Question

Predictive analytics in business is an important application of multiple regression analysis. Generally speaking, what is meant by predictive analytics? As a business owner, how could you use regression analysis and predictive analytics to increase your company's sales?

Answer 1

Predictive analytics:

Ø Predictive analytics is an area of statistics that deals with extracting information from data and using it to predict trends and behavior patterns.

Ø In Predictive analytics we captur relationships between explanatory variables and the predicted variables from past occurrences,and exploiting them to predict the unknown outcome.

Ø Often the unknown event of interest is in the future, but predictive analytics can be applied to any type of unknown whether it be in the past, present or future.

Ø For example credit card fraud as it occurs., customers next visit and which item likely to buy.

Ø Predictive analytics statistical techniques include data modeling, machine learning, AI, deep learning algorithms and data mining.

Ø The accuracy and usability of results will depend greatly on the level of data analysis and the quality of assumptions.

Regression : is one of the best tools one can possess for analysis of data. It helps us to understand and quantify the relationship between two or more variables. In business particularly regression is used for optimization and forecasting. Regression helps in the optimization of the manufacturing and delivery process and also provides the manager to predict the demand for the products and further their business.

As a business owner, how could you use regression analysis and predictive analytics to increase your company's sales?

1) Find customer preferences based on past transaction and then predict next purchase.

also we can calcualte purchase interval that is how frequentlly that customer purchase particular item.

2) Find customer value and also find loyal customer.

3) Also improve backend operation by optimizing inventry.For that predict items demand and use that for stock replenishment . This will help to reduce both carrying to much stock than necessary or running out of stock.Ultimatelly it will help to rediced inventory cost.