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01 Introduction

The document outlines the syllabus for a business analytics course, introducing descriptive, predictive, and prescriptive analytics methods and models. It will cover deterministic optimization models like linear programming, network optimization, and mixed integer programming, as well as probabilistic models like simulation and stochastic optimization. Students will learn to translate business problems into formal decision models and implement them in Excel spreadsheets through lectures, cases, exercises, homework assignments, exams, and class participation.

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aaronouyang1
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33 views

01 Introduction

The document outlines the syllabus for a business analytics course, introducing descriptive, predictive, and prescriptive analytics methods and models. It will cover deterministic optimization models like linear programming, network optimization, and mixed integer programming, as well as probabilistic models like simulation and stochastic optimization. Students will learn to translate business problems into formal decision models and implement them in Excel spreadsheets through lectures, cases, exercises, homework assignments, exams, and class participation.

Uploaded by

aaronouyang1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1

Decision Models & Analytics

1. Introduction

Professor Jiawei Zhang


Agenda 2

What is business analytics?

Three categories of analytics

Syllabus
What is Business Analytics 3

Business Analytics: A scientific process of transforming data into insights


for making better decisions (INFORMS)
-The Institute for Operations Research and the Management Sciences
is the largest professional society in the world in the field of
operations research, management science, and analytics (more than
12K members).

INFORMS recognizes that analytics is seen as both


-a complete business problem solving and decision making process,
and
-a broad set of analytical methodologies that enable the creation of
business value.
Three Categories of Analytics 4

Descriptive analytics
- Prepares and analyzes data
- Identifies patterns from samples for reporting of trends
- Data visualization, clustering of data

Predictive analytics
- Predicts future probabilities and trends
- Finds relationships in data that may not be readily apparent with
descriptive analysis

Prescriptive analytics
- Evaluates and determines new ways to operate
- Makes optimal decisions to achieve business objectives
- Balances all constraints
Analytics Methods and Models 5

Descriptive Analytics
– Basic Statistics
– Data Visualization

Predictive Analytics
– Regression Methods
– Time Series Analysis and Forecasting
– Traditional machine learning
– Deep learning

Prescriptive Analytics
– Deterministic Optimization (first module of this course)
– Simulation (second module of this course)
– Decision Analysis (DMU course)
– Stochastic Optimization (DMU course)
– Reinforcement learning (active area of research)
Models & Tools to be Covered 6

Deterministic Models and Optimization:


 Linear Programming (LP). Basic features, formulation of optimization
models, Spreadsheet modeling: using Excel Solver. Applications.
 LP-based Sensitivity Analysis. The Solver sensitivity report. Economic
interpretation of the shadow prices and reduced costs.
 Network Optimization. The transportation problem: applications.
Minimum-cost flow problems: applications.
 Mixed Integer Programming. Integer and binary variables, logical
relationships as linear constraints. Solving MIPs with Excel Solver.
Applications.
 Non-linear Programming (NLP). Nonlinearities in the objective function
and constraints. Excel Solver: The GRG algorithm parameterization.
 Evolutionary Solver. Dealing with problems with little structure.
 Linearization of nonlinear models.

Probabilistic Models and Stochastic Optimization


 Simulation. Basic concepts. Review of probability distributions. Crystal
Ball software.
 Stochastic Optimization. Using the Optquest. Applications.
Finance Applications 7

Capital Budgeting

Portfolio Management

Financial Planning

Pension Fund Management

Currency Trading

Cash Balance

Option Pricing

Retirement Planning
Marketing Applications 8

Demand Estimation

Price Bundling

Advertising Planning

Customer Valuation

Online Advertising

Search Engine “Keywords” Bidding


Operations Applications 9

Product Mix

Production Planning and Scheduling

Inventory Management

Logistics and Transportation

Airline Flight Scheduling

Staff Scheduling

Supply Chain Design

Hotel Overbooking
Course Objectives
Deeper understanding of prescriptive analytics
– What is it
– Why it is important to business

Basic principle and techniques of business analytics


– Translate business problems into formal decision models
– Understand the strength and limits of different decision models
– Understand their assumptions and learn to challenge them
– Implement decision models in Excel spreadsheet

This is NOT a math course, NOT a data science course!

This course is about decision modeling through Excel, NOT about


becoming an Excel expert
Hands-On Class 11

This class involves very little theory, but instead involves lots of
practice on modeling and solving business problems.
– Lectures
– Mini cases: model building
– In-class exercises
– Homework assignments

Laptop
– Install the required applications (Excel add-in).
– Download template files in advance.
Course Materials 12

Textbooks (free online access for NYU students)


– Many examples
– Solved problems

Slides (available on NYU Brightspace)

Spreadsheet templates (available on NYU Brightspace)


Grading 13

Homework Assignments 30%


Five individual assignments

Exam: open-notes
Midterm 1 25%
Midterm 2 22%

Quiz: 8%

Class participation 15%


Attendance (mandatory): 5 points
In-class discussions
In-class exercises
In-class model submission (mandatory): 5 points
Homework
1. Reading: Chapter 1 of Optimization Modeling with Spreadsheets book

2. Load the Solver Add-in in Excel. Use the link below or google “Load
Solver Add-in”.
https://support.office.com/en-us/article/load-the-solver-add-in-in-excel-612926fc-
d53b-46b4-872c-e24772f078ca

3. Download the zipped folders of template files from NYU Brightspace.

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