Business Analytics

Using Excel
 What is Business Analytics?

 Definition
 Business Analytics is the systematic practice of analyzing data to gain insights that help
in making informed business decisions. It involves the use of statistical techniques and
tools to examine historical data, uncover patterns, and make predictions about future
trends.
 Purpose
 The primary goal of business analytics is to use data to guide decision-making processes
and improve business outcomes. This means translating raw data into actionable insights
that can drive strategic planning and operational efficiency.
 Key Components

 Data Collection:
 Description: The process of gathering data from various sources,
including internal systems (e.g., sales records, customer databases)
and external sources (e.g., market research, social media).
 Importance:Ensures that the data used for analysis is relevant
and comprehensive.
 Methods:
 Surveys and Questionnaires: Collecting responses from customers
or employees.
 Transaction Records: Extracting data from sales, inventory, or
financial transactions.
 Web Scraping: Gathering data from websites or online platforms.
 APIs: Integrating data from external services and applications.
 Data Analysis:
 Description: Applying statistical and analytical methods to interpret the data.
This may involve calculating averages, percentages, trends, and correlations.
 Importance: Helps in identifying patterns and trends within the data.
 Techniques:
 Descriptive Statistics: Summarizing data through measures
such as mean, median, and standard deviation.
 Exploratory Data Analysis (EDA): Using visualizations like
histograms and scatter plots to explore data characteristics.
 Correlation Analysis: Identifying relationships between
different variables.
 Predictive Modeling:
 Description:
 Predictive modeling uses statistical techniques and machine learning algorithms to forecast
future events based on historical data. It helps in anticipating outcomes and trends.
 Purpose:
 To make informed predictions about future scenarios, enabling proactive decision-making
and planning.
 Methods:
 Regression Analysis: Estimating relationships between variables and forecasting future
values.
 Time Series Analysis: Analyzing data points collected or recorded at specific time
intervals.
 Machine Learning Algorithms: Using techniques like decision trees, random forests, and
neural networks for complex predictions.
 Decision Support
 Description:
 The final step involves using the insights gained from data analysis and predictive
modeling to support decision-making processes. This includes making strategic
recommendations and guiding operational improvements.
 Purpose:
 To translate analytical insights into actionable strategies that enhance business
performance and achieve organizational goals.
 Tools:
 Dashboards: Interactive visual tools that display key metrics and trends.
 Reports: Detailed documents summarizing analysis results and recommendations.
 Scenario Analysis: Evaluating different scenarios to understand potential outcomes
and make informed choices.
Descriptive Analytics

 Definition
 Descriptive Analytics focuses on summarizing and interpreting historical data to
understand what has happened in the past. It provides insights into past performance
and helps identify trends, patterns, and anomalies within the data.
 Purpose
 The main purpose of Descriptive Analytics is to provide a clear and comprehensive
view of historical data. This helps organizations understand past behaviors and
outcomes, which can inform current strategies and decisions.
 Key Components and Techniques
 Data Summarization
 Description: Aggregating and summarizing data to present it in a concise format.
This includes calculating basic statistics such as totals, averages, and percentages.
 Example: Calculating the total sales for each month and finding the average monthly
sales over a year.
 Data Visualization
 Description: Using visual tools to represent data graphically. This makes it easier to
spot trends and patterns.
 Techniques:
 Bar Charts: Display categorical data and compare values across different categories.
 Pie Charts: Show proportions of a whole, useful for understanding the share of different
segments.
 Line Graphs: Track changes over time, ideal for analyzing trends and patterns in time-series
data.
 Example: A bar chart showing monthly sales figures across different regions.
Trend Analysis

•Description: Identifying and analyzing patterns or trends in historical data.

•Techniques:
•Moving Averages: Smooth out data fluctuations to identify underlying trends.
•Seasonal Analysis: Examine data variations due to seasonal factors.
•Example: Analyzing seasonal sales trends to identify peak buying periods.
Descriptive Statistics
•Description: Applying statistical measures to describe and summarize data.

•Techniques:

•Mean (Average): Calculates the average value of a dataset.

•Median: Finds the middle value in a dataset when sorted.
•Mode: Identifies the most frequently occurring value.
•Standard Deviation: Measures the amount of variation or dispersion in the dataset.
•Example: Calculating the mean and standard deviation of customer satisfaction scores.
Tools for Descriptive Analytics

 Descriptive Analytics tools are essential for summarizing and

visualizing historical data. They help transform raw data into
meaningful insights by aggregating, organizing, and presenting it in a
way that is easy to understand. Here’s an overview of key tools
commonly used for descriptive analytics:
 1. Business Intelligence (BI) Tools
 Description: Business Intelligence tools are software applications
designed to analyze and visualize data, helping users make informed
decisions. They offer a range of features for creating reports,
dashboards, and visualizations.
 Popular BI Tools:
 Tableau:
 Features: Interactive dashboards, data blending, advanced visualization options.
 Use Case: Creating dynamic charts and graphs that can be explored interactively to
uncover insights.
 Power BI:
 Features: Integration with Microsoft products, customizable reports, real-time
data visualization.
 Use Case: Generating comprehensive reports and interactive visualizations
with easy integration into existing Microsoft ecosystems.
 QlikView/Qlik Sense:
 Features: Associative data model, drag-and-drop interface, self-service
analytics.
 Use Case: Building visualizations that allow users to explore data relationships
and patterns.
 Benefits:
 Allows for interactive exploration of data.
 Facilitates the creation of customized visualizations and reports.
 Provides real-time data updates and dashboards.
 2. Spreadsheet Software
 Description: Spreadsheet software is widely used for basic data analysis and
visualization. It provides functionalities for data organization, calculation, and
chart creation.
 Popular Spreadsheet Tools:
 Microsoft Excel:
 Features: Pivot tables, charts, formulas, data filtering.
 Use Case: Summarizing data with pivot tables, creating various types of charts, and
performing basic statistical analysis.
 Google Sheets:
 Features: Collaboration features, built-in formulas, integration with Google services.
 Use Case: Sharing and analyzing data collaboratively, creating charts and graphs for
simple data visualization.
 Benefits:
 User-friendly and widely accessible.
 Excellent for quick analysis and visualization.
 Supports a wide range of functions and formulas for data manipulation.
 3. Data Visualization Software
 Description: Data visualization software is specialized in creating visual
representations of data. These tools help users understand complex data through
graphs, charts, and interactive displays.
 Popular Data Visualization Tools:
 D3.js:
 Features: Highly customizable visualizations, interactive graphics.
 Use Case: Developing custom visualizations for web-based applications with detailed
and interactive features.
 Highcharts:
 Features: Rich charting library, interactive charts, support for various chart types.
 Use Case: Embedding interactive charts in web applications and dashboards.
 Benefits:
 Provides advanced visualizations and customization options.
 Helps in creating interactive and engaging data presentations.
 Ideal for users needing detailed and specific visual representation of data.
 4. Reporting Tools
 Description: Reporting tools are used to generate structured reports that summarize data insights.
They are often integrated with BI tools or used independently for creating formal reports.
 Popular Reporting Tools:
 Crystal Reports:
 Features: Advanced reporting capabilities, customizable reports, data integration.
 Use Case: Generating detailed reports with various formatting options and data sources.
 JasperReports:
 Features: Flexible report generation, open-source, supports multiple formats.
 Use Case: Creating detailed and customizable reports that can be embedded in applications.
 Benefits:
 Allows for the creation of detailed and formatted reports.
 Facilitates distribution and sharing of data insights.
 Supports integration with various data sources and formats.
Diagnostic Analytics

 Diagnostic analytics involves analyzing historical data to understand

past events. It aims to uncover the reasons behind certain outcomes
or behaviors.
 Purpose:
 To determine the causes of past events.
 To gain insights into why certain results occurred.
 Key Questions:
 What were the results or outcomes?
 Why did these outcomes occur?
 What factors contributed to these results?
 Techniques:
 Data Mining: Extracting patterns and relationships from large data
sets.
 Statistical Analysis: Applying statistical methods to analyze data
and find correlations.
 Root Cause Analysis: Identifying the underlying reasons for specific
outcomes.
 Examples:
 Sales Decline Analysis: Examining past sales data to identify reasons for
a decrease in sales performance.
 Customer Churn Analysis: Analyzing why customers stopped using a
service or product.
Predictive Analytics

 Definition: Predictive analytics uses historical data and statistical

algorithms to forecast future outcomes. It aims to predict what is
likely to happen based on past trends.
 Purpose:
 To anticipate future events or trends.
 To prepare for potential future scenarios.
 Key Questions:
 What is likely to happen in the future?
 What are the potential outcomes based on current data?
 How can we prepare for these future events?
 Techniques:
 Machine Learning: Utilizing algorithms that learn from data to make
predictions.
 Regression Analysis: Modeling relationships between variables to forecast
future trends.
 Time Series Analysis: Analyzing data points collected or recorded at specific
time intervals to predict future values.
 Examples:
 Sales Forecasting: Predicting future sales based on historical sales data
and trends.
 Customer Behavior Prediction: Using past data to anticipate future
customer actions and tailor marketing strategies accordingly.
Visuals:
 A Venn diagram or comparison chart showing the differences and overlaps
between diagnostic and predictive analytics

Icons:
 Use a magnifying glass icon for diagnostic analytics.
 Use a crystal ball or trend line icon for predictive analytics.

Diagnostic Analytics: Focuses on understanding past performance and uncovering

reasons behind it.
Predictive Analytics: Focuses on forecasting future trends and preparing for
potential scenarios.
Predictive Analytics
 Definition: Predictive analytics uses historical data and statistical techniques
to forecast future events. It aims to predict future outcomes based on past
patterns and trends.
 Purpose:
 To anticipate future trends and behaviors.
 To make informed decisions based on likely future scenarios.
 Key Questions:
 What is likely to happen in the future?
 What trends can we expect based on historical data?
 How can we use these predictions to make strategic decisions?
 Techniques:
 Machine Learning: Algorithms that learn from data to predict future outcomes.
 Regression Analysis: Statistical methods to model relationships between variables and
forecast trends.
 Time Series Analysis: Evaluating data points collected over time to predict future
values.
 Examples:
 Sales Forecasting: Predicting future sales based on historical sales data and market
trends.
 Customer Behavior Prediction: Estimating future customer actions to enhance
marketing strategies.
Cognitive Analytics

 Definition: Cognitive analytics involves simulating human thought processes using

advanced technologies such as artificial intelligence (AI) and machine learning. It
focuses on understanding complex data and providing insights that mimic human
cognition.
 Purpose:
 To analyze data in a way that mimics human reasoning and understanding.
 To provide deeper insights through advanced pattern recognition and natural language
processing.
•Key Questions:
•How can we simulate human thought processes to analyze data?
•What complex patterns can we uncover using cognitive technologies?
•How can these insights improve decision-making and problem-solving?
 Techniques:
 Natural Language Processing (NLP): Understanding and interpreting human
language from data.
 Pattern Recognition: Identifying patterns and anomalies in complex data
sets.
 AI Algorithms: Utilizing AI to simulate human reasoning and provide
insights.
 Examples:
 Customer Sentiment Analysis: Using NLP to analyze customer feedback and
determine sentiment.
 Fraud Detection: Employing AI to recognize unusual patterns that might
indicate fraudulent activity.
 Predictive Analytics: Focuses on forecasting future events based on historical data and
trends.
 Cognitive Analytics: Uses AI and advanced technologies to simulate human thought and
provide deeper insights from complex data.
 Visuals:
 Diagram: A comparison chart or Venn diagram showing the distinctions and overlaps
between predictive and cognitive analytics.
 Icons:
 Use a trend line icon for predictive analytics.
 Use a brain or AI chip icon for cognitive analytics.
Measures of Central Tendency

 A measure of central tendency is a descriptive statistic that describes

the average, or typical value of a set of scores.
 There are three common measures of central tendency:
 the mean
 the median
 the mode
The Mean

The mean is:

the arithmetic average of all the
scores
(X)/N
the number, m, that makes (X - m)
equal to 0
the number, m, that makes (X - m)2
a minimum
The mean of a population is
represented by the Greek letter ;
 Calculating the Mean for
Grouped Data

 f X
X 
N
where: f X = a score multiplied by its frequency

Mean affected by extreme values

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 12 14

Mean = 5 Mean = 6
When To Use the Mean

You should use the mean when

the data are interval or ratio scaled
Many people will use the mean with ordinally scaled
data too

and the data are not skewed

The mean is preferred because it is
sensitive to every score
If you change one score in the data
set, the mean will change
Calculating the Mean

 Calculate the mean of the following data:

1 5 4 3 2
 Sum the scores (X):
1 + 5 + 4 + 3 + 2 = 15
 Divide the sum (X = 15) by the number of scores (N = 5):
15 / 5 = 3
 Mean = X = 3
Calculating the Mean for Grouped
Data

Score Number of
students
Find the mean of the following data:
10 3
Mean = [3(10)+10(9)+9(8)+8(7)+10(6)+
2(5)]/42 = 7.57 9 10

8 9

7 8

6 10

5 2
The Median

 The median is simply another name for the 50th percentile

 It is the score in the middle; half of the scores are larger than the
median and half of the scores are smaller than the median
 Not affected by extreme values

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 12 14

Median = 5 Median = 5
How To Calculate the Median

 Conceptually, it is easy to calculate the median

 There are many minor problems that can occur; it is best to let a computer
do it
 Sort the data from highest to lowest
 Find the score in the middle
 middle = (n + 1) / 2
 If n, the number of scores, is even the median is the average of the middle
two scores
 Calculating the Median for
Grouped Data
N / 2  cf
Median l  h
f
• To use this formula first determine median class.
Median class is that class whose less than type cumulative
frequency is just more than N / 2 ;
• l = lower limit of median class ;
• cf = less than type cumulative frequency of premedian
class;
• f = frequency of median class
• h = class width.
When To Use the Median

The median is often used when the

distribution of scores is either
positively or negatively skewed
The few really large scores (positively
skewed) or really small scores
(negatively skewed) will not overly
influence the median
Median Example

 What is the median of the following scores:

10 8 14 15 7 3 3 8 12 10 9
 Sort the scores:
15 14 12 10 10 9 8 8 7 3 3
 Determine the middle score:
middle = (n + 1) / 2 = (11 + 1) / 2 = 6
 Middle score = median = 9
Median Example

 What is the median of the following scores:

24 18 19 42 16 12
 Sort the scores:
42 24 19 18 16 12
 Determine the middle score:
middle = (n + 1) / 2 = (6 + 1) / 2 = 3.5
 Median = average of 3rd and 4th scores:
(19 + 18) / 2 = 18.5
 The Mode

The mode is the score that occurs most

frequently in a set of data
Not Affected by Extreme Values
There May Not be a Mode
There May be Several Modes
Used for Either Numerical or Categorical
Data

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 0 1 2 3 4 5 6

Mode = 9 No Mode
 Calculating the Mode for
Grouped Data
 f m  f1 
Mode l   h
 2 f m  f1  f 2 
To use this formula first determine modal class.
Modal class is that class which has maximum
frequency ;
l = lower limit of modal class;
fm = maximum frequency;
f1 = frequency of pre modal class ;
f2 = frequency of post modal class
When To Use the Mode

The mode is not a very useful

measure of central tendency
It is insensitive to large changes in
the data set
That is, two data sets that are very different from each
other can have the same mode

The mode is primarily used with

nominally scaled data
It is the only measure of central
tendency that is appropriate for
nominally scaled data
 Calculate Mean, Median
& Mode
Problem 1 : Wages (in Rs) paid to workers of an organization are given
below. Calculate Mean, Median and Mode.

Wages ( C.I.) 40-60 60-80 80-100 100-120 120-140 140-160

No.of workers 50 80 30 20 50 20
(freq)

Problem 2 : Weekly demand for marine fish (in kg) (x) for 100 families is
given below. Calculate Mean, Median and Mode.
X 1 2 3 4 5 Total
No. of Families
20 50 20 5 5 100
(freq)
 Relation Between
Mean, Median & Mode
 In symmetrical
distributions, the median
and mean are equal
 For normal distributions,
mean = median = mode
 In positively skewed
distributions, the mean
is greater than the
median
In negatively skewed
distributions, the mean is
smaller than the median
 Variance

•Important Measure of Variation

•Shows Variation About the Mean:
•For the Population: 2  X  
i
2

 
N
•For the Sample: 
 xi  x 2

s2 
n 1
For the Population: use N in the For the Sample : use n - 1 in
denominator. the denominator.
 Standard Deviation

•Important Measure of Variation

•Shows Variation About the Mean:
•For the Population:

 X i  
2

•For the Sample:

s
 x  x 
i
2

n 1
 Coefficient of Variation

Measure of Relative Variation

Always a%
Shows Variation Relative to Mean
Used to Compare 2 or More Groups
Formula (for Sample):

 SD 
CV   100%
 X 
 Comparing Coefficient of Variation

 Stock A: Average Price last year = $50

 Standard Deviation = $5
 Stock B: Average Price last year = $100
 Standard Deviation = $5

Coefficient of Variation:
Stock A: CV = 10%
Stock B: CV = 5%
 Shape of Curve
 Describes How Data Are Distributed
 Measures of Shape:
 Symmetric or skewed

Left-Skewed Symmetric Right-Skewed

Mean Median Mode Mean = Median = Mode Mode Median Mean
Find the Variance, SD & CV

1. 5 test scores for Calculus I are 95, 83, 92, 81, 75.

2. Consider this dataset showing the retirement age of 11

people, in whole years:
54, 54, 54, 55, 56, 57, 57, 58, 58, 60, 60
3. Here are a bunch of 10 point quizzes from MAT117: 9, 6,
7, 10, 9, 4, 9, 2, 9, 10, 7, 7, 5, 6, 7
4. 11, 140, 98, 23, 45, 14, 56, 78, 93, 200, 123, 165
Find the Variance, SD & CV

 Class Interval Frequency

2 -< 4 3
4 -< 6 18
6 -< 8 9
8 -< 10 7
Example A: 3, 10, 8, 8, 7, 8, 10, 3, 3, 3

Example B: 2, 5, 1, 5, 1, 2

Example C: 5, 7, 9, 1, 7, 5, 0, 4
Find the Mean, Median, Mode
Variance, SD & CV

Exam marks for 60 students (marked out of 65)

mean = 30.3 sd = 14.46

Group Frequency Table

Frequency Percent
0 but less than 10 4 6.7
10 but less than 20 9 15.0
20 but less than 30 17 28.3
30 but less than 40 15 25.0
40 but less than 50 9 15.0
50 but less than 60 5 8.3
60 or over 1 1.7
Total 60 100.0