Business Optimization: The right data and factors can solve many problems

Key words: Data analysis, Statistics, business Analyst, Mathematics, Statistical models, Data,

The field of data analysis evolved in many dimensions. To start a discussion lets talk about some basics. Using time-machine let's see the history of modern statistics. There were two major branches of statistical analysis: Bayesian and classical statistics. It was the eighteenth century. Bayesians told a new theory. 

The probability of an event's occurrence = The probability of its past occurrence time. 

It is equal to the likelihood of its occurrence in the future.

For example, the next 5 day’s weather reports. 

This concept was later known as conditional probability. 

To be honest with you, business performance is all about probability. Even the strategy of cricket or government all depending on this probability theory. When you create a budget for a business trip, you can’t estimate the exact cost. You can't estimate your sale figures for this year exactly in January. Gauss and Laplace later introduced the concept of joint probability. In simple words, if you have a sent of predictor variables (say X's), you can create the "variable to be predicted" (Say, Y). Y is a function of predictor variables (X's). I am discussing here only from the surface. 

What is the statistical analysis? It is the science of collecting, exploring and presenting large amounts of data. You can also discover underlying patterns and trends. This field of study includes planning, designing, collecting data, analyzing. For all these you can draw meaningful interpretation. After that you can reporting of the research findings. On the day when you realize 

that Business Analysis is an interesting subject for you, you need to brush-up few basics. It is important to know more about some statistical concepts.

 "If we had enough data then this statistical approach would undoubtedly sort out these things, and a lot of problems are arising precisely, because we haven't got enough documents for the statistical approach to be wholly valid." - Jennifer K. McArthur  

 A business Analyst must know the concepts of the basic statistical methods. You will need them in conducting of some data analysis. 

One of the most common techniques used for summarizing a large volume of data is graph. When you visualize your data, it tells a story. 

If you can calculate the average, each value treated as equal. There are three measures of average: mean, median and mode. When most people say average, they are talking about the mean. The mode is the most common value in a data set. Sometimes researchers use the median instead. This is the mid-point of all the data. 

Using the concept of "Normal distribution" or "Gaussian distribution" you get a view. The standard normal distribution curve is asymmetrical bell-shaped. It is a bell-shaped graph with symmetrical positive and negative points. The corporate world finds benefits in using various statistical models. They are mathematical models that embody a set of statistical assumptions.  

The reasoning power of the human intellect needs Information. That's why you collect and store data. Managing your business with an optimized DBMS is the logical thing to do. Using query you can generate reports. Those reports are a collection of specific information of making a new decision. 

"Database means tables collected different information, so one site is a result of collected tables????"

― Deyth Banger

Your database is not only a data environment. It comprised of data, hardware, software, people and procedures. If you can design a powerful database, it manages people and processes together. You can answer any questions about your business. As you integrated more process to engage a large number of people, you need more complex queries. You can’t make a 100% accurate predictions when you have thousands of sample data. But you can make your prediction closer to accurate. 

You believe your expected result is depending on a specific set of variables. For example, you have a very good batting order with a batting average of 45 runs per innings. Statistical models are designed for inference about the relationships between variables.

A perfect example of KPI is a cricket player’s ICC ranking. You can find the variables in different form for information. For example, Runs they scored in last 10 matches, 

Batting Average, 

Batting Strike Rate

Number of the 50s and 100s (for batsmen) 

and Wickets were taken, Bowling Average, 

Bowling Strike Rate, 

Economy Rate (for bowlers). 

 IIM Calicut has done some research on the KPIs for ODI Ranking in Cricket. They used Principal Component Analysis (PCA). It is a dimension-reduction tool. It helps to reduce a large set of variables to a small set that still contains most of the information in the large set. It is then reduced to a single performance index using statistical analysis software. In 2013, the first performance-based market valuations of cricketers was introduced. 

Experts use some factor analysis method. It is a technique that is used to reduce a large number of variables into fewer numbers of factors. (Don’t ask me, what is the difference between variable and factor? A factor is an independent variable.) Each factor has two or more levels. Combinations of factor levels are called treatments. Researchers used "Factor analysis" as a tool for refinement of scales and measures. An algorithm is designed based on a Mathematical formula. Then a computer program can find the ranking of thousands of players. It does not include only "Strike Rate" and " Batting Average". They discover some new variables.

Impact of Pitch, 

Impact of Team,

 Impact of Opposition, 

Impact Location,

Contribution to Result.

All are real factors. Like sports authorities, business owners are every concern about all players rankings. Some well known business variables are its human resources, suppliers, manufacturers, product. You can include tax, transport, logistics, rents, cost per goods. The list of variables in business is not endless. But, it is finite and measurable. You can discover new variables for the refinement of existing variables. Based on certain key performance indicators you can set new strategies. 

"The Internet has enabled research that was previously done over the lifetime of a large group of researchers to be done in just a few years by a single person."

― Steven Magee