Operational Analytics- An Over ViewBY PRUDHA PALLAVI PENTAPATI

Descriptive Analytics

What is a fundamental Operational Problem? Time line of events

Steps before the Solution

Analyse the past data How much should you order News Vendor Problem Time’s Magazine Aprroach Broader application to the problem

Forecasting

What is Forecasting? Characteristics of Forecasts Probablity Distributions in Forecasting Model for future Demand

Making Best decisions with low uncertainity

A resource allocation Example Converting a verbal problem application into an algebraic model Algebraic model to spreadsheet implementation Matching demand and supply across space

Decision Variables

What are decision variables? Optimizing Production Build an Objective Function Working around constraints How to Identify Key Performance Indicators

Risk and Evaluation of Alternatives

Making Decisions in Low-Uncertainty vs. High-Uncertainty Settings

Connecting Random Inputs and Random Outputs Modeling Random Variables using Scenarios

Decision Trees

What is a decision tree Structure of a decision tree Understanding a decision tree

Approach to Evaluate Options using Decision Trees

“Maxi-min” strategy Choose the actions that maximize the minimum outcome Avoids bad outcomes…and…ignores the possibility of good outcomes “Risk averse” strategy

“Maxi-max” strategy Choose the actions that maximize the maximum outcome Seeks good outcomes...and…ignores the possibility of bad outcomes “Risk seeking” strategy

Maximize the expected value of the outcomes Gives equal weight to good and bad outcomes “Risk neutral” strategy

Decision Trees in Practice

IDEA is a small example designed to convey the essential ideas In practice, decision trees are used to evaluate a wide range of

complex problems. You can find examples in articles published in Interfaces m R&D licensing

Credit Scoring ,Polio Eradication There exists software to help manage and analyze large decision

trees m core-feature, single user, products: e.g., Tree Plan (free trial) massive-feature, enterprise-use products: Decision Tools, Logical Decisions