No Marshmallows, Just Term Papers
Teresa M. Tidwell
Dr. Sergey Samoilenko
Information Systems for Decision Making
September 2, 2012
The use of data mining by companies assists them with identifying information and knowledge from databases and data warehouses that would be beneficial for the company. The information is often buried in databases, records, and files. With the use of tools such as queries and algorithms, companies can access data, analyze it, and use it to increase their profit. The benefits of using data mining, its reliability, and privacy concerns will be discussed.
Benefits of Data Mining
1. Predictive Analytics: This type of analysis uses the customer’s data to make a specific model for the business. Existing information is used such as a customer’s recent purchases and their income, to create a prediction of future purchases and how much or what type of item would be purchased. The more variables used the more likely that the prediction will be correct. Such variables include the customer ranking, based on the number of and most recent purchases and the average profit made per customer purchase. Without data made available through web access and purchases by the customer, predictive analysis would be difficult to perform. The company, therefore, would not be able to plan nor predict how well they are performing.
2. Associations Discovery: This part of data mining helps the company to discover the “relationships hidden in larger data sets” (Pang-Ning, Steinbach, & Kumar, 2005). Some of the associations occur by chance and the use of this aspect of data mining can be quite expensive. It is important for the company to define what information at which they would like to review such as the frequency of a purchase, the number of items purchased, or the number of transactions made by the customer. Although the use of associations discovery doesn’t always imply causality, it can “suggest a strong co-occurrence...
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