Commercial Data Mining by David Nettleton

Author:David Nettleton
Language: eng
Format: epub
Publisher: Elsevier Inc.
Published: 2014-01-30T16:00:00+00:00

EIS Interface

Net Profit Predictive Variable

For the net profit ‘what if’ simulation (top right of Figure 10.2), the output variable could be defined as a continuous value that represents the real net profit of the business in dollars. Alternatively, it could be a relative value that indicates the percent increase or decrease with respect to a net profit baseline.

In the figure, the modifiable business parameters are divided into three categories: product mix, customer mix, and costs. The product mix allows the business to evaluate the effect of, for example, selling more of one type of product and less of another; the customer mix evaluates the effect of, say, having more customers from type A and less from type B; and the costs modifier allows the business to evaluate repercussion of, for example, a rise in interest rates, energy costs, having to pay more for the basic materials used in the products, transport costs, and so on. In terms of implementation, achieving a simulator with this capacity might be quite a challenge; hence a business would probably have to conform to a subset of the functionality shown. Each scenario (product mix, customer mix, and costs) could have a separate predictive model, or there could be just one—more complex—model whose inputs come from all three scenarios.

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