Exam 16: Decision Making and Payoff Tables in Investment Scenarios

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2006?

Why are long range predictions considered essential to managing a firm?

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.4, which of the following statements Are correct? i. The Expected Opportunity Loss for Company A is $20. ii. The Expected Opportunity Loss for Company B is $120. iii. The Expected Opportunity Loss for Company C is $440.

Given a linear time series trend, = - 5.2 + 3.1t, what is the forecast for 2015 if the t = 0 in 2007?

A plastics manufacturing performed a quarterly time series analysis for demands over the last five Years (periods 1 through 20). The analysis resulted in the following trend equation and seasonal Indexes: = 920.0 + 22.6 t Based on the seasonal indexes, which quarter is expect to have 21% more demand than predicted By the trend line?

Which one of the following is not a component of a time series?

The table below shows the sales for a plastics manufacturer recorded over the past year. The Seasonal indexes for each quarter are also provided. To track the trend for these four quarters, use The indexes to deseasonalize the sales data. What are deseasonalized sales for quarter 1?

Determine the expected opportunity loss for the following payoff table.

You have a decision to invest $10,000 in any of four different companies. You estimate the Probabilities that the economy will be favorable or unfavorable and you estimate the percent Returns over the next year. Based on the maximin criterion, what is the choice?

Below is the payoff table for two stocks based on whether the market rises or declines. Which of The following represents the opportunity loss table?

i. Using the ratio-to-moving-average method, dividing the actual sales for a month by the typical Seasonal for that month results in a figure that includes only trend, cycle and irregular fluctuations. This procedure is called deseasonalizing the sales. ii. The reason for deseasonalizing a sales series is to remove trend and cyclical fluctuations so that We can study seasonal fluctuations. iii. Knowing the seasonal pattern in the form of indexes allows the retailer to deseasonalize sales.

The table below shows the sales for a plastics manufacturer recorded over the past year. The Seasonal indexes for each quarter are also provided. To track the trend for these four quarters, use The indexes to deseasonalize the sales data. What are deseasonalized sales for quarter 3?

Teton Village contains shops, restaurants and motels. They have two peak seasons - winter for Skiing, and summer for tourists visiting nearby parks. The specific seasonal with respect to the total Sales volume for recent years are: Using the seasonal indexes below, explain the typical index for the spring season.

The following table lists the average price of home listings in Canada from January 2007 to January 2014. (See Connect for Data Set 7: CREA 2014). Forecast the average home price listing for Jan-16.

i. A forecast is considered necessary in order to have the raw materials, production facilities, and Staff available to meet estimated future demands. ii. One component of a time series is the secular trend that is the smooth movement of a series over A short period of time, such as a few months or quarters. iii. Many business and economic time series have a recurring seasonal pattern.

The states of nature are:

i. The moving average method merely smooths out the fluctuations in the data. ii. The moving average method averages out cyclical (C) and irregular (I) components. iii. To apply the moving average method to a time series, the data should follow a linear trend and Have a definite rhythmic pattern of fluctuations that repeat (say, every three years).

You have a decision to invest $10,000 in any of four different companies. You estimate the Probabilities that the economy will be favorable or unfavorable and you estimate the percent Returns over the next year. What is the expected value for Company 4?

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the Market rising in the next year is 0.60, which of the following statements are Correct? i. The Opportunity Loss for Company A is $1,860. ii. The Opportunity Loss for Company B is $1,860. iii. The Opportunity Loss for Company C is $1,540.

Consider the following decision table in which w, x, y, and z are decision alternatives and A and B Are the two possible states of nature, with probabilities 0.40 and 0.60. The expected value for decision W is ___________.