QMB 3600 Exam I - Terms & Definitions || All Accurately
Answered.
perscripitive analytics correct answers type of business analytics uses optimization models to
provide new and better ways to operate
Correlation and Causality correct answers Occurs when two seemingly unrelated variables that
happen to have correlation and claiming that they are causally related shows lack of
understanding and this misuse is strong.
Randumbness correct answers Occurs when a variable is random and/or when a variable is
difficult or impossible to predict.
Regression to the Moon correct answers Occurs in a time series when dependent variable is
percent that will eventually exceed 100% or a time series when there is negative correlation
(eventually will go below zero).
Time Dependent Correlation and Causality (also known as Spurious Correlation) correct answers
Occurs when names of data points are times (such as a years) and two variables correlate year by
year.
Decision strategy correct answers A rule that specifies which decision alternative will be selected
after new information becomes available.
Payoff table correct answers Table showing the expected payoffs for each alternative in every
possible state of nature (all combinations).
Conditional Values correct answers Consequence resulting from a specific combination of
decisions, alternatives, and state of nature.
State of Nature correct answers The possible outcomes for a chance event.
, Expected value correct answers The (weighted) average of a probability distribution and related
to the Law of Large Numbers.
Problem correct answers A statement, which should come from a manager, that indicates a
problem to be solved or an
objective or a goal to be reached. The statement gives direction and meaning to the following
steps.
Binary variable correct answers One type of dummy variable that can only have a yes/no type
state.
Categorical Variable (Qualitative) correct answers Dummy variables and they are always 1 or 0.
1 is for "yes" and 0 is for "no".
Qualitative variable correct answers A categorical variable for which each value represents a
distinct category. For example, hair color, present or absent (not present), happy or sad (not
happy).
Quantitative variables correct answers Numerical variables that represent a measurable quantity.
For example, when we speak of the population of a city, we are talking about the number of
people in the city - a measurable attribute of the city. Therefore, population would be a
quantitative variable. Other examples: scores on a set of tests, height and weight, temperature at
the top of each hour.
Descriptive Analytics correct answers The study and consolidation of historical data to describe
how a company has performed in the past and how it is performing now.
Sensitivity Analysis correct answers Because a model is only an approximation of reality, the
sensitivity of the solution to changes in the model and input data is a very important part of
analyzing the results.
Minimax regret approach correct answers Best decision-worst
Answered.
perscripitive analytics correct answers type of business analytics uses optimization models to
provide new and better ways to operate
Correlation and Causality correct answers Occurs when two seemingly unrelated variables that
happen to have correlation and claiming that they are causally related shows lack of
understanding and this misuse is strong.
Randumbness correct answers Occurs when a variable is random and/or when a variable is
difficult or impossible to predict.
Regression to the Moon correct answers Occurs in a time series when dependent variable is
percent that will eventually exceed 100% or a time series when there is negative correlation
(eventually will go below zero).
Time Dependent Correlation and Causality (also known as Spurious Correlation) correct answers
Occurs when names of data points are times (such as a years) and two variables correlate year by
year.
Decision strategy correct answers A rule that specifies which decision alternative will be selected
after new information becomes available.
Payoff table correct answers Table showing the expected payoffs for each alternative in every
possible state of nature (all combinations).
Conditional Values correct answers Consequence resulting from a specific combination of
decisions, alternatives, and state of nature.
State of Nature correct answers The possible outcomes for a chance event.
, Expected value correct answers The (weighted) average of a probability distribution and related
to the Law of Large Numbers.
Problem correct answers A statement, which should come from a manager, that indicates a
problem to be solved or an
objective or a goal to be reached. The statement gives direction and meaning to the following
steps.
Binary variable correct answers One type of dummy variable that can only have a yes/no type
state.
Categorical Variable (Qualitative) correct answers Dummy variables and they are always 1 or 0.
1 is for "yes" and 0 is for "no".
Qualitative variable correct answers A categorical variable for which each value represents a
distinct category. For example, hair color, present or absent (not present), happy or sad (not
happy).
Quantitative variables correct answers Numerical variables that represent a measurable quantity.
For example, when we speak of the population of a city, we are talking about the number of
people in the city - a measurable attribute of the city. Therefore, population would be a
quantitative variable. Other examples: scores on a set of tests, height and weight, temperature at
the top of each hour.
Descriptive Analytics correct answers The study and consolidation of historical data to describe
how a company has performed in the past and how it is performing now.
Sensitivity Analysis correct answers Because a model is only an approximation of reality, the
sensitivity of the solution to changes in the model and input data is a very important part of
analyzing the results.
Minimax regret approach correct answers Best decision-worst
