Quantitiative Techniques (1)

Question 1

In order for a business to plan and make decisions?

Answer 1

Needs to be able to accurately predict costs at differing output levels

Question 2

When is it possible to construct a model to predict costs at all future output levels?

Answer 2

We can identify the relationship between the output level and the cost at that level from observation

Question 3

What is meant by correlation?

Answer 3

Two variables are said to be correlated if a change in value of one variable is accompanied by a change in the value of the other variable

Question 4

What is meant by correlation coefficient?

Answer 4

Measures the degree of linear correlation between two variables

Question 5

What is the coefficient of determination?

Answer 5

Measures the proportion of total variation in value of one variable that can be explained by variations in the other variable

Question 6

Coefficient of determiniation purpose?

Answer 6

Denotes strength of linear association between two variables, but does not prove a cause and effect relationship

Question 7

What does regression analysis find?

Answer 7

Line of best fit mathematically, by minisiming the squares of the vertical differences

Question 8

What determines usefulness of regression analysis?

Answer 8

Prediciting results in future depends on how strong the correlation between the two variables is

Question 9

What is meant by interpolation?

Answer 9

Means using a line of best fit to predict a value within two extreme points of the observed range

Question 10

What is meant by extrapolation?

Answer 10

Using a line of best fit to predict a value outside the two extreme points of the observed range

Question 11

Advantages of linear regression analysis (definitive)

Answer 11

Gives a definitive line of best fit

Question 12

Advantages of linear regression analysis (efficient)

Answer 12

Makes efficient use of data and good results can be obtained with relatively small amounts of data

Question 13

Advantages of linear regression analysis (processes)

Answer 13

Many processes are linear and so are well described by regression analysis

Question 14

Disadvantages of linear regression analysis (linearity)

Answer 14

Assumes linearity between x and y

Question 15

Disadvantages of linear regression analysis (observations)

Answer 15

Observations used may be atypical and independent from each other

Question 16

Disadvantages of linear regression analysis (historic)

Answer 16

Historic data is used and patterns may change in the future

Question 17

Disadvantages of linear regression analysis (extrapolation)

Answer 17

Forecasting usually involves extrapolation outside given range of observations where working conditions and cost patterns may change

Question 18

What is time series?

Answer 18

A series of fugures or values recorded over time

Question 19

What does an analysis of time series allow?

Answer 19

Historical data to be monitored so observations can made about how a variable has performed over time

Question 20

Examples of time series?

Answer 20

Output of a factory each day for last month

Total costs per annum for last ten years

Monthly sales over last 5 years