data analytics final
To find the guaranteed optimal integer solution, Integer tolerance must be set to
0
Net operating income
= gross profit - operating expenses
general integer variables
Decision variables that re forced to be integers
TF Adding more realism to a model reduces its complexity
FALSE
TF One useful excel tool is the data error feature, which allows you to define acceptable input values in a spreadsheet and provides an error alert if an invalid entry is made
FALSE
TF The cash budget shows the daily cash balances and long-term forecasting decisions
FALSE
Variable cost
Fixed Cost + Variable Cost * Quantity produced
o Predictive decision models
Focus on understanding the future -Predicting financial performance, customer retention, product sales - Sales levels used to plan inventory levels. -Usually involve multiple time periods -Incorporate the uncertainty element
validity refers to
How well a model represents reality
TF A wide variety of practical problems in business analytics can be modeled using spreadsheets
TRUE
A feasible solution
a set of values for the decision variable that satisfy all of the constraints. Linear programs generally have an infinite number of feasible solutions
Operating expenses =
administrative expenses + selling expense + depreciation expense
The set of feasible solutions is often called
called the feasible region. The feasible region is the set of points that satisfy all constraints simultaneously
Simple bounds
constrain the value of a single variable
Net income
earnings before taxes - taxes
TF In predictive modeling, verification refers to how well a model represents reality?
false
Unbounded
if the value of the objective can be increased or decreased without bound, without violating any of the constraints.
Requirements
involve the specification of minimum levels of performance
Building spreadsheet models, often called spreadsheet engineering
is part art and part science. Spreadsheets need to be accurate, understandable, and user friendly
Constraints
limitations, requirements, or other restrictions that are imposed on any solution, either from practical or technological considerations or by management policy
An optimization model has the following elements
o 1) decision variables 2) an objective to maximize or minimize, and 3) Constraints.
Gross profit
o = sales - COGS
o Solver
o An add-in package with excel that was developed by frontline systems and can be used to solve many different types of optimization problems
o Optimal Solution
o Includes any set of decision variables that optimizes the objective function.
Profit =
o Revenue - Variable Cost - Fixed Cost
o Cash Budget
o The process of projecting and summarizing a company's cash inflows and outflows expected during a planning horizon, usually 6 to 12 months. o The cash budget also shows the monthly cash balances and any short-term borrowing used to cover cash shortfalls.
o Optimization
o Used extensively In operations and supply chains, finance, marketing, and other disciplines. o The process of selecting values of decision variables that minimize or maximize some quantity of interest.
data validation feature
o allows you to define acceptable input values in a spreadsheet and provides an error alert if an invalid entry is made. Can Help to avoid inadvertent user errors.
The best way to avoid scaling problems
o choose the "units" implicitly used in your model
Demand
o has an influence on profit by predicting how many units of a product will be sold.
Earnings before taxes
o net operating income - interest expense
A poorly scaled model
o one that computes values of the objective, constraints, or intermediate results that differ by several orders of magnitude.
an integer linear optimization model
o some or all of the variables are restricted to being whole numbers.
Verification
o the process of ensuring that a model is accurate and free from logical errors.
binary variables
o variables that are restricted to being either 0 or 1.
Proportional Relationships
often found in problems involving mixtures or blends of materials or strategies.
Two way data tables can evaluate only _____ out put variable
one
Infeasible Problem
one for which no feasible solution exists- that is, when there is no solution that satisfies all constraints simultaneously
Two-way data tables can evaluate
only one output variable
Problem statements such as production levels must be sufficient enough to meet promised customer orders would be categorized as __________ constraints
requirement
The process of developing good, useful, and correct spreadsheet models is known
spreadsheet engineering
Alternative (multiple) solutions
the objective is maximized (or minimized) by more than one combination of decision variables, all of which have the same objective function value.
Integer tolerance
the parameter that specifies when the solver algorithm will terminate an optimization process with integer constraints.
Verification
the process of ensuring that a model is accurate and free from logical errors
Objective function
the quantity that is to be minimized or maximized o The most important tool in prescriptive analytics.
TF Requirements involve the specifications of the minimum levels of performance
true
Limitations
usually involve allocation of scarce resources
Balance Constraints
§ : input = output and ensure that the flow of material or money is accounted for at locations or between time periods.
A unique optimal solution
§ there is only one solution that will result in the max (or min) objective.
The value of integer tolerance should be
§ zero in order to find the guaranteed optimal solution.
