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379 views30 pages

Predictive Analytics Updated

Uploaded by

sahilbansal136101
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LARANA INC.

INTRODUCTION TO
PREDICTIVE ANALYTICS
INTRODUCTION TO PREDICTIVE ANALYTICS
Predictive analytics involves using historical data, statistical algorithms, and machine
learning techniques to identify the likelihood of future outcomes based on past data.
It helps in making informed decisions by predicting future events and trends.

For Example:
A retail company like Walmart wants to optimize
its inventory management to ensure it has the
right stock for each product at any given time.
They want to avoid overstocking (which ties up
capital and leads to storage costs) and
understocking (which leads to lost sales and
dissatisfied customers).
EXAMPLE OF A RETAIL COMPANY
Scenario: Optimize inventory to avoid overstocking and understocking.

Data Collection:
Historical sales data
Customer demographics
Seasonal trends Outcome:

Data Preparation: Accurate inventory management, Cost savings, Improved customer satisfaction
Clean and transform data
Handle missing values
Model Building:
Choose and train algorithms
Validate model
Model Deployment:
Implement in inventory system
Generate demand forecasts
Adjust inventory orders
PREDICTIVE ANALYTICS PROCESS

DEPLOYMENT DEFINE PROJECT

MODELING DATA COLLECTION

STATISTICS DATA ANALYSIS


IMPORTANCE OF PREDICTIVE ANALYTICS
APPLICATIONS OF PREDICTIVE ANALYTICS
DIFFERENCE BETWEEN:
INTRODUCTION TO MACHINE LEARNING
WHAT IS MACHINE LEARNING?

Machine Learning is the field of study that gives computers the capability to
learn without being explicitly programmed.
WHAT IS MACHINE LEARNING?
Machine Learning is the field of study that gives computers the capability to
learn without being explicitly programmed.
FEATURES OF MACHINE LEARNING

Machine learning is data data-driven technology. Organizations generate a


large amount of data daily. So, by notable relationships in data, organizations
make better decisions.
The machine can learn from past data and automatically improve.
From the given dataset it detects various patterns in data.
For big organizations, branding is important and it will become easier to
target a relatable customer base.
It is similar to data mining because it also deals with a huge amount of data.
TYPES OF MACHINE LEARNING
Machine learning algorithms can be trained in many ways, with each method
having its pros and cons. Based on these methods and ways of learning, machine
learning is broadly categorized into four main types:
SUPERVISED LEARNING

Supervised learning is a type of machine learning where a model is trained on a


labeled dataset. In this approach, the model learns to map input data to known
output labels. Here's a concise overview:
1. Labeled Data: The training dataset includes both input features and their
corresponding output labels.
2. Training Process: The model learns to predict the output labels from the
input data by adjusting its parameters based on the errors it makes.
3. Objective: The goal is to create a model that can accurately predict the
output for new, unseen data.
4. Applications: Common tasks include classification (e.g., spam detection) and
regression (e.g., predicting house prices).
EXAMPLE OF SUPERVISED LEARNING
UNSUPERVISED LEARNING

Unsupervised learning involves training a model on an unlabeled dataset, where


the model identifies patterns and structures without explicit output labels.
Unlabeled Data: The dataset includes only input features, with no
corresponding labels.
Training Process: The model discovers hidden patterns or groupings within
the data on its own.
Objective: To uncover meaningful insights or structures in the data.
Applications: Common tasks include clustering (e.g., customer segmentation)
and dimensionality reduction (e.g., simplifying datasets).
EXAMPLE OF UNSUPERVISED LEARNING
REINFORCEMENT LEARNING

Reinforcement learning (RL) is a machine learning (ML) technique that trains


software to make decisions to achieve the most optimal results.
It mimics the trial-and-error learning process that humans use to achieve
their goals.
The purpose of reinforcement learning is for the agent to learn an optimal, or
nearly optimal, policy that maximizes the "reward function" or other user-
provided reinforcement signal that accumulates from the immediate
rewards.
For example, a parent might use praise or other rewards to get a child to
brush their teeth, get ready for bed, or clean up their room.
EXAMPLE OF REINFORCEMENT LEARNING
INTRODUCTION TO REGRESSION

Regression Analysis is a statistical method used to understand and predict


the relationship between a dependent variable and one or more
independent variables.

Real-World Example:
A company wants to predict future sales
based on advertising spend.
By analyzing past data, they found that
for every additional $1,000 spent on advertising,
sales increase by $5,000.
This helps them plan their advertising
budget to maximize sales.
TYPES OF REGRESSION
SIMPLE LINEAR REGRESSION
Simple Linear Regression is a statistical technique that models the relationship
between a dependent variable (Y) and a single independent variable (X).

It assumes a linear relationship between the variables.

Formula:
SIMPLE LINEAR REGRESSION

A linear regression model that draws a straight line between data points
CLASSIFICATION TECHNIQUES
Classification is a machine learning technique used to categorize data into
predefined classes or labels.
It is crucial for decision-making processes in various applications like spam
detection, medical diagnosis, and credit scoring.

Example : Classify emails as "spam" or "not spam."


CLASSIFICATION TECHNIQUES
Method:

Data Collection:
Gather a dataset of emails labeled as "spam" or "not spam."

Feature Extraction:
Extract features like word frequency, presence of certain keywords, and email metadata.

Model Training:
Use a classification algorithm (e.g., Decision Tree, Random Forest, Naive Bayes) to train the model
on the labeled dataset.

Prediction:
Apply the trained model to new emails to classify them as "spam" or "not spam."

Example Outcome:
An email containing frequent occurrences of words like "free," "win," and "prize" is classified as "spam."
An email from a known contact with relevant content is classified as "not spam."
CLASSIFICATION TECHNIQUES
DECISION TREE

A flowchart model where nodes represent tests on attributes, branches represent


outcomes, and leaves represent class labels.
Example:
Classifying emails as "spam" or "not spam."

RANDOM FOREST
Ensemble method combining multiple decision trees for better accuracy and
reduced overfitting.
Example:
Predicting customer churn.
K-Nearest Neighbors (KNN)
Classifies data based on the 'k' closest examples.
Example:
Classifying handwritten digits.
SUPPORT VECTOR MACHINES (SVM)
Finds the optimal hyperplane to separate data into classes, maximizing the margin
between them.
Example:
Classifying emails as spam or not spam.

NAIVE BAYES
A probabilistic classifier based on Bayes' Theorem, assuming feature independence.
Example:
Classifying text documents by category.
DIFFERENCE BETWEEN REGRESSION AND CLASSIFICATION
SUMMARY
Classification:
Categorizes data into predefined classes.
Used in spam detection, and medical diagnosis.
Example: Email spam classification.

Regression:
Predicts continuous outcomes.
Used in predicting prices, and sales.
Example: Forecasting sales based on advertising spend.

Predictive Analytics:
Uses historical data to predict future outcomes.
Informs business decisions.
Example: Demand forecasting, risk management.
THANK YOU

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