ACCA Applied Knowledge · Business and Technology · The impact of advances in technology
An airline uses analytics software that forecasts demand on each route and then automatically recommends ticket prices and the number of aircraft to schedule in order to maximise profit. Which type of analytics does the recommendation element represent?
Prescriptive analytics. It recommends specific actions, such as ticket prices and aircraft schedules, to achieve an objective like maximum profit. The demand forecast itself is predictive, but advising what to do about it is the defining feature of prescriptive analytics.
- ADescriptive analytics
- BDiagnostic analytics
- CPrescriptive analyticsCorrect
- DExploratory analytics
Explanation
Prescriptive analytics goes beyond forecasting by recommending actions to achieve a desired outcome, such as the best prices and schedules. Predictive analytics would only provide the demand forecast. Descriptive and diagnostic look backwards at what happened and why.
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