Both predictive and prescriptive analytics support optimization of business processes based on selection of the best possible scenarios. However, while predictive analytics helps model future events prescriptive analytics focuses on showing how different actions will impact business performance and points users towards selecting the best course of action.
Like predictive analytics, prescriptive analytics are used in instances when there are too many options, data points and variable, according to Jen Underwood, founder of boutique of predictive analytics firm Impact Analytix. She said it is used when real-world experimentation is too expensive or overly risky.
Prescriptive analytics is used in pricing, inventory management, operation resource allocation, production planning, supply chain optimization, transportation and distribution planning, utility management, sales lead assignment, marketing mix optimization and financial planning.
For example, said Underwood, airline ticket pricing systems use prescriptive analytics to analyze complex travel variables such as demand levels and purchase timing to arrive at prices that optimize profits and improve ticket sales as well.
Find out what are your prescriptive analytics software options here.