B4-M1 Projection and Forecasting Techniques 1 Flashcards
1
Q
what is probability (risk) analysis?
A
it is used to examine the possible outcomes given different alternatives. Sensitivity analysis uses a trial and error method in which the sensitivity of the solution to changes in variables is calculated. Therefore, probability analysis is an extension of sensitivity analysis
2
Q
what is regression analysis?
A
- Regression analysis is a statistical method that fits a line to the data by the method of least squares. It is the most accurate way to classify costs of an object as either fixed or variable
- Estimates the dependent cost variable
- Multiple regression analysis is an expansion of simple regression because it allows consideration of more than one independent variable
3
Q
what does correlation coefficient measure?
A
the correlation coefficient measures the strength of the relationship between variables. It is a number between -1 (downward slope) and +1(upward slope). the closer to -1 or +1, the better