Mathematical modeling – a prescriptive tool

Businesses often make complex decisions about their course of action to achieve objectives with the help of mathematical modeling or heuristics. A mathematical model in this sense is a prescriptive analytical tool. Answering the “where” and “when” is as important as answering what happened in the past (descriptive analytics) and what could happen in the future (predictive analytics). If a business wants to drive decisions from data in addition to insights and future predictions, it has to use both predictive and prescriptive tools in an integrated fashion.

Figure 2.8: Mathematical optimization or mathematical modeling

We will have a look at examples from industry verticals wherein these work in tandem, resulting in higher productivity and profitability.

Finance

Financial services, including banks, rely on ML models as well as mathematical models to determine the right...