(Solved): CIS370 – Business Analytics - Case 3: Data Mining (50 points)...
Case 3: Data Mining (50 points)
Problem 1: A local pizza restaurant wants to get a better sense of who its customers are and how much they buy. The file Pizza_Customers.xlsx shows data collected on 30 randomly selected customers. Variables include Age, Female (1 if female, 0 otherwise), Annual Income, Married (1 if married, 0 otherwise), Own (1 if own residence, 0 otherwise), College (1 if completed college degree, 0 otherwise), Size (household size) and Spending (annual store spending).
- Perform hierarchical clustering to group the customers based on the numerical variables only (Age, Annual Income, Size, and Spending). Describe each cluster based on the cluster characteristics.
- Perform hierarchical clustering to group the customers based on the categorical variables (Female, Married, Own, and College), and Spending. Describe each cluster based on the cluster characteristics.
- In your opinion, which of these two clustering methods is more insightful? Explain your answer.
- Experiment with other combinations of variables with Spending and find one that you believe is more insightful. Justify your recommendation.
Problem 2: A telecommunications company wants to identify customers who are likely to unsubscribe to their telephone service. The file Telecom.xlsx shows the data collected from 100 customers: ID (customer ID), Age, Income (annual income), Usage (monthly usage, in minutes), Tenure (time as a subscriber, in months), and Unsubscribe (1 if unsubscribed, 0 if still subscribed).
- Perform k-means clustering to group the 100 customers into four clusters based on Age, Income, Usage, and Tenure. Describe the characteristics of each cluster.
- Compute the percent of customers that have unsubscribed to the telephone service from each cluster. Which cluster has the highest percent of customers who have unsubscribed to the telephone service?
- Experiment with another cluster size. In your opinion, which of these two cluster sizes is more insightful. Explain your answer.
- What would you recommend to the telecommunication company as a result of this analysis?
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