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Multiplicative Model MA2 BPP book

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Multiplicative Model MA2 BPP book

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  • February 19, 2019 at 7:16 pm #505787
    tovele
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Hi,

    I´m analyzing an exemple where the average q1=0.975, q2=1.3035,q3=0.637 and q4= 1.0935 the total is 4.009/4=1.00225 but they use 0.00225 average to be deducted.

    Could someone help understing why they´re using a diffrente number?

    Thanks is advance.

    February 20, 2019 at 8:28 pm #505927
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10601
    • ☆☆☆☆☆

    The idea is that the sum of average corrections should should be 1 i.e. the corrections up and down should cancel out.

    Here the average is 0.00225 too high. If that is deducted from each adjustment they will average out to 1

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