Koen Vanhoof

Using association rules for product assortment decisions: a case study

It has been claimed that the discovery of association rules is well-suited for applications of market basket analysis to reveal regularities in the purchase behaviour of customers. Moreover, recent work indicates that the discovery of interesting rules can in fact only be addressed within a microeconomic framework. This study integrates the discovery of frequent itemsets with a (microeconomic) model for product selection (PROFSET). The model enables the integration of both quantitative and qualitative (domain knowledge) criteria. Sales transaction data from a fullyautomated convenience store is used to demonstrate the effectiveness of the model against a heuristic for product selection based on product-specific profitability. We show that with the use of frequent itemsets we are able to identify the cross-sales potential of product items and use this information for better product selection. Furthermore, we demonstrate that the impact of product assortment decisions on overall assortment profitability can easily be evaluated by means of sensitivity analysis.

A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and medium sized enterprises

Univ Limburg, Dept Appl Econ, B-3590 Diepenbeek, Belgium.Vanhoof, K, Univ Limburg, Dept Appl Econ, Univ Campus, B-3590 Diepenbeek, Belgium.

BANKRUPTCY PREDICTION USING A DATA ENVELOPMENT ANALYSIS

Univ Limburg, Dept Appl Econ, B-3590 Diepenbeek, Belgium.Vanhoof, K, Univ Limburg, Dept Appl Econ, Univ Campus, B-3590 Diepenbeek, Belgium.

Traffic accident segmentation by means of latent class clustering.

Traffic accident data are often heterogeneous, which can cause certain relationships to remain hidden. Therefore, traffic accident analysis is often performed on a small subset of traffic accidents or several models are built for various traffic accident types. In this paper, we examine the effectiveness of a clustering technique, i.e. latent class clustering, for identifying homogenous traffic accident types. Firstly, a heterogeneous traffic accident data set is segmented into seven clusters, which are translated into seven traffic accident types. Secondly, injury analysis is performed for each cluster. The results of these cluster-based analyses are compared with the results of a full-data analysis. This shows that applying latent class clustering as a preliminary analysis can reveal hidden relationships and can help the domain expert or traffic safety researcher to segment traffic accidents.

Benchmarking road safety: Lessons to learn from a data envelopment analysis

Road safety performance indicators (SPI) have recently been proposed as a useful instrument in comparing countries on the performance of different risk aspects of their road safety system. In this respect, SPIs should be actionable, i.e. they should provide clear directions for policymakers about what action is needed and which priorities should be set in order to improve a countrys road safety level in the most efficient way. This paper aims at contributing to this issue by proposing a computational model based on data envelopment analysis (DEA). Based on the model output, the good and bad aspects of road safety are identified for each country. Moreover, targets and priorities for policy actions can be set. As our data set contains 21 European countries for which a separate, best possible model is constructed, a number of country-specific policy actions can be recommended. Conclusions are drawn regarding the following performance indicators: alcohol and drugs, speed, protective systems, vehicle, infrastructure and trauma management. For each country that performs relatively poor, a particular country will be assigned as a useful benchmark.

Integrating Bayesian networks and decision trees in a sequential rule-based transportation model

Several activity-based transportation models are now becoming operational and are entering the stage of application for the modelling of travel demand. Some of these models use decision rules to support its decision-making instead of principles of utility maximization. Decision rules can be derived from different modelling approaches. In a previous study, it was shown that Bayesian networks outperform decision trees and that they are better suited to capture the complexity of the underlying decision-making. However, one of the disadvantages is that Bayesian networks are somewhat limited in terms of interpretation and efficiency when rules are derived from the network, while rules derived from decision trees in general have a simple and direct interpretation. Therefore, in this study, the idea of combining decision trees and Bayesian networks was explored in order to maintain the potential advantages of both techniques. The paper reports the findings of a methodological study that was conducted in the context of Albatross, which is a sequential rule based model of activity scheduling behaviour. To this end, the paper can be situated within the context of a series of previous publications by the authors to improve decision-making in Albatross. The results of this study suggest that integrated Bayesian networks and decision trees can be used for modelling the different choice facets of Albatross with better predictive power than CHAID decision trees. Another conclusion is that there are initial indications that the new way of integrating decision trees and Bayesian networks has produced a decision tree that is structurally more stable.

A data mining framework for optimal product selection in retail supermarket data: the generalized PROFSET model

In recent years, data mining researchers have developed efficient association rule algorithms for retail market basket analysis. Still, retailers often complain about how to adopt association rules to optimize concrete retail marketing-mix decisions. It is in this context that, in a previous paper, the authors have introduced a product selection model called PROFSET. This model selects the most interesting products from a product assortment based on their cross-selling potential given some retailer defined constraints. However this model suffered from an important deficiency: it could not deal effectively with supermarket data, and no provisions were taken to include retail category management principles. Therefore, in this paper, the authors present an important generalization of the existing model in order to make it suitable for supermarket data as well, and to enable retailers to add category restrictions to the model. Experiments on real world data obtained from a Belgian supermarket chain produce very promising results and demonstrate the effectiveness of the generalized PROFSET model.

Building an Association Rules Framework to Improve Product Assortment Decisions

It has been claimed that the discovery of association rules is well suited for applications of market basket analysis to reveal regularities in the purchase behaviour of customers. However today, one disadvantage of associations discovery is that there is no provision for taking into account the business value of an association. Therefore, recent work indicates that the discovery of interesting rules can in fact best be addressed within a microeconomic framework. This study integrates the discovery of frequent itemsets with a (microeconomic) model for product selection (PROFSET). The model enables the integration of both quantitative and qualitative (domain knowledge) criteria. Sales transaction data from a fully automated convenience store are used to demonstrate the effectiveness of the model against a heuristic for product selection based on product-specific profitability. We show that with the use of frequent itemsets we are able to identify the cross-sales potential of product items and use this information for better product selection. Furthermore, we demonstrate that the impact of product assortment decisions on overall assortment profitability can easily be evaluated by means of sensitivity analysis.

Identifying decision structures underlying activity patterns : An exploration of data mining algorithms

The utility-maximizing framework—in particular, the logit model—is the dominantly used framework in transportation demand modeling. Computational process modeling has been introduced as an alternative approach to deal with the complexity of activity-based models of travel demand. Current rule-based systems, however, lack a methodology to derive rules from data. The relevance and performance of data-mining algorithms that potentially can provide the required methodology are explored. In particular, the C4 algorithm is applied to derive a decision tree for transport mode choice in the context of activity scheduling from a large activity diary data set. The algorithm is compared with both an alternative method of inducing decision trees (CHAID) and a logit model on the basis of goodness-of-fit on the same data set. The ratio of correctly predicted cases of a holdout sample is almost identical for the three methods. This suggests that for data sets of comparable complexity, the accuracy of predictions does not provide grounds for either rejecting or choosing the C4 method. However, the method may have advantages related to robustness. Future research is required to determine the ability of decision tree-based models in predicting behavioral change.

A business process mining application for internal transaction fraud mitigation

Corporate fraud these days represents a huge cost to our economy. In the paper we address one specific type of corporate fraud, internal transaction fraud. Given the omnipresence of stored history logs, the field of process mining rises as an adequate answer to mitigating internal transaction fraud. Process mining diagnoses processes by mining event logs. This way we can expose opportunities to commit fraud in the followed process. In this paper we report on an application of process mining at a case company. The procurement process was selected as example for internal transaction fraud mitigation. The results confirm the contribution process mining can provide to business practice.