DataAnalyticsIntroduction and its ci.pptx

Outline
• Data Analytics Definition
• Steps of Data Analytics
• Types of Data Analytics
• Subsets of Data Analytics
• Applications of Data Analytics
• Concluding Remarks
2

What is Data Analytics?
• Analytics is the use of:
– Data
– Information technology
– Statistical analysis
– Quantitative methods
– Mathematical or computer-based models
• To help managers:
– Gain improved insight about their business operations
– Make better, fact-based decisions.
3

5
Ronald Coase - Economist & author, Winner of Nobel Memorial Prize in Economic
Sciences.

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1
•Goals setting
•Vital, understandable, simple, short, and measurable goals
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•Setting priorities for measurements
•Decide what to measuring, and what methods to use for measure it
3
•Data gathering
•Available datasets, recording/generating data
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•Data cleansing
•Outlier rejection, missing values interpolation, data structuring
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•Data analysis
•Data mining, business intelligence, data visualization, exploratory data analysis
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•Precise results’ interpretation
•Checking whether they are helpful in meeting initial objectives, results limiting, or
inconclusive

1. Goal Setting
• The business unit has to decide on objectives for the
data analytics.
• These objectives might be set out in question format
• For example, if a business is struggling to sell its
products, some relevant questions may be:
– Are we overpricing our goods?
– How is the competition’s product different to ours?
• To answer the question, “Are we overpricing our
goods?” business company have to gather data of:
– Production costs
– Details about the price of similar goods on the market.
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2. Setting Priorities for Measurements
• Determining what type of data is
needed to answer the questions
regarding objectives.
• How much time to take for the
analysis of the project.
• The units of measurement going to
be using.
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3. Data Gathering
• Data can be already available datasets
• Data can be generated by:
– The direct or interview method
• Company would interview “shoppers” regarding their favorite
brand of toothpaste.
– The indirect or questionnaire method
• The questionnaire are distributed to the respondents either by
personal delivery or by mail/email.
– The registration method
• The registration records kept by government organizations, e.g.,
NADRA.
– The experimental method
• Experimentation, simulation.
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4. Data Cleansing
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• Data cleansing process identifying:
– Incomplete
– Incorrect
– Inaccurate
– Irrelevant parts of the data
• The dirty or coarse data is:
• Replaced
• Modified
• Or deleted.

5. Data Analysis
• Data analysis is process of:
– Evaluating data using:
• Analytical reasoning
• Logical reasoning
• To examine each component of the data provided.
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I Preprocessing
• Data cleaning
– Fill in missing values, smooth noisy data, identify or remove outliers,
and resolve inconsistencies
• Data integration
– Integration of multiple databases, data cubes, or files
• Data transformation
– Normalization/ scaling and aggregation
• Data reduction
– Obtains reduced representation in volume but produces the same or
similar analytical results
17

Data Normalization
• Min-max normalization
• Z-score normalization
• Normalization by decimal scaling
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II Feature Engineering FE
• “Feature engineering is the process of transforming
raw data into features that better represent the
underlying problem to the predictive models,
resulting in improved accuracy on unseen data.”
Jason Brownlee, Machine Learning Mastery.
• As the models are getting better and better, the
focus shifts to what is put into them.
• Transforming data to create model’s inputs.
19

Feature Extraction
• Dimension reduction
– Principal component analysis (PCA)
– Non-negative matrix factorization (NMF)
– Kernel PCA
– Graph-based kernel PCA
– Generalized discriminant analysis (GDA)
• Data smoothing
– Wavelet transform
– Ramer–Douglas–Peucker algorithm
– Kernel smoother
– Laplacian smoothing
– Local regression, …
20

Feature Selection
• Identifying features that are redundant or
irrelevant
• Improved model interpretability.
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Feature selection Approaches
• Wrapper – Search through the space of subsets, train
a model for current subset, evaluate it on held-out
data, and iterate. Simple greedy search heuristics:
– Forward selection - start with an empty set,
gradually add the “strongest” features
• Random hill-climbing algorithm
– Backward selection - Start with the full set,
gradually remove the “weakest" features
computationally expensive
22

Feature Selection Approaches
• Filter – Use N most promising features according to
ranking resulting from a proxy measure, e.g. from
– Mutual information
– Pearson correlation coefficient
– ANOVA
– Chi-Square
• Embedded methods – Feature selection is a part of
model construction
• LASSO
• RIDGE regression
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Limitations on Feature Engineering
• Adding many correlated predictors can
decrease model performance.
• More variables make models less
interpretable.
• Models have to be generalizable to other data
– Too much feature engineering can lead to
overfitting.
– Close connection between feature engineering
and cross-validation.
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III Model Training
• Model construction: Describing a set of
predetermined classes
– Each tuple/sample is assumed to belong to a
predefined class, as determined by the class label
attribute
– The set of tuples used for model construction is
training set.
– The model is represented as classification rules,
decision trees, or mathematical formulae.
• Model usage: For classifying future or unknown
objects.
25

Supervised vs. Unsupervised Learning
• Supervised learning (classification/ regression)
– Supervision: The training data (observations,
measurements, etc.) are accompanied by labels
indicating the class of the observations.
– New data is classified based on the training set.
• Unsupervised learning (clustering)
– The class labels of training data is unknown.
– Given a set of measurements, observations, etc. with
the aim of establishing the existence of classes or
clusters in the data.
26

Models for Analysis
• Approaches
– Classification
– Regression
• Techniques
– Data mining
– Machine learning
– Artificial Intelligence (AI)
27

Classification
• Each object (e.g. arrays or columns) associated with a class label (or
response) Y  {1, 2, …, K} and a feature vector (vector of predictor
variables) of G measurements: X = (X1, …, XG)
• Aim: Predict Y_new from X_new.
sample1 sample2 sample3 sample4 sample5 … New sample
1 0.46 0.30 0.80 1.51 0.90 ... 0.34
2 -0.10 0.49 0.24 0.06 0.46 ... 0.43
3 0.15 0.74 0.04 0.10 0.20 ... -0.23
4 -0.45 -1.03 -0.79 -0.56 -0.32 ... -0.91
5 -0.06 1.06 1.35 1.09 -1.09 ... 1.23
Y Normal Normal Normal Cancer Cancer Unknown =Y_new
X X_new
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Classifiers
• A predictor or classifier partitions the space of gene expression
profiles into K disjoint subsets, A1, ..., AK, such that for a sample
with expression profile X=(X1, ...,XG)  Ak the predicted class is k.
• Classifiers are built from a learning set (LS)
L = (X1, Y1), ..., (Xn,Yn)
• Classifier C built from a learning set L:
C( . ,L): X  {1,2, ... ,K}
• Predicted class for observation X:
C(X,L) = k if X is in Ak
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Classification vs. Prediction
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Classification Prediction
Definition: A classification is a division or
category in a system which divides things
into groups or types
Definition: Prediction is a statement
made about the future, forecasting
unknown/ future figures
Model: Predicts categorical class labels
(discrete or nominal)
Model: Models continuous-valued
functions, i.e., predicts unknown or
missing values
Methods:
Linear Classifier LDA
SVM
Decision trees
Bayesian Classifier
Artificial Neural network
Kernel estimation k-nearest neighbor
Methods:
Linear Regression
Non linear regression
Poisson regression
Generalized linear model
Log-linear models
Regression trees
Applications : Email spam filtering
Cancer diagnosis
Voice classification (for Siri type
applications)
Video classification (for uploaded videos
on youtube, etc.)
Applications : Credit approval
Target marketing
Fault avoidance
Medical diagnosis
Fraud detection
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Regression
• Models the relationship between one or more independent or predictor
variables and a dependent or response variable
• Linear regression: Involves a response variable y and a single predictor
variable x，y = w0 + w1x
Where, w0 (y-intercept) and w1 (slope) are regression coefficients
• Method of least squares: estimates the best-fitting straight line
• Multiple linear regression: Involves more than one predictor variable
– Training data is of the form (X1, y1), (X2, y2),…, (X|D|, y|D|)
– Ex. For 2-D data, we may have: y = w0 + w1 x1+ w2 x2
– Solvable by extension of least square method or using SAS, S-Plus
– Many nonlinear functions can be transformed into the above
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Issues regarding Models for Analysis
• Accuracy
– Classifier accuracy and predictor accuracy
• Speed and scalability
– Time to construct the model (training time)
– Time to use the model (classification/prediction time)
• Robustness
– Handling noise and missing values
• Scalability
– Efficiency in disk-resident databases
• Interpretability
– Understanding and insight provided by the model
• Other measures, e.g., goodness of rules, such as decision tree size or
compactness of classification rules.
33

IV Model Optimization
• Tuning model to reduce error
– Models parameter optimization
• Meta-heuristics approaches
• PSO
• GA
• ABC, …
– Validation
• K-fold cross validation
• Monte-carlo method
34

V Performance Evaluation
• Model verification
• Accuracy measures
– MAPE, MAE, RMSE, MSE, …
35

6. Results interpretation
• The most important step.
• First, check:
• Does it help you with any objections that may have
been raised initially?
• Are any of the results limiting, or inconclusive?
• If this is the case, may have to conduct further
research.
• Have any new questions been revealed that weren’t
obvious before?
• For every company to be successful, it needs experts
who can interpret the analysis results.
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Model:
• An abstraction or representation of a real
system, idea, or object
• Captures the most important features
• Can be a written or verbal description, a
visual display, a mathematical formula, or a
spreadsheet representation
Decision Models
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• A decision model is a model used to
understand, analyze, or facilitate decision
making.
• Types of model input
• Data
• Uncontrollable variables
• Decision variables (controllable).
Decision Models
41

• Descriptive Decision Models
• Simply tell “what is” and describe
relationships.
• Do not tell managers what to do.
Decision Models
42

Descriptive Analytics
What has occurred?
Descriptive analytics, such as data
visualization, is important in helping
users interpret the output from
predictive and predictive analytics.
• Descriptive analytics, such as reporting/OLAP,
dashboards, and data visualization, have been widely
used for some time.
• They are the core of traditional BI.
43

• Predictive Decision Models often incorporate
uncertainty to help managers analyze risk.
• Aim to predict what will happen in the future.
• Uncertainty is imperfect knowledge of what
will happen in the future.
• Risk is associated with the consequences of
what actually happens.
Decision Models
44

Predictive Analytics
What will occur?
• Marketing is the target for many predictive analytics applications.
• Descriptive analytics, such as data visualization, is important in helping
users interpret the output from predictive and prescriptive analytics.
• Algorithms for predictive analytics, such as regression analysis, machine
learning, and artificial neural networks, have also been around for some time.
• Prescriptive analytics are often referred to as advanced analytics.
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A Linear Demand Prediction Model
As price increases, demand falls.
Decision Models
46

A Nonlinear Demand Prediction Model
Assumes price elasticity (constant ratio of % change
in demand to % change in price)
Decision Models
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• Prescriptive Decision Models help decision makers identify
the best solution.
• Optimization - finding values of decision variables that
minimize (or maximize) something such as cost (or profit).
• Objective function - the equation that minimizes (or
maximizes) the quantity of interest.
• Constraints - limitations or restrictions.
• Optimal solution - values of the decision variables at the
minimum (or maximum) point.
Decision Models
48

Prescriptive Analytics
What should occur?
• For example, the use of mathematical programming for revenue management is
common for organizations that have “perishable” goods (e.g., rental cars, hotel
rooms, airline seats).
• Harrah’s has been using revenue management for hotel room pricing for some
time.
• Prescriptive analytics are often referred to as advanced analytics.
• Regression analysis, machine learning, and neural networks
• Often for the allocation of scarce resources
49

Subsets of Data Analytics
• Business intelligence (BI)
• Big data analytics
52

Business Intelligence vs. Big Data Analytics
53

Business Intelligence Applications
• Analysis of clickstream data
• Customer profitability analysis
• Customer segmentation analysis
• Product recommendations
• Campaign management
• Pricing
• Forecasting
• Dashboards
59

61
• Business intelligence is important:
• Predict customer trends and behaviors
• Analyze, interpret and deliver data in meaningful
ways
• Increase business productivity
• Drive effective decision-making
• Enables business experts:
• Understand business direction and objectives
• Explore the meaning behind the numbers and
figures in data

• Enables business experts:
• Analyze the causes of certain events based on data
findings
• Present technical insights using easy-to-understand
language
• Contribute to business decision-making by offering
educated opinions
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Big Data Analytics Applications
• Information from multiple internal and external sources:
• Transactions
• Social media
• Enterprise content
• Sensors
• Mobile devices
• Companies leverage data to adapt products and services to:
• Meet customer needs
• Optimize operations
• Optimize infrastructure
• Find new sources of revenue
• Can reveal more patterns and anomalies
64

Applications of Big Data Analytics
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Concluding Remarks
• Data analysis helps in getting useful insights
that help in:
– Better decision making
– Long term planning
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Data Analytics vs. Statistical Analysis
Statistical Analysis
Utilizes statistical and/or
mathematical techniques
Used based on theoretical
foundation
Seeks to identify a
significant level to address
hypotheses or RQs
Data Analytics
Utilizes data mining
techniques
Identifies inexplicable or
novel relationships/trends
Seeks to visualize the data
to allow the observation
of relationships/trends
69

DataAnalyticsIntroduction and its ci.pptx

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