FOUNDATION TO DATA SCIENCE

Business Analytics

BASIC STATISTICS REFRESHER AND HOW TO

EXPLORE DATA-Day 1

Prof. Dr. George Mathew

B.Sc., B.Tech, PGDCA, PGDM, MBA, PhD 1
 Data science
Data science is basically the science of analyzing
raw data and deriving insights from this data. You
could use multiple techniques to derive insights; you
could use simple statistical techniques to derive
insights, you could use more complicated and more
sophisticated machine learning techniques to derive
insights and so on.
Data Science is used in many industries to allow
them to make better business decisions, and in
sciences to test models or theories. This requires a
process of inspecting, cleaning, transforming,
modelling, analysing and interpreting Data.
 Demand for Business Analytics
Business analytics is a crucial area
of study for students looking to enhance
their employment prospects. It is
predicted that there will be a shortage of
business managers in future with
adequate training in analytics.
It is the responsibility of managers to
plan, coordinate, organize, and lead their
organizations to better performance.
Trend of Business Analytics
 Levels of Managers and Type of Decisions
Strategic level:Strategic decisions are usually the domain
of higher-level executives and have a time horizon of three
to five years
Tactical Level: Tactical decisions concern how the
organization should achieve the goals and objectives set by
its strategy, and they are usually the responsibility of mid
level management. Tactical decisions usually span a year
and thus are revisited annually or even every six months.
Operational Level: Operational decisions affect how the
firm is run from day to day; they are the domain of
operations managers, who are the closest to the customer.
 Decision making process
1. Identify and define the problem
2. Determine the criteria that will be used to
evaluate alternative solutions
3. Determine the set of alternative solutions
4. Evaluate the alternatives
5. Choose an alternative
 Making right business decisions based on data

Challenges of Decision Making:

1.Uncertainty- is probably the number one challenge.
2.Enormous number of alternatives
Example: What is the best product line for a company that
wants to maximize its market share?

Business analytics is the scientific process of transforming

data into insight for making better decisions. Business
analytics is used for data-driven or fact-based decision
making, which is often seen as more objective than other
alternatives for decision making.
Business Analytics
 A Categorization of Analytical Methods
and Models
1. Descriptive analytics encompasses the set of
techniques that describes what has happened in
the past.
2. Predictive analytics consists of techniques that
use models constructed from past data to predict
the future or ascertain the impact of one variable
on another.
3. Prescriptive analytics differ from descriptive or
predictive analytics in that prescriptive analytics
indicate a best course of action to take; that is,
the output of a prescriptive model is a best
decision.
 Business Analytics in Practice
Business analytics involves tools as simple as reports and
graphs, as well as some that are as sophisticated as
optimization, data mining, and simulation. In practice,
companies that applied analytics often follow a trajectory
similar to that shown in Figure 2. Organizations start with
basic analytics in the lower left. As they realize the
advantages of these analytic techniques, they often progress
to more sophisticated techniques in an effort to reap the
derived competitive advantage. Predictive and prescriptive
analytics are sometimes therefore referred to as
advanced analytics. Not all companies reach that level of
usage, but those that embrace analytics as a competitive
strategy often do.
 DESCRIPTIVE STATISTICS
Data are the facts and figures collected, analyzed, and summarized for
presentation and interpretation. A characteristic or a quantity of interest
that can take on different values is known as a variable. Practically every
problem (and opportunity) that an organization (or individual) faces is
concerned with the impact of the possible values of relevant variables on
the business outcome. Thus, we are concerned with how the value of a
variable can vary; variation is the difference in a variable measured over
the observations (time, customers, items etc.)
The role of descriptive analytics is to collect and analyze data to gain a
better understanding of variation and its impact on the business setting.
The values of some variables are under direct control of the decision
maker (these are often called decision variables). The values of other
variables may fluctuate with uncertainty due to factors outside the direct
control of the decision maker. In general, a quantity whose values are not
known with certainty is called a random variable, or uncertain variable.
When we collect data, we are gathering past observed values, or
realizations of a variable. By collecting these past realizations of one or
more variables, our goal is to learn more about the variation of a particular
business situation.
 Qualitative, Quantitative and Categorical Data
Data can be categorized in several ways based on how they
are collected and the type collected. In many cases, it is not
feasible to collect data from the population of all elements of
interest. In such instances, we collect data from a subset of
the population known as samples.
It is very important to collect sample data that are
representative of the population data so that generalizations
can be made from them. In most cases, a representative
sample can be gathered by random sampling of the
population data. Dealing with populations and samples
can introduce subtle differences in how we calculate and
interpret summary statistics. In almost all practical applications
of business analytics, we will be dealing with sample data.
 Qualitative, Quantitative and Categorical Data
Data are considered quantitative data if
numeric and arithmetic operations, such as
addition, subtraction, multiplication, and
division, can be performed on them.
If arithmetic operations cannot be
performed on the data, they are considered
categorical data. We can summarize
categorical data by counting the number of
observations or computing the proportions of
observations in each category.
 Using Excel, excel solver
Modifying Data in Excel
Projects often involve so much data that it is difficult to analyze all of the data
at once. Here, we examine methods for summarizing and manipulating data
using Excel to make the data more manageable and to develop insights.

Sorting and Filtering Data in Excel

Excel contains many useful features for sorting and filtering data so that one
can more easily identify patterns. Table 1 contains data on the top 20 selling
automobiles in the United States in March 2011. The table shows the model
and manufacturer of each automobile as well as the sales for the model in
March 2011 and March 2010. Figure 3 shows the data from Table 1 entered
into an Excel spreadsheet, and the percent change in sales for each model
from March 2010 to March 2011 has been calculated. This is done by
entering the formula 5(D2-E2)/E2 in cell F2 and then copying the contents of
this cell to cells F3 to F20. (We cannot calculate the percent change in sales
for the Ford Fiesta because it was not being sold in March 2010.)
Exercise: 02-03 ASAP Discriptive statistics_Excel Solver.xlsx
 Conditional Formatting of Data in Excel
You can apply conditional Formatting rule to a cell or range, select cells and
then use one of the commands from Home -> Conditional Formatting
Conditional formatting in Excel can make it easy to identify data that satisfy
certain conditions in a data set. For instance, suppose that we wanted to
quickly identify the automobile models in Table 1 for which sales had
decreased from March 2010 to March 2011. We can quickly
highlight these models:
Step 1. Starting with the original data shown in Figure 6, select cells F1:F21
Step 2. Click on the HOME tab in the Ribbon
Step 3. Click Conditional Formatting in the Styles group
Step 4. Select Highlight Cells Rules, and click Less Than from the dropdown
menu
Step 5. Enter 0% in the Format cells that are LESS THAN: box
Step 6. Click OK
Example
 Using Excel, excel solver
Modifying Data in Excel
Projects often involve so much data that it is difficult to analyze all of the data
at once. Here, we examine methods for summarizing and manipulating data
using Excel to make the data more manageable and to develop insights.

Sorting and Filtering Data in Excel

Excel contains many useful features for sorting and filtering data so that one
can more easily identify patterns. Table 1 contains data on the top 20 selling
automobiles in the United States in March 2011. The table shows the model
and manufacturer of each automobile as well as the sales for the model in
March 2011 and March 2010. Figure 3 shows the data from Table 1 entered
into an Excel spreadsheet, and the percent change in sales for each model
from March 2010 to March 2011 has been calculated. This is done by
entering the formula 5(D2-E2)/E2 in cell F2 and then copying the contents of
this cell to cells F3 to F20. (We cannot calculate the percent change in sales
for the Ford Fiesta because it was not being sold in March 2010.)
Exercise: 02-03 ASAP Discriptive statistics_Excel Solver.xlsx