Ch. 1 Overview

Question 1

A set of mathematical relationships and logical assumptions implemented in a computer as a representation of some real world situation, decision, problem, or phenomenon. Organizations use these to help make decisions.

Name an example of one of these.

Answer 1

Computer Model

Example: electronic spreadsheets is the best way to implement and analyze computer models

Question 2

A computer model implemented via a spreadsheet

Answer 2

Spreadsheet Model

Question 3

A field of study that uses data, computers, statistics, and mathematics to solve business problems. It involves using the methods and tools of science to drive decision making.

Answer 3

Business Analytics

Question 4

Also referred to as operations research, management science or decision science.
Organizations can use analytics to identify the best decision alternatives for a given application or situation

Answer 4

Business Analytics

Question 5

The current trend of business analytics is:

Answer 5

Increasing usage to gain competitive advantage
Focusing on business intergration
Growing Demand for analytics talent

Question 6

To conduct business analytics you need:

Answer 6

Models
Human insights
Data

Question 7

Picturing how something will look in your mind’s eye

Answer 7

Mental Model

Question 8

set of drawings or blueprints for a house

Answer 8

Visual Model

Question 9

uses a mathematical relationship to describe or represent an object or decision problem

Answer 9

Mathematical Model

Question 10

1. Delivers needed information on a more timely basis
2. Helpful in examining situations that would be impossible to do in reality
3. Less expensive than implementing several alternative solutions

Answer 10

Benefits of Mathematical Model

Question 11

What is the dependent variable and independent variable in this equation: Profit = Revenue - Expenses

Answer 11

Profit depends on the revenue and expenses so it is the DEPENDENT VARIABLE

Revenue and Expenses are the INDEPENDENT VARIABLES

Question 12

the number of independent variables involved is this. Also the relationship between the dependent and independent variables is this.

Answer 12

F = function

Question 13

What does Y equal in the regression/time series equation

Answer 13

Y = the dependent variable

Question 14

the value of the inputs in the cell

Answer 14

Input Cells

Question 15

the results of the input cells

Answer 15

Output Cells

Question 16

a model that accurately represents the relevant characteristics of the object or decision problem being studied

Answer 16

Valid Model

Question 17

• the solutions tell the decision maker what actions to take
• known well defined functions

-the independent variables are known or under the decision makers control

Answer 17

Prescriptive Models (OPTIMIZATION)

Question 18

Examples of Prescriptive Models

Answer 18

Examples: Linear Programming, Networks, Integer Programming, Goal Programming

Real world: Investment portfolio design and Airline Flight schedules

Question 19

• the function might be unknown and must be estimated in order for the decision maker to make predictions about the dependent variables
• unknown, ill defined functions

-the independent variables are known or under the decision makers control

Answer 19

Predictive Models (FORECASTING)

Question 20

Examples of Predictive Models

Answer 20

Examples: Regression Analysis, Time Series Analysis, Discriminant Analysis

Realworld: FICO credit scoring and Fraud Detection

Question 21

• there is a well defined functional relationship, however there is great uncertainty as to the exact values that will be assumed by one or more of the independent variables
• seeks to measure and explain situations
• known, well-defined functions
• the independent variables are unknown or uncertain

Answer 21

Descriptive Models (ANALYSIS)

Question 22

Examples of Descriptive Models

Answer 22

Examples: Simulation, Queuing, Inventory Models

Realworld: inventory turns and employee absenteeism

Question 23

Synonym for
Prescriptive Models

Predictive Models
Descriptive Models

Answer 23

1. Prescriptive = Optimization
2. Predictive = Forecasting
3. Descriptive = Analysis

Question 24

5 steps to the Problem Solving Process (DECISION MAKING PROCESS)

Answer 24

1. Identify Problem
2. Formulate and Implement Model
3. Analyze Model
4. Test Results (if unsatisfactory result, go back to forumulate step)
5. Implement Solutions (this is considered the most difficult step)

Question 25

Arise when a seemingly trivial factor serves as a starting point for estimations in a decision making problem

Answer 25

Anchoring Effects

Question 26

Refer to how a decision maker views or perceives the alternatives in a decision problem - involves a win/loss perspective

Answer 26

Framing Effects

Question 27

Good Bad
Good Deserved Success Bad Luck

Bad Dumb Luck Poetic Justice

Answer 27

Decision Quality

Question 28

the factor that plays a role in determining whether a good or bad outcome occurs regardless of the quality of the decision.

Answer 28

Chance

Question 29

Economy - its often less costly to analyze decision problems using models rather than trying out a decision

Timeliness - Models can often deliver needed
information more quickly than their real-world
counterparts.

Feasibility - Models can be used to do things
that would otherwise be impossible.

Understanding - Models often provide insights
that can improve the decision-making process.

Answer 29

Benefits of Modeling

Question 30

Machine learning example: Labeled data (X and Y) applications

Example: predicting sports outcomes based on team characteristics

Answer 30

Supervised Machine Learning

Question 31

unlabeled data is widespread and inexpensive to acquire, while labeled data is limited and expensive to acquire

Example: detecting employee fraud where most of the fraud cases remain unidentified

Answer 31

Semi-Supervised Machine Learning

Question 32

Unlabeled data only (X) applications

Example: reducing customer churn

Answer 32

Unsupervised Machine Learning

Question 33

What is a factor that illustrates a constraint.

Answer 33

Budget

Question 34

Break Even Model formula?

Answer 34

Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit)

Question 35

describes many people using the cloud when working together on one project

Answer 35

E-collaboration

Question 36

type of management system includes the integration of technology and software across an organization

Answer 36

Enterprise resource planning systems