Lecture 3: Predictive Analytics & Modeling
Key Concepts
• Predictive Analytics uses statistical techniques and machine learning.
• Relies on historical data to predict likelihood of outcomes.
• Common models: Linear regression, logistic regression, decision trees.
• Advanced models: Random Forest, Gradient Boosting, Neural Networks.
• Time series models: ARIMA, Prophet for trend/seasonality forecasting.
Steps in Predictive Modeling
• Define the business problem clearly.
• Collect & prepare relevant data for the model.
• Choose the right algorithm depending on classification/regression/time-series.
• Split dataset: training and testing subsets.
• Train model on training set, test on unseen data.
• Evaluate with metrics: Accuracy, Precision, Recall, RMSE, R².
Applications
• Sales Forecasting: Anticipate demand for products.
• Customer Churn: Predict likelihood of customer leaving.
• Credit Scoring: Measure customer creditworthiness.
• Fraud Detection: Identify unusual activities in finance.
• Healthcare: Predict disease risks based on patient data.
Predictive Models Overview
Model Type Example Use
Linear Regression Regression Predict sales revenue
Logistic Regression Classification Predict churn (yes/no)
Decision Trees Classification/Regression Customer segmentation
Random Forest Ensemble Improve accuracy in churn prediction
ARIMA Time Series Monthly sales forecasting
Lecture 3: Predictive Analytics & Modeling
(continued)
Key Concepts
• Predictive Analytics uses statistical techniques and machine learning.
• Relies on historical data to predict likelihood of outcomes.
• Common models: Linear regression, logistic regression, decision trees.
• Advanced models: Random Forest, Gradient Boosting, Neural Networks.
• Time series models: ARIMA, Prophet for trend/seasonality forecasting.
Steps in Predictive Modeling
• Define the business problem clearly.
• Collect & prepare relevant data for the model.
• Choose the right algorithm depending on classification/regression/time-series.
• Split dataset: training and testing subsets.
• Train model on training set, test on unseen data.
• Evaluate with metrics: Accuracy, Precision, Recall, RMSE, R².
Applications
• Sales Forecasting: Anticipate demand for products.
• Customer Churn: Predict likelihood of customer leaving.
• Credit Scoring: Measure customer creditworthiness.
• Fraud Detection: Identify unusual activities in finance.
• Healthcare: Predict disease risks based on patient data.
Predictive Models Overview
Model Type Example Use
Linear Regression Regression Predict sales revenue
Logistic Regression Classification Predict churn (yes/no)
Decision Trees Classification/Regression Customer segmentation
Random Forest Ensemble Improve accuracy in churn prediction
ARIMA Time Series Monthly sales forecasting
Lecture 3: Predictive Analytics & Modeling
(continued)
Key Concepts
• Predictive Analytics uses statistical techniques and machine learning.
• Relies on historical data to predict likelihood of outcomes.
• Common models: Linear regression, logistic regression, decision trees.
• Advanced models: Random Forest, Gradient Boosting, Neural Networks.
• Time series models: ARIMA, Prophet for trend/seasonality forecasting.
Steps in Predictive Modeling
• Define the business problem clearly.
• Collect & prepare relevant data for the model.
• Choose the right algorithm depending on classification/regression/time-series.
• Split dataset: training and testing subsets.
• Train model on training set, test on unseen data.
• Evaluate with metrics: Accuracy, Precision, Recall, RMSE, R².
Applications
• Sales Forecasting: Anticipate demand for products.
• Customer Churn: Predict likelihood of customer leaving.
• Credit Scoring: Measure customer creditworthiness.
• Fraud Detection: Identify unusual activities in finance.
• Healthcare: Predict disease risks based on patient data.
Predictive Models Overview
Model Type Example Use
Linear Regression Regression Predict sales revenue
Logistic Regression Classification Predict churn (yes/no)
Decision Trees Classification/Regression Customer segmentation
Random Forest Ensemble Improve accuracy in churn prediction
ARIMA Time Series Monthly sales forecasting
