From the course: Business Analytics Foundations: Predictive, Prescriptive, and Experimental Analytics
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PSA tools and techniques
From the course: Business Analytics Foundations: Predictive, Prescriptive, and Experimental Analytics
PSA tools and techniques
- [Instructor] Let us take a look at the tools and techniques used for prescriptive analytics. The first tool used in prescriptive analytics is linear programming. Linear programming is a technique used to maximize an outcome given the list of constraints. Outcome could be units sold, profit margin, et cetera. It assumes a linear relationship between variables. It makes simplifying assumptions. Constraints used in linear programming include budget, time, resource limits, et cetera. Here is an example of how linear programming looks like. We are trying to find the values of x and y, such that we get the maximum value for zed. The constraints that are there include that x could be between zero and hundred and y should be between 50 and 150 and x is greater than y. Zed could be the total units sold, while x and y could be the number of individual products that can be sold based on inventory capacity. The second technique used is decision analysis. Decision analysis consists of a set of…
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