13. A project seeks to build a predictive data-mining model of customer profitability based upon a
series of independent variables including customer transaction history, demographics, and externally
purchased credit-scoring information. There are currently 100,000 unique customers available for use
in building the predictive model. Which of the following strategies would reflect the BEST allocation
of these 100,000 customer data points?
a) Use 70,000 randomly selected data points when building the model, and hold the remaining
30,000 as a test dataset.
b) Use all 100,000 data points when building the model.
c) Build four separate models and randomly partition the data into 4 separate datasets of
25,000 data points each.
d) Use 1,000 randomly selected data points when building the model.
14. Conjoint analysis in market research applications can:
a) give its best estimates of customer preference structure based on in-depth interviews with
a small number of carefully chosen subjects.
b) only trade off relative importance to customers of features with similar scales.
c) allow calculation of relative importance of varying features and attributes to customers.
d) only trade off among a limited number of attributes and levels.
15. One of the main advantages of tree-based models and neural networks is that they:
a) are easy to interpret, use, and explain.
b) build models with higher R squared than other regression techniques.
c) reveal interactions without having to explicitly build them into the model.
d) can be modeled even when there is a significant amount of missing data.
16. The monthly profit made by a clothing manufacturer is proportional to the monthly demand, up to
a maximum demand of 1000 units, which corresponds to the plant producing at full capacity. (Any
excess demand over 1000 units will be satisfied by some other manufacturer, and hence yield no
additional profit.) The monthly demand is uncertain, but the average demand is reliably estimated at
1000 units. At this level of demand the monthly profit is $3,000,000. Which of the following statements
must be true of the expected monthly profit, P?
a) P can have any positive value.