SCENARIO 17-3 The Tree Diagram Below Shows the Results of the Classification

question 53

True/False

SCENARIO 17-3
The tree diagram below shows the results of the classification tree model that has been constructed to predict the probability of a cable company's customers who will switch ("Yes" or "No")into its bundled program offering based on the price ($30,$40,$50,$60)and whether the customer spends more than 5 hours a day watching TV ("Yes" or "No")using the data set of 100 customers collected from a survey.

-Referring to Scenario 17-3,the highest probability of switching is predicted to occur among customers who watch more than 5 hours of TV a day and are offered the bundled price of lower than $50.

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Definitions:

Expenses and Losses

Costs incurred in the operation of a business (expenses) and decreases in value not directly related to operations (losses).

Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Direct Method

A cash flow statement approach that lists major classes of gross cash receipts and payments.

Revenues and Gains

Income generated from normal business operations and other positive financial events.