3.3 - Summary Flashcards
How is the moving average calculated?
The average is calculated by adding together the three figures and then dividing them by 3
What are the limitations of quantitative sales forecasting?
Relatively short term
Dependent on the quality of market research
Less valuable in volatile markets
Unlikely to take into account external shocks
Prior data has little bearing on what will happen in the future
Why might a business use investment appraisal?
Assists in judging the desirability of investing in particular projects
Why might a business calculate payback?
Helps a business work out how long it will take to recoup the initial investment
Why is ARR useful when making investment decisions?
Measures the profit achieved on an investment over time which can then be compared with other investments
How might a manager use decision trees?
To assess how profitable a certain course may be and how likely it is to be successful
What is the expected value in a decision tree?
Shows the probability of each event occurring
What are the limitations of decision trees?
Probabilities are only estimates and don’t consider qualitative information
What other decision-making tools might a manager use alongside a decision tree?
Critical path analysis
What are the EST and LFT on a network diagram?
Earliest Start Time & Latest Finish Time
What is the ‘float’ on an activity?
The time an activity can overrun so that final deadline can still be met
What is meant by the ‘critical path’?
The path that involves all the activities being completed in the shortest amount of time
What are the benefits of using Critical Path Analysis when implementing a strategy
Introduces clear deadlines
Can help to efficiently allocate resources to different activities
Identify float times
What are the limitations of Critical Path Analysis?
Only estimations
Doesn’t consider significant external factors and unexpected events
Doesn’t consider employee morale and productivity
