Management 402

Sections 1 & 4

Fall 2009

Data and Decisions

Professor Kevin McCardle D520 Cornell Hall (310) 825-3926 kevin.mccardle@anderson.ucla.edu Class Hours: Section 1, Mon-Wed 10:00 11:30 am in C315 Section 4, Mon-Wed 8:00 9:30 am in C315 Office Hours: Mondays 2-3:30 pm or by appointment Teaching Assistants: Nick Degnan, nicholas.degnan.2010@anderson.ucla.edu George Georgiadis, georgios.georgiadis.2013@anderson.ucla.edu

Course Description
Objectives: Business decisions are made with partial information and in an uncertain environment. The objectives of this course are to introduce (i) data analyses that are appropriate for generating information useful in decision-making and (ii) a framework for analyzing decisions based on partial information. In order to achieve these objectives, we shall develop a foundation of probability and statistics; this basic grounding is also necessary for subsequent courses and for a management career. Although the course is quantitative in nature it is not a mathematics course. Mathematics is used as a language for describing data and decisions, and both mathematics and computers are used to find solutions.

Text: Complete Business Statistics by Aczel, seventh edition, Irwin McGraw-Hill, 2006 is a required text. Those who find the course material difficult should also consult The Cartoon Guide to Statistics by Gonick and Smith; this book provides a step-by-step treatment of about half the material we cover. Problem Sets: Eleven problem sets are included in the course pack. They are designed to help in understanding the material and to give you practice in using various concepts and techniques discussed in class. We will work through some of these problems in class, so please bring a copy of the problem set(s) to each class. Cases: The cases put the somewhat technical course material in a managerial perspective. You are required to turn in answers to a total of three of the cases: World Cup, Insurance, and Harmon Foods. Work in your learning teams. Hand in one analysis (one or two pages is sufficient) for your team, with the names of all the members in your team listed in alphabetical order. Work is to be done strictly within the team. You may not access outside materials, including prior years materials, or discuss the case outside of your team. Everyone whose name appears on the assignment is assumed to have actively participated in its preparation. Classes will be a series of lectures interspersed with case discussions and problem sessions. Before each class, you should read the sections from the text assigned for that day and attempt some of the problems at the end of the text sections. In addition, prepare each case (including cases that are not submitted) before it is scheduled for discussion. Students will be cold called to discuss their case analyses. The Class Schedule lists a problem set or two next to each class. After lecturing on a topic I will cold call students to help me solve a problem or two from the days problem set(s). You are not expected to have done the problems before class. You should, however, attempt these problems after class. The problem sets will not be collected or graded. Answers to the problem sets will be provided during the quarter. Solutions to textbook problems are posted on the course website.

Online Quizzes: There will be a total of six online quizzes through the quarter. You are to answer an online quiz by logging (with your Anderson login ID) onto the course website. The deadlines by which you must complete the online quizzes are: Online Quiz 1: 11:50pm, Sunday, Oct 4 Online Quiz 2: 11:50pm, Sunday, Oct 11 Online Quiz 3: 11:50pm, Sunday, Oct 18 Online Quiz 4: 11:50pm, Sunday, Oct 25 Online Quiz 5: 11:50pm, Sunday, Nov 8 Online Quiz 6: 11:50pm, Sunday, Nov 15 The purpose of these quizzes is to encourage you to keep up with the class material. We anticipate that you will have little difficulty in answering the questions on an online quiz if you are up to date on the class materials, including those for the upcoming week. Online quizzes will be available at the course website a few days before the deadlines listed above. You may submit answers to an online quiz as often as you wish but only your last set of answers (submitted before the deadline) will be graded. Online quizzes are to be done individually: you may consult the textbook and any other course materials but you may not seek assistance from others. If you do not answer (on the course website) an online quiz by its deadline, you will not get any points for that quiz. The five best scores of your six online quizzes will be used in determining your grade. Each of these five quizzes has equal weight (3% of course grade). Exams and Grading: There will be a midterm exam and a final exam. The exams are closed-book. See the Class Schedule for exam dates. Your course grade will be based on the midterm exam, the final exam, five best out of six online quizzes, and your groups written analyses of cases World Cup, Insurance, and Harmon Foods. Grades will be determined as follows: Cases Online quizzes Midterm exam Final exam 10% 15% 30% 45%

Software: Excel is helpful for carrying out calculations for some of the problems and cases. We shall also use Excel add-ins for the classes on regression and decision analysis. Laptop Policy: Unless you are specifically asked to bring them, laptop use during class is discouraged; network connections are not allowed. The use of laptops during the midterm exam and the final exam is not permitted. Teaching Assistants: Nick Degnan, a second year MBA student, and George Georgiadis, a DOTM PhD student, are the teaching assistants for this course. They will conduct discussion sessions on Fridays. They will also have weekly office hours during which students may meet in small groups to discuss specific questions and difficulties. The times of discussion sessions and office hours will be announced later. Office Hours: My office hours are Mondays, 2-3:30 pm in D520. If you need to see me at another time, feel free to make an appointment or knock on my door.

Management 402, sections 1 and 4 Fall 2009 Class Schedule Date

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Sept 28 Sept 30 Oct 5^ Oct 7 Oct 12^ Oct 14 Oct 19^ Oct 21 Oct 26^ Oct 28 Nov 2 Nov 4 Nov 9^ Friday Nov 13 Nov 16^ Nov 18 Nov 23 Nov 25 Nov 30 Dec 2 8-11am Dec 9 Hypothesis Testing Regression Introduction Regression Regression Regression Regression Decision Analysis Decision Analysis: Value of information Decision Analysis Final Exam

Topic
Descriptive Statistics, Probability Probability Bayes Rule Random Variables, Uniform Distribution Binomial Distribution Normal Distribution Joint Random Variables, Covariance, Sums Covariance Sampling Confidence Intervals

Reading
1.1-1.5 2.1-2.3 2.4, 2.5 2.7, 2.8 3.1- 3.3 (not pp. 108-109) 3.10, 3.11 3.4, 3.5 4.1-4.5 Note on Joint Random Variables in coursepack

Case
S&P500 World Cup*

Problem Set
1 1 2 3

Insurance*

4 4 5

Portfolio 5.1-5.3 6.1-6.4, 6.6 Midterm Exam 7.1-7.4 (not variances) 10.1-10.6 10.7-10.10 11.1-11.5 11.1-11.7 11.8-11.12 15.5-15.6 15.2, 15.7, 15.9 Harmon Foods* Freemark Abbey Industrial Real Estate Colonial Broadcasting Co. Industrial Real Estate Vioxx

5 6 7

8 9 9 9, 10 10 10 11 11 11

Deadline for an online quiz is 10 minutes till midnight on the day before these classes. *World Cup, Insurance, and Harmon Foods are collected.