20 IN FOCUS tudents seeking careers in the service sector should seriously consider the new opportunities emerging in the knowledge economy, where growth depends on information and its e ective use to solve societal problems. One key area is decision analytics. This involves analysis of data (including statistical and machine learning techniques), simulation, modeling, and prescriptive analytics tools to support measurably better decisions for companies and governments. The eld has its roots in several disciplines. It borrows from industrial engineering its contributions to manufacturing and logistics. Management science provides some of the modeling background while operations research supplies optimization methodology, simulation, and stochastic processes. Many of these disciplines were developed at a time when data were scarce and computing power expensive. The current abundance of data and tremendous advances in computer power make it possible to merge these disciplines with statistical and machine learning, and arti cial intelligence to support decision making in the knowledge economy. As an example, data collected from consumers’ choices can help companies design and price products and services to improve pro ts and capacity utilization while providing consumers with products that are better aligned with their needs. “Decision analytics supports companies and governments in making measurably better decisions” Take the travel and leisure industry. The airfare for the same flight on the same departure date will experience price fluctuations that are influenced by the booking date (number of days before departure), travel restrictions (such as Saturday night stay, or returning within days), ancillary services included (luggage handling, boarding priority, advance seat assignments, mileage accrual, and others), remaining capacity and expected demand. The intelligent design of fares (restrictions and ancillary services) together with dynamic pricing o en results in a win-win for airline companies and consumers who travel for leisure or for business. Airlines can boost revenues, while consumers can purchase tickets that better t their travel intentions (for example, bundling discounts for tickets and hotel rooms for the leisure segment and providing availability for last-minute tickets for those who travel for business). Decision analytics leverages data, modeling and analytics to support companies and government organizations in making more informed decisions. At HKUST, our Decision Analytics program provides students with a range of flexible problem-solving skills that can be applied in di erent areas, including ntech, nancial engineering, consulting, risk management, healthcare, as well as logistics and advanced manufacturing. This is the future trend where decision analysts are present in companies to maximize pro t margins, improve overall consumer experience and better utilize scarce resources. The rise of decision analytics in the knowledge economy Prof. Guillermo GALLEGO is Department Head and Chair Professor of the Department of Industrial Engineering and Decision Analytics and Crown Worldwide Professor of Engineering. He has published in uential papers on dynamic pricing and revenue optimization, supply chain management, discrete choice modeling, and demand and supply analytics. He works closely with global companies and government agencies. By Prof. Guillermo Gallego S Faculty Column Watch the video exploring the Department of Industrial Engineering and Decision Analytics. Vision of the future
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