Learning Objectives

1) Apply theories from Business Intelligence and decision making in a real-world setting.

2) Explore and apply data-mining techniques in a real-world setting.

3) Apply quantitative methods to data-mining applications.

Deliverables

- Your association rules and their associated statistical evaluations in the form of an Excel workbook.

- Come -up with (500-1000 words) that explains your association rules to your instructor.

- PowerPoint slide presentation

This assignment is intended to get you thinking about association rules and simple data mining techniques in a way that is 1) applicable to our class, 2) applicable to a real-world decision, and 3) interesting!

Your assignment

For this assignment, pretend that you are a newly hired loan officer at a bank. Your new job is to approve or deny loan applications. You must approve all or none of a loan- you cannot approve part of it. Since you are new, you don't have much experience. However, your boss did give you a dataset

credit_risk_assn2_workbook_final.xlsx

The dataset included information about 425 clients that the bank has done business with in the past. The dataset tells you some facts about the clients in the form of several independent variables (demographics, bank account info, past loan outcomes, etc.), and it also tell you whether the bank thinks these individuals are a good credit risk (indicated by the dependent variable "credit standing"). What you would like to do is learn from these examples. In the very near future, you will be asked to process a loan application. Of course, since you are new, you will not have the final say- your boss or your boss's boss will, depending on the amount of the loan. Your boss will be watching you to see if you make stupid loans to bad clients, and also if you miss opportunities to make prudent loans to good clients.

Fortunately, you paid attention during your data mining class, and you seem to remember a technique for finding rules that might help you make decisions. Oh, yeah- association rules was one technique you seem to remember. But, that's all you remember. So, to get brushed up, watch the two lectures your teacher posted about association rules.

The lectures that accompany this project can be found at:

Part 1

http://www.youtube.com/watch?v=v0vdP5fqxF4&feature=youtu.be

Part 2

http://www.youtube.com/watch?v=DaO4rM0Ftv0&feature=youtu.be

Finally, you think you might want to try to come up with some association rules. So, your assignment is as follows:

Come up with between at 20-25 association rules like the ones you see on the right-hand side of the spreadsheet. Your rules can be on the right-hand side of the same worksheet (as mine are), or you may want to list them on a separate worksheet (please keep them in the same workbook/file).

For each association rule, compute the support and confidence of each rule.

What you want to do is find a set of rules that will ID both bad and good loan risks. So, ID some great rules, and then write a short memo for your boss.

Guidelines for your final report (Word document) and PowerPoint slides for your boss

As with any major project, you will come up with a write-up that can be read by other people. For starters, we can assume that your boss will want to see what you've done, but you can also assume that (if it's any good) your boss might want her boss to see it, too. Write for your audience assuming that they don't know anything about association rules. If you think it's smart to write an explanation about association rules that requires more than 3 sentences,include it as an appendix at the end of your document. As a rule of thumb- anticipate your boss's needs!

IMPORTANT NOTE: This write-up (along with the Power Point slides) is intended to be an opportunity for you to put your best foot forward. I encourage you make it your goal to create a write-up and Power Point that you would be proud to take to future job interviews as an example of your abilities and an example of what you are capable of.

The memo should be at least 2 paragraphs but less than 2 pages. Again- assume your boss knows nothing about association rules. Be sure to explain:

1) What you have discovered. DO NOT give a walk-through for each rule you discover. Rather, you might want to choose 2-3 especially informative rules and briefly discuss them as examples, and assume your boss will get the point.

2) Why your findings are significant.

3) Suggestions for further action- what's the "Next step"?

If your boss is impressed by your work, it's very possible he or she will hold a meeting and present it to other workers, company big-wigs, or customers. Consequently, I suggest that you operate on the expectation that your boss likes your work, and that she will ask you for a PowerPoint presentation that she can give to her bosses at a meeting (if your boss is a sneak, he or she will try to pass your work off as their own). Don't worry about it- your boss wouldn't know an association rule from a banana, and you can expect to get a phone call from your boss 5 minutes before the meeting starts asking you to attend because your boss isn't comfortable with the numbers oryour ideas (trust me on this one).

So, the last thing you need to do for the assignment is create 5 to 10 PowerPoint slides that you could use during a 5-10 minute presentation about your work. Assume that your slides are going to be presented to the Board of Directors- make sure they are crystal clear, concise, no fluff, and professional- in other words, "board room ready".

Submit your spreadsheet, your memo, and your power points through Canvas by the deadline.

Association Rules Rubric

Rules (Excel)

Rules are correctly executed: /2

At least 30 rules are executed: /2

Write-up (Word doc)

Situation/problem is clearly stated: /2

At least 3 rules are stated or shown: /1

At least 3 rules are explained/discussed: /2

Meaningful, actionable future action (based on the rules you find) is suggested: /3

Memo is "board room ready": /2

PowerPoint Slides (PowerPoint)

Power points are "board room ready" (formatting, grammar/spelling, tables, etc.) /1

Power points clearly state and describe the problem you are investigating /1

Power points clearly present and discuss your results (including what you did to address the question, a brief presentation of your findings, and suggestions for action): /4

DO NOT USE MACROS in your file. I will not open files if I am prompted that they contain macros, and you will receive a zero on the project.

To execute your association rules- DO NOT save your data to an external file or import data from another file! Your work should be self-contained within your Excel workbook.

I expect each individual to put in between 3-8 hours on this project, depending on your experience with Excel, your knowledge of financial data, your writing ability, and your creativity.

I encourage you to get started on this project right away and do not put it off until the last few days before it is due!

Write to me or call or stop by during office hours if you have questions.

Submission instructions:

Submit your memo, the Excel file that contains your association rules, and your PowerPoint slides through Canvas by the due date.