INTRODUCTION to BUSINESS

ANALYTICS
•DECISION MAKING in OPERATIONS MANAGEMENT

Strategic decisions (long term) – involve higher-level

issues concerned with the overall direction of the
organization; they define the organization’s overall goals
and aspirations; and they are at the domain of higher-
level executives and have a time horizon of 3- 5 years.

Tactical decisions (short term) – concern how the

organization should achieve the goals and objectives set
by its strategy, and they are usually the responsibility of
mid-level management. They usually span for a year and
thus are revisited annually or even every six months.
 INTRODUCTION to BUSINESS
ANALYTICS
What makes decision making difficult and
challenging?

Uncertainty (e.g. if we know how stocks will

perform, investing would be a lot easier).

Enormous alternatives (e.g. what is the best

combination of stocks to help meet our financial
objectives; or how should an airline price its
tickets so as to maximize revenue? )
 INTRODUCTION to BUSINESS
ANALYTICS
BUSINESS ANALYTICS
- is the scientific process of
transforming data into insight for making
better decisions.

- It is used for data-driven or fact-based

decision making.
INTRODUCTION to BUSINESS
ANALYTICS
 INTRODUCTION to BUSINESS
ANALYTICS
IMPORTANCE OF BUSINESS ANALYTICS

• It creates insights from data.

• It improves the ability to more accurately
forecast for planning purposes.
• It helps in quantifying risk
• It yields better alternatives through
analysis and optimization.
INTRODUCTION to BUSINESS
ANALYTICS
 INTRODUCTION to BUSINESS
ANALYTICS
CATEGORIES OF BUSINESS ANALYTICS

• Descriptive analytics

• Predictive analytics

• Prescriptive analytics
INTRODUCTION to BUSINESS
ANALYTICS
 INTRODUCTION to BUSINESS
ANALYTICS
Descriptive analytics

- encompasses the set of techniques that

describes what has happened in the past

TOOLS: data queries, reports, descriptive

statistics, data visualization; data
dashboards.
INTRODUCTION to BUSINESS
ANALYTICS
 INTRODUCTION to BUSINESS
ANALYTICS
Predictive analytics
- consist of techniques that use models
constructed from the past data to predict the
future or ascertain the impact of one variable on
another .
TOOLS : linear regression; time series
analysis, simulation or risk analysis; and some
data-mining techniques

Data mining techniques – are used to find

patterns or relationships among elements of
the data in a large database.
INTRODUCTION to BUSINESS
ANALYTICS
 INTRODUCTION to BUSINESS
ANALYTICS

Prescriptive Analytics

- Indicate a best course of action to take.

TOOLS: linear programming; solver

 INTRODUCTION to BUSINESS
ANALYTICS

Prescriptive analytics

- Revenue management

- Portfolio models in finance

- Supply network design models in operations

- Price mark-down models in retailing