JASE Guest Blogger, Dean Knickerbocker, is the owner of Data Science Solutions, a Hampton Roads based statistical and quantitative consulting group. Dean’s goal is to help local businesses and organizations with the new emerging field of analytics and data science, and to provide a very personal, friendly and straightforward means of using mathematics to improve your business. He can be reached at firstname.lastname@example.org or via www.datasciencesolutions.net.
Decisions are made everyday throughout your business or organization. These decisions may range from trivial to complex, and may be made instantly, or require a substantial amount of leadership time. But in either case, how often is your organization assessing whether the decisions were effective? Using techniques such as Data Science, Quantitative Methods, Analytics and Predictive Models can provide data-driven insight to help build competitive strategies, support smart decision making and effective execution. Data Science Solutions is a Hampton Roads based statistical and quantitative consulting group dedicated to helping you use these methods to help make important decisions and take effective actions.
One approach towards to making important decisions is to reduce or remove uncertainty or risk (risks are states of uncertainty where a possible conclusion constitutes a loss or other undesirable outcome). How often as a business leader do you make decisions based upon hunches or simply based upon your experience and expertise? Do you ever utilize measurement and quantitative insight to assist your process? Uncertainty can be measured and quantifiably assessed just like any other piece of information using a set of quantifiable probabilities with quantifiable outcomes, to help you make better informed decisions not based solely on hunches.
At Data Science Solutions, we develop quantitative models of possible results by utilizing a range of values for any factor that has inherent uncertainty. Our solutions, based upon Monte Carlo Simulations, identify the uncertainties associated with each decision factor and assign a precise set of probabilities or range of values. We also model the relationships amongst the decision factors to generate a means of calculating the results probability and producing a quantifiable outcome. But most importantly, our solutions are delivered in an easy to understand format, where you as the business leader can get the data and insight you need without being overcome by mathematical jargon.
Many important business scenarios, processes and decisions can be modeled as Monte Carlo Simulations. As part of a solution, uncertainty is modeled by sampling from the distribution of each possible outcome. A large sampling is conducted to achieve greater accuracy in modeling an outcome. Sensitivity analysis can be conducted to identify which inputs had the biggest effect on results and what the data combinations were when certain outcomes occurred. After a review of the results have been conducted, an appropriate and effective decision can be made.
Conducting Monte Carlo Simulations will help your business or organization achieve the following:
- Better Measure and Quantitatively Asses Risk: Asses states of uncertainty using a set of quantifiable probabilities with quantifiable outcomes.
- Predict Decision Impacts: Forecast the impact of decisions and analyze their impact.
- Review Probabilistic Results: Results show not only what could happen, but how likely each outcome is.
- View What Matters Most : Conduct sensitivity analyses to learn exactly which inputs had the biggest effect on results and what the data combinations were when certain outcomes occurred.
Making decisions are certainly the most important and often difficult task a business conducts. Your organization can make effective decisions, guided by measurement and quantitative insight. Utilizing techniques such as Analytics and Monte Carlo Simulations can help you make better decisions, compete and grow.