business 3.3 Flashcards
(13 cards)
What are some methods used in quantitative sakes forecasting
moving averages (series of averages from a successive segment of a series data)
extrapolation(prediction of future sales from past data-can be done by extending line of best fit)
correlaltion
what are some limitations of quantitative sales forecasting
seasonality
competition
changes t legislation
market changes
publicity
what is investment appraisal
comparing expected future cash flows of an investment. businesses use this to find out how soon investment will recoup initial outlay and how profitable investment will be
what is the evaluation for simple pay back period
amount of time it is expected an investment will take to pay for itself
adv
simple to calculate and understand
focuses on liquidity
useful for high risk projects
disadv
may encourage short term thinking
potential lucrative investments may be dismissed as they take longer to pay back
no insight into porfitability of investment
what is the evaluation for average rate of return
the average profit per year generated by an investment
adv
consider all of the net cash flows
easy to understand
disadv
opportunity cost on investment is ignored
ignores timing of returns
evaluate NPV in discounted cash flow
calculated the total value of future cash flows
adv
considers time value of money
takes into account all future cash flows
disadv
more complex
depends heavily on accuracy of estimates
why might investment appraisal tecniques be accurate
unexpected increase in costs
arrival of new competitors
changes in consumer tastes
economic growht or recession
What are decision trees
quantitative method of tracing the outcomes of a decision so the most profitable decision can be identified
what are the advantages of decision trees
adv
may reveak options that havent been previously considered
managers are forced to consider risk
required deep research
what are the limitations of decision trees
requires skills to avoid bias
constructed using estimates
time lag between construction and implication is likely to further affect reliability
What are the benfits critical path analysis
identifies critical tasks
effective resource management
better time management
improved communication
clear project timeline
what is critical path analyis
a project management tecnique used to identify the shortest possible time to complete a project
What are the limitations of critical path analysis
complex for large products
relies on estimates
doenst gaurantee success
does not account for resource constraints
