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LLM Applications And RAG

Learn LLM Applications And RAG for NLP Engineer for free: roadmap, examples, subskills, and a skill exam.

Published: January 5, 2026 | Updated: January 5, 2026

Why this skill matters for NLP Engineers

LLM Applications and RAG (Retrieval-Augmented Generation) let you build reliable, business-ready systems that answer questions with up-to-date and proprietary knowledge. As an NLP Engineer, this unlocks tasks like enterprise Q&A, analytics copilots, support assistants, research agents, and compliance-aware generation. You will combine prompts, retrieval, reranking, tool use, and guardrails to deliver grounded, auditable answers rather than generic text.

When to use RAG vs. fine-tuning
  • Use RAG when knowledge changes often or must be cited/controlled per query.
  • Use fine-tuning when you need style/formatting adaptation or domain reasoning patterns that do not rely on specific documents.
  • Often, use both: RAG for grounding, light fine-tuning or prompt tuning for output style and task fit.

Who this is for

NLP Engineers and ML practitioners building chatbots, search+chat, assistants, or workflow agents that must be accurate, explainable, and aligned with company knowledge.

Prerequisites

  • Comfortable with Python and basic data structures.
  • Basic NLP concepts: tokenization, embeddings, cosine similarity.
  • Familiarity with HTTP APIs and JSON.
  • Understanding of model context windows and rate limits.

Learning path (practical roadmap)

1) Model + Data Fit

Pick a base LLM (latency, cost, context window). Identify your corpus (docs, FAQs, tickets) and define answer requirements: format, citations, refusal policy.

2) Indexing & Chunking

Normalize documents, split into chunks with overlap, compute embeddings, and store vectors + metadata (doc_id, title, URL or internal reference).

3) Retrieval & Reranking

Implement top-k retrieval, then rerank for relevance with cosine or cross-encoders. Test recall vs. latency trade-offs.

4) Prompting & Grounding

Design structured prompts requiring citation brackets (e.g., [doc42]) and a clear refusal rule when evidence is missing.

5) Guardrails

Add content rules (no PII leakage), function calling for tools (search, calculators), schema validation, and safe fallbacks.

6) Offline Evaluation

Build a small gold set with queries, references, and source docs. Evaluate answer faithfulness, citation correctness, context precision/recall.

7) Observe & Iterate

Log prompts, retrieved chunks, outputs, and user feedback. Adjust chunking, reranking, prompts, and tools based on errors.

Worked examples

Example 1: Minimal RAG pipeline (Python)
# Minimal, library-light sketch for clarity
import math

def embed(text: str):
    # Placeholder embedding: split chars into simple features.
    # Replace with a real embedding model in production.
    vec = [0]*26
    for ch in text.lower():
        if 'a' <= ch <= 'z':
            vec[ord(ch)-97] += 1
    # L2 normalize
    norm = math.sqrt(sum(v*v for v in vec)) or 1.0
    return [v/norm for v in vec]

def cosine(a, b):
    return sum(x*y for x,y in zip(a,b))

# Build index
documents = [
    {'doc_id': 'doc1', 'text': 'RAG combines retrieval with generation to ground answers.'},
    {'doc_id': 'doc2', 'text': 'Chunk text with overlap to preserve context across boundaries.'},
    {'doc_id': 'doc3', 'text': 'Use citations like [doc1] in the final answer.'},
]
index = [{'doc_id': d['doc_id'], 'text': d['text'], 'vec': embed(d['text'])} for d in documents]

def retrieve(query, k=2):
    qv = embed(query)
    scored = sorted(
        [{'doc_id': r['doc_id'], 'text': r['text'], 'score': cosine(qv, r['vec'])} for r in index],
        key=lambda x: x['score'], reverse=True
    )
    return scored[:k]

SYSTEM_PROMPT = (
    "You are a helpful assistant. Use ONLY the provided context. "
    "Cite sources like [doc_id]. If unsure, say 'I don't know'."
)

def llm_generate(prompt: str):
    # Placeholder: echo with a simple template.
    return f"Answer (simulated): Based on context, {prompt[:120]} ... [doc1]"

def answer_query(query):
    ctx = retrieve(query, k=2)
    context_text = "\n\n".join(f"[{c['doc_id']}] {c['text']}" for c in ctx)
    user_prompt = (
        f"{SYSTEM_PROMPT}\n\nContext:\n{context_text}\n\nQuestion: {query}\n" 
        f"Instructions: Provide a concise answer with citations."
    )
    return llm_generate(user_prompt)

print(answer_query('How does RAG ensure grounded answers?'))
Example 2: Prompt design for reliability
# Structure messages and enforce output shape
system = (
    "Role: Enterprise QA Assistant.\n" 
    "Rules: \n- Use only provided context.\n- Cite sources like [doc_id].\n- If no evidence, say 'I don't know'.\n"
)
user = (
    "Context:\n[doc1] RAG combines retrieval with generation to ground answers.\n\n"
    "Question: Explain RAG grounding. Return JSON with fields: answer, citations (array), confidence (0-1)."
)
# Expected shape guidance (add to prompt):
shape = (
    "Respond EXACTLY as JSON: {\"answer\": string, \"citations\": [string], \"confidence\": number}."
)
# Combine into your model call; validate JSON after generation.

Tip: Keep rules short, explicit, and test with edge cases (no context, conflicting docs).

Example 3: Context window management (chunking)
def chunk(text, max_chars=800, overlap=120):
    parts = []
    i = 0
    while i < len(text):
        parts.append(text[i:i+max_chars])
        i += max(1, max_chars - overlap)
    return parts

long_doc = "..."  # your source text
chunks = chunk(long_doc, max_chars=800, overlap=120)
# Index each chunk with metadata: doc_id, chunk_id, title

Guideline: start with 500–1000 characters (or 200–400 tokens) and overlap 10–20%.

Example 4: Simple reranking (MMR-style)
def mmr(query_vec, candidates, lambda_mult=0.7, top_k=4):
    selected = []
    while candidates and len(selected) < top_k:
        best = None
        best_score = -1e9
        for c in candidates:
            relevance = cosine(query_vec, c['vec'])
            diversity = 0.0
            if selected:
                diversity = max(cosine(c['vec'], s['vec']) for s in selected)
            score = lambda_mult * relevance - (1 - lambda_mult) * diversity
            if score > best_score:
                best_score = score
                best = c
        selected.append(best)
        candidates = [c for c in candidates if c is not best]
    return selected

MMR balances relevance and diversity to reduce redundant chunks.

Example 5: Tool use and function calling
# Describe tools the assistant may call
TOOLS = [
    {
        'name': 'search_docs',
        'description': 'Semantic search over indexed enterprise documents',
        'input_schema': {'type': 'object', 'properties': {'query': {'type': 'string'}}, 'required': ['query']}
    },
    {
        'name': 'calc',
        'description': 'Perform arithmetic operations',
        'input_schema': {'type': 'object', 'properties': {'expr': {'type': 'string'}}, 'required': ['expr']}
    }
]

# Basic router based on intent heuristics
import re

def route(user_text):
    if re.search(r'\b(sum|add|\d+\s*[+\-*/])\b', user_text):
        return {'tool': 'calc', 'args': {'expr': user_text}}
    if len(user_text.split()) > 6:
        return {'tool': 'search_docs', 'args': {'query': user_text}}
    return {'tool': None, 'args': {}}

In production, let the LLM propose a tool call by outputting a structured JSON with tool name and arguments, then execute safely and pass results back.

Example 6: Guardrails and safe fallbacks
BLOCKLIST = [
    r'password', r'api[-_ ]?key', r'ssn', r'credit\s*card'
]

import re

def violates(text):
    return any(re.search(pat, text, flags=re.I) for pat in BLOCKLIST)

def safe_answer(context, draft):
    if violates(draft):
        return "I can't share sensitive information. Please clarify your request without secrets."
    if 'I don\'t know' in draft or len(context.strip()) == 0:
        return "I don't know based on the provided context."
    return draft

Combine policy prompts with programmatic checks. Always prefer refusal over confident guessing.

Drills and exercises

  • [ ] Take 10 random queries and verify each answer contains at least one correct citation like [doc_id].
  • [ ] Remove top-1 retrieved chunk and see if answers degrade; adjust k and reranking until stable.
  • [ ] Stress test: very long question, very short question, ambiguous terms, and conflicting documents.
  • [ ] Add a tool (calculator or date parser) and ensure the assistant calls it only when needed.
  • [ ] Build a tiny eval set (20 queries) and compute context recall and citation correctness.

Common mistakes and debugging tips

  • Mistake: Oversized chunks. Fix: Reduce chunk size, add overlap, and compress with summaries when needed.
  • Mistake: Missing refusal rule. Fix: Add explicit instruction to say 'I don't know' without evidence.
  • Mistake: Trusting raw retrieval scores. Fix: Add reranking and inspect top candidates.
  • Mistake: Unvalidated JSON outputs. Fix: Schema-validate; re-prompt with error messages if invalid.
  • Mistake: Hidden prompt leakage. Fix: Keep system rules minimal and logged; avoid secrets in prompts.
  • Debug tip: Log query, retrieved chunks, final prompt, and output for every request; sample failures for manual review.

Mini project: Enterprise policy Q&A with citations

Goal: A console app that answers employee questions about internal policies with citations and safe refusals.

  1. Ingest: Load 30–100 policy pages, clean text, chunk (e.g., 800 chars, 120 overlap), embed, and index.
  2. Query: Retrieve top-8, rerank to top-4 with MMR.
  3. Prompt: Require JSON output: answer, citations[], confidence. Enforce refusal if no evidence.
  4. Guardrails: Block secrets/PII. Cap answer length. Strip any URLs from output; keep only [doc_id] citations.
  5. Eval: Create 25 questions with expected references. Report: context recall, citation correctness, and faithfulness.
Acceptance checklist
  • [ ] Outputs valid JSON consistently.
  • [ ] At least one citation in every supported answer.
  • [ ] Correct refusal when evidence absent.
  • [ ] Passes offline eval with ≥ 70% faithfulness.
  • [ ] Latency under 2s on average for your setup (adjust as needed).

Subskills

  • RAG Architecture Basics: Components, pipelines, indexing, and E2E data flow.
  • Prompt Design For Reliability: Roles, rules, JSON outputs, refusal policies.
  • Context Window Management: Chunking, overlaps, compression, summaries.
  • Grounding And Citations Concepts: Evidence-first answers with [doc_id] style citations.
  • Reranking And Context Selection: Cosine, cross-encoders, MMR diversity.
  • Tool Use And Function Calling Basics: Schemas, routing, safe execution, loopbacks.
  • Handling Hallucinations With Guardrails: Policies, validators, constrained generation.
  • Offline Evaluation For RAG: Gold sets, faithfulness, citation checks, regression tests.

Next steps

  • Grow your eval set to cover real user intents, edge cases, and adversarial prompts.
  • Add domain-specific tools (search indices, internal APIs) and monitor tool usage rate.
  • Experiment with compression prompts and response length to fit tighter context windows.
  • Automate nightly offline eval and alert on regressions.

LLM Applications And RAG — Skill Exam

This exam checks core concepts of RAG and LLM application design: retrieval, reranking, prompt reliability, grounding, guardrails, tools, and offline evaluation. You can take it for free. Everyone can attempt; only logged-in users have their progress saved and can resume later.Rules: closed-book is encouraged but not required. Choose the best answer(s). Passing score is 70%.

12 questions70% to pass

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