MSIS 3223 Exam 1 Review Questions &
Answers(RATED A+)
discount rate - ANSWERthe opportunity costs of spending funds now vs achieving a return through
another investment, & the risks associated with not receiving returns until a later time.
Descriptive analytics - ANSWER-summarizes data into meaningful charts and reports, for example,
about budgets, sales, revenues, or cost.
-most commonly used and most-well understood type of analytics.
Predictive Analytics - ANSWERpredict the future by examining historical data, detecting patterns or
relationships in these data, and then extrapolating these relationships forward in time.
positive NPV - ANSWERthe investment will provide added value because the projected return
exceeds the discount rate.
Prescriptive Analytics - ANSWERuses optimization to identify the best alternatives to minimize or
maximize some objective.
Data Reliability - ANSWERmeans that data are accurate and consistent
-Data used in business decisions need to be reliable and valid.
Validity - ANSWERdata correctly measures what it is supposed to measure.
Many decision models can be formalized using - ANSWERa model
Model - ANSWER-an abstraction or representation of a real system, idea, or object.
-capture the most important feature of a problem and present them in a form that is easy to
interpret.
-can be a written or verbal description of some phenomenon, a visual representation (visual model)
such as a graph or flowchart, or a mathematical or spreadsheet representation.
, Decision models typically have three types of input: - ANSWER-data
-uncontrollable inputs
-decision options
Decision model: Data - ANSWERassumed to be constant for purposes of the model.
Decision model: Uncontrollable Inputs - ANSWERquantities that can change but cannot be directly
controlled by the decision maker.
Decision model: Decision Options - ANSWER-are controllable and can be selected at the discretion of
the decision maker.
-Decision options are often called decision variables.
Descriptive models - ANSWER-explain behavior and allow users to evaluate potential decisions by
asking "what-if?" questions.
-describe relationships allowing a manager to make a decision, without telling a manager what to do.
Predictive models - ANSWERfocus on what will happen in the future.
Prescriptive models - ANSWER-uses optimization: the process of finding a set of values for decision
options that minimize or maximize some quantity of interest.
-helps decision makers identify the best solution to decision problems.
The fundamental purpose of analytics - ANSWERto help managers solve problems and make
decisions.
Phases in Problem Solving - ANSWER1. Recognizing the problem-a problem exists when there is a gap
between what is happening & what we think should be happening.
2. Defining the problem-In defining problems, it is important to involve all people who make the
decisions or who may be affected by them.
3. Structuring the problem-a formal model is often developed in this phase.
4. Analyzing the problem-experimentation or solution process, evaluating different scenarios, or
analyzing risks associated with various decision alternatives.
Answers(RATED A+)
discount rate - ANSWERthe opportunity costs of spending funds now vs achieving a return through
another investment, & the risks associated with not receiving returns until a later time.
Descriptive analytics - ANSWER-summarizes data into meaningful charts and reports, for example,
about budgets, sales, revenues, or cost.
-most commonly used and most-well understood type of analytics.
Predictive Analytics - ANSWERpredict the future by examining historical data, detecting patterns or
relationships in these data, and then extrapolating these relationships forward in time.
positive NPV - ANSWERthe investment will provide added value because the projected return
exceeds the discount rate.
Prescriptive Analytics - ANSWERuses optimization to identify the best alternatives to minimize or
maximize some objective.
Data Reliability - ANSWERmeans that data are accurate and consistent
-Data used in business decisions need to be reliable and valid.
Validity - ANSWERdata correctly measures what it is supposed to measure.
Many decision models can be formalized using - ANSWERa model
Model - ANSWER-an abstraction or representation of a real system, idea, or object.
-capture the most important feature of a problem and present them in a form that is easy to
interpret.
-can be a written or verbal description of some phenomenon, a visual representation (visual model)
such as a graph or flowchart, or a mathematical or spreadsheet representation.
, Decision models typically have three types of input: - ANSWER-data
-uncontrollable inputs
-decision options
Decision model: Data - ANSWERassumed to be constant for purposes of the model.
Decision model: Uncontrollable Inputs - ANSWERquantities that can change but cannot be directly
controlled by the decision maker.
Decision model: Decision Options - ANSWER-are controllable and can be selected at the discretion of
the decision maker.
-Decision options are often called decision variables.
Descriptive models - ANSWER-explain behavior and allow users to evaluate potential decisions by
asking "what-if?" questions.
-describe relationships allowing a manager to make a decision, without telling a manager what to do.
Predictive models - ANSWERfocus on what will happen in the future.
Prescriptive models - ANSWER-uses optimization: the process of finding a set of values for decision
options that minimize or maximize some quantity of interest.
-helps decision makers identify the best solution to decision problems.
The fundamental purpose of analytics - ANSWERto help managers solve problems and make
decisions.
Phases in Problem Solving - ANSWER1. Recognizing the problem-a problem exists when there is a gap
between what is happening & what we think should be happening.
2. Defining the problem-In defining problems, it is important to involve all people who make the
decisions or who may be affected by them.
3. Structuring the problem-a formal model is often developed in this phase.
4. Analyzing the problem-experimentation or solution process, evaluating different scenarios, or
analyzing risks associated with various decision alternatives.
