3.3 Decision Making Techniques Glossary Flashcards
Correlation
The relationship between two sets of variables.
Moving Average
A succession of averages derived from successive segments (typically of constant size and overlapping) of a series of values.
Scatter graph
A graph showing the performance of one variable against another independent variable on a variety of occasions. It used to show whether a correlation exists between the two variables.
Time Series Analysis
Method that allows a business to predict future levels from past figures.
Investment
The purchase of capital goods.
Investment Appraisal
The evaluation of an investment project to determine whether or not it is likely to be worthwhile.
Capital Cost
The amount of money spent when setting up a new venture.
Net Cash Flow
Inflow - Outflows
Payback Period
The amount of time that it takes to recover the cost of the initial investment
Average rate of return
A measure of the net return per annum as a percentage of the initial spending.
Net Present Value (NPV)
The present value of the future income of a project, minus the cost.
Decision Tree
A technique that shows all possible outcomes of a decision.
CPA Analysis
A method of calculating the minimum time required to complete a project, identifying delays which could be critical to its completion.
Critical Path
The tasks involved in a project which, if delayed, could delay the project.
Network diagram
A chart showing the order of the tasks involved in competing a project, containing information about the times taken to complete a task.
