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## Final Exam Review

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**Final Exam Review**Spring 2011**Exam format**About 75 questions 45% multiple choice and T/F 30% short fill-ins 25% short-paragraph explanations**What to study**• 50 questions from Exam 1 and 2 • 12-15 questions about presentation topics • 10-13 questions will come from labs • Concepts from • Market Basket: Data Mining • SCM: RFID (hardward) + XML(concept) • Fund Trading: DBs for Optimization • Pivot Chart: DBs for Discovery & Prediction • Wagemart: DBs for Decision Support**Market Basket Analysis**Support: Probability (P) that an item is in someone’s checkout basketA,B,E A,B,F A,B A,B,F,G A,D,FC,D C,D,G E,F,G E,F E,G P(A) = 5/10 = 50% P(AB) = 4/10 = 40% P(C) = 2/10 = 20% P(CD) = 2/10 = 20%**Market Basket Analysis**Confidence X Y = P(XY)/P(X) : If item X is purchased, what is the probability that item Y is also purchased Confidence B A = P(AB)/P(A) = 40%/50% = 80% Confidence C D = P(CD)/P(C) = 20%/20% = 100% Given: P(A) = 5/10 = 50% P(AB) = 4/10 = 40% P(C) = 2/10 = 20% P(CD) = 2/10 = 20%**Market Basket Analysis**Quality X Y = Confidence X Y * P(YX) High quality association rules Quality A B = 80% * 40% = 32% Quality C D = 100% * 20% = 20%**Apriori Algorithm:**• Calculate high quality association rules given • billions of transactions • millions of items • Complex Association Rule ADGMS CLPT (50% quality, 80% confidence), i. • 5 items (A,D,G,M, and S) imply with great confidence that 4 items (C, L, P, and T) are purchased. • Without the Apriori Algorithm, the calculation would take too long (millions of years).**Apriori Algorithm**How it works: By setting minimum support level, the algorithm can prune low confidence pairs (2-itemsets) to compute 3-itemsets. Then, the pruned 3-itemsets can compute 4-itemsets. The algorithm is guaranteed to return all the itemsets above the minimum support level. When you get to 5-, 6-, or 7-itemsets, the pruning reduces the number of possible sets from trillions to a few thousand or hundred, which can help humans discover very complex, high quality association rules.**Importance of Apriori Algorithm**• A process • An innovation that takes terabytes of data and reduces it to meaningful rules • Raw Data Relevant and Timely Information • A.I. • Data Mining • Market Basket Analysis**Pivot Chart Lab**• Great example of Online Analytical Processing (OLAP) • Slice & Dice data (Temp., Mood, Day, Weather) • Drill Down (look at only incorrect predictions) • Unlike Data Mining, • the process is interactive • a person participates in the process • The process is Ad. Hoc. • The process is not pre-determined like Apriori Algo.**Significance of Pivot Chart Lab**Business Intelligence (like A.I.) Use OLAP to find patterns Encode patterns as IF statements to predict future cases. The spreadsheet can automate the human decision making process on a large scale, faster than a human. Such a system enables timely, accurate predictions without a human decision-maker (Business Intelligence System)**Excel Pivot Charts as a tool**First: Pattern is noticed Second: Interactive analysis tools (Pivot Chart) helps to confirm and pin-point the pattern Example: A marketer thinks that geography plays a role in sales; a Pivot chart shows that Southern stores do have better sales.**Database queries as tools**• First: The data mining reveals numerous patterns (association rules) • Second: Human intelligence can derive the theory behind the pattern. • Example: The Apriori algorithm discovers a high quality association rule (Beer Diapers). Later, Marketers try to unravel the reason why. • The data analysis must come before the hypothesis because the data is too big for humans to analyze.**Fund Trading Lab**• Decision Support Automation: Using a Database to compute the optimal sequence of trades. • Too many combinations for a human to analyze • Another Example of Business intelligence • At first we use a graph and human intuition to make the trades • We do better if we use a query to calculate and sort all possible transactions • We use Database tools to pick the best one’s that don’t overlap**Decision Support Systems: Wagemart vs. Fund Trading**Wagemart • start with tons of data • individual salaries, availability • reduce it to simple info • total cost, average rating • to help make a decision. Fund Trading • start with less data • Fund value for each day • compute every possible transaction • Much more data • Queries are used to find the optimal transactions**Decision Support Systems: Wagemart vs. Fund Trading**• Both system model scenarios to compute the outcome of decisions • one is structured • one scenario to optimize • the other unstructured • many different scenarios to consider • Fund Trading was more structured, i.e., you can only buy and sell; you just have to decide the optimal day and funds to buy/sell. • Wagemart was very unstructured, many different ways to cut costs.**Porter’s 5-forces**• Do companies complete because its fun? • Maybe some… • They compete because of the threat of going out of business. • Profitability is the penultimate measure of success • Why?**What are the threats?**• A new competitor • Will take away your sales and profits? • Because they are better? • In business what does better really mean?**The five forces/threats**New entrants Substitute products Rivalry Bargaining power of consumers Bargaining power of suppliers**Example**Target forces their supplier to use XML-formatted shipment data and boxes tagged with RFID chips. Apple refuses and wins Target has to use Apple’s system to sell Apple’s products. What force is this?**Example**• Indirect: Brooke visits Google Shopping and Shopzilla to compare prices on a new camera. • She’ll buy from the most inexpensive online retailer • Direct: Bradley uses Lending Tree.com where banks try to underbid each other to get his business.**Example**Disney World implements a new ride tracking system, that directs visitors to the rides with shortest wait times. Forces Universal Studios to invest in a similar system.**Example**Everyone at the gym is using their iPhone or Android phone to listen to music MP3 players are now collecting dust**Example**Netflix emerges and puts 120 Blockbuster videos stores out of business**Competitive strategies**To fight the forces • Do something totally new (innovation) • Be inexpensive (cost leadership) • Be big to increase power (growth) • Lock-in your customers • Lock-out your competition • Make mutually beneficial partnerships (alliance) • Be different but in a good way (differentiation) • Put up barriers to the competition**Example**• Imagine if Blockbuster decided to use Internet/Mail delivery before Netflix. • But Blockbuster was NOT ______________ • By the way, Netflix created a totally new process for renting videos. • How does an IS make this possible? • How is the IS better than the old-fashioned process.**E-commerce**It was an innovation at one point Now it necessary to stay in business**Example**• Walmart’s efficient supply chain cuts cost. • RFID and XML play a role • Their size allows them to negotiate low prices with suppliers. • Large companies absolutely need information systems for good management • Walmart’s strategy is 2-fold.**How do Information Systems really help businesses to**compete? The labs provide many examples • RFID, XML • More accessible, timely information for improving supply chain. • Market Basket • More relevant information for increasing sales/profits**How do Information Systems really help businesses to**compete? The labs provide many examples • Wagemart • More accurate information for modeling decisions • Pivot Chart & Fund Trading • Flexible information; manipulated in real-time to solve problems (prediction & optimization)**The 11 information attributes are fair game**• Flexibility and accessibility are different. • Putting something on the web makes it more accessible • Storing data electronically can make it more flexible • Putting electronic data in a robust, standardized format (XML) improves both.**Attribute Trade-offs**Simple vs. Complete Secure vs. Accessible**Presentations**Don’t forget to review presentations The websites will be linked on Tuesday**Textbook Reading**Low priority**Top Priority**• Review past exams and lookup correct answers (Text and Google) • Will post them on Tuesday • Skim lab materials and instructions on Blackboard • Create cheat sheet