Question

7. Explain the characteristics of a problem could be solved by using Neural Network.

Answer 1

Neural networks are used for solving many business problems such as sales forecasting, data validation, risk management and customer research.

Characteristics of neural networks:-

1)An Artificial Neural Network consists of large number of neuron like processing elements.

2)The connections between the elements provide a distributed representation of data.

3)All these processing elements have a large number of weighted connections between them.

4)A Learning Process is implemented to acquire knowledge.

i)Marketing:-

Target marketing involves market segmentation, where we divide the market in-to distinct groups of customers with different consumer behavior.

Neural networks are well equipped to carry this out by segmenting customers according to basic characteristics including demographics, location, purchase patterns, and attitude towards a product. Unsupervised neural networks can be used to automatically group and segment customers based on the similarity of their characteristics, while supervised neural networks can be trained to learn the boundaries between customer segments based on a group of customers.

ii) Banking& Finance

Neural networks have been applied successfully to problems like derivative securities pricing and hedging, exchange rate forecasting, futures price forecasting, and stock performance and statistical techniques have driven the software. These days, however, neural networks are the underlying technologies driving decision making.

iii)Retail& Sales:-

Neural networks have the ability to simultaneously consider multiple variables such as market demand for a product, a customer’s income, population, and product price. Forecasting of sales in supermarkets can be of great advantage here.

If there is a relationship between two products over time, say within three-four months of buying a printer the customer returns to buy a new cartridge, then retailers can use this information to contact the customer, decreasing the chance that the customer will purchase the product from a competitor.

Types of neural networks:-

1)Convolutional Neural Networks

2)Recurrent Neural Networks

3)Autoencoders

simple problem would be to make neural networks to figure out number patterns:-

For example, lets make an input sequence are 1,4,5,8,6,...

What is the next number in this sequence?

Well, a neural network should spit out the correct number, since there is a pattern in this number sequence.