PREDICTIVE

ANALYTICS IN
OPERATIONS
PREDICTIVE ANALYTICS
• Predictive analytics is the branch of the advanced analytics uses
historical data to predict future events. 
• Predictive analytics uses many techniques from data mining, statistics,
modeling, machine learning, and artificial intelligence to analyze
current data to make predictions about future.
TYPES OF PREDICTIVE ANALYSIS

• Predictive Model:
 Predictive model analyze the relationship between one or more attributes of
input data.
 These models are used to estimate the likelihood that a similar unit that
exhibit the same performance in different places.
 This category focuses on modelling in many fields such as operations
management where they understand the complex data patterns revealing
customer performance & identifying the fraudulent activities in a business.
 Predictive model perform calculation over live transaction in order to solve
many issues to operational management such as to evaluate the risk of the
business.
• Descriptive Model:
 Descriptive models used to establish the relationship in data which is used to
classify customers and products into groups.
 Descriptive modelling differs from predictive modelling in a way that it identifies
many different relationship between customers and products.
 Descriptive model differs from predictive analysis in a way that as they do not rank
the customers on the basis of their behavior to a particular action.
 Descriptive model are used to classify the customers based on their product
selection.

• Decision Model:
 Decision model establish the relationship between all the elements of decision, (the
known data attributes, the decisions, the results forecasted..), in order to predict
decision that involves in several variables.
 These models are used in optimizing the favorable outcomes i.e maximizing the
interest ones and minimizing the uninterested ones.
 Decision models are used to produce set of logical decisions and business rules that
will considered every action of customers.
3 KINDS OF PREDICTION TECHNICS
USED FOR OPERATIONS:

• Judgmental Forecasts:
 This forecasting technique make prediction on subjective inputs from various sources.
 This type of forecasting technique used when the data is outdated or if there is short time to collect
the data
 Judgmental Forecasting has several types of surveys such as customer surveys, sales force
opinions etc.

• Time series Forecast:

 Time series forecast is a series of observation that are made at regular interval of time and the
sequence is ordered according to time.
 It uncovers the pattern that are hidden in these observations
 Time series forecast works on quantitative level of prediction and helps predict the future events.
• Associate Model:
 Associative model deals with quantitative prediction in business
organization eg: It can be used for predicting demand or estimating price of
a product.
 It includes predictive variables and develops a mathematical equation that
predicts value of the predicting variable.
ANALYTICAL TECHNIQUES
• Predictive analytical Techniques and approaches can be categorized into:
Regression Technique :
 This technique derive a mathematical equation. The equation derived can be used as a
model to represent the relationship between all the features and attributes under
contribution.
 Regression is a statistical measurement to determine the strength of the relationship
between one dependent variable (usually denoted by Y) and a series of other changing
variables (known as independent variables).
 Used to measure the cost of process
 Used to estimate the future demand of product
 Used to measure the quality of the product
 To reduce the wastage.

• Regression Model can be further categorized some of them are:

 Linear Regression Model.
 Logistic Linear regression Model.
Correlation Technique:
• Correlation is usually defined as a measure of the linear relationship
between two quantitative variable.
• There are 3 types of correlation
• Positive
• Negative
• Zero
Application Of Correlation In Operations:
 Used to measure the length, weight of the product.
 Control the production process based on previous reports
 Used to measure amount of electricity Vs bill
 Used to measure work vs productivity
 Used to measure quantity of product vs price.
Machine Learning Technique:
 Machine Learning comes under in the field of Artificial Intelligence. It helps
computers to learn and understand.
 It consist of several techniques which find in variety of fields such as fraud
deduction, Medical diagnosis, Analysis of stock market and Weather
forecasting etc.
 It is also used to predict the value of unknown dependent variable without
analyzing the relationship between known and independent variables.
 Machine learning technique is used in complex situations to deduce the
variables.
• Machine learning technique can be further categorized some of them
are:
 Back Propagation Network.
 Support vector Machine etc..