Business Analytics Final

Decision Variables

Quantifiable factors that can be controlled or chosen in an optimization problem to achieve the objective.

Constraints

Limitations or restrictions on the decision variables in an optimization problem, often expressed as inequalities or equalities.

Objective Function

The mathematical expression that represents the goal of an optimization problem, which is to be maximized or minimized (e.g., profit, cost).

Shadow Price

The change in the optimal value of the objective function per unit increase in the right-hand side of a binding constraint.

Sensitivity Report

A report generated by Excel Solver that provides information about the sensitivity of the optimal solution to changes in the objective function coefficients and the right-hand side values of the constraints.

Reduced Cost

For a variable at its lower or upper bound in an optimal solution, the reduced cost indicates how much the objective function coefficient would need to improve (increase for maximization, decrease for minimization) for the variable to become positive (or decrease from its upper bound).

Maximin

A decision rule that selects the alternative with the best possible outcome among the worst possible outcomes for each alternative.

Maximax

A decision rule that selects the alternative with the best possible outcome among all possible outcomes.

EMV (Expected Monetary Value)

The weighted average of the potential payoffs of a decision alternative, where the weights are the probabilities of each payoff occurring.

Shifted CDF (Cumulative Distribution Function)

A cumulative probability distribution where the cumulative probabilities are mapped to corresponding values of a random variable, facilitating simulation using random numbers.

Moving Average (MAV)

A time series forecasting method that averages a fixed number of the most recent data points to generate a forecast.

Weighted Moving Average (WMA)

A time series forecasting method that assigns different weights to the most recent data points, with more recent data typically receiving higher weights.

Exponential Smoothing

A time series forecasting method that uses a weighted average of the current actual value and the previous forecast to generate a new forecast.

Smoothing Constant (Alpha - α)

A value between 0 and 1 in exponential smoothing that determines the weight given to the most recent actual observation.

Seasonality

A recurring pattern of fluctuations in time series data that occurs at regular intervals (e.g., monthly, quarterly, yearly).

Seasonal Factor

A multiplier used in seasonality models to adjust a base forecast based on the expected seasonal impact.

MAD (Mean Absolute Deviation)

A measure of forecast accuracy calculated as the average of the absolute differences between actual and forecasted values.

MAPE (Mean Absolute Percentage Error)

A measure of forecast accuracy calculated as the average of the absolute percentage differences between actual and forecasted values.

RMSE (Root Mean Squared Error)

A measure of forecast accuracy calculated as the square root of the average of the squared differences between actual and forecasted values. It gives more weight to larger errors.

Span (in Moving Average)

The number of past data points included in the calculation of the moving average.