Procedure for Cluster Analysis

Clustering process begins with formulating the problem and concludes with carrying out analysis to verify fhe accuracy and appropriateness of the method. The clustering process has the following steps  

Plot the dendrogram (A dendrogram is a tree diagram used to illustrate the output of clustering analysis) and carry out analysis to compare the means across various clusters. 

Let us illustrate the cluster analysis for supplier selection using Case 

Step 1 In the first step every supplier is rated on a scale of 0-1 for each attribute as shown in Table 6.12. 

Step 2 In this step we need to decide on the number of clusters. We want the initial list of suppliers to be split into two categories, good suppliers (shortlisted) and bad suppliers (rejected) hence the number of clusters is two. 

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Fig. 12. Schematic procedure for cluster analysis. Original data points are shown as letters a-j the sequence of joining nearest neighbours and replacing them with the centroid is shown numerically. The dendo-gram is shown below, the lengths of each branch being approximately proportional to the distance between the points or locates being joined...

Shick A. and Rajagopalan R., Reverse Monte Carlo procedure for cluster analysis in colloidal systems. Colloids Surf., 66,113-119 (1992). 

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