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OLAP and Data Mining and Decision Making

The document discusses using spreadsheets to support business decision making. It covers the stages of decision making and how spreadsheets can help at each stage by exploring alternatives, evaluating feasibility, and selecting the best solution through optimization, satisficing or heuristics. The document also discusses using OLAP and pivot charts to investigate problems by exploring relationships between multiple variables.

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thelangastamper
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Download as PPTX, PDF, TXT or read online on Scribd
18 views

OLAP and Data Mining and Decision Making

The document discusses using spreadsheets to support business decision making. It covers the stages of decision making and how spreadsheets can help at each stage by exploring alternatives, evaluating feasibility, and selecting the best solution through optimization, satisficing or heuristics. The document also discusses using OLAP and pivot charts to investigate problems by exploring relationships between multiple variables.

Uploaded by

thelangastamper
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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BUSINESS DECISION SUPPORT

•MANAGEMENT DECISION-MAKING
BUSINESS DECISION SUPPORT:
MODULE CONTENT
• Module introduction: Spreadsheets in business
• Using models to support decision-making
• Good spreadsheet design and development principles
• Spreadsheet management and auditing
- Multidimensional data analysis
- What-If analysis
- Estimation modelling
WHO MAKES WHAT TYPE OF
DECISION?

Unstructured
Strategic
management

Tactical
management

Operational
Structured management

3
SOME CHARACTERISTICS OF
DECISIONS

Consider:
• Time frame
• Consequences Strategic
management
• Risk
• Complexity Tactical
management
• Frequency
• Availability of information Operational
management
• Sources of information
4
MANAGEMENT DECISION-MAKING
(AND THE ROLE OF SPREADSHEETS)
WHAT HAPPENS IN DECISION-MAKING?

• Trigger for decision-making


• To solve a problem
• To take advantage of an opportunity
• Stages of decision-making (Simon, 1977)
• Intelligence: define the problem or opportunity
• Design: develop and evaluate alternative solutions
• Choice: select the ‘best’ course of action
THE DECISION_MAKING PROCESS
EXCEL SUPPORT FOR DECISION-MAKING

• Intelligence stage
• Becoming aware of the problem
• Defining the problem details and scope
• Design stage
• Identifying alternative solutions
• Evaluating the feasibility of each solution
• Choice stage
• Deciding on the ‘best’ solution
SELECTING THE ‘BEST’ SOLUTION

• Optimising
• Explores all possible solutions
• Identifies the best outcome based on numbers
• Satisficing
• Explores a limited number of possible solutions
• Stops if the best outcome meets requirements
• Heuristics
• Relies on approaches that have worked in the past
HOW SPREADSHEETS CAN ADD VALUE
• A key to good decision making is to explore and compare many relevant
alternatives
• The more alternatives there are, the more computer-assisted searching
and comparison is needed
• Typically, decisions must be made under time pressure.
• It may not be possible to manually process the needed information fast
enough to be effective
• It’s often necessary to conduct sophisticated mathematical analysis in order
to make a good decision
• This type of analysis requires the use of modeling
MANAGEMENT DECISION-MAKING

STAGE 1: INTELLIGENCE
INVESTIGATING THE PROBLEM

On-Line Analytical Processing (OLAP)


• Explores the relationship between multiple variables
• Usually at least three variables involved
• Relies on large data sets
• Usually has a time component
• Graphical display aids understanding
• Identifies patterns occurring in data
• The Excel equivalent is a Pivot Chart
HOW OLAP WORKS

• The user selects a set of (possibly) relevant variables


• The user request a particular view of the data set
• The user can specify desired calculations e.g. sum/average
• Underlying relationships and/or trends are shown visually
• Views are easily adjusted and manipulated
• Underlying data values can be revealed (“drill-down”)
OLAP VS DATA MINING

• Identification of (possibly) relevant variables to be analysed:


• OLAP: Variables are selected by the user based on experience or intuition
• Data mining: The system takes into account all available variables

• Type of analysis
• OLAP: Patterns & trends based on aggregated data are shown graphically or as a table of values, with drill-down
facility to access underlying values
• Data mining: Automated processing of a range of statistical tests (correlation, regression etc) revealing hidden
patterns in the underlying data based on the relationships between variables

• Presentation of results
• OLAP: Basically visual
• Data mining: Basically numeric
• In both cases it’s up to the user to interpret & explain the results

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