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Data Analysis and Decision Making

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Ayushi Tanwar
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76 views

Data Analysis and Decision Making

Uploaded by

Ayushi Tanwar
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 14

© 2015 Cengage Learning. All Rights Reserved.

May not be scanned, copied or duplicated, or posted to a


publicly accessible website, in whole or in part.

Chapter 1
DECISION MAKING
DATA ANALYSIS AND
BUSINESS ANALYTICS:

Introduction to Data Analysis and Decision Making


Introduction
(slide 1 of 2)

 Living in the age of technology has implications


for everyone entering the business world.
 Technology makes it possible to collect huge amounts
of data.
 Technology has given more people the power and
responsibility to analyze data and make decisions.
 A large amount of data already exists and will only
increase in the future.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Introduction
(slide 2 of 2)

 One of the hottest topics in today’s business world


is business analytics.
 This term encompasses all of the types of analysis
discussed in this book.
 It also typically implies the analysis of very large data
sets.
 By using quantitative methods to uncover the
information in these data sets and then acting on
this information, companies are able to gain a
competitive advantage.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Methods
(slide 1 of 2)

 This book combines topics from two separate fields:


statistics and management science.
 Statistics is the study of data analysis.
 Management science is the study of model building,
optimization, and decision making.
 Three important themes run through this book:
 Data analysis—includes data description, data inference,
and the search for relationships in data.
 Decision making—includes optimization techniques for
problems with no uncertainty, decision analysis for
problems with uncertainty, and structured sensitivity
analysis.
 Dealing with uncertainty—includes measuring uncertainty
and modeling uncertainty explicitly.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Methods
(slide 2 of 2)

 The figure below shows where these themes and


subthemes are discussed in the book.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Software
(slide 1 of 3)

 The software included in new copies of this book,


together with Microsoft Excel®, provides a
powerful combination that can be used to analyze a
wide variety of business problems.
 Excel—the most heavily used spreadsheet package on
the market
 The file excel_tutorial.xlsm explains many of the features
of Excel.
 Solver Add-in—uses powerful algorithms to perform
spreadsheet optimization.
 SolverTable Add-in—shows how the optimal solution
changes when certain inputs change.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Software
(slide 2 of 3)

 DecisionTools® Suite—Excel add-ins, including:


 @RISK—can run multiple replications of a spreadsheet
simulation, perform a sensitivity analysis, and generate
random numbers from a variety of probability distributions.
 RISKOptimizer combines optimization with simulation.
 StatTools—generates statistical output quickly in an easily
interpretable form.
 PrecisionTree—used to analyze decisions with uncertainty.
 NeuralTools—mimics the working of the human brain to
find “neural networks” that quantify complex nonlinear
relationships.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Software
(slide 3 of 3)

 The figure below illustrates how these add-ins are


used throughout the book.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Modeling and Models
 A model is an abstraction of a real problem that
tries to capture the essence and key features of the
problem.
 There are different types of models, and each can
be a valuable aid in solving a real problem:
 Graphical models
 Algebraic models
 Spreadsheet models

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Graphical Models
 Graphical models attempt to portray graphically
how different elements of a problem are related—
what effects what.
 A very simple graphical model, called an influence
diagram, is shown below.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Algebraic Models
 Algebraic models use algebraic equations and
inequalities to specify a set of relationships in a
very precise way.
 A typical example is the “product mix” model shown
below.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Spreadsheet Models
(slide 1 of 2)

 Spreadsheet modeling is an alternative to algebraic


modeling that relates various quantities in a
spreadsheet with cell formulas.
 Instant feedback is available from spreadsheets, so if a
formula is entered incorrectly, it is often immediately
obvious.
 Developing good spreadsheet models is not easy.
 They must be correct, well designed and well documented.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Spreadsheet Models
(slide 2 of 2)

 A spreadsheet model for a specific example of the


product mix problem is shown below.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
A Seven-Step Modeling Process
 This book portrays modeling as a seven-step
process, but not all problems require all seven
steps.
1. Define the problem.
2. Collect and summarize data.
3. Develop a model.
4. Verify the model.
5. Select one or more suitable decisions.
6. Present the results to the organization.
7. Implement the model and update it over time
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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