales – predicting the likelihood that customers will purchase another product or leave
the store
⚫ Human resources – detecting if employees are thinking of quitting and then
persuading them to stay
⚫ IT security – identifying possible security breaches that require further investigation
⚫ Healthcare – predicting staff and resource needs
BRAHMDEVDADA MANE INSTITUTE OF TECHNOLOGY, BELATI, SOLAPUR
Prescriptive analytics
prescriptive analytics tells you what should be done.
This is the most advanced stage in the business analysis process and the one that calls
businesses to action, helping executives, managers and operational employees make the
best possible decisions based on the data available to them.
Advantages
⚫ Prescriptive analytics, when used effectively, provides invaluable insights in order to
make the best possible, data-based decisions to optimize business performance.
Disadvantages
⚫ as with predictive analytics, this methodology requires large amounts of data to
produce useful results, which isn’t always available.
machine learning algorithms, on which this analysis often relies, cannot always account
for all external variables. On the flip side, the use of machine learning dramatically
reduces the possibility of human error
Applications
⚫ Oil and manufacturing – tracking fluctuating prices
⚫ Manufacturing – improving equipment management, maintenance, price modelling,
production and storage
⚫ Healthcare – improving patient care and healthcare administration by evaluating
things such as rates of readmission and the cost-effectiveness of procedures
⚫ Insurance – assessing risk in regard to pricing and premium information for clients
Pharmaceutical research – identifying the best testing and patient groups for clinical
trials
3. The Roles of Statistics and Data Mining with Machine Learning:
Statistics: -
it is the science of analyzing the data.
Classical or conventional statistics is inferential in nature, meaning it’s used to reach conclusions
about the data (various parameters).
Statistical modeling is focused primarily on making inferences and understanding the
characteristics of the variables.
Machine learning models leverage statistical algorithms and apply them to predict analytics.
In a statistical model, a hypothesis is a testable way to confirm the validity of the specific
algorithm
BRAHMDEVDADA MANE INSTITUTE OF TECHNOLOGY, BELATI, SOLAPUR
Data mining: -
it is based on the principles of statistics
It is the process of exploring and analyzing large amounts of data to discover patterns in that
data.
Algorithms are used to find relationships and patterns in the data, then this information about the
patterns is used to make forecasts and predictions.
Data mining is used to solve a range of business problems, such as fraud detection, market
basket analysis, and customer churn analysis.
Traditionally, organizations use data mining tools on large volumes of structured data, such as
customer relationship management databases or aircraft parts inventories.
The goal of data mining is to explain and understand the data.
Data mining is not intended to make predictions or back up hypotheses.
Generally, the goal of the data mining is to extract data from a larger data set for the purposes of
classification or prediction.
data mining is intended to show patterns that can be used by humans. In contrast, machine
learning automates the process of identifying patterns that are used to make predictions
Reasoning
Reasoning: Machine reasoning allows a system to make inferences based on data. In essence,
reasoning helps fill in the blanks when there is incomplete data. Machine reasoning helps make
sense of connected data.
For example, if a system has enough data and is asked “What is a safe internal temperature for
eating a drumstick?” the system would be capable of telling you that the answer is 165 degrees.
The logic chain would be as follows: A drumstick that is eaten (as opposed to a part of a musical
instrument) refers to a chicken leg, a chicken leg contains dark chicken meat, dark chicken meat
needs to be cooked at 165 degrees, therefore the answer is 165 degrees
work to figure out who is who. Neural networks and deep learning are often used in image
recognition, speech, and computer vision applications
How it works
⚫ The machine is already trained on all types of shapes, and when it finds a new shape,
it classifies the shape on the bases of a number of sides, and predicts the output.
Example of supervised Learning
• you get bunch of photos with information what is on them and you train a model to
recognize new photos
• predicting stock market price
• an email is spam or not
• predicting house/property price
• a patient has disease or not
• Face detection and recognition
• Image classification and handwriting recognition
• Predict the age of a viewer watching a given video on YouTube.
• Predict the temperature at any location inside a building using weather data, time,
door
Supervised learning algorithms
⚫ Linear regression.
⚫ Logistic regression.
⚫ Decision tree.
⚫ SVM algorithm.
⚫ Naive Bayes algorithm.
⚫ KNN algorithm.
⚫ K-means.
Random forest algorithm
well-defined problem, since we are not told what kinds of patterns to look for, and there is
no obvious error metric to us your mother says “that’s a dog”, but that’s very little
information.
Example:-
customers by purchasing behavior
Advantages
⚫ It is easy to understand.
⚫ It reduces the amount of annotated data used.
⚫ It is a stable algorithm.
⚫ It is simple.
⚫ It has high efficiency
Disadvantages
⚫ Iteration results are not stable.
⚫ It is not applicable to network-level data.
⚫ It has low accuracy.
Reinforcement Learning
⚫ Reinforcement learning is a type of machine learning method where an intelligent
agent (computer program) interacts with the environment and learns to act within that.
⚫ It is a core part of Artificial Intelligence and all AI agent works on the concept of
reinforcement learning.
⚫ Reinforcement Learning is a feedback-based Machine learning technique in which an
agent learns to behave in an environment by performing the actions and seeing the
results of actions. For each good action, the agent gets positive feedback, and for each
bad action, the agent gets negative feedback or penalty.
Working of Reinforcement Learning
Suppose there is an AI agent present within a maze environment, and his goal is to find the
diamond. The agent interacts with the environment by performing some actions, and based
on those actions, the state of the agent gets changed, and it also receives a reward or penalty
as feedback
⚫ Agent(): An entity that can perceive/explore the environment and act upon it.
⚫ Environment(): A situation in which an agent is present or surrounded by. In RL, we
assume the stochastic environment, which means it is random in nature.
⚫ Action(): Actions are the moves taken by an agent within the environment.
⚫ State(): State is a situation returned by the environment after each action taken by the
agent.
⚫ Reward(): A feedback returned to the agent from the environment to evaluate the
action of the agent.
⚫ Policy(): Policy is a strategy applied by the agent for the next action based on the
current state.
⚫ Value(): It is expected long-term retuned with the discount factor and opposite to the
short-term reward.
Advantages
⚫ Reinforcement Learning is used to solve complex problems that cannot be solved by
conventional techniques.
⚫ This technique is preferred to achieve long-term results which are very difficult to
achieve.
⚫ This learning model is very similar to the learning of human beings. Hence, it is close
to achieving perfection
Disadvantages
⚫ Too much reinforcement learning can lead to an overload of states which can diminish
the results.
⚫ This algorithm is not preferable for solving simple problems.
⚫ This algorithm needs a lot of data and a lot of computation.
⚫ The curse of dimensionality limits reinforcement learning for real physical systems.
BRAHMDEVDADA MANE INSTITUTE OF TECHNOLOGY, BELATI, SOLAPUR
instructions.
3. Traffic prediction:
If we want to visit a new place, we take help of Google Maps, which shows us the correct
path with the shortest route and predicts the traffic conditions.
It predicts the traffic conditions such as whether traffic is cleared, slow-moving, or heavily
congested with the help of two ways:
a. Real Time location of the vehicle form Google Map app and sensors
b. Average time has taken on past days at the same time.
Everyone who is using Google Map is helping this app to make it better. It takes information
from the user and sends back to its database to improve the performance.
4. Product recommendations:
Machine learning is widely used by various e-commerce and entertainment companies
such as Amazon, Netflix, etc., for product recommendation to the user. Whenever we search
for some product on Amazon, then we started getting an advertisement for the same product
while internet surfing on the same browser and this is because of machine learning.
Google understands the user interest using various machine learning algorithms and
suggests the product as per customer interest.
As similar, when we use Netflix, we find some recommendations for entertainment series,
movies, etc., and this is also done with the help of machine learning.
5. Self-driving cars:
One of the most exciting applications of machine learning is self-driving cars. Machine
learning plays a significant role in self-driving cars. Tesla, the most popular car
manufacturing company is working on self-driving car. It is using unsupervised learning
method to train the car models to detect people and objects while driving.
problem at all, as for this also machine learning helps us by converting the text into our
known languages. Google's GNMT (Google Neural Machine Translation) provide this
feature, which is a Neural Machine Learning that translates the text into our familiar
language, and it called as automatic translation.
The technology behind the automatic translation is a sequence to sequence learning
algorithm, which is used with image recognition and translates the text from one language to
another language.
7. Getting Started with a Strategy
Before you can define the strategy, you have to understand the problem that you’re trying to
solve. As businesses go through major strategy transitions, certain challenges present themselves.
What is the status of existing business and existing customer engagement? What does the future
hold for what customers will buy and expect from you in the future? The obvious answer is to ask
customers if they are happy and what they will purchase in the future. While this is a sound
starting point, it is not enough. Customers that are happy one minute become unhappy when
something transformational comes along. If you do traditional Business Intelligence (BI) analysis,
you will have a good sense of where your business has been in the past but not where it is going
in the future.
Using machine learning to remove biases from strategy
Typically, strategic planning and strategy exercises begin by gaining insights into customer
satisfaction and future requirements. Where is the market headed? What are the competitive
threats that could impact the company? But this is not enough. Even the best strategy consultants
can’t anticipate the sudden emergence of new discoveries or new trends.
More data makes planning more accurate
What difference could machine learning make in business strategy? Take the example of a
business that executes a traditional data analysis of customer satisfaction. In analyzing the data, it
becomes clear that some anomalies in the data exist. Because of the data set being used, the
analyst throws out the data that doesn’t conform, assuming that this data is not accurate.
However, if more data did exist, it may become clear that those anomalies that were assumed to
be errors are actually an indication of a change in customer buying patterns or customer
satisfaction.
As more data is added into a model, trained, and analyzed with the most appropriate machine
learning algorithms, it becomes increasingly clear that there are changes that will directly impact
the future of the business
BRAHMDEVDADA MANE INSTITUTE OF TECHNOLOGY, BELATI, SOLAPUR