CHAPTER 5

Business
Intelligence
1
Where are we now

(C) Wiley 2015; Edited and revised by Yue Zhang 2

What is management?

• The art of Manipulation to achieve goals

• Time
• People
• Information
• Money
• Other resources

3
The Roles

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Decision making process
• Intelligence – What is the problem
• Design – What are the choices
• Choice – Let’s pick one and see what happens

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Decision analysis framework
• Problem Structure
• The Nature of decision

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What is business intelligence?

Hardware and software solutions used to analyze an organization's raw data

• Descriptive
• Predictive
• Prescriptive

• Multidimensional analysis
• Data Mining
• Decision support systems

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 Decision support system
A DSS is a computer-based information system that supports business
or organizational decision-making activities

What are the goals?

• Save Time
• Increase the quality of decisions

Scale of DSS
• Enterprise – wide DSS
• Desktop DSS
Types of DSS
• Data Driven - Provide access to data and present it in a useful way
• Model driven - Implements a model that will analyze and transform
the data

(C) Wiley 2015; Edited and revised by Yue Zhang 9

3 classes of DSS

• Passive DSS – more control, less efficient

• Active DSS – more efficient, less control
• Cooperative DSS – the best of two worlds

It’s a tradeoff between your comfort

and control

(C) Wiley 2015; Edited and revised by Yue Zhang 10

Decision support common applications
• What if analysis
• Sensitivity analysis
• Goal-seek analysis
• Optimization analysis
• Simulations
• Machine learning
• Forecasting

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What if analysis

•The
  process of changing the input data to see how the outcome will change
• Scenario analysis

• Base case
• Worst case
• Best case

• Controllable variables vs uncontrollable

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Sensitivity Analysis

• A quantitative relationship between variables and outcome

• Regression

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Neural Networks
• If the box is square then the item is round, if the item is round then it
should be fruit, if it is a round fruit then it’s an orange
Kargin - 101

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Simulations

• Monte Carlo simulation

• Probability distribution

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Optimization analysis

• Now that you know the most probable outcome, you can optimize
the controllable inputs

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Data visualization - Dashboards
•See everything at once
• Three colors
• KPI’s
• Dynamic charts
• Drilldown
• Exception analysis
• Status Access

(C) Wiley 2015; Edited and revised by Yue Zhang 17