Highline Class, BI 348

Basic Business Analytics using Excel, Chapter 01

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Topics
• Raw Data Into Useful Information
• Business Analytics (Textbook):
• Descriptive Analytics
• Predictive Analytics
• Prescriptive Statistics
• Big Data
• Steps In Making A Decision
• Types Of Decisions
• Approaches To Decision Making

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Raw Data Into Useful
Information
• Data Analysis (From Busn 216 and Busn 218):
• Converting raw data into useful information for decision makers
• Statistical Analysis (Busn 210):
• Statistics is the art and science of collecting, analyzing, presenting and
interpreting data to help make informed decisions.
• Analysis (Merriam-Webster dictionary):
• A careful study of something to learn about its parts, what they do and
how they relate to each other
• An explanation of the nature and meaning of something
• Analytics (Merriam -Webster dictionary):
• Information resulting from systematic analysis of data or statistics
• Business Analytics (textbook):
• Scientific process of transforming data into
insight for better decisions 3
Business Analytics (Textbook):
• Scientific process of transforming data into insight for better
decisions
• Data driven decision making
• Fact-based decision making
• Scientific process such as: Queries, Linear Regression, and
Optimization
• Business Analytics has three parts:
• Descriptive Analytics
• Describing the past
• Predictive Analytics
• Build models that help predict the unknown future
• Prescriptive Analytics 4
• Build models to help predict the best course of action
Descriptive Analytics
• Set of techniques that describe what has happened in the past.
• Examples:
• Data Queries
• Like a Filter in Excel or an Access Query
• Reports
• Like an Income Statement, a Regional Report or a PivotTable with multiple
Criteria
• Descriptive Statistics
• Examples: Mean, Median Mode, Standard Deviation, Correlation
• Data Visualization
• Examples; Charts, Tables, Conditional Formatting
• What if Excel models
• Like Income Statement Budget with Assumption Table or a Fixed Variable
Cost Analysis
• Data Dashboards
• Collection of items such as tables, charts and descriptive statistics that will 5
update as new data arrives
Predictive Analytics
• Set of techniques that use models constructed from past data
to:
• Predict the future
or
Ascertain impact of one variable on another
• Examples:
• Linear Regression
• Models to help predict one variable based on a one or more other
variables)
• Time Series Analysis & Forecasting
• Using data to make forecasts of unknown future
• Data Mining (not covered in this class)
• Methods to reveal patterns and relationships in data 6
Prescriptive Analytics
• Set of techniques to indicate the best course of action; what
decision to make to optimize outcome.
• Examples:
• Optimization models
• A mathematical model that gives the best decision, subject to the
situations constraints
• We’ll use the Excel feature called “Solver” which can tell us things like
what number of units to produce to maximize profit.
• Simulation
• Use Native Excel Functions to create a simulation
• Decision Analysis (not covered in this class)
• Advanced Analytics
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• Predictive Analytics and Prescriptive Analytics
Big Data
• A set of data that cannot be managed, processed or analyzed with
commonly available software in a reasonable amount of time.
• Why do we have so much data now:
• Every time you buy something, the scanner beep at the register records
a lot of data such as price, product name, time, date, location, sales
person and more.
• All our personal devices collect vast amounts of data everyday
• Social media
• E-commerce data
• Almost every click on the internet…
• According to Google: Amount of data generated every 48 hours is
equal to all data created from the beginning of civilization to 2003.
• Business Analytical methods are used more often now because of:
• Vast amount of data
• Improved computational approaches and algorithms to handle the vast
amounts of data 8
• Faster computers and more ability to store vast amounts of data
Steps In Making A Decision:
• Identify and define the problem
• Determine criteria that will be used to evaluate alternative
solutions
• Determine the set of alternative solutions
• Evaluate the alternatives with the criteria
• Choose the alternative

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Types Of Decisions:
• Strategic Decisions
• High-level manager decisions concerning the overall direction, goals
and objectives of the organization (3 - 5 year time span)
• Examples:
• Does a local company try and sell out of the state or internationally?
• Does an online only company try to open brick and mortar stores?
• Tactical Decisions
• Mid-level manager decisions about how organization can achieve the
goals and objectives of the organization (1 year or 6 month time span)
• Examples:
• What states or cities or locations to sell in?
• Operational
• Decisions concerning day to day operations such as number of products 10
to make or order, or how to schedule events.
Approaches To Decision Making:
• Tradition
• (Probably based on someone’s past experience from way back)
• Intuition
• (Probably based on persons unconscious past experiences)
• Rule of Thumb
• (Probably based on past experiences)
• Data Based Decisions
• (Based on past experiences, but in a more objective way)

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