Chapter -2

Types of Chapter Contents- Course Name- Business

Analytics
• Descriptive Analysis
Statistical • Predictive Analysis Course Code-LOGI 403
Analysis • Prescriptive Analysis

Presented by
Amber Batwara
(Assistant Professor)

Logistics and Supply Chain Management

Business Analytics

• Today, most organizations emphasize data to drive business decisions, and

rightfully so. But data alone is not the goal. Facts and figures are meaningless
if can’t gain valuable insights that lead to more-informed actions.

• Analytics solutions offer a convenient way to leverage business data. But the
number of solutions on the market can be daunting—and many may seem to
cover a different category of analytics.

• Business Analytics is the process by which businesses use statistical methods

and technologies for analyzing data in order to gain insights and improve
their strategic decision-making.
4 Types of Analytics

• Descriptive Analytics tells you what happened in the past.

• Diagnostic Analytics helps you understand why something happened in
the past.
• Predictive Analytics predicts what is most likely to happen in the future.
• Prescriptive Analytics recommends actions you can take to affect those
outcomes.
Descriptive Analytics
Descriptive Analytics: Descriptive analytics involves examining past data to
understand what has happened. It summarizes historical data and provides
insights into patterns, trends, and key metrics.
How can descriptive analytics help in the real world? In a healthcare setting,
for instance, say that an unusually high number of people are admitted to
the emergency room in a short period of time. Descriptive analytics tells
you that this is happening and provides real-time data with all the
corresponding statistics (date of occurrence, volume, patient details, etc.).
• Descriptive Analytics Use Cases

• Use of social media and engagement data (Facebook and Instagram likes)

• Summarizing past events such as marketing campaigns sales.

• Collating survey results

• Reporting general trends

Application
• Exploratory Data Analysis: Investigating and visualizing data to discover
relationships and identify patterns, providing a foundation for further analysis.

• Generating Sales Report: Creating a comprehensive report that presents sales data,
performance metrics, and relevant insights for decision-making.

• Customer Segmentation Analysis: Dividing customers into distinct groups based on

their characteristics or behaviors to understand their preferences and tailor
marketing strategies accordingly.

• Data Profiling: Assessing and examining data to understand its quality, structure,
and characteristics, enabling better understanding and preparation for analysis.
Diagnostic Analytics:
• Diagnostic analytics goes beyond descriptive analytics by aiming to
understand why something happened. It involves delving into the data to
identify the root causes of a particular outcome

• In the healthcare example mentioned earlier, diagnostic analytics would

explore the data and make correlations. For instance, it may help you
determine that all of the patients’ symptoms—high fever, dry cough, and
fatigue—point to the same infectious agent. You now have an
explanation for the sudden spike in volume at the ER.
• Root Cause Analysis: Identifying the underlying reasons or factors that
contribute to an issue or problem.

• Fraud Detection: Utilizing techniques to identify and prevent fraudulent

activities or behavior.

• Performance Analysis: Assessing and evaluating the efficiency and

effectiveness of processes or systems.

• Process Optimization: Improving workflows and operations to enhance

efficiency, productivity, and outcomes.
Predictive Analytics
• Predictive analytics involves using historical data and statistical
techniques to predict future events or outcomes. It utilizes patterns
and relationships found in the data to estimate what might happen in
the future.
• Back in our hospital example, predictive analytics may forecast a
surge in patients admitted to the ER in the next several weeks. Based
on patterns in the data, the illness is spreading at a rapid rate.
• Predictive analytics can be further divided into–

• Predictive Modeling –What will happen next?

• Root Cause Analysis-Why this happen?

• Data Mining- Identifying correlated data.

• Forecasting- What if the existing trends continue?

• Monte-Carlo Simulation – What could happen?

• Pattern Identification and Alerts –When should action be invoked to correct a process?

• Sentiment analysis is the most common kind of predictive analytics. The learning model takes input in plain
text, and the output is a sentiment score that helps determine whether the sentiment is positive, negative,
or neutral.
• Sales Forecasting: Predicting future sales by analyzing past data, market trends, and various
factors.

• Demand Planning: Planning for future demand for products or services.

• Predictive Maintenance: Identifying and predicting potential equipment failures or maintenance

needs to optimize performance and minimize downtime.

• Risk Assessment: Evaluating and quantifying potential risks or threats to make informed
decisions and mitigate negative impacts.

• Churn Prediction: Anticipating and predicting customer attrition or Churn to proactively take
retention measures.
Prescriptive Analytics:
• Prescriptive Analytics: Prescriptive analytics takes data analysis further by
recommending specific actions to optimize outcomes based on predictive models
and business objectives. It uses advanced algorithms, optimization techniques,
and simulation to generate actionable insights.
• Back to our hospital example: now that you know the illness is spreading, the
prescriptive analytics tool may suggest that you increase the number of staff on
hand to adequately treat the influx of patients.
• In summary: Both descriptive analytics and diagnostic analytics look to the past
to explain what happened and why it happened. Predictive analytics and
prescriptive analytics use historical data to forecast what will happen in the
future and what actions you can take to affect those outcomes. Forward-thinking
organizations use a variety of analytics together to make smart decisions that
help your business—or in the case of our hospital example, save lives.
Prescriptive Analytics Example

• Listed below are some examples of types of prescriptive analytics in different contexts:

• Evaluating wildfire evacuation requirements: Prescriptive analytics helps fire departments assess
whether residents should evacuate during nearby wildfires by analyzing fire behavior,
population density, and available resources.

• Predicting article popularity: Prescriptive analytics predicts an article's popularity based on data
about search trends, social media engagement, and historical performance, enabling content
creators to optimize content and maximize its reach.

• Real-time adjustment of worker training: Prescriptive analytics adjusts worker training programs
in real-time by analyzing engagement, performance metrics, and historical data, providing
personalized recommendations for curriculum modifications to enhance learning outcomes.
Application of Different Types of Analytics in
Big Data and Data Science
• Supply Chain Optimization: Maximizing efficiency and minimizing costs throughout the supply chain
to enhance overall performance.

• Inventory Optimization: Balancing inventory levels to meet customer demand while minimizing
holding costs and stockouts.

• Pricing Optimization: Determining the most effective pricing strategy to maximize revenue and profit.

• Resource Allocation: Assigning and distributing resources efficiently and effectively to achieve
desired outcomes.

• Personalized Recommendations: Providing tailored recommendations to individuals based on their

preferences, behavior, or historical data.