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Business Analytics 4th Edition Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann - Solutions
9. Yield from Recruiting Seminars. To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3,500, and the commission for each new
8. Tire Warranty Analysis. Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5,000 miles and that tire mileage is normally distributed. To promote the new tire, Grear has offered to refund some
7. Playoff Series in National Basketball Association. The Dallas Mavericks and the Golden State Warriors are two teams in the National Basketball Association. Dallas and Golden State will play multiple times over the course of an NBA season. Assume that the Dallas Mavericks have a 25% probability
6. Automobile Collision Claims. State Farm Insurance has developed the following table to describe the distribution of automobile collision claims paid during the past year.a. Set up a table of intervals of random numbers that can be used with the Excel VLOOKUP function to generate values for
5. Estimating Auto Accident Costs. Statewide Auto Insurance believes that for every trip longer than 10 minutes that a teenager drives, there is a 1 in 1,000 chance that the drive will result in an auto accident. Assume that the cost of an accident can be modeled with a beta distribution with an
4. Profitability of New Product. The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the
3. Wearable Electronic Product Launch. The management of Madeira Computing is considering the introduction of a wearable electronic device with the functionality of a laptop computer and phone. The fixed cost to launch this new product is $300,000.The variable cost for the product is expected to be
2. Dice Rolls. Construct a spreadsheet simulation model to simulate 1,000 rolls of a die with the six sides numbered 1, 2, 3, 4, 5, and 6.a. Construct a histogram of the 1,000 observed dice rolls.b. For each roll of two dice, record the sum of the dice. Construct a histogram of the 1,000
1. Virtual Reality Goggle Inventory. Galaxy Co. sells virtual reality (VR) goggles, particularly targeting customers who like to play video games. Galaxy procures each pair of goggles for $150 from its supplier and sells each pair of goggles for $300. Monthly demand for the VR goggles is a normal
21. Discount Price Versus Zero-Percent Financing. An auto dealership is advertising that a new car with a sticker price of $35,208 is on sale for $25,995 if payment is made in full, or it can be financed at 0% interest for 72 months with a monthly payment of$489. Note that 72 payments3$489 per
20. Transportation Costs. Refer to Problem 19. Floyd’s Bumpers pays a transportation company to ship its product in full truckloads to its customers. Therefore, the cost for shipping is a function of the distance traveled and a fuel surcharge (also on a per-mile basis). The cost per mile is
19. Assigning Customers to Distribution Centers. Floyd’s Bumpers has distribution centers in Lafayette, Indiana; Charlotte, North Carolina; Los Angeles, California;Dallas, Texas; and Pittsburgh, Pennsylvania. Each distribution center carries all products sold. Floyd’s customers are auto repair
18. Mortgage Prepayment. Consider again the mortgage refinance problem in Problem 17. Assume that Dave and Jana have accepted the refinance offer of a 15-year loan at 3% interest rate with out-of-pocket expenses of $2,937. Recall that they are borrowing$208,555.87. Assume that there is no
17. Refinancing a Mortgage. A few years back, Dave and Jana bought a new home. They borrowed $230,415 at an annual fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their 25th payment, and the current balance on the loan is $208,555.87.Interest rates are at an
16. Revenue with Substitutable Products. The Camera Shop sells two popular models of digital single lens reflex (DSLR) cameras. The sales of these products are not independent;if the price of one increases, the sales of the other increases. In economics, these two camera models are called
15. Risk Analysis of European Options. Consider again Problem 14. The point of purchasing a European option is to limit the risk of a decrease in the per-share price of the stock. Suppose you purchased 200 shares of the stock at $28 per share and 75 sixmonth European put options with an exercise
14. European Financial Options. A put option in finance allows you to sell a share of stock at a given price in the future. There are different types of put options. A European put option allows you to sell a share of stock at a given price, called the exercise price, at a particular point in time
13. Revenue Model with Quantity Discounts. Richardson Ski Racing (RSR) sells equipment needed for downhill ski racing. One of RSR’s products is fencing used on downhill courses.The fence product comes in 150-foot rolls and sells for $215 per roll. However, RSR offers quantity discounts. The
12. Calculating Course Grades. Professor Rao would like to accurately calculate the grades for the 58 students in his Operations Planning and Scheduling class (OM 455).He has thus far constructed a spreadsheet, part of which follows:a. The Course Average is calculated by weighting the Midterm Score
11. Auditing a Transportation Model. Consider the transportation model in the file Williamson, which is very similar to the Foster Generators model discussed in this chapter. Williamson produces a single product and has plants in Atlanta, Lexington, Chicago, and Salt Lake City and warehouses in
9. Net Discounted Cash Flow. Goal Kick Sports (GKS) is a retail chain that sells youth and adult soccer equipment. The GKS financial planning group has developed a spreadsheet model to calculate the net discounted cash flow of the first five years of operations for a new store. This model is used
8. Retirement Planning with Net Present Value. Consider again Lindsay’s investment in Problem 7. The real value of Lindsay’s account after 30 years of investing will depend on inflation over that period. In the Excel function 5NPV(rate, value1, value2, . . .), rate is called the discount rate,
7. Retirement Planning. Lindsay is 25 years old and has a new job in web development.She wants to make sure that she is financially sound in 30 years, so she plans to invest the same amount into a retirement account at the end of every year for the next 30 years. Note that because Lindsay invests
6. Profit Maximization for an e-Book. Consider again Problem 3. Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand 54,000 26p, where p is the price of the e-book.a. Update your spreadsheet
5. Scenario Analysis for Profitability of a Symposium. Consider again the scenario described in Problem 4.a. The Center for Business Analytics is considering a refund policy for no-shows. No refund would be given for members who do not attend, but nonmembers who do not attend will be refunded 50%
4. Breakeven Analysis for a Symposium. The University of Cincinnati Center for Business Analytics is an outreach center that collaborates with industry partners on applied research and continuing education in business analytics. One of the programs offered by the center is a quarterly Business
3. E-book Breakeven Analysis. Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be$160,000. Variable processing costs are
2. Breakeven Volume. Use the spreadsheet model constructed to answer Problem 1 to answer this problem.a. Construct a one-way data table with production volume as the column input and profit as the output. Breakeven occurs when profit goes from a negative to a positive value; that is, breakeven is
1. Profit Model for Electronics Company. Cox Electric makes electronic components and has estimated the following for a new design of one of its products:Fixed cost $10,000 Material cost per unit $0.15 Labor cost per unit $0.10 Revenue per unit $0.65 55 55 These data are given in the file
3. Your report should include appropriate charts (ROC curves, lift charts, etc.) and include a recommendation on how to apply the results of your proposed model. For example, if GCC sends the targeted marketing to the top 10% of the test set that the model believes is most likely to renew, what is
2. Appropriately partition the data set into training, validation, and test sets. Experiment with various classification methods and propose a final model for identifying customers who will respond to the targeted marketing.
1. Explore the data. Because of the large number of variables, it may be helpful to filter out unnecessary and redundant variables.
26. Housing Price Bubble (random forest estimation). Refer to the scenario in Problem 24 regarding estimating house prices.a. Consider the Pre-Crisis data. Apply a random forest of regression trees using Price as the target (or response) variable and all the other variables as input
25. Housing Price Bubble (regression tree). Refer to the scenario in Problem 24 regarding estimating house prices.a. Consider the Pre-Crisis data. Predict the sale price using an individual regression tree. Use Price as the target (or response) variable and all the other variables as input
24. Housing Price Bubble (k-NN estimation). As an intern with the local home builder’s association, you have been asked to analyze the state of the local housing market, which has suffered during a recent economic crisis. You have been provided two data sets: the Pre-Crisis data contains
23. Academy Awards (logistic regression). Each year, the American Academy of Motion Picture Arts and Sciences recognizes excellence in the film industry by honoring directors, actors, and writers with awards (called “Oscars”) in different categories. The most notable of these awards is the
22. Credit Scores (k-NN estimation). Refer to the scenario in Problem 20 regarding the estimation of individuals’ credit scores. Predict the individuals’ credit scores using k-nearest neighbors for a range of values of k. Use CreditScore as the target (or response) variable and all the other
21. Credit Scores (random forest estimation). Refer to the scenario in Problem 20 regarding the estimation of individuals’ credit scores. Apply a random forest of regression trees using CreditScore as the target (or response) variable and all the other variables as input variables.a. Experiment
20. Credit Scores (regression tree). A consumer advocacy agency, Equitable Ernest, is interested in providing a service that allows an individual to estimate his or her own credit score (a continuous measure used by banks, insurance companies, and other businesses when granting loans, quoting
19. Cellphone Customer Retention (logistic regression). Refer to scenario in Problem 16 regarding the identification of churning cellphone customers. Apply logistic regression using Churn as the target (or response) variable and all the other variables as input variables.a. Evaluate several
18. Cellphone Customer Retention (random forest classification). Refer to scenario in Problem 16 regarding the identification of churning cellphone customers. Apply a random forest of classification trees using Churn as the target (or response) variable and all the other variables as input
17. Cellphone Customer Retention (classification tree). Refer to scenario in Problem 16 regarding the identification of churning cellphone customers. Fit an individual classification tree using Churn as the target (or response) variable and all the other variables as input variables.a. For a
16. Cellphone Customer Retention (k-NN classification). Telecommunications companies providing cell-phone service are interested in customer retention. In particular, identifying customers who are about to churn (cancel their service) is potentially worth millions of dollars if the company can
15. Undecided Voters (random forest classification). Refer to scenario in Problem 12 regarding the identification of undecided voters. Apply a random forest of classification trees using Age, HomeOwner, Female, Married, HouseholdSize, Income, Education, and Church as input variables and Undecided
14. Undecided Voters (classification tree). Refer to the scenario in Problem 12 regarding the identification of undecided voters. Fit an individual classification tree using Age, HomeOwner, Female, Married, HouseholdSize, Income, Education, and Church as input variables and Undecided as the target
13. Undecided Voters (logistic regression). Refer to the scenario in Problem 12 regarding the identification of undecided voters. Use logistic regression to classify observations as undecided (or decided) using Age, HomeOwner, Female, Married, HouseholdSize, Income, Education, and Church as input
12. Undecided Voters (k-NN classification). Campaign organizers for both the Republican and Democratic parties are interested in identifying individual undecided voters who would consider voting for their party in an upcoming election. A non-partisan group has collected data on a sample of voters
11. Direct Deposit Adoption (k-NN classification). Sandhills Bank would like to increase the number of customers who use payroll direct deposit as part of the rollout of its new e-banking platform. Management has proposed offering an increased interest rate on a savings account if customers sign up
10. Student Retention (logistic regression). Over the past few years the percentage of students who leave Dana College at the end of their first year has increased. Last year, Dana started voluntary one-credit hour-long seminars with faculty to help first-year students establish an on-campus
9. Coupon Use (logistic regression). Salmons Stores operates a national chain of women’s apparel stores. Five thousand copies of an expensive four-color sales catalog have been printed, and each catalog includes a coupon that provides a $50 discount on purchases of $200 or more. Salmons would
8. Lift Chart for Targeted Marketing. Mary Jay is a salesperson for a cosmetics company that relies on direct marketing to sell its products. A classification method was developed to predict whether a customer will purchase if contacted with a targeted marketing pitch. This classification method
7. Addressing Customer Churn. Watershed is a media services company that provides online steaming movie and television content. As a result of the competitive market of streaming service providers, Watershed is interested in proactively identifying will unsubscribe in the next three months based on
6. Targeted Coupon Offers. Honey is a technology company that provides online coupons to its subscribers. Honey’s analytics staff has developed a classification method to predict whether a customer who has been sent a coupon will apply the coupon toward a purchase. For a sample of customers, the
5. Alumni Donors (random forest). A university is applying classification methods in order to identify alumni who may be interested in donating money. The university has a database of 58,205 alumni profiles containing numerous variables. Of these 58,205 alumni, only 576 have donated in the past.
4. Wine Approval (classification tree). Sommelier4U is a company that ships its customers bottles of different types of wine and then has them rate the wines as “Like”or “Dislike.” For each customer, Sommelier4U trains a classification tree based on the characteristics and customer ratings
3. Athlete Contract Negotiations (regression tree). Casey Deesel is a sports agent negotiating a contract for Titus Johnston, an athlete in the National Football League(NFL). An important aspect of any NFL contract is the amount of guaranteed money over the life of the contract. Casey has gathered
2. Cupcake Approval (k-NN classification). Fleur-de-Lis is a boutique bakery specializing in cupcakes. The bakers at Fleur-de-Lis like to experiment with different combinations of four major ingredients in its cupcakes and collect customer feedback; it has data on 150 combinations of ingredients
1. Dating Web Site (logistic regression). The dating web site Oollama.com requires its users to create profiles based on a survey in which they rate their interest (on a scale from 0 to 3) in five categories: physical fitness, music, spirituality, education, and alcohol consumption. A new Oollama
3. An estimate of lost sales for the Carlson Department Store for September through December.
2. An estimate of countywide department store sales had there been no hurricane.
1. An estimate of sales for Carlson Department Store had there been no hurricane.
2. Using the dummy variable approach, forecast sales for January through December of the fourth year. How would you explain this model to Karen?
1. A time series plot. Comment on the underlying pattern in the time series.
28. Gasoline Sales and Price. Donna Nickles manages a gasoline station on the corner of Bristol Avenue and Harpst Street in Arcata, California. Her station is a franchise, and the parent company calls her station every day at midnight to give her the prices for various grades of gasoline for the
27. Sales of Frozen Treats. Hogs & Dawgs is an ice cream parlor on the border of northcentral Louisiana and southern Arkansas that serves 43 flavors of ice creams, sherbets, frozen yogurts, and sorbets. During the summer Hogs & Dawgs is open from 1:00 p.m. to 10:00 p.m. on Monday through Saturday,
26. Sales of Docks and Seawalls. South Shore Construction builds permanent docks and seawalls along the southern shore of Long Island, New York. Although the firm has been in business for only five years, revenue has increased from $308,000 in the first year of operation to $1,084,000 in the most
17. Using the dummy variables defined in part (b) and ts, develop an equation to account for seasonal effects and any linear trend in the time series.e. Based on the seasonal effects in the data and linear trend estimated in part (d), compute estimates of the levels of nitrogen dioxide for July
25. Air Pollution. Air pollution control specialists in Southern California monitor the amount of ozone, carbon dioxide, and nitrogen dioxide in the air on an hourly basis.The hourly time series data exhibit seasonality, with the levels of pollutants showing patterns that vary over the hours in the
24. Textbook Sales. The quarterly sales data (number of copies sold) for a college textbook over the past three years are as follows:a. Construct a time series plot. What type of pattern exists in the data?b. Use a regression model with dummy variables as follows to develop an equation to account
23. Estimating Trend and Seasonal Effects. Consider the following time series data:a. Construct a time series plot. What type of pattern exists in the data?b. Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data: Qtr151
22. Estimating Seasonal Effects. Consider the following time series:a. Construct a time series plot. What type of pattern exists in the data? Is there an indication of a seasonal pattern?b. Use a multiple linear regression model with dummy variables as follows to develop an equation to account for
21. Manufacturing Costs. The president of a small manufacturing firm is concerned about the continual increase in manufacturing costs over the past several years. The following figures provide a time series of the cost per unit for the firm’s leading product over the past eight years:Year
20. Administrative Expenses. The Seneca Children’s Fund (SCF) is a local charity that runs a summer camp for disadvantaged children. The fund’s board of directors has been working very hard over recent years to decrease the amount of overhead expenses, a major factor in how charities are rated
19. University Enrollment. Because of high tuition costs at state and private universities, enrollments at community colleges have increased dramatically in recent years. The following data show the enrollment for Jefferson Community College for the nine most recent years:a. Construct a time series
18. Using Regression for Forecasting with Seven Time Periods of Data. Consider the following time series:a. Construct a time series plot. What type of pattern exists in the data?b. Use simple linear regression analysis to find the parameters for the line that minimizes MSE for this time series.c.
17. Using Regression for Forecasting with Five Time Periods of Data. Consider the following time series:t 1 2 3 4 5 yt 6 11 9 14 15a. Construct a time series plot. What type of pattern exists in the data?b. Use simple linear regression analysis to find the parameters for the line that minimizes MSE
16. Portfolio Composition. The following table reports the percentage of stocks in a portfolio for nine quarters:Quarter Stock (%)Year 1, Quarter 1 29.8 Year 1, Quarter 2 31.0 Year 1, Quarter 3 29.9 Year 1, Quarter 4 30.1 Year 2, Quarter 1 32.2 Year 2, Quarter 2 31.5 Year 2, Quarter 3 32.0 Year 2,
15. Commodity Futures Index. Ten weeks of data on the Commodity Futures Index are as follows: CommodityFutures 7.35 7.40 7.55 7.56 7.60 7.52 7.52 7.70 7.62 7.55a. Construct a time series plot. What type of pattern exists in the data?b. Use trial and error to find a value of the exponential
14. Sales Forecasts. The following time series shows the sales of a particular product over the past 12 months.Month Sales Month Sales 1 105 7 145 2 135 8 140 3 120 9 100 4 105 10 80 5 90 11 100 6 120 12 110a. Construct a time series plot. What type of pattern exists in the data?b. Use a 5 0.3 to
13. Building Contracts. The values of Alabama building contracts (in millions of dollars)for a 12-month period are as follows:a. Construct a time series plot. What type of pattern exists in the data?b. Compare a three-month moving average forecast with an exponential smoothing forecast. Use a 5
12. Bond Interest Rates. Corporate triple A bond interest rates for 12 consecutive months are as follows: TripleABond 9.5 9.3 9.4 9.6 9.8 9.7 9.8 10.5 9.9 9.7 9.6 9.6 240 350 230 260 280 320 220 310 240 310 240 230a. Construct a time series plot. What type of pattern exists in the data?b. Develop
11. On-Time Shipments. For the Hawkins Company, the monthly percentages of all shipments received on time over the past 12 months are 80, 82, 84, 83, 83, 84, 85, 84, 82, 83, 84, and 83.a. Construct a time series plot. What type of pattern exists in the data?b. Compare a three-month moving average
10. Demand for Dairy Products. United Dairies, Inc. supplies milk to several independent grocers throughout Dade County, Florida. Managers at United Dairies want to develop a forecast of the number of half gallons of milk sold per week. Sales data for the past 12 weeks are as follows:Week Sales
9. Comparing Gasoline Sales Forecasts with Moving Averages and Exponential Smoothing. With a smoothing constant of a 5 0.2, equation (8.7) shows that the forecast for week 13 of the gasoline sales data from Table 8.1 is given by yˆ 5 0.2y 1 0.8yˆ 13 12 12. However, the forecast for week 12 is
8. Forecasting Gasoline Sales with Exponential Smoothing. With the gasoline time series data from Table 8.1, show the exponential smoothing forecasts using a 5 0.1.a. Applying the MSE measure of forecast accuracy, would you prefer a smoothing constant of a 5 0.1 or a 5 0.2 for the gasoline sales
7. Forecasting Gasoline Sales with Moving Averages. Refer to the gasoline sales time series data in Table 8.1.a. Compute four-week and five-week moving averages for the time series.b. Compute the MSE for the four-week and five-week moving average forecasts.c. What appears to be the best number of
6. Forecasting Monthly Data. Consider the following time series data:Month 1 2 3 4 5 6 7 Value 24 13 20 12 19 23 15a. Construct a time series plot. What type of pattern exists in the data?b. Develop a three-week moving average for this time series. Compute MSE and a forecast for week 8.Copyright
5. Forecasting Weekly Data. Consider the following time series data:a. Construct a time series plot. What type of pattern exists in the data?b. Develop a three-week moving average for this time series. Compute MSE and a forecast for week 7.c. Use a 5 0.2 to compute the exponential smoothing values
4. Measuring the Forecast Accuracy for Monthly Data. Consider the following time series data:Month 1 2 3 4 5 6 7 Value 24 13 20 12 19 23 15 Week 1 2 3 4 5 6 Value 18 13 16 11 17 14a. Compute MSE using the most recent value as the forecast for the next period. What is the forecast for month 8?b.
3. Comparing the Forecast Accuracy of the Naïve Method and the Average of All Historical Data. Problems 1 and 2 used different forecasting methods. Which method appears to provide the more accurate forecasts for the historical data? Explain.
2. Measuring the Forecast Accuracy of the Average of All Historical Data. Refer to the time series data in Problem 1. Using the average of all the historical data as a forecast for the next period, compute the following:a. Mean absolute errorb. Mean squared errorc. Mean absolute percentage errord.
1. Measuring the Forecast Accuracy of the Naïve Method. Consider the following time series data:Week 1 2 3 4 5 6 Value 18 13 16 11 17 14 Using the naïve method (most recent value) as the forecast for the next week, compute the following:a. Mean absolute errorb. Mean squared errorc. Mean absolute
4. Based upon the results of your analysis, what estimated regression equation would you recommend using to predict Winnings ($)? Provide an interpretation of the estimated regression coefficients for this equation.
3. Create two new independent variables: Top 2–5 and Top 6–10. Top 2–5 represents NASCAR the number of times the driver finished between second and fifth place and Top 6–10represents the number of times the driver finished between sixth and tenth place. Develop an estimated regression
2. Develop an estimated regression equation that can be used to predict Winnings ($)given the number of poles won (Poles), the number of wins (Wins), the number of top five finishes (Top 5), and the number of top ten finishes (Top 10). Test for individual significance and discuss your findings and
1. Suppose you wanted to predict Winnings ($) using only the number of poles won(Poles), the number of wins (Wins), the number of top five finishes (Top 5), or the number of top ten finishes (Top 10). Which of these four variables provides the best single predictor of winnings?
5. Discuss the need for other independent variables that could be added to the model.What additional variables might be helpful?
4. What is the predicted annual credit card charge for a three-person household with an annual income of $40,000?
3. Develop an estimated regression equation with annual income and household size as the independent variables. Discuss your findings.
2. Develop estimated regression equations, first using annual income as the independent variable and then using household size as the independent variable. Which variable is the better predictor of annual credit card charges? Discuss your findings.
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