From Data Mining to Knowledge Discovery in Databases

In science one of the primary application 38 ai

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Unformatted text preview: eal-world problems in science and in business. In science, one of the primary application 38 AI MAGAZINE areas is astronomy. Here, a notable success was achieved by SKICAT, a system used by astronomers to perform image analysis, classification, and cataloging of sky objects from sky-survey images (Fayyad, Djorgovski, and Weir 1996). In its first application, the system was used to process the 3 terabytes (1012 bytes) of image data resulting from the Second Palomar Observatory Sky Survey, where it is estimated that on the order of 109 sky objects are detectable. SKICAT can outperform humans and traditional computational techniques in classifying faint sky objects. See Fayyad, Haussler, and Stolorz (1996) for a survey of scientific applications. In business, main KDD application areas includes marketing, finance (especially investment), fraud detection, manufacturing, telecommunications, and Internet agents. Marketing: In marketing, the primary application is database marketing systems, which analyze customer databases to identify different customer groups and forecast their behavior. Business Week (Berry 1994) estimated that over half of all retailers are using or planning to use database marketing, and those who do use it have good results; for example, American Express reports a 10- to 15percent increase in credit-card use. Another notable marketing application is market-basket analysis (Agrawal et al. 1996) systems, which find patterns such as, “If customer bought X, he/she is also likely to buy Y and Z.” Such patterns are valuable to retailers. Investment: Numerous companies use data mining for investment, but most do not describe their systems. One exception is LBS Capital Management. Its system uses expert systems, neural nets, and genetic algorithms to manage portfolios totaling $600 million; since its start in 1993, the system has outperformed the broad stock market (Hall, Mani, and Barr 1996). Fraud detection: HNC Falcon and Nestor PRISM systems are used for monitoring creditcard fraud, watching over millions of accounts. The FAIS system (Senator et al. 1995), from the U.S. Treasury Financial Crimes Enforcement Network, is used to identify financial transactions that might indicate moneylaundering activity. Manufacturing: T he C ASSIOPEE troubleshooting system, developed as part of a joint venture between General Electric and SNECMA, was applied by three major European airlines to diagnose and predict problems for the Boeing 737. To derive families of faults, clustering methods are used. CASSIOPEE received the European first prize for innova- Articles tive applications (Manago and Auriol 1996). Telecommunications: The telecommunications alarm-sequence analyzer (TASA) was built in cooperation with a manufacturer of telecommunications equipment and three telephone networks (Mannila, Toivonen, and Verkamo 1995). The system uses a novel framework for locating frequently occurring alarm episodes from the alarm stream and presenting them as rules. Large sets of discovered rules can be explored with flexi...
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