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6 Cards in this Set
- Front
- Back
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What are the two basic laws of probability?
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1) Probability of any event or state of nature occurring must be GREATER THAN or EQUAL to 0 and LESS THAN or EQUAL to 1
2) The sum of the simple probabilities for ALL possible outcomes of the activity MUST EQUAL 1 |
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What is a randon variable? What are the various types of random variables?
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A random variable is a function defined over a sample space. There are 2 types: discrete & continuous.
The distributions for the price of a product, the num of sales for a salesperson, and the num of oz in a food container are examples of a probability distribution. |
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What is the expected value and what does it measure? How is it computed for a discrete probability distribution?
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The expected value is the average of the distribution and is computed by using the following formula: E(X) * P(X) (this is for a discrete prob distribution.)
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What is a time-series forecasting model?
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a forecasting model that uses historical data to predict future trends
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What is a qualitative forecasting model, and when is it appropriate?
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Qualitative models incorporate subjective factors into the forecasting model. Judgmental models are useful when subjective factors are important. When quantitative data are difficult to obtain, qualitative models are appropriate.
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What is MAD, why is it important in the selection and use of forecasting models?
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MAD is a technique for determining the accuracy of a forecasting model by taking the average of the absolute deviations.
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