TOD 512 – DECISION SCIENCE GROUP

SUBMISSION

INSTRUCTOR – A B RAJU

GROUP – 12

NAME ENROLLMENT NO.

Kritika Krity AU2314111

Maan Bhavsar AU2314119

Manan Patel AU2314062

Krutagna Kadia AU2314058

Aryan Patel AU2314083

1|Page
 Decision Tools In Finance
1. Financial Modelling
The Importance of Financial modeling is becoming more and more apparent every day.
 Decision Making: Financial modeling offers a quantitative framework for assessing
the financial effects of various scenarios and options to make well-informed
decisions.
 Planning and Forecasting: Financial modeling aids in projecting future financial
performance, allowing companies to make growth plans, determine the amount of
capital needed, and establish attainable goals.
 Risk Assessment: Financial modeling assists in identifying and evaluating the possible
risks and uncertainties related to various business choices by including sensitivity
analysis and scenario testing.
 Valuation: Business valuation is made easier by financial modeling, which calculates
the present value of future cash flows and evaluates the value of investments,
acquisitions, and divestitures.
 Investment Analysis: Financial models analyze the possible rewards, risks, and
viability of investment opportunities to assist in the evaluation process.
 Capital Budgeting: To effectively allocate money, financial modeling helps analyze
and compare various investment projects.
 Strategic Planning: Financial models are a useful tool in strategic planning and
decision-making. They evaluate the financial effects of various tactics, as well as the
state of the market and competition.
 Stakeholder Communication: Investors, management, and lenders are among the
stakeholders to whom financial models succinctly and convey financial facts and
insights.
 Business Performance Evaluation: By comparing actual financial performance to
predicted or historical data, financial models make it possible to identify areas that
want improvement.
 Financial models are useful for analyzing how different situations might affect
important financial indicators. It enables companies to prepare for possible obstacles
and possibilities proactively.
Example
Stakeholders, most of the time do not possess the knowledge to comprehend the technical
jargon of the finance sector but they can comprehend statements and models, financial
modeling allows managers to explain predicted future positions of the company to
stakeholders thereby allowing them to justify their decisions.
For instance, Using financial modeling as a base to simulate the stock prices of an investment
prospect, can allow a reasonable estimate for managers to effectively time their investment
and the same models can be used to justify their investment to stakeholders.

2|Page
2. Algorithmic Trading
Algo-trading is a Decision Tool since it involves the Automation of investment avenues, it is
the managerial decision to depend upon software rather than fund managers. It also removes
the heavy burden of Making continuous Investment decisions off the shoulders of managers,
which also reduces the chances of Emotional Bias and Human error.
Algorithmic trading is the process of placing a trade using a computer program that executes
an algorithm—a predetermined set of instructions. Theoretically, the deal can produce gains
faster and more frequently than a human trader could ever achieve.
The specified sets of instructions can be derived from any mathematical model, time, cost, or
quantity. Algo trading eliminates the influence of human emotions on trading activities,
which increases trading systematicity and market liquidity in addition to providing
opportunities for profit for the trader.
Algorithmic trading automates the process of Investment decision-making by allowing the
algorithm to invest according to its set of functions, it is beneficial for newer companies who
typically outsource their Investment decisions to outsider firms usually on a commission
basis.
Benefits
 The benefits of using an algorithm for trading are as follows:
 Best Execution: The best prices are frequently used to execute trades.
 Low Latency: Trade orders can be placed accurately and instantly, with a high
probability of being executed at the specified levels. Trades are executed promptly
and at the right time to prevent large price swings.
 Lower expenses for transactions.
 Automated checks on several market circumstances simultaneously.
 No Human Error: Lower chance of blunders or manual errors during trade placement.
Additionally refutes the inclination of human traders to be influenced by
psychological and emotional elements.
 Backtesting: To determine if algorithm trading is a profitable trading method,
backtesting can be done with current and previous data.

Examples
For A company to invest in the NSE, all they require is a computer program that can read
current market prices, has access to real-time price feeds from the NSE, order placing
capability that can route the order to the NSE, Backtesting capability on historical Price
Feeds Some examples of such software are Zerodha Streak, Zerodha AlgoZ, ODIN, EToro,
etc.
So if Company X a startup based in Ahmedabad, used to invest through a fund manager and
were dissatisfied with the returns on their principal and high commission fees, they decided
to take matters into their own hands and invest in the Indian Securities Market, however,

3|Page
company X did not have enough resources to start an Investment Wing neither did they have
enough manpower to make these investment decisions for them. They thus decided to depend
on Algo-Trading which automated their Investment Decision making by buying and selling
securities within its specified set of rules and constraints.
IMPORTANCE OF HR WORKFORCE ANALYTICS
1. Informed Decision-Making: HR Workforce Analytics enables data-driven decision-
making in all aspects of human resource management. It helps understand workforce
trends, patterns, and correlations, allowing HR professionals to make strategic
decisions that positively impact recruitment, retention, and performance.
2. Optimizing Recruitment Strategies: By analyzing data on successful hires,
recruitment channels, and candidate profiles, HR can optimize their recruitment
strategies, focusing on sources that yield the best-fit candidates. This leads to
improved hiring outcomes and reduced time-to-fill positions.
3. Enhancing Employee Engagement: Analyzing employee feedback, sentiment, and
engagement metrics aids in identifying factors affecting employee satisfaction and
engagement. This insight allows HR to develop targeted initiatives to improve
workplace culture, leading to higher employee morale and productivity.
4. Identifying Skill Gaps and Development Needs: Workforce analytics helps identify
organizational skill gaps. This information is crucial in designing training and
development programs that address these gaps, ensuring employees have the
necessary skills to meet current and future job demands.
5. Forecasting Future Workforce Needs: Predictive HR analytics allows for
forecasting future workforce requirements based on business goals and industry
trends. This enables proactive planning for staffing needs, succession planning, and
mitigating talent shortages.
6. Measuring and Improving Performance: Analytics provides insights into individual
and team performance, enabling HR to set meaningful KPIs, track progress, and
recognize high-performing employees. This data-driven approach encourages
continuous improvement and supports fair performance evaluations.
7. Cost Optimization and Efficiency: By understanding workforce dynamics and
trends, HR can optimize resource allocation, control unnecessary expenses, and
enhance overall operational efficiency. This helps in maximizing the return on
investment in human capital.

4|Page
Application of HR Workforce Analytics Tool
1. Recruitment Optimization: Analyzing historical hiring data, application sources,
and candidate demographics helps refine recruitment strategies. It assists in
identifying the most effective sources for attracting top talent, optimizing job
postings, and streamlining the selection process.
2. Retention Strategies: By analyzing turnover rates, identifying patterns in employee
exits, and conducting stay interviews, HR can develop targeted retention strategies.
Insights gained from analytics help understand why employees leave and implement
measures to enhance retention, such as improving work-life balance or career
development opportunities.
3. Training and Development: Workforce analytics aids in identifying skill gaps and
training needs within the organization. HR can assess the effectiveness of training
programs by measuring their impact on employee performance and identifying areas
for improvement.
4. Performance Management: Data-driven insights enable HR to set objective
performance metrics, track individual and team performance, and provide valuable
feedback to employees. Analytics can identify top performers, areas needing
improvement, and factors contributing to success, allowing for more effective
performance evaluations.
5. Succession Planning: HR Workforce Analytics helps identify potential future leaders
and critical positions that might face a talent shortage. This enables proactive
succession planning by nurturing talent internally or identifying areas for external
recruitment.
6. Workforce Diversity and Inclusion: Analytics can provide insights into diversity
metrics within the organization. HR can develop strategies to enhance diversity and
foster an inclusive work culture by analyzing demographic data and tracking diversity
initiatives' effectiveness.

Example
A retail company is noticing higher turnover among its sales staff. By utilizing HR Workforce
Analytics, they examined the tenure of sales employees alongside performance metrics. They
discovered that sales associates who received regular coaching sessions consistently
increased sales performance compared to those without coaching.

This discovery prompted the company to implement a coaching program for all sales staff.
After six months of consistent coaching, sales performance across the board improved, and
turnover reduced.

5|Page
Importance of Predictive Analytics Tools:

1. Data-Driven Decision-Making: This is made possible thanks to predictive analytics tools,

which allow businesses to base their decisions on data instead of intuition. Analyzing
historical patterns and trends will allow organizations to predict future events and make
decisions based on data-driven insights.
2. Risk Mitigation: The issues businesses face include, for instance, financial instability and
operational problems. The use of predictive analytics identifies any possible danger signals in
past data and enables organizations to take preventive actions to avoid or reduce such
dangers.
3. Optimizing Operations: With the use of predictive analytics tools, organizations can be able
to predict demand, identify bottlenecks as well as improve business processes. As a result,
this ensures high efficiency while reducing the cost and improving overall output.
4. Customer Insights: Businesses need to understand customers’ behavior. Using predictive
analytics, tools will allow an organization to know its customers well so that they can offer
what is right for them and therefore satisfy people’s needs and make them happy.
5. Fraud Detection and Prevention: The practice of predictive analytics is also common in the
financial and insurance sectors, where it helps catch and block fraud acts. Organizations can
use this historical transaction of data and anomaly detection to catch any potential fraud as
soon as possible and thus stop it.
6. Healthcare Forecasting: Predictive analytics is critically important in determining outbreaks
of diseases, results of patients as well and resource allocation in the healthcare sector. This
helps in resource management by healthcare providers, provision of quality care, and
improvement of the overall healthcare process.
7. Supply Chain Optimization: Supply chain processes are improved upon through the
utilization of predictive modeling. It leads to lower costs, shorter delivery periods, and
enhanced supply chain performance.

Applications of Predictive Analytics Tools:

1. Financial Forecasting: Predictive analytics is widely applied in finance for predicting stock
prices, investment risk assessment, as well as optimal portfolio management. These are tools
that can be used by financial institutions to make intelligent decisions as well as effectively
handle finances.
2. Marketing and Customer Relationship Management (CRM): Marketers can use predictive
analytics tools to find out existing prospective clients; custom-tailor their marketing activities,

6|Page
 and estimate how customers will behave. This allows organizations to customize their
marketing strategies in a way that increases customer participation.
3. Human Resources: Predictive analytics in HR for recruitment, staffing, and employee
retention. Organizations should analyze employee data about what recruitment, training, and
retention policies the company should implement.
4. E-commerce Personalization: Predictive analytics help e-commerce platforms tailor-make
the online shopping experience. These tools analyze the behavior, liking, and buying
experiences of consumers and make suggestions for products, optimize prices, and improve
the shopping process.
5. Predictive Maintenance in Manufacturing: Predictive analytics is used in manufacturing
industries for predicting and facilitating maintenance planning. Organizations analyze
equipment sensor data to predict that a breakdown will occur to plan preventative maintenance
during downtimes at a low cost.

Example: The use of predictive analytics for inventory optimization in retail.

Problem: In the context of retail trade, it is essential to efficiently handle the stock to prevent
excessive stocking, and shortage of stock, minimize expenses, and satisfy customers.

Application:
1. Historical Sales Analysis: Use of predictive analytics to analyze previous sales data taking into
account issues such as seasonality and promotions.
2. Demand Forecasting: Incorporated seasonal trends and advanced algorithms to predict future
demands on each product.
3. Supplier and Lead Time Analysis: Calculate time frames required for restocking by using
supplier data & lead times.
4. Dynamic Reordering: Dynamically adjust order points according to demand forecasts to maintain
optimum stock levels.
5. Preventing Stockouts and Overstock: Constantly analyses live data in order not to face a stockout
or an overstock situation.
6. Seasonal Inventory Planning: Plan stock levels of seasonal demand pattern products.
7. Cost Optimization: Minimize inventory-related expenses, decrease storage costs, and lower
depreciation costs.
8. Enhanced Customer Satisfaction: Enhanced customer satisfaction through always having the
correct products on the shelves.

7|Page