Data-Driven Decision Making: Realising the Power of Math in Business Analytics - Kalkine Media

July 19, 2023 06:32 PM AEST | By Angela Wellnes (Guest)
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Introduction

We should recall what mathematics is before we begin to discuss the power of math in business analytics. Mathematics is a science of quantity, space, change, and structure. It evolved from counting, measurements, and calculation. There is also the systematic study of shapes and motion of physical objects. The earliest use of mathematics dates back to 3000 BC. Babylonians and Egyptians used mathematics for trade, measuring land, and recording time. Calculation came before writing. The first records of numbers were left by the Egyptians and can be seen on Ahmes’s Papyrus. Ancient Greeks and Persians were great mathematicians. They produced a plethora of important innovations in this field.

Until the 16th century, geometry and arithmetic were the main branches of math. In that time algebra began to develop. And the analysis was invented in the 17th century. The emergence of probability theory, statistics, and abstract algebra marked the 20th century.

You may have to make a research paper or essays about math branches that are used in business analytics. You can say: I’ll do my math at Edubirdie and see what it offers. You will see which math branches students should focus on if they want to be engaged in data science and business analytics.

What is business analytics?

In simple words, business analytics are ways of transforming data into insights. These insights are there to solve business problems and improve business actions and decisions. Business analytics uses data analysis, statistical models, and other math methods.

There are four kinds of analysis in the world of business. In the first place, there is descriptive analysis. The diagnostic analysis follows descriptive analysis. Then there is predictive analysis. And at the end comes prescriptive analysis. Descriptive analysis sums up past data. It also tracks Key Performance Indicators (KPIs), answering the question: what happened? Diagnostic analysis determines the causes of the outcomes. It answers the question: why did that happen? Predictive analysis is a type of study that predicts and examines future outcomes on the basis of previous data. It also answers the question: what is likely to happen? And the fourth type of analysis is prescriptive analysis. These analyses determine the best course of action to find a solution or make a decision.


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Which math branches are used in business analytics?

Probability theory

For the study of random phenomena whose outcome is unknown, probability theory is the mathematical basis. Obviously, you can never tell what the resolution will be, but you can create predictable answers. You will do that by pulling multiple data and its associated information.

When we talk about business, probability theory is a very important math field. Several firms use probability while making a business decision. They use the following principles of probability in marketing and business. There are sales forecasting, scenario analysis, sensitivity analysis, and risk evaluation. Sales forecasting is a probability method to analyse the response of the market to business and marketing strategies. Scenario analysis examines and analyzes possible future events and their outcomes. Companies and organizations use scenario analysis to predict the possible results of marketing decisions.

Companies also use sensitivity analysis to examine the effects of integrating some materials in marketing campaigns. Received marketing information is analyzed by comparing sales results. Risk evaluation means the comparison and estimation of the significance and possible impact of particular risks. Companies and organizations try to reduce and mitigate risks by using this strategy.

Calculus

While grading college papers, your teacher uses calculus for adding up test points. Calculus is the mathematical study of persistent change. It lets you to employ variables and models to reach a solution. When it comes to calculus in business analysis, things are clear. Companies use business calculus to calculate revenues, costs, and profits. They want to meet optimum production quantities which will bring the greatest profit. Also, there is something called marginal profit – profit on additional items – computed by calculus. As long as marginal revenue beats marginal cost, the company increases its profit.

Applied statistics

Applied statistics tries to explain the connections among variables as a means of demonstrating an understanding of the data. Organizations and companies follow statistics to check their performance. They wish to have a look at the performance of a new marketing strategy or the latest product line. Also, they examine the performance of employees.

Moreover, the statistics help companies to predict risks and optimize the return on investments. Statistics can be utilised to explain markets and set prices. It also shows the changes in consumers’ demand, and informs advertising.

Linear algebra

It is necessary for several significant business operations. Some of them are payroll, depreciation, and taxes. Every company possesses a payroll to pay their employees.

Depreciation is the estimated reduction in the value of fixed assets within a fiscal year. It is a tool that helps the company lower its tax bill. It also helps the company achieve a lucid picture of its long-term expenses. If you run a business, you need to pay state, federal and local taxes. For all these business operations data analysts use linear algebra.

Conclusion

Mathematics is present in every area of our life. It plays a crucial part in business analytics. It provides the foundation for measuring and interpreting data to make informed business decisions. In this particular article, we discuss what business analytics is. The main part of the article presents math branches that have an influence in solving business problems. As well as improving business actions and decisions. If you want to start a business or become a business analyst, you should focus in math class. You should especially improve these four branches of mathematics.


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