ICAEW BIP · Chapter 8 · Question 1 of 10
A retailer uses its historical sales data, together with weather forecasts and local event data, in a statistical model to estimate next month's demand for each product in each store. Which type of data analytics is this?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Predictive analytics
Explanation
Predictive analytics uses historical and current data in statistical or machine learning models to estimate what is likely to happen, such as future demand. Descriptive analytics summarises what has already happened, diagnostic analytics explains why it happened, and prescriptive analytics recommends the best action to take. Using predictive analytics can make budgets and forecasts more accurate and quicker to update.
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