BANA 2 - Final

Interaction

(Quiz) refers to the scenario in which the relationship between the dependent variable and one independent variable is different at different values of a second independent variable. (PPT) This occurs when the relationship between the dependent variable and one independent variable is different at various values of a second independent variable

cross-validation

(quiz) Assessing the regression model on data other than the sample data that was used to generate the model is known as (PPT) If you have access to a sufficient quantity of data, assess your model on data other than the sample data that were used to generate the model It is recommended to divide the original sample data into training and validation sets

Training set

(quiz) is the data set used to build the candidate models. (PPT) The data set used to build the candidate models that appear to make practical sense

Validation set

(quiz) refers to the data set used to compare model forecasts and ultimately pick a model for predicting values of the dependent variable. (PPT) The set of data used to compare model performances and ultimately pick a model for predicting values of the dependent variable

What would be the Coefficient of determination if the total sum of squares (SST) is 23.29 and the sum of squares due to regression (SSR) is 10.03

.42 (SSR / SST) 10.03 / 23.29

In binary integer linear program, the integer variables take only the values

0 or 1

What would be the coefficient of determination if the total sum of squares (SST) is 15, the sum of squares due to regression (SSR) is 10, and the sum of squares due to error (SSE) is 5? Round your answer to three decimal places.

0.667

If at most 4,000 MWs of power can be supplied by any one of the power plants in Question 1, determine the new optimal solution. What is the annual increase in power distribution cost that results from adding these constraints to the original formulation? Enter your answer rounded to two decimal places and without a dollar sign.

100566.41

A soft drink manufacturing company has 3 factories—one in Orlando, one in Tampa, and one in Port St. Lucie—which supply soft drink bottles to 3 warehouses located in the city of Miami. The associated per-unit transportation cost table is provided below. Transportation Costs ($) Factories/Warehouse (W) W1 W2 W3 Orlando 4 3 7 Tampa 7 6 4 Port St. Lucie 3 6 6 The factory in Orlando has a capacity of 15,000 units. The factory in Tampa has a capacity of 18,000 units. The factory in Port St. Lucie has a capacity of 8,000 units. The requirements of the warehouses are: Warehouse Requirement (Bottles) W1 18,000 W2 12,000 W3 5,000 ​ Determine how much of the company's production should be shipped from each factory to each warehouse in order to minimize the total transportation cost. What is the optimal value of the objective function?

141000

What would be the value of the sum of squares due to regression (SSR) if the total sum of squares (SST) is 25.32 and the sum of squares due to error (SSE) is 6.89?

18.43

What would be the value added by a market analysis undertaken, if the expected value with sample information is $8.56 million and the expected value without sample information is $6.39 million?

2.17 million (Expected with Sample - Expected without Sample)

Based on the assigned web article, in the Dodgers Front Office how many people have the term analyst or research in their titles?

21

Aggie Power Generation supplies electrical power to residential customers for many U.S. cities. Its main power generation plants are located in Los Angeles, Tulsa, and Seattle. The attached data table shows Aggie Power Generation's major residential markets, the annual demand in each market (in Megawatts or MWs), and the cost to supply electricity to each market from each power generation plant (prices are in $/MW). AGGIE If there are no restrictions on the amount of power that can be supplied by any of the power plants, what is the the total annual power distribution cost? Enter your answer rounded to two decimal places and without a dollar sign.

2552382.81

East Coast Trucking provides service from Boston to Miami using regional offices located in Boston, New York, Philadelphia, Baltimore, Washington, Richmond, Raleigh, Florence, Savannah, Jacksonville, and Tampa. The number of miles between the regional offices is provided in the attached file. EastCoast The company's expansion plans involve constructing service facilities in some of the cities where regional offices are located. Each regional office must be within 400 miles of a service facility. For instance, if a service facility is constructed in Richmond, it can provide service to regional offices located in New York, Philadelphia, Baltimore, Washington, Richmond, Raleigh, and Florence. Management would like to determine the minimum number of service facilities needed and where they should be located. Formulate an integer linear program that can be used to determine the minimum number of service facilities needed and their locations. Solve the integer linear program formulated. How many service facilities are required? This is the last problem in your homework assignment.

3

Never use a ________ chart when a __________ chart will suffice.

3-D; 2-D

Reconsider the Par Inc. problem. Suppose that the profit per bag for deluxe bags in $15. The rest of the problem remains the same. What is the optimal number of deluxe bags to produce?

420

The Calhoun Textile Mill is in the process of deciding on a production schedule. It wishes to know how to weave the various fabrics it will produce during the coming quarter. The sales department has confirmed orders for each of the 15 fabrics produced by Calhoun. These demands are given in the attached data table. Calhoun Also given in this table is the variable cost for each fabric. The mill operates continuously during the quarter: 13 weeks, 7 days a week, and 24 hours a day. There are two types of looms: dobbie and regular. Dobbie looms can be used to make all fabrics and are the only looms that can weave certain fabrics, such as plaids. The rate of production for each fabric on each type of loom is also given in the table. Note that if the production rate is zero, the fabric cannot be woven on that type of loom. Also, if a fabric can be woven on each type of loom, then the production rates are equal. Calhoun has 90 regular looms and 15 dobbie looms. For this problem, assume that the time requirement to change over a loom from one fabric to another is negligible. Management would like to know how to allocate the looms to the fabrics and which fabrics to buy on the market so as to minimize the cost of meeting demand. Enter your answer rounded to two decimal places without a dollar sign.

599108.16

Data dashboard

A data visualization tool that updates in real time and gives multiple outputs is called Data visualization tool that illustrates multiple metrics and automatically updates these metrics as new data become available Key performance indicators (KPIs) Automobile dashboard: Current speed, Fuel level, and oil pressure Business dashboard: Financial position, inventory on hand, customer service metrics

a risk avoider

A decision maker who would choose a guaranteed payoff over a lottery with a superior expected payoff is a

Global maximum

A feasible solution when there are no other feasible points with a larger objective function value in the entire feasible region; also a local maximum

Global minimum

A feasible solution when there are no other feasible points with a smaller objective function value in the entire feasible region; also a local minimum

sparkline

A line chart that has no axes but is used to provide information on overall trends for time series data is called a

Line chart

A line connects the points in the chart Useful for time series data collected over a period of time (minutes, hours, days, years, etc.)

Trend line

A line that provides an approximation of the relationship between the variables

A canned food manufacturer has its manufacturing plants in three locations across a state. Their product has to be transported to three central distribution centers, which in turn disperse the goods to seventy-two stores across the state. Which of the following visualization tools could help understand this problem better?

A network graph

Markowitz mean-variance portfolio

A portfolio optimization model used to construct a portfolio that minimizes risk subject to a constraint requiring a minimum level of return A key trade-off in financial planning is that between risk and return; for a chance to earn greater returns, the investor must also accept greater risk In most portfolio optimization models: The return used is the expected (or average) return of the possible outcomes The risk is some measure of variability in these possible outcomes

MapReduce

A programming model used within Hadoop that performs two major steps: the map step and the reduce step

Simple linear regression

A regression analysis for which any one unit change in the independent variable, x, is assumed to result in the same change in the dependent variable, y

simple linear regression

A regression analysis involving one independent variable and one dependent variable is referred to as a

Data query

A request for information with certain characteristics from a database

Big data

A set of data that cannot be managed, processed, or analyzed with commonly available software in a reasonable amount of time Represents opportunities Presents challenges in terms of data storage and processing, security, and available analytical talent More companies are hiring data scientists who know how to process and analyze massive amounts of data

Geographic Information Systems (GIS):

A system that merges maps and statistics to present data collected over different geographies Helps in interpreting data and observing patterns

Heat map

A two-dimensional graphical representation of data that uses different shades of color to indicate magnitude. Typically should not use red and green (color blind people)

continuous probability distribution

A uniform probability distribution

Crosstabulation (Pivot Table)

A useful type of table for describing data of two variables

Dummy variable

A variable used to model the effect of categorical independent variables in a regression model which generally takes only the value zero or one is called

Clustered column (or bar) chart

An alternative chart to stacked column chart for comparing quantitative variables

Confidence interval

An estimate of a population parameter that provides an interval believed to contain the value of the parameter at some level of confidence

Hadoop

An open-source programming environment that supports big data processing through distributed storage and processing over multiple computers

Nonlinear optimization

Any optimization problem in which at least one term in the objective function or a constraint is nonlinear

Predictive analytics

Are techniques that use models, constructed from past data, to predict the future or to ascertain the impact of one variable on another.

Combined PPT Chapter Start Dates

Chapter 3 (Data Visualization) 38 Chapter 7 (Linear Regression) 96 Chapter 10 (Spreadsheet Models) 185 Chapter 11 (Linear Optimization) 226 Chapter 12 (Integer Linear) 313 Chapter 13 (Non Linear Optimization) 379 Chapter 14 (Monte Carlo) 446 Chapter 15 (Decision Analysis) 508

Parallel-coordinates plot

Chart for examining data with more than two variables Includes a different vertical axis for each variable Each observation is represented by drawing a line on the parallel coordinates plot connecting each vertical axis The height of the line on each vertical axis represents the value taken by that observation for the variable corresponding to the vertical axis

An alternative for a stacked column chart when comparing more than a couple of quantitative variables in each category is a

Clustered column chart

Data dashboards

Collections of tables, charts, maps, and summary statistics that are updated as new data become available Uses of dashboards: To help management monitor specific aspects of the company's performance related to their decision-making responsibilities For corporate-level managers, daily data dashboards might summarize sales by region, current inventory levels, and other company-wide metrics Front-line managers may view dashboards that contain metrics related to staffing levels, local inventory levels, and short-term sales forecasts

Simulation optimization:

Combines the use of probability and statistics to model uncertainty with optimization techniques to find good decisions in highly complex and highly uncertain

Pie charts

Common form of chart used to compare categorical data

Tactical decisions

Concern how the organization should achieve the goals and objectives set by its strategy. Are usually the responsibility of midlevel management

_____ refers to the probability of one event, given the known outcome of a (possibly) related event.

Conditional probability

Predictive analytics

Consists of techniques that use models constructed from past data to predict the future or ascertain the impact of one variable on another. Survey data and past purchase behavior may be used to help predict the market share of a new product Techniques used Linear regression Time series analysis Data mining is used to find patterns or relationships among elements of the data in a large database; often used in predictive analytics

_________ is a constraint requiring that two binary variables be equal and that thus are both either in or out of the solution together.

Corequisite constraint

Bubble chart

Graphical means of visualizing three variables in a two-dimensional graph. Sometimes a preferred alternative to a 3-D graph

Scatter chart

Graphical presentation of the relationship between two quantitative variables

key performance indicators.

In a business, the values indicating the business's current operating characteristics, such as its financial position, the inventory on hand, and customer service metrics, are typically known as

Independent variable

In a linear regression model, the variable (or variables) used for predicting or explaining values of the response variable are known as the ________________. It(they) is(are) denoted by x.

Constrained Problem

In calculating the unconstrained optimal solution, we have ignored the production constraints

Bubble Chart

In order to visualize three variables in a two-dimensional graph, we use a

Prescriptive Analytics

Indicates a best course of action to take

Strategic Decisions

Involve higher-level issues concerned with the overall direction of the organization. Define the organization's overall goals and aspirations for the future

Which of the following is true of verification?

It is largely a debugging task.

Which of the following is true of rounding the optimized solution of a linear program to an integer?

It may or may not be feasible.

The linear program that results from dropping the integer requirements for the variables in an integer linear program is known as

LP relaxation.

Which one of the following is used in predictive analytics?

Linear regression

A portfolio optimization model used to construct a portfolio that minimizes risk subject to a constraint requiring a minimum level of return is known as

Markowitz mean-variance portfolio model.

Rob is a financial manager with Sharez, an investment advisory company. He must select specific investments—for example, stocks and bonds—from a variety of investment alternatives. Which of the following statements is most likely to be the objective function in this scenario?

Maximization of expected return

Which of the following is a second way of formulating the Markowitz model?

Maximizing the expected return of the portfolio subject to a constraint on variance

Data ink ratio

Measures the proportion of what Tufte terms "data-ink" to the total amount of ink used in a table or chart Edward R. Tufte first described the data-ink ratio Helpful for creating effective tables and charts for data visualization Data-ink: Ink used in a table or chart that is necessary to convey the meaning of the data to the audience Non-data-ink: Ink used in a table or chart that serves no useful purpose in conveying the data to the audience

A canned food manufacturer has its manufacturing plants in three locations across a state. Their product has to be transported to three central distribution centers, which in turn disperse the goods to seventy-two stores across the state. Which of the following is most likely to be the objective function in this scenario?

Minimizing the cost of shipping goods from the plant to the store

Optimization models

Models that give the best decision subject to constraints of the situation

A ___________ uses repeated random sampling to represent uncertainty in a model representing a real system and that computes the values of model outputs.

Monte Carlo simulation

uses repeated random sampling to represent uncertainty in a model representing a real system and that computes the values of model

Monte Carlo simulation

option in Excel Solver is helpful when the solution to a problem appears to depend on the starting values for the decision variables

Multistart

refers to the expression that defines the quantity to be maximized or minimized in a linear programming model

Objective function

Which one of the following statements is not true concerning PivotTables in Excel?

PivotTables can only be used if one variable is categorical and the other is quantitative data

__________ refer to the probabilities of the states of nature after revising the prior probabilities based on sample information.

Posterior probabilities

Extrapolation

Prediction of the value of the dependent variable outside the experimental region It is risky

advanced analytics

Predictive and prescriptive analytics are sometimes referred to as

analytics use techniques that take input data and yield a best course of action

Prescriptive

_____________ or modeling, is the process of translating a verbal statement of a problem into a mathematical statement.

Problem formulation

Statistical inference

Process of making estimates and drawing conclusions about one or more characteristics of a population (the value of one or more parameters) through the analysis of sample data drawn from the population Consider both hypothesis testing and interval estimation

The ratio of the amount of ink used in a table or chart that is necessary to convey information to the total amount of ink used in the table and chart is known as data-ink ratio. Using additional ink that is not necessary to convey information has what effect on the data-ink ratio?

Reduces

Multiple regression

Regression analysis involving one dependent variable and more then one independent variable known as

Multiple linear regression

Regression analysis involving two or more independent variables

Probability distribution

Represents not only the range of possible values but also the relative likelihood of various outcomes

Overfitting

Results from creating an overly complex model to explain idiosyncrasies in the sample data Results from the use of complex functional forms or independent variables that do not have meaningful relationships with the dependent variable If a model is overfit to the sample data, it will perform better on the sample data used to fit the model than it will on other data from the population Thus, an overfit model can be misleading about its predictive capability and its interpretation

Grouping in Excel

Right click on first data set Group Enter in custom directions

___________ is the study of the possible payoffs and probabilities associated with a decision alternative or a decision strategy in the face of uncertainty.

Risk analysis

Sum of Squares

SST = SSR + SSE Measures how much the 𝑦 ̂ values on the estimated regression line deviate from 𝑦 ̅

The _________ function pairs each element of the first array with its counterpart in the second array, multiplies the elements of the pairs together, and adds the results.

SUMPRODUCT

Business analytics

Scientific process of transforming data into insight for making better decisions. Used for data-driven or fact-based decision making, which is often seen as more objective than other alternatives for decision making

Best-subsets procedure

Simple linear regressions for each of the independent variables under consideration are generated, and then the multiple regressions with all combinations of two independent variables under consideration are generated, and so on Once a regression has been generated for every possible subset of the independent variables under consideration, an output that provides some criteria for selecting regression models is produced for all models generated

controllable inputs

Simulation results help us to make decision recommendations for the (controllable inputs) that address not only the average output but also the variability of the output

The ___________ value for each less-than-or-equal-to constraint indicates the difference between the left-hand and right-hand values for a constraints

Slack

Coefficient of Determination

The ratio SSR/SST used to evaluate the goodness of fit for the estimated regression equation. Interpreted as the percentage of the total sum of squares that can be explained by using the estimated regression equation R2 = SSR / SST

Tables

The reader needs to refer to specific numerical values The reader needs to make precise comparisons between different values and not just relative comparisons The values being displayed have different units or very different magnitudes Table Design Principles Avoid using vertical lines in a table unless they are necessary for clarity Horizontal lines are generally necessary only for separating column titles from data values or when indicating that a calculation has taken place

Testing Individual Regression Parameters:

To determine whether statistically significant relationships exist between the dependent variable y and each of the independent variables x1, x2, . . . , xq individually If a βj = 0, there is no linear relationship between the dependent variable y and the independent variable xj If a βj ≠ 0, there is a linear relationship between y and xj

utility function for money

Top curve is utility function for risk avoider Bottom curve is utility function for risk taker Utility function for a decision maker neutral to risk shows a constant return (middle line)

Arrows pointing from the selected cell to cells that depend on the selected cell are generated by using the ___________ button of the Formula Auditing group.

Trace Dependents

The ____________ button, located in the Formula Auditing group, creates arrows pointing to the selected cell from cells that are part of the formula in that cell

Trace Precedents

Based on your results in Question 6 (question above), you would investigate getting additional time in the Cutting and Dyeing Department.

True

Column Charts

Use vertical bars to display the magnitude of the quantitative variable Bar and column charts are very helpful in making comparisons between categorical variables

Decision analysis

Used to develop an optimal strategy when a decision maker is faced with several decision alternatives and an uncertain set of future events

Scatter chart matrix

Useful chart for displaying multiple variables

Treemap

Useful for visualizing hierarchical data along multiple dimensions

Dependent variable

Variable being predicted y = dependent variable x = independent variable

Independent variable

Variables being used to predict the value of the dependent variable y = dependent variable x = independent variable

Charts

Visual methods of displaying data

A feasible solution is __________ if there are no other feasible points with a better objective function value in the entire feasible region.

a global optimum

A one-way data table summarizes

a single input's impact on the output of interest

The SUM function in Excel

adds up all the numbers in a range of cells.

prior probability

assessments for the states of nature that are the best probability values available prior to obtaining additional information

In a nonlinear optimization problem

at least one term in the objective function or a constraint is nonlinear.

The charts that are helpful in making comparisons between categorical variables are

bar charts and column charts

Lines showing the alternatives from decision nodes and the outcomes from chance nodes are called

branches

An uncertain future event affecting the consequence associated with a decision is known as a

chance event

In the Bass forecasting model, the __________ measures the likelihood of adoption due to a potential adopter being influenced by someone who has already adopted the product.

coefficient of imitation

In the Bass forecasting model, the ___________measures the likelihood of adoption, assuming no influence from someone who has already purchased (adopted) the product.

coefficient of innovation

The states of nature are defined so that they are ___________. This means that at least one state of nature must occur at a given time for a chance event.

collectively exhaustive

Choosing a decision alternative that maximizes the minimum profit is a feature of the __________ approach.

conservative

Rob is a financial manager with Sharez, an investment advisory company. He must select specific investments—for example, stocks and bonds—from a variety of investment alternatives. Restrictions on the type of permissible investments would be a _________ in this case.

constraint

The points where constraints intersect on the boundary of the feasible region are termed as the

extreme points.

Local minimum

feasible solution when there are no other feasible solutions with a smaller objective function value in the immediate neighborhood

Fields may be chosen to represent all of the following except ____________ in the body of a PivotTable

filters

Risk profile

for a decision alternative shows the possible payoffs along with their associated probabilities

An effective display of trend and magnitude is achieved by using a combination of a

heat map and sparklines

Risk analysis

helps the decision maker recognize the difference between the expected value of a decision alternative and the payoff that may actually occur

The choice of the probability distribution for a random variable can be guided by

historical data.

Deleting the grid lines in a table and the horizontal lines in a chart

increases the data-ink ratio

In a simulation process, the error of the estimates of the output can be reduced by

increasing the number of trials per simulation.

A(n) _____________ is a visual representation that shows which entities affect others in a model.

influence diagram

what-if analysis

involves considering alternative values for the random variables (direct labor cost, parts cost, and first-year demand) and computing the resulting value for the output (profit)

Data-ink is the ink used in a table or chart that

is necessary to convey the meaning of the data to the audience.

Payoff

is the outcome resulting from a specific combination of a decision alternative and a state of nature

A disadvantage of stacked-column charts and stacked-bar charts is that

it can be difficult to perceive small differences in areas.

The utility function for money is a curve that depicts the relationship between

monetary value and utility.

The degree of correlation among independent variables in a regression model is called

multicollinearity

No more than one state of nature can occur at a given time for a chance event. This indicates that the states of nature are defined such that they are

mutually exclusive

The sum of two or more binary variables must be less than or equal to one in a _____ constraint.

mutually exclusive

The minimax regret approach is

neither purely optimistic nor purely conservative.

An intersection or junction point of a decision tree is called a(n)

node

You have solved a linear programming problem to determine an investment strategy that will maximize the return to shareholders. Now you are told that another constraint needs to be added to reduce risk exposure. You know that the addition of the new constraint will

not increase the current optimal value of the return to shareholders.

The amount of loss (lower profit or higher cost) from not making the best decision for each state of nature is known as

opportunity loss.

The ___________ approach evaluates each decision alternative in terms of the best payoff that can occur.

optimistic

A(n) _________ refers to the result obtained when a decision alternative is chosen and a chance event occurs.

outcome

With reference to a spreadsheet model, an uncontrollable model input is known as a(n)

parameter

A special case of sample information where the information tells the decision maker exactly which state of nature is going to occur is known as_____ information.

perfect

Making visual comparisons between categorical variables is difficult in a

pie chart

Making visual comparisons between categorical variables is possible but difficult in a

pie chart

A description of the range and relative likelihood of possible values of an uncertain variable is known as a

probability distribution.

In linear programming models of real problems, the occurrence of an unbounded solution means that the

problem formulation is improper

Decision Tree

provides a graphical representation of the decision-making process

Constraints are

restrictions that limit the settings of the decision variables.

Exponential utility functions indicate that the decision maker is

risk averse.

A _____ is a decision maker who would choose a guaranteed payoff over a lottery with a better expected payoff.

risk avoider

New information obtained through research or experimentation that enables an updating or revision of the state-of-nature probabilities is known as

sample information.

Regret

the difference between the payoff associated with a particular decision alternative and the payoff associated with the decision that would yield the most desirable payoff for a given state of nature

The condition that VLOOKUP assumes is that

the first column of the table is sorted in ascending order

Reduced gradient

value associated with a variable in a nonlinear model that is analogous to the reduced cost in a linear model; the shadow price of a binding simple lower or upper bound on the decision variable

The measure of risk most often associated with the Markowitz portfolio model is the

variance of the portfolio's return

The process of determining that a computer program implements a simulation model as it is intended is known as

verification

The shadow price of nonbinding constraints

will always be zero.

utility theory

Assigns values to outcomes based on the decision maker's attitude toward risk, loss, and other factors

multicollinearity

The degree of correlation among independent variables in a regression model

Regression Model

The equation that describes how y is related to x and an error term Simple Linear Regression Model: y = β0 + β1x + ε Intercept + Variable 1 x(variable unknown) Parameters: The characteristics of the population, β0 and β1 Random variable: Error term, ε. The error term accounts for the variability in y that cannot be explained by the linear relationship between x and y

straight line regression

The graph of the simple linear regression equation is a(n)

Validation

The process of ensuring that the simulation model provides an accurate representation of a real system

Data security

The protection of stored data from destructive forces or unauthorized users

Experimental region

The range of values of the independent variables in the data used to estimate the model The regression model is valid only over this region

Bar Charts

Use horizontal bars to display the magnitude of the quantitative variable Bar and column charts are very helpful in making comparisons between categorical variables

__________ is a measure of the total worth of a consequence reflecting a decision maker's attitude toward considerations such as profit, loss, and risk.

Utility

____________ is the process of determining that a simulation model provides an accurate representation of a real system.

Validation

is the process of determining that a simulation model provides an accurate representation of a real system

Validation

We are determining where to locate our manufacturing plants in the United States. The locations are represented by the binary variables P1through P5. Each plant may or may not have a warehouse associated with it. These warehouses are represented by the binary variables W1 through W5. A warehouse can only be opened if the associated plant is opened. To accommodate this requirement we will add five constraints of the form that

Wi is less than or equal to Pi for i = 1 to 5

estimated regression equation for finding a missing X value

Y = MX+ B Excel regression Y value is the missing value X value is given

The slack value for binding constraints is

Zero

The geographic information system

_____ merges maps and statistics to present data collected over different geographies.

Concave function

a function that is bowl-shaped down For example, the following are concave functions: f(x)= -5x2 - 5x f(x, y) = -x2 - 11y2

Convex function

a function that is bowl-shaped up For example, the following are convex functions: f(x)= x2 - 5x f(x, y) = x2 + 5y2

A constraint involving binary variables that does not allow certain variables to equal one unless certain other variables are equal to one is known as a

conditional constraint.

Branches

connect the nodes; those leaving the decision node correspond to the decision alternatives

A(n) ____________ refers to a model input that can be controlled in a spreadsheet model.

decision variable

refers to a model input that can be controlled in a spreadsheet model

decision variable

discrete probability distribution

describes the probability of occurrence of each value of a discrete random variable.

Sensitivity analysis

determines how changes in the probabilities for the states of nature or changes in the payoffs affect the recommended decision alternative

efficient frontier

each point on the efficient frontier is the minimum possible risk (measured by portfolio variance) for the given return

A(n) __________ is a set of points defining the minimum possible risk for a set of return values.

efficient frontier

Bayes' theorem

enables the use of sample information to revise prior probabilities.

optimistic approach

evaluates each decision alternative in terms of the best payoff that can occur

conservative approach

evaluates each decision alternative in terms of the worst payoff that can occur

The weighted average of the payoffs for a chance node is known as the

expected value

In Excel, the expression LN(RAND())*(-m) would generate a(n) __________ random variable with mean m.

exponential

A(n) ___________ solution satisfies all the constraint expressions simultaneously.

feasible

solution satisfies all the constraint expressions simultaneously.

feasible

The situation in which the value of the solution may be made infinitely large in a maximization linear programming problem or infinitely small in a minimization problem without violating any of the constraints is known as

unbounded

Simulation

involves the use of probability and statistics to construct a computer model to study the impact of uncertainty on a decision

risk taker

is a decision maker who would choose a lottery over a guaranteed payoff when the expected value of the lottery is inferior to the guaranteed payoff

scatter chart

is a graphical presentation of the relationship between two quantitative variables

Trendline

is a line that provides an approximation of the relationship between the variables

utility

is a measure of the total worth or relative desirability of a particular outcome

Payoff table

is a table showing payoffs for all combinations of decision alternatives and states of nature

A feasible solution is a(n) ___________ if there are no other feasible solutions with a better objective function value in the immediate neighborhood.

local optimum

In _______________ decision making companies have to decide whether they should manufacture a product or outsource its production to another firm.

make-versus-buy

One of the ways to formulate the Markowitz model is to

minimize the variance of the portfolio subject to a constraint on the expected return of the portfolio.

The term _____________ refers to the expression that defines the quantity to be maximized or minimized in a linear programming model.

objective function

expected value (EV)

of a decision alternative is the sum of weighted payoffs for the decision alternative

expected utility (EU)

of the utilities in a similar fashion as we computed expected value

minimax regret approach

one would choose the decision alternative that minimizes the maximum state of regret that could occur over all possible states of nature

Regret is often referred to as

opportunity loss

Verification

the process of determining that the computer procedure that performs the simulation calculations is logically correct

The weekly demand for an item in a retail store follows a uniform distribution over the range 70 to 83. What would be the weekly demand if its corresponding computer-generated value is 0.5?

76.5

sample information

Additional information is obtained through experiments designed to provide

Operational decisions

Affect how the firm is run from day to day. Are the domain of operations managers, who are the closest to the customer.

The company identified in Chapter 7, Analytics in Action: The Analytics in Action example in Chapter 7 concerned: Chapter 7 focuses on:

Alliance Data Systems Predicting the effect of advertising Linear regression

Stacked column chart

Allows the reader to compare the relative values of quantitative variables for the same category in a bar chart

is used to test the hypothesis that the values of the regression parameters B 1, B 2, ... B q are all zero

An F test

The __________forecasting model uses nonlinear optimization to forecast the adoption of innovative and new technologies in the marketplace.

Bass

Binary variables are identified with the _____designation in the Solver Parameters dialog box.

Bin

In order to visualize three variables in a two-dimensional graph, we use a

Bubble Chart

Within a given range of cells, the number of times a particular condition is satisfied is computed by using the ________ function.

COUNTIF

The uncertain future events, referred to as

Chance

Data Visulation

Creating a summary table for the data. Generating charts to help interpret, analyze, and learn from the data Uses of data visualization: Helpful for identifying data errors Reduces the size of your data set by highlighting important relationships and trends in the data

Line Chart

DJ needs to display data over time. Which of the following charts should he use?

An Excel _________________ quantifies the impact of changing the value of a specific input on an output of interest.

Data Table

Descriptive analytics

Data dashboards are a type of _________ analytics

A retail store owner offers a discount on product A and predicts that the customers would purchase products B and C in addition to product A. Identify the technique used to make such a prediction.

Data mining

Which of the following is a disadvantage of using simulation?

Each simulation run provides only a sample of how the real system will operate.

Descriptive analytics

Encompasses the set of techniques that describes what has happened in the past; examples Data queries Reports Descriptive statistics Data visualization (including data dashboards) Data-mining techniques Basic what-if spreadsheet models

The calculations of a cell can be investigated in great detail by using the ___________ button.

Evaluate Formula

The software package most commonly used for creating simple charts is

Excel

Excel searches for an exact match of the first argument in the first column of the data when the range in the VLOOKUP function is

FALSE

The __________ function in Excel is used to compute the statistics required to create a histogram.

FREQUENCY

Based on your results in Question 6 (two up), you would investigate getting additional time in the Finishing Department.

False

Refer to the Calhoun Textile Mill production problem described in the previous question. Use the procedure described in class to try to find an alternative optimal solution. Based on your answer, you can conclude that there are not alternative optimal solutions.

False

Marketing Analytics

Fastest growing out of Financial and HR A better understanding of consumer behavior through the use of scanner data and data generated from social media has led to an increased interest in marketing analytics

overfitting

Fitting a model too closely to sample data, resulting in a model that does not accurately reflect the population is termed as

Which of the following is true of the relationship between the value of the optimal integer solution and the value of the optimal solution to the LP Relaxation?

For integer linear programs involving minimization, the value of the optimal solution to the LP Relaxation provides a lower bound on the value of the optimal integer solution.

Solving nonlinear problems with local optimal solutions is performed using _____________, in Excel Solver, which is based on more classical optimization techniques.

GRG Nonlinear

Confidence level

Indicates how frequently interval estimates based on samples of the same size taken from the same population using identical sampling techniques will contain the true value of the parameter we are estimating

____________ is the situation in which no solution to the linear programming problem satisfies all the constraints.

Infeasibility

The __________ option in Excel Solver is helpful when the solution to a problem appears to depend on the starting values for the decision variables.

Multistart

quadratic regression

Process to make regression 1. Square data set in question (typically b1) 2. Make regression with b1 and b2 (squared data set) 3. draw conclusion An estimated regression equation given by: 𝑦 ̂ = b0 + b1x1 + b2𝑥_1^2 + e In the Reynolds example, to account for the curvilinear relationship between months employed and scales sold we could include the square of the number of months the salesperson has been employed in the model as a second independent variable

The __________ function is used to generate a pseudorandom number in Excel.

RAND()

function is used to generate a pseudorandom number in Excel.

RAND()

The Excel function __________ generates integer values between lower and upper bounds.

RANDBETWEEN

Least squares method

Slides 106 - 125 A procedure for using sample data to find the estimated regression equation Determine the values of b0 and b1 Interpretation of b0 and b1:

_____________ are possible outcomes for chance events that affect the consequences associated with a decision alternative.

States of nature

The VLOOKUP with range set to _________ takes the first argument and searches the first column of the table for the last row that is strictly less than the first argument.

TRUE

Stepwise procedure

The analyst establishes both a criterion for allowing independent variables to enter the model and a criterion for allowing independent variables to remain in the model In the first step of the procedure, the independent variable that best satisfies the criterion for entering the model is added First, the remaining independent variables not in the current model are evaluated, and the one that best satisfies the criterion for entering is added to the model Then the independent variables in the current model are evaluated, and the one that violates the criterion for remaining in the model to the greatest degree is removed The procedure stops when no independent variables not currently in the model meet the criterion for being added to the regression model, and no independent variables currently in the model violate the criterion for remaining in the regression model

With reference to the SUMPRODUCT function, which of the following statements is true?

The arrays that appear as arguments must be of the same dimension.

Knot

The value of the independent variable at which the relationship between dependent variable and independent variable changes

Tables should be used instead of charts when

The values being displayed have different units or very different magnitudes

Which of the following inferences about a variable of interest can be drawn from the graph given below?

The variable is equally likely to take any value between 20 and 40.

Which of the following is true about the sensitivity analysis for integer optimization problems?

To determine the sensitivity of the solution to changes in model inputs for integer optimization problems, the data must be changed and the problem must be re-solved.

Pivot Chart

To summarize and analyze data with both a crosstabulation and charting, Excel pairs PivotCharts with PivotTables

quadratic regression model

Which of the following regression models is used to model a nonlinear relationship between the independent and dependent variables by including the independent variable and the square of the independent variable in the model?

A scenario in which the optimal objective function contour line coincides with one of the binding constraint lines on the boundary of the feasible region leads to _____ solutions.

alternative optimal

random variables

are randomly generated from the specified probability distributions

Posterior probabilities

are revised probabilities after obtaining additional information

Global optimum

feasible solution when there are no other feasible points with a better objective function value in the entire feasible region; may be either a global maximum or a global minimum A Feasible Solution is a(n) ___ if there are no other feasible points with a better objective function value in the entire feasible region

Local optima

feasible solution when there are no other feasible solutions with a better objective function value in the immediate neighborhood; may be either a local maximum or a local minimum A Feasible Solution is a(n) ___ if there is no other feasible solutions with a better objective function value in the immediate neighborhood

Local maximum

feasible solution when there are no other feasible solutions with a larger objective function value in the immediate neighborhood

Which of the following conclusions can be drawn from the below figure using the Bass forecasting model? (Note: Bass forecasting model is given by: Ft = (p + q[Ct - 1 /m]) (m - Ct - 1), where m = the number of people estimated to eventually adopt the new product, Ct - 1 = the number of people who have adopted the product through time t - 1, q = the coefficient of imitation, and p = the coefficient of innovation.)

q < p

risk analysis

quantifying the likelihood and magnitude of an undesirable outcome

In many cases, white space in a chart can improve

readability

The reduced gradient is analogous to the ___________ for linear models.

reduced cost

In the Bass forecasting model, parameter m

refers to the number of people estimated to eventually adopt the new product.

A simulation model extends spreadsheet modeling by

replacing the use of single values for parameters with a range of possible values.

The difference between the observed value of the dependent variable and the predicted using the estimated regression equation is known as the

residual

The difference between the observed value of the dependent variable and the value predicted using the estimated regression equation is known as the

residual

Constraints are

restrictions that limit the settings of the decision variables

The study of how changes in the input parameters of a linear programming problem affect the optimal solution is known as

sensitivity analysis

The study of how changes in the probability assessments for the states of nature or changes in the payoffs affect the recommended decision alternative is known as

sensitivity analysis.

The Lagrangian multiplier is the __________ for a constraint in a nonlinear problem

shadow price

The change in the optimal objective function value per unit increase in the right-hand side of a constraint is given by the

shadow price.

Multicollinearity

slide 149 refers to the correlation among the independent variables in multiple regression analysis In t tests for the significance of individual parameters, the difficulty caused by multicollinearity is that it is possible to conclude that a parameter associated with one of the multicollinear independent variables is not significantly different from zero when the independent variable actually has a strong relationship with the dependent variable

In decision analysis, the possible outcomes for a chance event are the

states of nature

The parameter R in an exponential utility function represents

the decision maker's risk tolerance

The imposition of an integer restriction is necessary for models where

the decision variables cannot take fractional values

Lagrangian multiplier

the shadow price for a constraint in a nonlinear problem, that is, the rate of change of the objective function with respect to the right-hand side of a constraint

Problems with infeasible solutions arise in practice because

too many restrictions have been placed on the problem.

Prescriptive analytics

use techniques that take input data and yield a best course of action.

F Test

used to Test the hypothesis that the values of the regression parameters b0, b1, b2.... are all zero 𝐹= (SSR/𝑞)/(SSE/(𝑛 −𝑞 −1)) SSR = Sum of squares due to regression SSE = Sum of squares due to error q = the number of independent variables in the regression model n = the number of observations in the sample Larger values of F provide stronger evidence of an overall regression relationship

Monte Carlo simulation

used to evaluate the impact of uncertainty on a decision

Nodes

used to represent decisions and chance events