1. Data Mining Chapter 26

2. Chapter 1. Introduction Motivation: Why data mining?
What is data mining?
Data Mining: On what kind of data?
Data mining functionality
Are all the patterns interesting?
Major issues in data mining

3. Motivation: “Necessity is the Mother of Invention”
Data explosion problem
Automated data collection tools and mature database technology lead to tremendous amounts of data stored in databases, data warehouses and other information repositories
We are drowning in data, but starving for knowledge!
Solution: Data warehousing and data mining
Data warehousing and on-line analytical processing
Extraction of interesting knowledge (rules, regularities, patterns, constraints) from data in large databases

4. Evolution of Database Technology
Data collection, database creation, IMS and network DBMS
1970s:
Relational data model, relational DBMS implementation
1980s:
RDBMS, advanced data models (extended-relational, OO, deductive, etc.) and application-oriented DBMS (spatial, scientific, engineering, etc.)
1990s—2000s:
Data mining and data warehousing, multimedia databases, and Web databases

5. What Is Data Mining? Data mining (knowledge discovery in databases):
Extraction of interesting (non-trivial, implicit, previously unknown and potentially useful) information or patterns from data in large databases
Alternative names:
Data mining: a misnomer?
Knowledge discovery(mining) in databases (KDD), knowledge extraction, data/pattern analysis, data archeology, data dredging, information harvesting, business intelligence, etc.
What is not data mining?
(Deductive) query processing.
Expert systems or small ML/statistical programs

6. Why Data Mining? — Potential Applications
Database analysis and decision support
Market analysis and management
target marketing, customer relation management, market basket analysis, cross selling, market segmentation
Risk analysis and management
Forecasting, customer retention, improved underwriting, quality control, competitive analysis
Fraud detection and management
Other Applications
Text mining (news group, , documents)
Stream data mining
Web mining.
DNA data analysis

7. Market Analysis and Management (1)
Where are the data sources for analysis?
Credit card transactions, loyalty cards, discount coupons, customer complaint calls, plus (public) lifestyle studies
Target marketing
Find clusters of “model” customers who share the same characteristics: interest, income level, spending habits, etc.
Determine customer purchasing patterns over time
Conversion of single to a joint bank account: marriage, etc.
Cross-market analysis
Associations/co-relations between product sales
Prediction based on the association information

8. Market Analysis and Management (2)
Customer profiling
data mining can tell you what types of customers buy what products (clustering or classification)
Identifying customer requirements
identifying the best products for different customers
use prediction to find what factors will attract new customers
Provides summary information
various multidimensional summary reports
statistical summary information (data central tendency and variation)

9. Corporate Analysis and Risk Management
Finance planning and asset evaluation
cash flow analysis and prediction
contingent claim analysis to evaluate assets
cross-sectional and time series analysis (financial-ratio, trend analysis, etc.)
Resource planning:
summarize and compare the resources and spending
Competition:
monitor competitors and market directions
group customers into classes and a class-based pricing procedure
set pricing strategy in a highly competitive market

10. Fraud Detection and Management (1)
Applications
widely used in health care, retail, credit card services, telecommunications (phone card fraud), etc.
Approach
use historical data to build models of fraudulent behavior and use data mining to help identify similar instances
Examples
auto insurance: detect a group of people who stage accidents to collect on insurance
money laundering: detect suspicious money transactions (US Treasury's Financial Crimes Enforcement Network)
medical insurance: detect professional patients and ring of doctors and ring of references

11. Fraud Detection and Management (2)
Detecting inappropriate medical treatment
Australian Health Insurance Commission identifies that in many cases blanket screening tests were requested (save Australian $1m/yr).
Detecting telephone fraud
Telephone call model: destination of the call, duration, time of day or week. Analyze patterns that deviate from an expected norm.
British Telecom identified discrete groups of callers with frequent intra-group calls, especially mobile phones, and broke a multimillion dollar fraud.
Retail
Analysts estimate that 38% of retail shrink is due to dishonest employees.

12. Other Applications Sports Astronomy Internet Web Surf-Aid
IBM Advanced Scout analyzed NBA game statistics (shots blocked, assists, and fouls) to gain competitive advantage for New York Knicks and Miami Heat
Astronomy
JPL and the Palomar Observatory discovered 22 quasars with the help of data mining
Internet Web Surf-Aid
IBM Surf-Aid applies data mining algorithms to Web access logs for market-related pages to discover customer preference and behavior pages, analyzing effectiveness of Web marketing, improving Web site organization, etc.

13. Data Mining: A KDD Process
Knowledge
Pattern Evaluation
Data mining: the core of knowledge discovery process.
Data Mining
Task-relevant Data
Selection
Data Warehouse
Data Cleaning
Data Integration
Databases

14. Steps of a KDD Process Learning the application domain:
relevant prior knowledge and goals of application
Creating a target data set: data selection
Data cleaning and preprocessing: (may take 60% of effort!)
Data reduction and transformation:
Find useful features, dimensionality/variable reduction, invariant representation.
Choosing functions of data mining
summarization, classification, regression, association, clustering.
Choosing the mining algorithm(s)
Data mining: search for patterns of interest
Pattern evaluation and knowledge presentation
visualization, transformation, removing redundant patterns, etc.
Use of discovered knowledge

15. Data Mining: On What Kind of Data?
Relational databases
Data warehouses
Transactional databases
Advanced DB and information repositories
Object-oriented and object-relational databases
Spatial and temporal data
Time-series data and stream data
Text databases and multimedia databases
Heterogeneous and legacy databases
WWW

16. Data Mining Functionalities

17. Association Rule Mining
Finding frequent patterns, associations, correlations, or causal structures among sets of items or objects in transaction databases, relational databases, and other information repositories.
Frequent pattern: pattern (set of items, sequence, etc.) that occurs frequently in a database
Motivation: finding regularities in data
What products were often purchased together? — Beer and diapers?!
What are the subsequent purchases after buying a PC?
What kinds of DNA are sensitive to this new drug?
Can we automatically classify web documents?

18. Association Rule Mining (cont.)
Itemset X={x1, …, xk}
Find all the rules XY with min confidence and support
support, s, probability that a transaction contains XY
confidence, c, conditional probability that a transaction having X also contains Y.
Transaction-id
Items bought 10
A, B, C 20
A, C 30
A, D 40
B, E, F
Customer
buys diapers
buys both
buys beer
Let min_support = 50%, min_conf = 50%:
A  C (50%, 66.7%)
C  A (50%, 100%)

19. Mining Association Rules—an Example
Min. support 50%
Min. confidence 50%
Transaction-id
Items bought 10
A, B, C 20
A, C 30
A, D 40
B, E, F
Frequent pattern
Support
{A}
75%
{B}
50%
{C}
{A, C}
For rule A  C:
support = support({A}{C}) = 50%
confidence = support({A}{C})/support({A}) = 66.6%

20. Apriori: A Candidate Generation-and-test Approach
Any subset of a frequent itemset must be frequent
if {beer, diaper, nuts} is frequent, so is {beer, diaper}
every transaction having {beer, diaper, nuts} also contains {beer, diaper}
Apriori pruning principle: If there is any itemset which is infrequent, its superset should not be generated/tested!
Method:
generate length (k+1) candidate itemsets from length k frequent itemsets, and
test the candidates against DB
The performance studies show its efficiency and scalability

21. The Apriori Algorithm — An Example
Itemset
sup
{A} 2
{B} 3
{C}
{D} 1
{E}
Itemset
sup
{A} 2
{B} 3
{C}
{E}
Database TDB L1 C1
Tid
Items 10
A, C, D 20
B, C, E 30
A, B, C, E 40
B, E
1st scan C2
Itemset
sup
{A, B} 1
{A, C} 2
{A, E}
{B, C}
{B, E} 3
{C, E} C2
Itemset
{A, B}
{A, C}
{A, E}
{B, C}
{B, E}
{C, E}
2nd scan L2
Itemset
sup
{A, C} 2
{B, C}
{B, E} 3
{C, E} C3 L3
Itemset
{B, C, E}
3rd scan
Itemset
sup
{B, C, E} 2

22. The Apriori Algorithm
Pseudo-code:
Ck: Candidate itemset of size k
Lk : frequent itemset of size k
L1 = {frequent items};
for (k = 1; Lk !=; k++) do begin
Ck+1 = candidates generated from Lk;
for each transaction t in database do
increment the count of all candidates in Ck that are contained in t
Lk+1 = candidates in Ck+1 with min_support
end
return k Lk;

23. Important Details of Apriori
How to generate candidates?
Step 1: self-joining Lk
Step 2: pruning
Example of Candidate-generation
L3={abc, abd, acd, ace, bcd}
Self-joining: L3*L3
abcd from abc and abd
acde from acd and ace
Pruning:
acde is removed because ade is not in L3
C4={abcd}

24. How to Generate Candidates?
Suppose the items in Lk-1 are listed in an order
Step 1: self-joining Lk-1
insert into Ck
select p.item1, p.item2, …, p.itemk-1, q.itemk-1
from Lk-1 p, Lk-1 q
where p.item1=q.item1, …, p.itemk-2=q.itemk-2, p.itemk-1 < q.itemk-1
Step 2: pruning
forall itemsets c in Ck do
forall (k-1)-subsets s of c do
if (s is not in Lk-1) then delete c from Ck

25. Classification and Prediction
Finding models (functions) that describe and distinguish classes or concepts for future prediction
E.g., classify countries based on climate, or classify cars based on gas mileage
Presentation: decision-tree, classification rule, neural network
Prediction: Predict some unknown or missing numerical values

26. Classification Process: Model Construction
Algorithms
Training
Data
Classifier
(Model)
IF rank = ‘professor’
OR years > 6
THEN tenured = ‘yes’

27. Classification Process: Use the Model in Prediction
Classifier
Testing
Data
Unseen Data
(Jeff, Professor, 4)
Tenured?

28. Decision Trees
Training set

29. Output: A Decision Tree for “buys_computer”
age?
<=30
overcast
30..40
>40
student?
yes
credit rating? no
yes
excellent
fair no
yes no
yes

30. Cluster and outlier analysis
Cluster analysis
Class label is unknown: Group data to form new classes, e.g., cluster houses to find distribution patterns
Clustering based on the principle: maximizing the intra-class similarity and minimizing the interclass similarity
Outlier analysis
Outlier: a data object that does not comply with the general behavior of the data
It can be considered as noise or exception but is quite useful in fraud detection, rare events analysis

31. Clusters and Outliers