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Business
Analytics
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Objectives:
 Statistical learning including
quantitative, qualitative analysis
techniques
 Predictive Analytics using linear,

polynomial and logistic regression

techniques and model comparison
 The use of the above analysis and

visualization to aid decision making

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Content:
 Business Analytics - Introduction
 Statistical Methods for Business Analytics
 Basics of Hypothesis Testing
 Correlation and Regression
 Multiple Linear Regression
 Model Comparison and Performance
 Classification
 Time Series Analysis
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Classification:
 A person arrives at the emergency room with a set of
symptoms that could possibly be attributed to one of
three medical conditions. Which of the three
conditions does the individual have?
 An online banking service must be able to determine
whether or not a transaction being performed on the
site is fraudulent, on the basis of the user’s IP
address, past transaction history, and so forth.
 On the basis of DNA sequence data for a number of
patients with and without a given disease, a biologist
would like to figure out which DNA mutations are
deleterious (disease-causing) and which are not.
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Classification:

Why not MRA?

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Classification:

Conditional Probability: Prob (Y=1| X=x)

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Classification: Prob (Y=1| X=x)

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Logistic Regression: Prob (X)

Likelihood Function
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Logistic Regression: Prob (X)

Likelihood Function
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Logistic Regression: Prob (X)

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Logistic Regression: Prob (X)

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Multiple Logistic Regression: Prob (X)

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Classification – Multi Level Categorical DV

Bayes Theorem
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Classification - KNN
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Classification - KNN
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Classification – KNN (Value of K)

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Classification – KNN – For Regression

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Classification – KNN – For Regression

K=1 K=9
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Classification – Clustering

Unsupervised
Learning
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Classification – Clustering

• K Means

• Hierarchical
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Classification – Clustering – K Means

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Classification – Clustering – K Means

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Classification – Clustering – K Means

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Classification – Clustering – K Means

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Classification – Clustering – K Means

1. Randomly assign a number, from 1 to K, to each of the
observations. These serve as initial cluster assignments
for the observations.
2. Iterate until the cluster assignments stop changing:
(a) For each of the K clusters, compute the cluster
centroid. The kth cluster centroid is the vector of the p
feature means for the observations in the kth cluster.
(b) Assign each observation to the cluster whose centroid
is closest (where closest is defined using Euclidean
distance).
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Classification – Clustering – K Means

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Classification – Clustering-Hierarchical
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Classification – Clustering-Hierarchical
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Classification – Clustering-Hierarchical
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Classification – Clustering-Hierarchical
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Classification – Clustering-Hierarchical
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Let’s Practice

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