UNIT III

BUSINESS FORECASTING
PART - A Questions
1. How do you choose the right business forecasting technique?
Context of the forecast
Availability and relevance of past data Degree of
accuracy required
Allocated time to conduct the forecast Period
to be forecast
Costs and benefits of the forecast
Stage of the product or business needing the forecast
2. What is business forecasting?
Business forecasting is the process of analyzing data to predict future company needs
and make insight-driven development decisions.
Benefits of business forecasting:
Foresee upcoming changes
Decrease the cost of unexpected demand by preparing ahead of time. Business
Forecasting is a great starting point for demand planning.
Increase customer satisfaction by giving them what they want, when they want it.
Set long- and short-term goals by tracking your progress.
Learn from the past by analyzing it. With this new information, your company can make the
necessary adjustments to avoid similar mistakes in the future.
3.List of challenges of Business forecasting.
You can’t always expect the unexpected.
It takes time to create an accurate forecast.
Historical data will always be outdated
4. List the technique of Business forecasting.
Choosing the right business forecasting technique depends on many factors.
Some of these are:
 Context of the forecast
 Availability and relevance of past data
Degree of accuracy required
 Allocated time to conduct the forecast
 Period to be forecast
  Costs and benefits of the forecast
 Stage of the product or business needing the forecast.
5. What is Predictive Analytics?
Predictive Analytics is the domain that deals with the various aspects of
statistical techniques including predictive modeling, data mining, machine
learning, analyzing current and historical data to make the predictions for the
future.
6. List Feature of Predictive Analytics.
 The term predictive analytics refers to the use of statistics and modeling
 techniques to make predictions about future outcomes and performance.
 Predictive analytics looks at current and historical data patterns to
determine if those patterns are likely to emerge again.
 This allows businesses and investors to adjust where they use their
resources to take advantage of possible future events. Predictive
analysis can also be used to improve operational efficiencies and
reduce risk.
 Predictive analytics uses statistics and modeling techniques to determine
future
 performance.
 Industries and disciplines, such as insurance and
marketing, use predictive techniques to make important
decisions.
 Predictive models help make weather forecasts, develop video games,
translate voice-to-text messages, customer service decisions, and develop
investment portfolios.

7. What is Descriptive Analytics?

Descriptive analytics looks at data statistically to tell you what happened in the past.
Descriptive analytics helps a business understand how it is performing by providing
context to help stakeholders interpret information. This can be in the form of data
visualizations like graphs, charts, reports, and dashboards.
8. How can descriptive analytics help in the real world?
In a healthcare setting, for instance, say that an unusually high number of people are
admitted to the emergency room in a short period of time. Descriptive analytics tells you
that this is happening and provides real-time data with all the corresponding statistics
(date of occurrence, volume, patient details, etc.).

9. What is Diagnostic Analytics?

Diagnostic analytics takes descriptive data a step further and provides deeper analysis to
answer the question: Why did this happen? Often, diagnostic analysis is referred to as
root cause analysis. This includes using processes such as data discovery, data mining,
and drill down and drill through.

10. Why is Predictive Analytics Important?

Deploying analytics for analyzing past, present and projected future outcome Choosing the
right step to drive the action in the most optimal manner Predictive Analytics includes both
decision optimization and advanced analytics Supporting action and recommended actions
are sent to the decision-makers It helps to take proactive risk management measures
Testing iterative actions for the intended and unintended consequences
Process improvement, cost reduction and revenue generation are all
possible
11. What is Data Mining?
Data mining refers to a process of analyzing data from different contexts and
summarizing it into useful information.
The information gathered from data mining could include customer patterns,
purchase patterns, transaction times, customer demand, and the relationship
between the sold items.
12. List the Features of Data mining.
o These are the following key features that data mining usually
allows us: Sift through all the chaotic and repetitive noise in
your data.
o Allows understanding what is relevant and then making good use of that information
to assess likely outcomes.
o Accelerate the pace of making informed decisions.
13. List the Advantages of Predictive Analytics and Machine Learning.
o Automation of processes and, as a result, saving time and
money
o Improving economic performance through a well-thought-out financial
strategy and logistics
o Getting into the vanguard of a niche due to the ability to foresee the global
business trend and understand behavioral factors
o Technology consolidation, simplifying processes for end-users.

14. List the advantages of Predictive Analytics.

Improved Decision-Making:
Provides data-driven insights that support more informed and effective decisions.
Risk Management:
Helps in identifying potential risks and their impact, allowing organizations to take
preemptive measures to mitigate these risks.
Cost Reduction:
Optimizes operations and resource allocation, leading to significant cost savings.
Enhanced Customer Understanding:
Offers deeper insights into customer behavior and preferences, enabling personalized
marketing and improved customer satisfaction.
15. Define Logic driven models
Logic-driven models are analytical models that use predefined rules and logical
relationships to simulate and analyze complex systems. These models rely on explicit, often
human-defined, rules and conditions rather than on statistical or machine learning
algorithms. Logic-driven models are particularly useful for situations where the
relationships between variables are well understood and can be expressed clearly through
logical statements.

16. Define Data-driven Model.

It refers to the models in which data is collected from many sources to qualitatively
establish model relationships. Logic driven models is often used as a first step to
establish relationships through data-driven models. Data driven models include
 sampling and estimation, regression analysis, correlation analysis, forecasting models
and stimulation.
17. Describe the main advantages and limitations of survey data.
Survey data can be highly useful in short-term forecasting when carefully used to
elicit consumer perceptions and attitudes. However, survey data are “soft” when
they don’t relate to actual market transactions and can be unreliable when consumers
have incentives to misreport information.

18. What is trend projection, and why is this method often employed
in economic forecasting?
Trend projection involves a simple extrapolation of historical patterns of
economic activity. A primary advantage is that many economic series involve a
substantial trend element due to the effects of population and economic growth and can
be readily forecast using trend projection methods. For example, when past use,
personal selling or advertising creates a high degree of customer loyalty, a strong
trend element in product sales data will emerge. Similarly, when repeat business
is high, there is a large trend element in firm sales data. As a result, trend projection
methods are often employed to forecast the long-term secular increase or decrease in
economic data.
19. what are the main characteristics of accurate forecasts?
The main characteristics of accurate forecasts are a close correspondence, on
average, between actual and forecast values and a high correlation between the actual
and forecast series. When these two criteria are met, actual and forecast data will be
closely related, and a desirable low level of average forecast error (root mean squared
forecast error) will be apparent.

20. What is the standard approach to supervised learning?

The standard approach to supervised learning is to split the set of example
into the training set and the test.

21. Explain what is the function of ‘Unsupervised Learning’?

 Find clusters of the data
 Find low-dimensional representations of the data.
 Find interesting directions in data
  Interesting coordinates and correlations
 Find novel observations/ database cleaning
22. Explain what is the function of ‘Supervised Learning’?
 Classifications
 Speech recognition
 Regression
 Predict time series
 Annotate strings

PART – B

Q. Questions CO K Level
No. Level
1 Explain Business Forecasting Process CO3 K2

2 Discuss Business Forecasting Methods CO3 K3

3 How to apply Predictive analytics to Business Forecasting CO3 K2

4 How to apply Predictive analytics in Data Mining CO3 K3

5. Explain Machine Learning algorithms for Predictive CO3 K2

Analytics