29 Questions
What is the common pattern followed by the sales of a new product?
S-shaped curve over time
What does the mathematical model S = ae^(bct) represent?
Rate of sales starting small and then growing at an increasing rate over time
In a decision model, what are uncontrollable inputs?
Quantities that can change but cannot be controlled
What characterizes early adopters in the sales of a new product?
They evaluate new products before others do
What is the purpose of a decision model in a business situation?
To understand, analyze, or facilitate making a decision
Which model provides a visual representation of sales as an S-shaped curve?
Visual model
What does price elasticity measure?
The percentage change in demand relative to the percentage change in price
In the linear demand prediction model D = a − bP, what does 'a' represent?
Demand when the price is zero
Which model assumes constant price elasticity?
Nonlinear Demand Prediction Model: D = cP − d
What is the key assumption for developing a demand prediction model?
The relationship between demand and price
What is associated with the consequences and likelihood of what might happen?
Risk
How is economic progress defined according to the text?
By committing present resources to future expectations
What is the primary goal of optimization in the context provided?
To find values of decision variables that minimize cost or maximize profit
What is the objective function in optimization?
The equation that minimizes (or maximizes) the quantity of interest
In the pricing model example, what is the objective function trying to maximize?
Total Revenue
What is the purpose of making assumptions in a model?
To simplify the model and better characterize historical data
According to the example, what economic theory is used as an assumption for the pricing model?
Demand for a product is negatively related to its price
What is the optimal solution in optimization?
The values of the decision variables at the minimum (or maximum) point
According to Peter Drucker, what is the greatest risk of all?
Both attempting to eliminate and minimize risks
Which step in problem solving involves identifying the gap between the current and desired state?
Recognizing a problem
Which of the following factors does NOT increase the complexity of defining a problem?
The problem belongs to an individual
Which step in problem solving involves identifying goals, potential decisions, and constraints?
Structuring the problem
Which of the following is an example of a problem that could be recognized in problem solving?
Costs are too high compared with competitors
Which of the following factors increases the complexity of defining a problem?
Time limitations exist
What is the fixed cost per unit for manufacturing the product in the outsourcing decision model?
$50,000 per unit
What is the breakeven production volume in the outsourcing decision model?
1000
Which of the following is true about predictive models?
Predictive models focus on what will happen in the future.
In the grocery industry example, how do managers typically study the relationship between sales volume and pricing, coupons, and advertising strategies?
By implementing different combinations of these strategies and observing the resulting sales.
What is the purpose of the predictive models developed by grocery managers in the example?
To predict future sales as a function of pricing, coupons, and advertising.
Explore the common patterns observed in the sales of new products like first-generation iPads or 3D televisions. Understand the three forms of a model that depict the sales growth, saturation, and decline over time.
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