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Road Map To Predictive Analytics: Dr. P.K.Viswanathan Professor (Analytics)

1) This document provides an overview of predictive analytics. It discusses how predictive analytics uses machine learning algorithms to analyze large amounts of data and automate strategic decisions. 2) Key concepts covered include supervised vs. unsupervised learning, examples of predictive analytics like customer churn prediction, and common predictive modeling techniques like logistic regression, decision trees, and neural networks. 3) The document aims to explain the basic concepts and applications of predictive analytics to help readers understand this important field.

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Shreenidhi M R
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59 views17 pages

Road Map To Predictive Analytics: Dr. P.K.Viswanathan Professor (Analytics)

1) This document provides an overview of predictive analytics. It discusses how predictive analytics uses machine learning algorithms to analyze large amounts of data and automate strategic decisions. 2) Key concepts covered include supervised vs. unsupervised learning, examples of predictive analytics like customer churn prediction, and common predictive modeling techniques like logistic regression, decision trees, and neural networks. 3) The document aims to explain the basic concepts and applications of predictive analytics to help readers understand this important field.

Uploaded by

Shreenidhi M R
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Road Map to Predictive Analytics

Dr. P.K.Viswanathan
Professor(Analytics)
Present Competitive Environment
has been witnessing cornucopia of
Data that is increasing at an
astonishing rate beyond
human imagination.
AI is the New Electricity

“AI will transform every


industry just like electricity
transformed them 100
years back.”
Andrew Ng
Connection between Analytics and AIMLDL

AI
ML
▪ Artificial Intelligence(AI is the major field)
▪ Machine Learning(ML) is a subfield of AI
▪ Deep Learning(DL) is a subfield of ML
DL
Pillars of Analytics

▪ Descriptive Analytics What has happened?

▪ Diagnostic Analytics Why it has happened?

▪ Predictive Analytics What will happen?

▪ Prescriptive Analytics What should be done?


What is Predictive Analytics?

▪ Predictive analytics involves the use of data and quantitative


modeling to predict future trends and events. Predictive Analytics
generates potential future scenarios that can help drive strategic
decisions.

▪ In this modern internet and information technology world,


predictive analytics uses machine-learning algorithms to
automate strategic decisions.
Predictive Analytics: Examples
▪ I have large amount of data on various customer characteristics.
Can you segment the market appropriately and then predict in each segment
whether a customer will buy my new product? Which segment has the highest
probability of buying?

▪ Can you predict when the market churn will take place so that my company
can take appropriate action to save a lot of money?

▪ What is the chance that a customer will default on a loan if I choose to give?
▪ What is the market demand for my new product that I would like to launch?
Why the term “Predictive Analytics”?

Predictive
Training Data Model
Algorithms
Data Set

Test Data Model Predictions


Supervised Learning

Nature of Y Nature of X Model to Use?

1)Continuous Continuous Multiple Regression

2)Continuous Categorical Dummy Regression

3)Continuous Mixed Multiple Regression(Dummy


Coding for Categorical)
Supervised Learning

Nature of Y Nature Model to Use?


of X

4)Binary(0/1) Continuous Logistic Regression/Discriminant


Analysis
5)Binary(0/1) Categorical Logistic Regression

6)MultiClass(>2) Continuous Multiple Discriminant Analysis


Supervised Learning
Modern Classifiers

• CART

• Neural Nets

• Random Forest

• Support Vector Machines(SVM)

• Naive Bayes
Unsupervised Learning

Nature of X Model to Use

1)Continuous If the variables are highly correlated,


collapse them into dimension by using Principal
Component Analysis.

2)Continuous If the aim is to reduce the objects, use Cluster


Analysis for Segmenting into Groups.

3)Categorical Use Correspondence Analysis for Dimension


Derivation and Clustering
Quick-Review Test

1) In an analytic study to understand consumer behavior toward


buying, the response variable rating is continuous(scale of 1 to 7
was used) and it depends on advertisement with three
levels(Low budget, medium budget, and high budget) and price
two levels(High and Low). The model to predict consumer rating
is

Dummy Regression(Preference Decomposition, and Conjoint


analysis are also correct )
Quick-Review Test

2) If the objective is to classify the consumers into low risk takers,


medium risk takers, and high risk takers based on key
characteristics, the models that can be used are
Discriminant Analysis, Logistic Regression, and Neural Network.
BABI-Review Test

3) In a predictive modeling study to predict loan default, two


independent variables were used namely Income and Current
Loans in Credit Card. The logistic regression gave the odds
(Exp(Beta) corresponding to Current Loans in Credit Card as
2.78. Interpret this number.
[0 represents Not a Defaulter and 1 represents a Defaulter]

The odds of defaulter to non-defaulter will be 2.78 to 1 for every unit


increase in Current Loans.
Quick-Review Test

4) When a very large number of variables are involved in a study to


understand selling behavior, the objective is to collapse these
variables into manageable dimensions. The appropriate
technique is

Principal Component Analysis


Quick-Review Test

5) When we want to understand Interaction between factors and


relationship between variables, we use

ANOVA and Correlation(Correlation and Regression is also


correct)

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