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Amazon SageMaker Pipelines is designed for creating, automating, and managing end-to-end ML workflows, including complex data preprocessing tasks. It supports handling large datasets and can integrate with custom steps, such as NLP transformations. By combining SageMaker Pipelines with Amazon EventBridge, the entire workflow can be triggered and automated efficiently, meeting the requirements for scalability, automation, and processing complexity.

City (name): One-hot encoding

Type_year (type of home and year the home was built): Feature splitting

Size of the building (square feet or square meters): Standardized distribution

City (name): One-hot encoding

Why? The "City" is a categorical feature (non-numeric), so one-hot encoding is used to transform it into a numeric format. This encoding creates binary columns for each unique category (e.g., cities like "New York" or "Los Angeles"), which the model can interpret.

Type_year (type of home and year the home was built): Feature splitting

Why? "Type_year" combines two pieces of information into one column, which could confuse the model. Feature splitting separates this column into two distinct features: "Type of home" and "Year built," enabling the model to process each feature independently.

Size of the building (square feet or square meters): Standardized distribution

Why? Size is a continuous numerical variable, and standardization (scaling the feature to have a mean of 0 and a standard deviation of 1) ensures that the model treats it fairly compared to other features, avoiding bias from differences in feature scale.

By applying these feature engineering techniques, the ML engineer can ensure that the input data is correctly formatted and optimized for the model to make accurate predictions.

A high max_depth value in XGBoost can lead to overfitting, where the model learns the training dataset too well but fails to generalize to new and unseen data. By decreasing the max_depth, the model becomes less complex, reducing overfitting and improving its ability to detect fraud in new transactions. This adjustment helps the model focus on general patterns rather than memorizing specific details in the training data.

The text feature contains high-cardinality categorical values with minor spelling variations, which is a common real-world data quality issue. Traditional encoding techniques such as ordinal encoding (Option A) or one-hot encoding (Option C) would treat each misspelled value as a completely separate category, resulting in poor generalization and very high dimensionality.

Similarity encoding addresses this problem by grouping or encoding categories based on string similarity. Categories that differ only slightly—such as spelling errors—are encoded with similar numerical representations. Amazon SageMaker Data Wrangler supports similarity encoding specifically for such noisy categorical features.

Target encoding (Option D) depends on the target label distribution and risks target leakage if not carefully applied.

Therefore, similarity encoding is the most appropriate and AWS-recommended solution.

AWS recommends SageMaker shadow testing as the safest way to validate a new model version using real production traffic without impacting production responses. A shadow variant receives a copy of inference requests but does not return predictions to end users. This completely eliminates the risk of exposing incorrect predictions.

Options A and B are canary deployments. While useful, they still allow v2 to return responses to real users, which violates the requirement to prevent disruption. Option C sends 100% of traffic to v2 externally and is risky.

Shadow variants are explicitly designed to minimize risk while using real data, making them the AWS best practice for pre-production validation.

Therefore, Option D is correct.

The temperature parameter controls the randomness in the model's responses. Lowering the temperature makes the model produce more deterministic and consistent answers.

The top_k parameter limits the number of tokens considered for generating the next word. Reducing top_k further constrains the model's options, ensuring more predictable responses.

By decreasing both parameters, the responses become more focused and consistent, reducing variability in similar queries.

Amazon Macie is a fully managed data security and privacy service that uses machine learning to discover and classify sensitive data in Amazon S3. It is purpose-built to identify sensitive data with minimal operational overhead. After identifying the sensitive data, you can use AWS Lambda functions to automate the process of removing or redacting the sensitive data, ensuring efficiency and integration with the hybrid cloud environment. This solution requires the least development effort and aligns with the requirement to handle sensitive data effectively.

AWS Secrets Manager is designed for securely storing, managing, and automatically rotating secrets, including API tokens. By configuring a Lambda function for custom rotation logic, the solution can automatically rotate the API tokens every 3 months as required. Secrets Manager simplifies secret management and integrates seamlessly with other AWS services, making it the ideal choice for this use case.

This solution is the most efficient and involves the least operational overhead:

Amazon Kinesis data streams efficiently handle real-time ingestion of high-volume streaming data.

Amazon Managed Service for Apache Flink provides a fully managed environment for stream processing with built-in support for RANDOM_CUT_FOREST, an algorithm designed for anomaly detection in real-time streaming data.

This approach eliminates the need for deploying and managing additional infrastructure like SageMaker endpoints, Lambda functions, or external tools, making it the most scalable and operationally simple solution.