The Power of Analytics

Descriptive, Predictive and Prescriptive

Analytics––descriptive, predictive and prescriptive is a rapidly evolving field that gives companies the knowledge to make smarter business decisions. It provides valuable insight into past performance and future prediction and decision guidance. According to Gartner, the number of companies using prescriptive analytics tools may increase from ~10% in 2016 to over 35% by the end of 2020. Gurobi Optimizer is one of these tools: a math programming solver. While prescriptive analytics is growing, analytics overall is still dominated by descriptive (what happened in the past) and predictive (what is likely to happen in the future) tools. As a result, it’s important to see how prescriptive analytics fits into the broader analytics landscape.


Analytics Framework

The analytics framework by Tom Davenport (external link), offers a useful perspective on the main components of analytics:   Summary chart of the three analytics described


Descriptive Analytics

  • Answers the Question: What happened and why?
  • Primary Tools: Data aggregation and data mining
  • Limitation: A snapshot of the past may have limited ability to guide future decisions
  • Best Use: Summarize results for all or part of your business

  Descriptive Analytics gives insight into the past and current state of your business through the use of business intelligence tools. These tools can help you obtain a range of insights into your business, such as:

  • How much of a given product you sold over a certain time-period
  • Your current product inventory levels distribution centers

  Most business functions in your company are already using descriptive analytics in the form of recurring or custom reports. With analytics tools, you can dive deeper into the past and retrieve meaningful results. You can also conduct Diagnostic Analytics which focuses on understanding why something happened, as part of your descriptive analytics activities.


Predictive Analytics

  • Answers the Question: What might happen?
  • Primary Tools: Machine learning, statistical models, and simulation
  • Limitations: Estimation of the future
  • Best use: Backing of an educated guess for the results of low complexity decisions

  Predictive Analytics seeks to provide insight into what the future may hold for your business. It takes existing data and applies statistical techniques often using machine learning. Results may be coarse-grained (e.g., expected industry growth or raw material pricing), company-centric (e.g., revenue or profit growth), or operational (e.g., expected changes in demand by product line).


Prescriptive Analytics

  • Answers the Question: What should we do?
  • Primary Tools: Optimization and heuristics
  • Limitations: Most effective where you have some control over what is being modeled
  • Best use: When you need to make important, interdependent, complex or time-sensitive decisions

  Prescriptive Analytics applies computational sciences, typically through math programming models, to optimize a set of decisions for directing a given business situation. Utilizing this tool in support of achieving desired business outcomes will bring specific direction and high value to your business. By building a decision model and using a math programming solver, you can:

  • Explore an astronomical number of possible combinations and options and find the proven best option.
  • Apply a range of option constraints to maximize or minimize your objectives
  • Reduce decision-making risk
  • Free up time for higher-value efforts such as performing scenario analysis or considering larger strategic questions

  For example, Prescriptive Analytics could answer these business decision questions:

  • In which order should you produce what products?
  • In which manufacturing facilities?
  • On what product lines?
  • In what quantities?

  Subject to a range of constraints:

  • Minimum production of a given product
  • Required manufacturing time and cost of a particular machine
  • Raw material inventory
  • Finished goods inventory capacity

  To maximize or minimize your objectives

  • Total product costs

  The result is improved decisions, increased profitability and saved time for your business.


Math Programming Solvers: The Primary Tool in Prescriptive Analytics

Used as the primary tool in prescriptive analytics, mathematical programming solvers, such as the Gurobi Optimizer, help transform data and models into smarter business decisions.

How it works

Leveraging a broad range of programming languages, users can:

  • State their toughest business problems as mathematical models, then call a solver to automatically consider trillions or more possibilities and find the best one.
  • Use the Gurobi Optimizer solver as a decision-making assistant, helping guide the choices of a skilled expert, or as a fully automated tool, making decisions without human intervention.
    • Solvers rapidly consider large numbers of business constraints and decision variables within minutes, far exceeding the choices a human brain could consider over the course of many years.
    • Solvers support companies’ needs to refine the way they currently make decisions and enable them to efficiently and effectively take a wider array of factors and options into consideration than ever before. The end result – decisions that drive better business results.


Prescriptive Analytics Impact

Leading companies and government agencies are using prescriptive analytics to improve operations and increase profitability.

824 Trillion Possible Schedule Combinations

The NFL used Gurobi’s Optimizer to produce the 2017 NFL schedule from more than 824 trillion possible combinations.

$3M Saved

The Pennsylvania State Prison System saved $3 Million using Gurobi Optimizer.

10% Reduction in Electrical Power

Aria Laboratory is using Gurobi to reduce the amount of electrical power consumed by Tokyo's water system by 10%.

Commercial License

Commercial Users: Gurobi allows you to try a free, full-featured, commercial evaluation license for 30 days. During that time, you’ll also get:

  • Free benchmarking services
  • Free model tuning services
  • Access to Gurobi’s world-class technical support
  • Two free hours of one-on-one consulting services

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Evaluation licenses are reserved for our commercial users who first want to verify it fits with their needs.

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You can get your free license and learn about our academic program here.

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