1-1. 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.
1-2. Multiple models are often used in supporting business decision making. Outline a situation in your organization or industry that required the need for multiple models. What factors were unique to this situation? Support your response with rationale from the readings or external research.
2-1. Apply a business decision model to something you do every day, such as select an outfit, order lunch, or determine your exercise routine. Be creative in your approach. How did you select the model? Include rationale with support from the readings.
2-2. Using the decision tree resources available in the Topic Materials, create a decision tree for the scenario you outlined in 2-1. Attach the decision tree to your response and include insights in crafting the decision tree. How would you apply your experience to larger-scale decisions at an organizational level?
3-1. Identify two business situations or problems within your current organization or industry. Articulate how one of these lends itself to a simple linear regression and how one does not. Why is simple linear regression appropriate to address one situation or problem but not the other? Support your ideas with evidence from the readings.
3-2. You are the vice president of sales for TerraFirma, a company that manufactures outdoor sporting gear. You receive a report on your desk one morning that claims little or no relationship between the University of Michigan Consumer Sentiment Index (CSI) and outdoor sporting gear sales. The claim is based on a very low R2 of the simple regression model, using these two variables (CSI and sales). Discuss how you would (or should) react to this report and why. What clarifying questions might you ask?
Read “Decision Trees: Analysis: Choosing by Projecting ‘Expected Outcomes,'” located on the Mind Tools website. (Note: This is a good site for gaining a high level of understanding of decision trees.)
Read items 1-6 in the Contents of “Chapter 15: Prediction,” from the online eBook, HyperStat Online Statistics Textbook, by Lane (2013), found on the David Lane (Rice University) website.