1) Discuss how you might use business analytics in your personal life, such as managing your grocery purchasing, automobile maintenance, budgeting, sports, and so on. Be creative in identifying opportunities!

1) Discuss how you might use business analytics in your personal life, such as managing your

grocery purchasing, automobile maintenance, budgeting, sports, and so on. Be creative in

identifying opportunities!

3) Suggest some metrics that a hotel might want to collect about their guests. How might these

metrics be used with business analytics to support decisions at the hotel?

6) Identify each of the variables in the Excel file Credit Approval Decisions as categorical,

ordinal, interval, or ratio and explain why.

9) A bank developed a model for predicting the average checking and savings account balance as

balance=−17,732+367×age+1,300×years education+0.116×household wealth.

a) Explain how to interpret the numbers in this model. b) Suppose that a customer is 32 years old, is a college graduate (so that years education =

16), and has a household wealth of $150,000. What is the predicted bank balance?

12) Return on investment (ROI) is computed in the following manner: ROI is equal to turnover

multiplied by earnings as a percent of sales. Turnover is sales divided by total investment. Total

investment is current assets (inventories, accounts receivable, and cash) plus fixed assets. Earnings

equal sales minus the cost of sales. The cost of sales consists of variable production costs, selling

expenses, freight and delivery, and administrative costs.

a) Construct an influence diagram that relates these variables. b) Define symbols and develop a mathematical model.

13) Total marketing effort is a term used to describe the critical decision factors that affect

demand: price, advertising, distribution, and product quality. Let the variable x represent total

marketing effort. A typical model that is used to predict demand as a function of total marketing

effort is

D=axb

Suppose that a is a positive number. Different model forms result from varying the constant b.

Sketch the graphs of this model for b = 0, b = 1, 0 b 1, b 0, and b 1. What does each

model tell you about the relationship between demand and marketing effort? What assumptions

are implied? Are they reasonable? How would you go about selecting the appropriate model?

15) A manufacturer of mp3 players is preparing to set the price on a new model. Demand is

thought to depend on the price and is represented by the model

D=2,500−3P

The accounting department estimates that the total costs can be represented by

C=5,000+5D

Develop a model for the total profit in terms of the price, P.

16) The demand for airline travel is quite sensitive to price. Typically, there is an inverse

relationship between demand and price; when price decreases, demand increases and vice versa.

One major airline has found that when the price (P) for a round trip between Chicago and Los

Angeles is $600, the demand (D) is 500 passengers per day. When the price is reduced to $400,

demand is 1,200 passengers per day.

a) Plot these points on a coordinate system and develop a linear model that relates demand to price.

b) Develop a prescriptive model that will determine what price to charge to maximize the total revenue.

c) By trial and error, can you find the optimal solution that maximizes total revenue?