1. Classification Models Via Tabu Search: An Application to Early Stage Venture Classification
- Author
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Canan Akdemir, Thomas B. Astebro, Samir Elhedhli, Department of Management Sciences, University of Waterloo [Waterloo], Joseph L. Rotman School of Management, University of Toronto, HEC Research Paper Series, Haldemann, Antoine, Groupement de Recherche et d'Etudes en Gestion à HEC (GREGH), and Ecole des Hautes Etudes Commerciales (HEC Paris)-Centre National de la Recherche Scientifique (CNRS)
- Subjects
JEL: C - Mathematical and Quantitative Methods/C.C5 - Econometric Modeling/C.C5.C53 - Forecasting and Prediction Methods • Simulation Methods ,Mixed integer program ,Computer science ,media_common.quotation_subject ,Benders' decomposition ,Machine learning ,computer.software_genre ,decision heuristic ,JEL: C - Mathematical and Quantitative Methods/C.C4 - Econometric and Statistical Methods: Special Topics/C.C4.C45 - Neural Networks and Related Topics ,JEL: C - Mathematical and Quantitative Methods/C.C6 - Mathematical Methods • Programming Models • Mathematical and Simulation Modeling/C.C6.C63 - Computational Techniques • Simulation Modeling ,Artificial Intelligence ,Classification models ,tabu search ,Quality (business) ,Decision-making ,Selection (genetic algorithm) ,media_common ,Mathematics ,business.industry ,General Engineering ,early stage venture forecast ,large-scale mixed integer program ,Tabu search ,Computer Science Applications ,Data set ,classification ,[SHS.GESTION.STRAT]Humanities and Social Sciences/Business administration/domain_shs.gestion.strat ,[SHS.GESTION]Humanities and Social Sciences/Business administration ,Stage (hydrology) ,Data mining ,Artificial intelligence ,[SHS.GESTION] Humanities and Social Sciences/Business administration ,business ,computer ,Integer (computer science) - Abstract
We model the decision making process used by Experts at the Canadian Innovation Centre to classify early stage venture proposals based on potential commercial success. The decision is based on thirty-seven attributes that take values in { - 1 , 0 , 1 } . We adopt a conjunctive decision framework due to Astebro and Elhedhli (2005) that selects a subset of attributes and determines two threshold values: one for the maximum allowed negatives (n) and one for minimum required positives (p). A proposal is classified as a success if the number of positives is greater than or equal to p and the number of negatives is less than or equal to n over the selected attributes. Based on a data set of 561 observations, the selection of attributes and the determination of the threshold values is modeled as a large-scale mixed integer program. Two solution approaches are explored: Benders decomposition and Tabu search. The first, was very slow to converge, while the second provided high quality solutions quickly. Tabu search provides excellent classification accuracy for predicting commercial successes as well as replicating Experts’ forecasts, opening the venue for the use of Tabu search in scoring and classification problems.
- Published
- 2015