EBRD: Financing metals and mining projects Astana Mining and Metallurgy 13 June 2014.
Design and Implementation of Enterprise Financing Decision Model Based on Data Mining
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Transcript of Design and Implementation of Enterprise Financing Decision Model Based on Data Mining
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Design and Implementation of Enterprise Financing Decision Model Based
on Data Mining
Abstract
Based on the data warehouse , data mining techniques, using the method of system, The
paper analyzed the use of data mining strategy in enterprise financing decisions, Studied the
financing decision system design goal, the function and the logic structure model, explored
the data warehouse model and data mining model structure and realization method. It is
found that heterogeneous data integration is the basis for financing decision system design,
Key lies in the multidimensional data warehouse model building, data mining algorithm
design and expression. These results are important significance on promoting the construction
of enterprise financing decision system, realizing enterprise financing decision automation
and intelligent.
Introduction
Financing decision is the enterprise according to the amount of capital demand in production
and business operation activities, selecting the appropriate financial institutions, financial
markets, financing ways to obtain funds needed for the decision-making behaviour. The
enterprise when carries on financing decisions, needs according to the cost of financing,
financing risk and the difficulty degree of obtaining fund, through the analysis to determine a
reasonable fundraising plan, and to use specific indexes for fundraising plan feasibility
analysis and evaluation, these indexes including financial evaluation index, environmental
evaluation index, risk evaluation index and evaluation expert knowledge and experience, etc.
The raising fund is business capital movement beginning, is decided that the fund movement
scale and the production operation degree of development's important link, is the enterprise
financial management and decision-making important content. In the present globalization,
information, network under the background of knowledge economy, improve enterprise
financing decision quality, efficiency, optimize capital structure is the important means to
promote the enterprise competitiveness. Establish financing decision support system for
enterprise managers can provide various auxiliary decision information, and many of the
financing solutions, thereby reduced managers in low level information processing and
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analysis of the burden, they focus on the most in need of wisdom and experience of decision-
making work, therefore improved the policy-making quality and the efficiency. In the mid
1990s, the data warehouse, the data mining and so on new technology's starting has provided
the new way for the development financing decision support system. This article has
discussed the data warehouse and data mining technology, has constructed financing decision
system model based on data mining, and key which realizes on the model: The data
warehouse design and data mining model design and implementation are studied.
Literature Survey
Data Mining as Financial Data Analysis
Financial data is mainly collected from banks and from other financial sectors. This financial
data is usually reliable, complete and has high quality. Financial data need a systematic
method for data analysis. Data Mining plays an important in analysis of financial data. Data
Mining follows steps such as data collection and understanding, data refinement, model
building and model evaluation and deployment. These steps help to deal with analysis of
financial data. The proper analysis of financial data enables us to better decisions makingcapabilities according to the market analysis. Data Mining tools and techniques helps to
analyze the financial data in the following ways:
Data collected from the various financial institutes like banks are first collected in the data
warehouse. Multidimensional data analysis techniques are used to analyze such data collected
in data warehouse for its general properties.
One of main task related to analyze about the prediction about loan payments and customer
credit policies. For such analysis , Data Mining methods such as feature selection that helps
to identifies the various features like customer income level, payment to income ratio and
credit history etc. By analyze of such features the bank can decide about the loan grant
policies on the basis of relatively low risks.
Clustering and Classification techniques of Data Mining help the financial institutes to
cluster various customers that have the similar features. Effective clustering and filtering
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methods helps the bank to identify the customer groups,relate new customer with the present
cluster and facilitate them some common benefits.
Data Mining tools helps the financial institutes to detect the frauds or crimes by interrelate
data from the various data bases and from the history transactions done by that customers.
Data Visualization tools help to present data in the different format like graphs based on the
certain attributes. By viewing data from different angles the bank can view the customers
who have performed some illegal operations and then the detail investigation of these
suspicious cases helps to find the frauds and crimes.
The use of big data will become a key basis of competition and growth for individual firms.
From the standpoint of competitiveness and the potential capture of value, all companies needto take big data seriously. In most industries, established competitors and new entrants alike
will leverage data-driven strategies to innovate, compete, and capture value from deep and
up-to-real-time information. Indeed, we found early examples of such use of data in every
sector we examined.
The use of big data will underpin new waves of productivity growth and consumer surplus.
For example, we estimate that a retailer using big data to the full has the potential to increase
its operating margin by more than 60 percent. Big data offers considerable benefits to
consumers as well as to companies and organizations. For instance, services enabled by
personal-location data can allow consumers to capture $600 billion in economic surplus.
While the use of big data will matter across sectors, some sectors are set for greater gains. We
compared the historical productivity of sectors in the United States with the potential of these
sectors to capture value from big data (using an index that combines several quantitative
metrics), and found that the opportunities and challenges vary from sector to sector. The
computer and electronic products and information sectors, as well as finance and insurance,
and government are poised to gain substantially from the use of big data.
Several issues will have to be addressed to capture the full potential of big data. Policies
related to privacy, security, intellectual property, and even liability will need to be addressed
in a big data world. Organizations need not only to put the right talent and technology in
place but also structure workflows and incentives to optimize the use of big data. Access to
data is criticalcompanies will increasingly need to integrate information from multiple data
sources, often from third parties, and the incentives have to be in place to enable this.
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Impractical Manual Data Analysis
The traditional method of turning data into knowledge relies on manual analysis and
interpretation. For example, in the health-care industry, it is common for specialists to
analyze current trends and changes in health-care data on a quarterly basis. The specialists
then provide a report detailing the analysis to the sponsoring health-care organization; the
report is then used as the basis for future decision making and planning for health-care
management. In a totally different type of application, planetary geologists sift through
remotely sensed images of planets and asteroids, carefully locating and cataloging geologic
objects of interest, such as impact craters.
For these (and many other) applications, such manual probing of a dataset is slow,expensive, and highly subjective. In fact, such manual data analysis is becoming impractical
in many domains as data volumes grow exponentially. Databases are increasing in size in two
ways: the number N of records, or objects, in the database, and the number d of fields, or
attributes, per object. Databases containing on the order of N=109 objects are increasingly
common in, for example, the astronomical sciences. The number d of fields can easily be on
the order of 102 or even 103 in medical diagnostic applications. Who could be expected to
digest billions of records, each with tens or hundreds of fields?
Yet the true value of such data lies in the users ability to extract useful reports, spot
interesting events and trends, support decisions and policy based on statistical analysis and
inference, and exploit the data to achieve business, operational, or scientific goals. When the
scale of data manipulation, exploration, and inference grows beyond human capacities,
people look to computer technology to automate the bookkeeping. The problem of
knowledge extraction from large databases involves many steps, ranging from data
manipulation and retrieval to fundamental mathematical and statistical inference, search, and
reasoning.
Different techniques and planning has been used in past for the building financial model in
enterprises. so far data mining has never used for modelling the strategy for business or
financial decision. so we have proposed datamining technique for enterprise decision model.
we have proposed datamining techniques which will take care of finance, expense project
timeline for tracking the deadline etc. In future it can be used at different levels in enterprise
for accounting and managing financial values. Datamining integrates the every aspect of
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enterprise to a centralized software. This software helps the enterprise for making decisions
and fulfilling the needs of the company.
By following these operation and tedious tasks, the management faces following problems:
Production delays due to raw-material non-availability Stuck-up of investments in raw-material inventories Ineffective control over raw material issuance and wastages.
Data mining System is cost-effective solution for managing raw material & inventory.
Managing the inventory reduces the inventory carrying cost by Inventory procurement and
assisting the management in just in time decision-making. Datamining War house inventory
System is ideal business solution for manufacturers and Producers who want to reduce their
operational costs and become more competitive.
Warehouse System provides elegant, effective, and practical solution to automate the
Procurement process and other up-stream supply chain operations. High ROI (return on
Investment) is guaranteed in the form of optimized inventories.
Warehouse System Inventory provides a competitive edge to manufacturers by reducing theinventory Carrying cost and by avoiding production delays through timely availability of raw
Materials. Also the cost of production goes down due to control in the raw material
Warehouse SYSTEM optimize the raw material inventories by adopting an intelligent
inventory procurement process. Inventory procurement is completely automated.
Warehouse System manages the procurement of inventory on the basis of purchase orders.
System performs the analysis of required inventory items for manufacturing orders, and
generates the demand for a particular item to the particular vendor of each of the inventory
items. It then generates the purchase orders for vendors (automated procurement process).
The inventory is procured only when its required, and thus the total stock available in the
Warehouse is reduced and inventory-carrying cost goes down.
Management of large number of orders, starting in different calendar dates, involving
different inventory items, become easy and effortless operation. Ware house System not only
informs the users about the current level of inventory available in the Ware house, but also it
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gives the details about the utilization of inventory items for future manufacturing orders by
generating demands.
Data Mining
Data mining, from a technical point of view to define, is from massive, incomplete, noisy,
fuzzy and random data sets identify effective, innovative and potentially useful and
ultimately understandable patterns of the process. Defines from the commercial angle, data
mining is a commercial information processing technology, its main characteristic is to
commercial business data extraction, conversion, analysis and other model processing,
discovers the valuable hideaway information in large amounts of data, analyzes, makes the
induction inference, helps the enterprise policy-makers to adjust the market strategy, provides
the reference for the enterprise decision-making. In today's rapidly changing business
environment, the main way of competition is the competition information, the traditional
model of data analysis, after analysis method was prior to explore the type of data mining.
Meanwhile, between the information provider also has the keen competition, like between
financial information and non-financial information competition. Not only the data mining
technology's application increased the competition chip for the information provider, alsoimpelled data mining expansion directly.
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System Architecture
Data warehouse
Data warehouse is a better support enterprise or organization for decision-making analysis
and processing, subject-oriented, integrated, not updated, with time changing, the collectionof data used to support management decisions. According to this definition, data warehouse
is different from the existing operational database, is made of several heterogeneous data pre-
processing, according to certain rules collection, and is the data management further
development.
Multi-dimensional data processing
The multi-dimensional data processing is by analysis, management and decision-making
executives from several angles from the original data conversion to the user, can truly
understand the information quickly and consistent, interactively access to data, so as to
achieve a deeper understanding of software technology
Financing Decisions
In financing decision system is mainly used in the following data mining strategy.
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1. Classification, classification is a function to each data item is mapped to a predefinedcategory, or is excavates about this kind of data description or the model, with
emphasis on model building, the new instance assigned to a group of defined as a
class. For example: to determine whether a high-risk financing to all funding
programs are classified as high risk or low risk groups and so on.
2. Estimation, and the classification model is similar, estimation model aims todetermine an unknown value of the property. However, unlike the classification of
property is an estimation problem, the output attributes (one or more) is a numerical
rather than classification. For example: Estimates a financing risk degree, Estimates
the cost of financing, etc.
3. Prediction, prediction model aims to determine the future output rather than thecurrent behaviour. Through establishing model of representing data patterns and
trends inherent, so that the model can be used to predict the outcome of future events,
in financing decision system, there are often some of the examples of forecasts:
Forecasting margins of financing, Forecasting the use effect of capital, Prediction of
project investment funds requirements, etc.
4. Without guide clustering, For without guidance clustering, no dependent variableguide learning process. without guidance clustering strategy aims to find the data
concept structure, is one kind to has the common tendency and the pattern data
element group carries on the grouping the method
System Analysis
The financing decisions system based on data mining design goal is: according to historical
data and enterprise development goal establishment enterprise fund raising plan; Establishesa set of perfect fund raising evaluating index system and the corresponding measurable
standard, causes the fund raising procedure standardization; Take the cost theory as the
foundation, carries on the cost appraisal to the fund raising plan; Take the risk theory as the
foundation, the determination fund raising plan risk factor; Through the correct appraisal
fund raising's cost and the risk, improve the effectiveness of financing decisions. Finally
realize enterprise financing decision process optimization, scientific, intelligent target.
To achieve these goals, the system should have the following main functions:
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Financing business and planning functions: According to historical data accumulated from
the business operating environment, its operating conditions, analyzing operational and
financial benchmarks, and funding opportunities, develop practical business and financing
plans.
Model establishment and management functions: in a proper way, financing decision
model is stored and in an interactive way, realize financing decision model establishment,
modify and management.
Financing decision functions: According to the establishment fund raising evaluating index
system and the corresponding measurable standard, using the appropriate model and expert's
knowledge and experience, auxiliary enterprises to choose and determine funding financing
opportunity, determination fund raising scale, choice fund raising way, determination debt
redemption way decisions making; through the advanced intelligent optimal selection of a
more systematic project, the project on mutually exclusive decision-making choices, etc.
Modules
Admin Function Expense tracking Project timeline Timetable salary module
Proposed System
This is high performance software, which speeds up the business operations of the
organization. Every organization, which deals with the raw materials, put its great effort in
the efficient utilization of its raw material according to its need and requirement. The
organization has to perform number of tasks and operations in order to run its business in a
manual system. For example:
Estimation of new raw material required. Preparation of purchase order. Preparation of Inward gate pass/purchase invoice. Preparation of Outward gate pass /sale invoice.
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Preparation of Debit note.
Advantages of systems are as follows:
1. Inventory information can be handled easily.2. The manager can easily view when the updates are done at the point of
sale devices.
3. The manager can make decisions very fast.4. The manager can plan the goods production.5. Automatic value generation.6. Expense Tracking7. Project Timeline
Major functions of Data mining warehouse SYSTEM include the following:
Inventory Procurement
Manage procurement schedule Keep minimum required inventory levels Purchase only when required for productionprocurement automation
Monitor and improve Vendor relations
Monitor supplier commitments Manage supplier payments
Payments
Payments into/from Purchase Orders are recorded providing Purchase OrdersBalances
Customizability and Flexibility
User defined attributes for inventory items
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Definition of inventory items, their vendors, vendor prices Definition of customers and their relevant information Definition of departments and their employees
Data Flow Diagram (DFD)
Level 0
Report
Level 1
User
1.0
DM
Warehouse
System
User
1.0
DM
System
Tool
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Level 2
Database
.
1.1
Financial
Decision
1.2
Payment
1.3
Expense
1.4
Project
User2.1
Authenti
cation
2.2
Expense
2.3
Software
Tool
2.3
Project
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System Specification
System Requirements:
Hardware Requirements:
Processor : Intel Duel Core.
Hard Disk : 60 GB.
Floppy Drive : 1.44 Mb.
Monitor : LCD Colour.
Mouse : Optical Mouse.
RAM : 512 Mb.
Software Requirements:
Operating system : Windows XP.
Coding Language : JAVA
Data Base : SQL Server 2005
Tool : Netbeans 7.0
SYSTEM STUDY
FEASIBILITY STUDY
The feasibility of the project is analyzed in this phase and business proposal is put
forth with a very general plan for the project and some cost estimates. During system
analysis the feasibility study of the proposed system is to be carried out. This is to ensure
that the proposed system is not a burden to the company. For feasibility analysis, some
understanding of the major requirements for the system is essential.
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Three key considerations involved in the feasibility analysis are
ECONOMICAL FEASIBILITY TECHNICAL FEASIBILITY SOCIAL FEASIBILITY
ECONOMICAL FEASIBILITY
This study is carried out to check the economic impact that the system will have on
the organization. The amount of fund that the company can pour into the research and
development of the system is limited. The expenditures must be justified. Thus the developed
system as well within the budget and this was achieved because most of the technologies
used are freely available. Only the customized products had to be purchased.
TECHNICAL FEASIBILITY
This study is carried out to check the technical feasibility, that is, the technical
requirements of the system. Any system developed must not have a high demand on the
available technical resources. This will lead to high demands on the available technical
resources. This will lead to high demands being placed on the client. The developed system
must have a modest requirement, as only minimal or null changes are required for
implementing this system.
SOCIAL FEASIBILITY
The aspect of study is to check the level of acceptance of the system by the user. This
includes the process of training the user to use the system efficiently. The user must not feel
threatened by the system, instead must accept it as a necessity. The level of acceptance by the
users solely depends on the methods that are employed to educate the user about the system
and to make him familiar with it. His level of confidence must be raised so that he is also able
to make some constructive criticism, which is welcomed, as he is the final user of the system.