Question

 When will a company use a predictive

 decision model?

 A. When it wishes to determine the

 best product pricing to maximize

 revenue.

 B. When it wishes to know how best to

 use advertising strategies to influence

 sales.

 C. When it wishes to know sales

 patterns to plan inventory levels.

 D. When it wishes to ensure that a

 specified level of customer service is

 achieved.

 

 Which of the following is necessary to

 calculate the variable cost of

 production for the company to develop

 a profit model?

 A. unit sale price

 B. quantity of item produced

 C. quantity of item sold

 D. fixed cost of production

Answer 1

Answer A: Option C: When it wishes to know the sales patterns to plan inventory levels.

Explanation: Predictive analysis is the use of data, algorithms, and machine learning techniques to predict future outcomes based on historical data. The purpose is to get an accurate assessment of what will happen in the future. Organizations use predictive analysis to solve difficult problems and to find new opportunities. Some of the common uses are as follows:

• To detect fraud by analyzing the historical pattern and preempt and prevent criminal activity.
• Predictive analysis also helps to optimize marketing campaigns by determining customer’s responses or purchases and it helps them to attract, retain, and grow their most profitable customers.
• It helps to improve operations by forecasting sales, optimizing inventories, and optimizing the use of the resources based on the analysis.
• It helps the organization to become more efficient. Predictive analysis also helps to reduce risk by assessing a buyer’s chances of defaulting for purchases. A credit score is a number generated by predictive analysis, which incorporates all details of a client's creditworthiness.

Answer B: Option B: quantity of item produced

Explanation: Variable costs are costs, which change in proportion to the production output. The variable cost will change as the quantity produced by a company increases or decreases. The variable cost is directly proportionate to the quantity of item produced therefore if production output increases variable costs will increase and if product output falls, the variable cost will decrease. Variable cost includes the sum of labor and material required to produce a unit of a product. The formula for calculating total variable cost =Total output x variable cost of each unit produced.