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ACCA Strategic Professional · Advanced Performance Management · Data science and analytics

Brindle Airlines has a model that forecasts seat demand per flight. It now adds an optimisation engine that, given forecast demand, fleet constraints and crew costs, automatically recommends ticket prices and aircraft allocation to maximise contribution. Which statement is most accurate?

The optimisation engine makes the system prescriptive. Prescriptive analytics recommends actions, such as prices and aircraft allocation, to achieve an objective like maximum contribution within constraints. The demand forecast on its own is predictive, but adding recommended decisions moves the system to the prescriptive stage.

  1. AThe forecasting model alone is prescriptive because it informs pricing
  2. BThe optimisation engine makes the system prescriptive, because it recommends actions to achieve an objective given constraintsCorrect
  3. CThe system remains predictive, because all of its outputs depend on forecast demand
  4. DThe system is diagnostic, because it explains the causes of demand variation

Explanation

Prescriptive analytics recommends decisions or actions, typically using optimisation under constraints, to achieve an objective. Here the engine recommends prices and allocations to maximise contribution. The forecast alone is predictive; relying on forecasts as inputs does not make the whole system merely predictive.

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