Decision-making Techniques

Question 1

What is centering

Answer 1

a method used to calculate a moving average, where the average is plotted or calculated in relation to the central figure

Question 2

What is correlation

Answer 2

the relationship between two sets of variables

Question 3

What is correlation coefficient

Answer 3

a measure of the extent of the relationship between two sets of variables

Question 4

What is extrapolation

Answer 4

forecasting future trends based on past data

Question 5

What is the line of best fit

Answer 5

A straight line drawn through the center of a group of data points plotted on a scatter graph

Question 6

What is moving average

Answer 6

a succession of averages derived from successive segments of a series of values

Question 7

What is a scatter graph

Answer 7

a graph showing the performance of one variable against another independent variable on a variety of occasions, it is used to show whether a correlation exists between the variables

Question 8

time-series analysis

Answer 8

a method that allows a business to predict future levels from past figures

Question 9

What is the average rate of return or accounting rate of return (APR)

Answer 9

A method of investment appraisal that measures the net return per annum as a percentage of the initial spending

Question 10

What is capital cost

Answer 10

The amount of money spent when setting up a new venture

Question 11

What is cash inflow

Answer 11

the cash coming into the business such as that from sales or bank loans

Question 12

What is cash outflow

Answer 12

The cash going out of a business when payments are made to workers or suppliers

Question 13

What is discounted cash flow (DCF)

Answer 13

a method of investment appraisal that takes interest rates into account by calculating the present value of future income

Question 14

What is investment

Answer 14

the purchase of capital goods

Question 15

What is investment appraisel

Answer 15

The evaluation of an investment project to determine whether or not it is likely to be worthwhile

Question 16

What is net cash flow

Answer 16

Cash inflow minus outflows

Question 17

What is net present value (NPV)

Answer 17

the present value of future income from an investment project, minus the cost

Question 18

What is opportunity cost

Answer 18

When choosing between different alternatives, the benefit lost from the next best alternative

Question 19

What is a payback period

Answer 19

The amount of time it takes to recover the cost of an investment project

Question 20

What is qualitative

Answer 20

Represented by words

Question 21

What is quantitative

Answer 21

represented by numbers

Question 22

What is back data

Answer 22

data obtained from a previous time period

Question 23

What is chance node

Answer 23

a point on a decision tree diagram where a number of outcomes are possible

Question 24

What is a decision tree

Answer 24

a technique which shows all possible outcomes of a decision. The names comes from the similarity of the diagrams to the branches of trees

Question 25

What is expected value

Answer 25

the numerical value of an outcome multiplied by the probability of that outcome happening

Question 26

What is probability

Answer 26

The chance if an event happening

Question 27

What is rollback technique

Answer 27

the process of working back through a decision tree calculating expected values at each node

Question 28

What is critical path

Answer 28

the tasks involved in a project which, if delayed, could delay the project

Question 29

What is critical path analysis/network analysis

Answer 29

A method of calculating the minimum time required to complete a project, identifying delays which could be critical to its completion

Question 30

What is earliest start time (EST)

Answer 30

How soon a task in a project can begin. It is influenced by the length of time taken by tasks which must be completed before it can begin.

Question 31

What is free float

Answer 31

The time by which a task can be delayed without affecting the following task

Question 32

What is latest finish time (LFT)

Answer 32

The latest time that a task in a project can finish

Question 33

What is a network diagram

Answer 33

A chart showing the order of the tasks involved in completing a project, containing information about the times taken to complete the tasks

Question 34

What are nodes

Answer 34

positions in a network diagram which indicate the start and finish times of a task

Question 35

What is total float

Answer 35

The time by which a task can be delayed without affecting the time needed to complete the project

Question 36

What is contribution

Answer 36

The amount of money left over from a sale after variable costs have been substracted from revenue. The money contributes to fixed costs and profit

Question 37

What is contribution costing

Answer 37

The use of contribution to help make decisions based on costs, such as which order to accept

Question 38

What is contribution pricing

Answer 38

A pricing strategy that involves setting a price that exceeds the value of the variable cost

Question 39

What are overheads

Answer 39

An overhead cost or expense, indirect cost

Question 40

What is a total contribution

Answer 40

The amount of money left over from the sale of several units, or an order, after variable costs have been covered.

Question 41

What is unit contribution

Answer 41

The amount of money left over from the sale of a single unit after variable costs have been covered