B4 - Operations Management: Planning Techniques Flashcards
What is R-squared?
The coefficient of determination. It is a number between -1 and +1.
The proportion of the dependent variable explained by the independent variable.
Estimates the dependent variables based on changes in the independent variable.
What is the Standard Error?
A measure of Std Dev.
What is t-statistic?
Used in hypothesis testing and computation of confidence levels.
What is p-value?
Statistical measure that shows the likelihood that data could have occurred by chance.
What is regression analysis?
A method that can be used to separate costs into fixed and variable components.
What is a Monte Carlo analysis?
It is used to generate individual values for a random variable.
What is Dynamic Programming?
It is used to make a series of interrelated decisions.
What is trend analysis?
Used to project costs in the future.
What does a negative coefficient of correlation indicate?
Inverse relationship.
What does a positive coefficient of correlation indicate?
A strong relationship.
What does a zero coefficient of correlation indicate?
No relationship.
What is the intercept value?
The point at which at which a variable intercepts Y axis.
What is the difference between Multiple Regression and Simple Regression?
Multiple regression has more than one independent variable.
What is a Learning Curve analysis?
Used to determine increases in efficiency for production as experience is gained.
What is expected value analysis?
LT of repeated trials.
Sum of Probability * Payoffs
What is a continuos probability simulation?
Studies a problem by creating a model of the process, then test it, and improve the solution based of test results.
How do you calculate estimated cost with the high and low method?
(Highest Cost - Lowest Cost) / (Highest Amt - Lowest Amt)
When is Risk reduction best achieved?
When combining stocks that are negatively correlated to each other.
What is a master budget?
Documents specific short term performance goals. Includes nonfinancial (operating) and financial budget.
Collective budget of all lower level budgets.
What’s the first budget you make?
Sales Budget
What’s the last budget you make?
Cash Budget
What is the first process in the sales planning process?
Develop management guidelines specific to sales planning.
What’s the first step in the budget development process?
Forecast sales volume.
What product should a company manufacture to maximize profit?
The one with the greater contribution margin.
