Answer to Question #297922 in Accounting for Jen

Question

Imagine a dataset that pertains to an accounting or business decision. For the business decision, write four scenarios that require the computation of (1) a descriptive analytic, (2) a diagnostic analytic, (3) a predictive analytic, or (4) a prescriptive analytic. Indicate the analytic you would perform for each scenario.

Answer 1

a) Descriptive Analytics.

It is used in scenario of what has been happening to the business and how this is likely to affect future sales.

It is commonly used whereby historical data is collected, organised and then presented in a way that is easily understood. Descriptive analytics is focused only on what has already happened in a business and, unlike other methods of analysis, it is not used to draw inferences or predictions from its findings. Descriptive analytics is, rather, a foundational starting point used to inform or prepare data for further analysis down the line. 

b) Diagnostic Analytics helps you understand why something happened in the past.It is the process of using data to determine the causes of trends and correlations between variables. It can be viewed as a logical next step after using descriptive analytics to identify trends. Diagnostic analysis can be done manually, using an algorithm, or with statistical software

One of the scenarios where diagnostic analytics can be used is examining market demand.

c) Predictive Analytics predicts what is most likely to happen in the future.

One of the scenario where it can be used is predicting employee growth in HR. This helps an organization predict what might happen in future in terms of employee growth and prepare in advance.

d) Prescriptive Analytics recommends actions you can take to affect those outcomes.

One of the scenarios where prescriptive analytics can be used is marketing and sales

Marketing and sales agencies have access to large amounts of customer data that can help them to determine optimal marketing strategies, such as what types of products pair well together and how to price products. Prescriptive analytics allows marketers and sales staff to become more precise with their campaigns and customer outreach, as they no longer have to act simply on intuition and experience.