Market basket analysis - Association Rule

Mining

August 21 2013

Market basket analysis

Customers RFID/Barcode Transaction Data

Business StrategyMarketing TechniqueRevenue

ARM

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TID Items

1 Bread, Milk

2 Bread, diaper, Beer, Eggs

3 Milk, Diaper, Beer, Coke

4 Bread, Milk, Diaper, Beer

5 Bread, Milk, Diaper, Coke, Beer

Frequent Itemsets Support

Beer, Diaper =4/5

Milk, Beer =3/5

Bread, Beer =3/5

Bread, Milk =3/5

Milk, Beer, Diaper = 3/5

Representation of Association Rule : X → Y X and Y are itemsets E.g. {Milk, Diaper} →{ Beer} - 100%(3/3) E.g. { Beer} → {Milk, Diaper} – 75% (4/3)

Itemset A collection of one or more items E.g. {Milk, Diaper, Beer}=3

ASSOCIATION RULE MINING (ARM)

ARM(Contd.)

Support(S) Fraction of transactions that contain an itemset E.g. Support = 3/5 = 0.6

Confidence(C) Measures how often items in Y appear in transactions that contain X E.g. Confidence = 3/3 = 1

Association Rules Find all itemsets that have minimum support (frequent itemsets) Use the frequent itemsets to generate the desired association rules

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LOGISTICS SLOTTING

Identify the relationship among the parts those are shipped together.

Slot the parts those are shipped together into one area ex: Rack, Crib etc.,

Slotting together parts with strong confidence and support helps reducing the manual touches.

Excel tool Input for Market basket analysis

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