Present an example of a business situation that you believe would lend itself to the use of a quantitative business model. Clearly explain how the model could be used in this situation.
Multiple models are often used in supporting business decision making. Why might this be the case and what factors may dictate the need for multiple models?
Which business functions are more likely to use decision analysis models than others, and why?
What are some inherent challenges in using decision trees effectively in today’s organizations? How can these challenges be overcome?
What types of business situations or problems might best lend themselves to simple linear regression and what types may not? Why and why not?
A health researcher is interested in determining whether or not the speed at which people walk is related to their cholesterol levels. He picks 100 adult volunteers at random, checks their cholesterol levels, and then times each one while they walk a stretch of 100 yards. He is amazed at the results: a simple regression between the walk times and the cholesterol levels has an R2 of 0.98 and the slope of the regression line is 0.7. Would he be justified in concluding that walking slowly may cause high cholesterol or that high cholesterol may affect walking speed? Discuss why or why not.
Reference: Render, B., Stair, R. M., and Hanna, M. E. (2011). Quantitative analysis for management. (11th ed.) Upper Saddle River, NJ:
1. Decision tree analysis: Choosing between options by projecting likely outcomes
Review “Decision tree analysis: Choosing between options by projecting likely outcomes.” By MindTools. (n.d.). (Note: This is a good site for gaining a high level of understanding of decision trees.)
Read “Valuing dot-coms.” By Desmet, D., Francis, T., Hu, A., Koller, T. M., and Riedel, G. A. (2000). The McKinsey Quarterly, 1, 148-157.
Read “How SmithKline Beecham makes better resource-allocation decisions.” By Sharpe, P., and Keelin, T. (1998, March). Harvard Business Review, 76(2), 45-57.
HyperStat Online Statistics Textbook
View HyperStat Online Statistics Textbook. (Click Chapter 15 in the left hand column. Read Contents 1-6.)
Managers guide to forecasting
Read “Managers guide to forecasting.” By Georgoff, D. M., and Murdick, R. G. (1986, January). Harvard Business Review, 64, 110-120.
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