Prescriptive analytics tools like mathematical optimization help you make decisions based on your real-world business goals (“objectives”) and limitations (“constraints.”) This can be especially useful when you’re facing a business problem with multiple, conflicting goals (such as cutting spending while increasing production) and multiple constraints (such as time, distance, product availability).
Learn more about prescriptive analytics in our article, “What is Prescriptive Analytics?”
Predictive analytics seeks to identify patterns in data to forecast future events, such as predicting cyberattacks or imminent machine failures. Prescriptive analytics, on the other hand, utilizes mathematical modeling to guide decisions based on real-world objectives and constraints, such as minimizing costs or managing raw material inventory.
While predictive analytics tells you what might happen, prescriptive analytics provides actionable recommendations on how to achieve specific goals, given certain limitations.
Learn more about the difference in our article, “Predictive Analytics vs. Prescriptive Analytics.”
In the real world, prescriptive analytics has diverse applications, including transportation providers like Air France and Uber using it to create optimal routing, staffing, and maintenance plans. Professional sports leagues, such as the National Football League, plan their game schedules using prescriptive analytics. Additionally, manufacturers utilize prescriptive analytics to plan and manage the procurement, production, and distribution of their products, aligning decisions with real-world goals and constraints.
Learn more about examples in our article, “Examples of Prescriptive Analytics.”
Yes! By using machine learning predictions as valuable input for mathematical optimization solutions, or conversely, using mathematical optimization to inform machine learning predictions, you can leverage the problem-solving power of mathematical optimization to enhance machine-learning applications.
Learn more in our article, “Improving Machine Learning Applications with Prescriptive Analytics.”
Say you were planning a trip. Predictive analytics can predict what you may encounter along your journey (weather, traffic, engine trouble), and prescriptive analytics can, given those predictions, identify the route that best helps you achieve your goals (fastest, cheapest, safest route), given your constraints (time, budget, speed limits).
Here are some additional examples:
Learn more in our article, “How Can Prescriptive and Predictive Analytics Work Together?”
The primary goal of prescriptive analytics is to provide actionable recommendations to help decision-makers determine the next (and best) course of action. Whereas predictive analytics can help project what will happen next, prescriptive analytics can tell us what we should do based on that information.
Mathematical optimization techniques—including linear programming, integer programming, and nonlinear programming—often play a key in prescriptive analytics. Other techniques include simulation, scenario analysis, heuristics, machine learning and AI, and game theory.
“Prescriptive analytics” is often used interchangeably with mathematical optimization, mixed-integer programming (MIP), and decision intelligence. However, there are some distinctions. Mathematical optimization is actually a key tool used in prescriptive analytics, while decision intelligence is a broader framework that encompasses optimization, prescriptive analytics, and AI.
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