In this video, the instructor creates a forecast based on a regression analysis.
- [Narrator] Once we've gone through,…figured out what our question is,…gathered our data, cleaned it up, and ran our analysis,…then we're ready to test our options.…Now, the reality is that big data today…is generally used for monitoring and identifying problems.…And the reality is that that's great,…but it's really not fully capturing the power that data has.…It's not using data to make forecasts…the way we've talked about so far.…In fact, in many business cases today,…there's limited use of data for making decisions thus far.…
Best practice at most firms is to allow tests on variables…based on our decisions.…In particular, we want to gather that data…and then figure out how to harness it to make choices.…For example, one classic business question…that almost every firm faces…is how much marketing should we use on our product?…What is the optimal amount of marketing spend?…In particular, we might ask, how is profit going to be impacted…if our marketing spend is doubled?…This is exactly the kind of question…
Join Professor Michael McDonald and discover how to use predictive analytics to forecast key performance indicators of interest, such as quarterly sales, projected cash flow, or even optimized product pricing. All you need is Microsoft Excel. Michael uses the built-in formulas, functions, and calculations to perform regression analysis, calculate confidence intervals, and stress test your results. You'll walk away from the course able to immediately begin creating forecasts for your own business needs.
- List the two methods of making decisions.
- Identify the most common method of conventional financial forecasting.
- Describe common challenges that come when trying to merge data.
- Assess the types of questions that business intelligence is best suited to answer.
- Distinguish the statistic that is most useful for estimating the impact of an X variable on a Y variable.