Economic Order Quantity

Economic order quantity (EOQ) is the order quantity that minimizes total inventory
holding costs and ordering costs. It is one of the oldest classical production
scheduling models. The framework used to determine this order quantity is also
known as Wilson EOQ Model or Wilson Formula.

Co-relation and regression

The goal of a correlation analysis is to see whether two measurement variables co
vary, and to quantify the strength of the relationship between the variables,
whereas regression expresses the relationship in the form of an equation.
*Scatter Diagram
A graph in which the values of two variables are plotted along two axes, the pattern
of the resulting points revealing any correlation present.

Time Series Analysis

Time series analysis comprises methods for analyzing time series data in
order to extract meaningful statistics and other characteristics of the data.
Time series forecasting is the use of a model to predict future values based
on previously observed values.

Statistical Hypothesis
A statistical hypothesis is a scientific hypothesis that is testable on the basis
of observing a process that is modeled via a set of random variables. A
statistical hypothesis test is a method of statistical inference used for testing
a statistical hypothesis.
*Statistical Hypothesis null (H0) and Statistical Hypothesis
alternative (Ha or H1)
In statistical hypothesis testing, the alternative hypothesis (or maintained
hypothesis or research hypothesis) and the null hypothesis are the two rival
hypotheses which are compared by a statistical hypothesis test.
In inferential statistics on observational data, the null hypothesis refers to a
general statement or default position that there is no relationship between

two measured phenomena.

Chi Square Test

Chi-squared test (2) is a statistical test applied to sets of categorical data to
evaluate how likely it is that any observed difference between the sets arose
by chance. It is suitable for unpaired data from large samples. It is the most
widely used of many chi-squared tests (Yates, likelihood ratio, portmanteau
test in time series, etc.). In contexts where it is important to improve a
distinction between the test statistic and its distribution.
It tests a null hypothesis stating that the frequency distribution of certain
events observed in a sample is consistent with a particular theoretical
distribution. The events considered must be mutually exclusive and have

total probability 1. A common case for this is where the events each cover an
outcome of a categorical variable.

Diagrams

Scatter diagrams are commonly produced from surveys or experiments, and

are composed of points relating two variables, e.g. height and age of people
under 18. Logically, for such a diagram, the horizontal axis would be used for
age and the vertical axis for height. Each point on this diagram would
represent the characteristics of an individual person.
Obviously for such a graph, you might expect some correlation between the
results, i.e. you might expect that as age increases, so does height. The
points would tend to show a relationship does exist but the points definitely
do not fall on a nice straight line - this 'straight line' relationship is implied.
When there appears to be a relationship between the two quantities
displayed on a scatter diagram, then we say they appear to be correlated.
Look at the diagrams above.
The first and last diagrams indicate correlation, the first is described as
positive correlation, the last one as negative correlation. It is not exact, but
all other things being equal, we are inclined to believe that there is a
relationship between the quantities represented on the diagrams.
We ought to point out that correlation itself is not proof of any causal
relationship between the two variables. In the past, correlation has been
shown to exist between the parrot population in an area of Central America
and an economic factor in the United States. So although there was good
correlation in this case, this was just chance - there was no actual causal
connection between the two quantities at all.
At the other end of the scale, even for quantities where a causal connection
could exist, correlation is not, by itself, proof of an actual causal connection it is just a piece of evidence that you would need to back up with other
arguments, if you wanted suggest that there was an actual causal
connection.

It should also be stressed that here we having been talking about linear
correlation (a 'straight line' connection). Features that are not linearly
correlated could still possibly be correlated by a more complicated
mathematical expression
Neural networks
A neural network usually involves a large number of processors operating in
parallel, each with its own small sphere of knowledge and access to data in
its local memory. Typically, a neural network is initially "trained" or fed large
amounts of data and rules about data relationships (for example, "A
grandfather is older than a person's father"). A program can then tell the
network how to behave in response to an external stimulus (for example, to
input from a computer user who is interacting with the network) or can
initiate activity on its own (within the limits of its access to the external
world).
In making determinations, neural networks use several principles, including
gradient-based training, fuzzy logic, genetic algorithms, and Bayesian
methods. Neural networks are sometimes described in terms of knowledge
layers, with, in general, more complex networks having deeper layers. In
feed forward systems, learned relationships about data can "feed forward" to
higher layers of knowledge. Neural networks can also learn temporal
concepts and have been widely used in signal processing and time series
analysis.