introduction to data science and analytics - stephan sorger · pivot tables extract significance...

Disclaimer:

• All images such as logos, photos, etc. used in this presentation are the property of their respective copyright

owners and are used here for educational purposes only

• Some material adapted from: Sorger, “Marketing Analytics: Strategic Models and Metrics”

© Stephan Sorger 2016; www.StephanSorger.com; Data Science: Excel Tools; 1

Introduction to

Data Science and Analytics

Stephan Sorger www.StephanSorger.com

Unit 3. Excel Tools

http://www.stephansorger.com/


Outline/ Learning Objectives

Topic Description

Basic Statistics Mean, Median, Variance, Standard deviation, RMS

Pivot Tables Extract significance from large data sets

Solver Maximize/Minimize criteria subject to constraints

ToolPak Analysis add-in functionality of Excel



Basic Statistics



Basic Statistics: Overview


Data set

Data set summarized by basic statistics:

Mean (average)

Median (half-way point)

RMS (Root Mean Square)

Standard Deviation (degree of variability)


Basic Statistics: Example


Single-season home run records: Barry Bonds, Mark McGwire, and Sammy Sosa

Each player wanted to break the record held by Roger Maris

Home run counts per season: Barry Bonds 1 6 9

2 4

2 5 5

3 3 3 4 4

3 7 7

4 0 2

4 6 9

5

5

6

6

7 3

Stemplot

-Separate each observation into a “stem” (left digits) and “leaf” (right digit)

So, 16 would be: 1 | 6 with “1” as the stem and “6” as the leaf

-Write stems vertically in increasing order from top to bottom

-Draw vertical line from top to bottom

-”Split” the stems for greater clarity by entering two “2”, “3”, “4”, etc.

-Interpret the stemplot: Study the distribution; Outlier at 73?


Basic Statistics: Mean


Mean = (Sum of all observation values) / (Number of observations)

Xbar = Mean = (16 + 25 + 24 + … + 73) / (16) = 35.4375

What if we did not count the outlier in 2001?

Mean = (16 + 25 + 24 + …. + 49) / 15 = 32.93; One good season increased his average 2.5!

In statistics, we say that the mean is not a resistant measure of center,

because it cannot resist the influence of one extreme observation


Basic Statistics: Median


M = Median = Center (middle) of set of observations

To find the median, we re-arranged the observations from smallest to largest (above)

For an odd number, the process is easy just pick the middle one

But we have 16 observations, which is an even number

So we pick the “center pair” of observations # 8 and #9 (both of these are 34)

What if we remove the extreme observation of 73?

Median is still 34; Therefore, we say that medians are a resistant measure


Basic Statistics: RMS


RMS = Root Mean Square

A kind of average used in statistics and engineering

Used as a component of the calculation of the standard deviation

To compute, square all the numbers in the set, find the mean, and take the square root

RMS = SQRT ( (a1)^2 + (a2)^2 + (a3)^2 + …) / n )

where a1, a2, a3, … = observations

n = number of observations

Similar in size to average

(average was 35.4375)


Basic Statistics: Standard deviation


s = Standard Deviation

Measures the spread by examining how far the observations are from their mean

To compute, calculate the variance:

Variance = s^2 = [ (x1 – xbar)^2 + (x2 – xbar)^2 + …+ (xn – xbar)^2 ] / (n – 1)

s = SQRT (Variance)

For our previous baseball example, recall that the mean (xbar) = 35.4375:


Pivot Tables



Pivot Tables


Original Data Set

Name Sales Date of Sale Product Channel

Alex Alpha $1,100 January Product A Store

Betty Beta $100 February Product B Internet

Debbie Delta $300 February Product B Store

Edie Epsilon $200 January Product B Internet

Gary Gamma $1,300 January Product A Store

Extract significant data points from large data set


Pivot Tables


Excel

Home Insert …

Pivot Table

A B C D E F G

Create Pivot Table

Select a table or range:

Table Range: Sheet1:$A$1:$E$6

Use an external data source

New Worksheet

Existing Worksheet

Choose where you want the Pivot Table report

Choose the data set to analyze

OK

Launching Pivot Table in Excel


Pivot Tables


Pivot Table Field List

Row Labels

Choose fields to add to report:

Values

Report Filter Column Labels

Drag fields between areas below:

Customer

Sales

Date

Product

Channel

Excel’s Pivot Table Field

List, Based on Original

Input Data Set;

Select “Sales” and

“Product” to get basic

table of sales by product

Different versions

of Excel look different;

PC vs. MAC



Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

1

2

3

4

5

6

7

8

Row Labels

Product A

Product B

Grand Total

Product Sum of Sales

Sum of Sales

2400

600

3000

9

12

11

10

Pivot Tables: Basic Report: Sales by Product;

Select “Date” to see how sales vary over time


Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

1

2

3

4

5

6

7

8

Row Labels

Product A

Product B

Grand Total


Sum of Sales

2400

600

3000

Date

January

January

February

2400

200

400

x

9

12

11

10

Pivot Tables: Sales by Product and Date

Select “Channel” to see how sales vary with type of Channel (store)


Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

1

2

3

4

5

6

7

8

Row Labels

Product A

Grand Total Product Sum of Sales

Sum of Sales

2400

2400

200

Date

January

February

2400

600

200

x

9

12

Retail Store

Product B

January

Internet

Internet

Retail Store

11

10

x

3000

300

100

400

Pivot Tables: Sales by Product, Date, and Channel (Added Date, and then Channel)

What if we had added Channel, and then Date?


Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

1

2

3

4

5

6

7

8

Row Labels

Product A

Grand Total Product Sum of Sales

Sum of Sales

2400

2400

200

Date

January

February

2400

600

300

x

9

12

Retail Store

Product B

January

Internet

February

Retail Store

11

10

x

3000

300

300

100

Pivot Tables: Sales by Product, Date, and Channel (Added Channel, and then Date)


Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

1

2

3

4

5

6

7

8

Row Labels

Product A

Grand Total


Sum of Sales

2400

200

Date

January

February

2400

600 x

9

12

Product B

January

11

10

3000

400 Add to Report Filter

Adding Field to Report Filter


Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

1

2

3

4

5

6

7

8

Product Date

Channel

Sum of Sales

9

12

11

10

Channel (All)

(All)

Internet

Retail Store

OK

x

x

Selecting Reports using Report Filter


Pivot Tables



Row Labels


Values



Customer

Sales

Date

Product

Channel

x

x

A B C D

Sum of Sales

300

200

100

1

2

3

4

5

6

7

8

Column Labels

Row Labels

Product A

January

Product B

January

February

Grand Total

Internet Retail Store Grand Total

300

2400

2400

300

300

2700

2400

2400

600

200

400

3000

Product Date

Channel

Sum of Sales

9

12

11

10

x

x


Microsoft Excel Solver



Excel Solver: Maximization under Constraints


Linear

Optimization

Model

INPUTS OUTPUTS

Objective Function

Constraints

Maximized Objective

Or Minimized Objective

Common Terms for Process:

-Linear Optimization

-Linear Programming

-Maximization/ Minimization


Solver: Maximization under Constraints: Process


Vehicle Contribution: Determine effectiveness of campaigns, based on historical data

Promotion Objective: Declare promotion objective in equation form

Promotion Constraints: Specify promotion constraints in equation form

Optimization Model: Execute model

Vehicle

Contribution Promotion

Objective

Optimization

Model

Promotion

Constraints

Promotion Data Budget Allocation


Excel Solver: Constraints


Contractual Constraints

Company Policy Constraints

Financial Constraints

Legal Constraints

Typical

Promotion

Constraints

Budget NTE (not to exceed) $XXX/yr

Must follow legal regulations

Contracts with outside agencies

Observe company policies


Excel Solver


Promotion Vehicle Audience/Ad Cost/Ad Maximum Quantity

D: Direct Marketing 30 Viewers/Ad $30/Ad 30

P: Pay Per Click 30 Viewers/Ad $40/Ad 20

S: Social Media 40 Viewers/Ad $60/Ad 10

Direct Marketing: Emails sent directly to individuals within target market

Pay Per Click: Campaigns displaying ads during relevant Internet searches

Social Media: Paid advertisements on social media platforms


Excel Solver


Linear Optimization Element Equation

Objective Function Z = 30*D + 30*P + 40*S

Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000

#2: Maximum campaigns/ month: D D <= 30

#3: Maximum campaigns/ month: P P <=20

#4: Maximum campaigns/ month: S S <= 10

Objective Function

Z = 30 * D + 30 * P + 40 * S


Excel Solver








Promotion Constraints: Budget

B = 30 * D + 40 * P + 60 * S ≤ $2,000


Excel Solver


Promotion Constraints

D ≤ 30: Cannot exceed 30 direct marketing campaigns per month

P ≤ 20: Cannot exceed 20 pay per click campaigns per month

S ≤ 10: Cannot exceed 10 social media campaigns per month








Excel Solver: Execution


Optimization Model:

Setup

Optimization Model:

Execution

Optimization Model:

Interpretation

Excel Solver function Specific format Identify limiting factors


Excel Solver: Execution: Setup


Changing Cells

Target Cell 30 30 40

Constraint #1: Budget 30 40 60

Constraint #2: D ≤ 30 1

Constraint #3: P ≤ 20

Constraint #4: S ≤ 10 1

1

D P S

Columns for D, P, and S parameters

Changing cells for D, P, and S

Target Cell

(Contains objective equation)

Constraint, Left Side

(Contains constraint equation)

Constraint, Right Side

(Contains constraint value)

a b c

d

e f

g h

i j

k l

A B C D E F

1

2

3

4

5

6

7

8

9


Excel Solver: Execution: Launch


Excel

Home Data … …

Solver

A B C D E F G


Excel Execution: Add Constraints


Solver Parameters

Set Target Cell: Solve

Options

Equal To: Max. Min.

$E$4

By Changing Cells:

Subject to the Constraints:

$B$2: $D$2

$E$6 <= $F$6

$E$7 <= $F$7

$E$8 <= $F$8

$E$9 <= $F$9

Add

Add Constraint

Cell Reference:

OK

$E$6 <=

Constraint:

=$F$6

Positive Integer constraint:

To ensure our answers are positive integers:

-Select box “Make variables non-negative”

-Add constraint: Changing Cells > Int (pull-down menu)


Excel Solver: Execution


Changing Cells

Target Cell 30 30 40

Constraint #1: Budget 30 40 60

Constraint #2: D ≤ 30 1

Constraint #3: P ≤ 20

Constraint #4: S ≤ 10 1

1

D P S

Columns for D, P, and S parameters

Changing cells for D, P, and S

Target Cell

(Contains objective equation)

Constraint, Left Side

(Contains constraint equation)

Constraint, Right Side

(Contains constraint value)

30 20 5

1700

2000 2000

30 30

20 20

5 10

A B C D E F

1

2

3

4

5

6

7

8

9


Excel Solver: Interpretation


Solver Results: Summary

Promotion Vehicle Solver Result Cost/Ad Total Cost per Vehicle

D: Direct Marketing 30 (30 max.) $30/Ad $900

P: Pay Per Click 20 (20 max.) $40/Ad $800

S: Social Media 5 (10 max.) $60/Ad $300

Total Spending $2,000


Excel Solver: Interpretation


Solver Results: Constraints

Promotion Vehicle Solver Result Max. Allowable Status

D: Direct Marketing 30 30 Binding

P: Pay Per Click 20 20 Binding

S: Social Media 5 10 Not Binding

Budget $2,000 $2,0000 Binding


Microsoft Excel

Analysis ToolPak



Analysis ToolPak


PC Installation:

1. Click on upper left:

-Called “Office Button”

on Excel pre-2010

-Called “File Tab”

on Excel post-2010

2. Excel Options

Purpose:

Provides data tools

for financial,

statistical, and

engineering

Data analysis


Analysis ToolPak


3. Click “Add-Ins”


Analysis ToolPak


4. Click “Add-Ins”

again


Analysis ToolPak


5. Select:

“Analysis ToolPak”

“Solver Add-in”

Click OK


Analysis ToolPak


6. Access Add-ins

through Data tab

Apple Macintosh users:

Jobs removed ToolPak

Instead, download

StatPlus (free) add-in.

Go to

StephanSorger.com

and follow instructions


Analysis ToolPak


Several analysis tools available.

Typically use the following:

-Descriptive statistics

-Exponential smoothing

-Moving average

-Regression

-t-test; z-test


Outline/ Learning Objectives

Topic Description

Basic Statistics Mean, Median, Variance, Standard deviation, RMS

Pivot Tables Extract significance from large data sets

Solver Maximize/Minimize criteria subject to constraints

ToolPak Analysis add-in functionality of Excel



introduction to data science and analytics - stephan sorger · pivot tables extract significance...

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