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

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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
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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

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