Which analytics term describes the practice of using data to recommend actions?

• A. Prescriptive analytics
• B. Descriptive analytics
• C. Predictive analytics
• D. Diagnostic analytics

Answer: (A)

Prescriptive analytics is the practice of using data, models, and business rules to recommend actions and predict their likely outcomes. It goes beyond describing what happened or why it happened, and beyond forecasting what might happen, by suggesting specific decisions that optimize desired results within given constraints. For example, given current demand, inventory, pricing, and capacity, prescriptive analytics can propose the best pricing, production levels, and promotional levers to maximize profit or service level, while accounting for budget, lead times, and risk.

Descriptive analytics summarizes past data to show what occurred. Diagnostic analytics digs into data to explain why something happened. Predictive analytics estimates what will happen in the future. The ability to translate data into concrete, actionable recommendations is what defines prescriptive analytics and makes it the best choice for this question.