Bicycle Coffee Shop is a local chain of coffee shops. With increased competition, they are analyzing the financial impacts of closing an existing location. A prescriptive analysis would answer which question?

Question

BlackTom AI · Accepted Answer

The prompt centers on identifying what a prescriptive analysis would address in the scenario of evaluating a potentially closing location.
Option a: 'What sales revenue is needed for the location to be financially sustainable?' This aligns with prescriptive analytics, which focuses on prescribing actions and the thresholds required for sustainability or success, such as target revenue to cover costs and achieve profitability.
Option b: 'If the location is closed, what is the forecasted net income for the Bicycle Coffee shop?' This is more of a post-decision or counterfactual assessment about a specific decision outcome, which resembles a diagnostic or descriptive scenario rather than prescribing an action to take.
Option c: 'What is the total net revenue for the fiscal year for the location slated to be closed?' This is a descriptive or historical query about current or past performance, not about determining a required level of performance to justify operation or closure.
Option d: 'Are sales trending downwards for the location slated to be closed?' This question investigates a trend or trajectory, which is diagnostic in nature and helps understand what has happened, not what should be done to achieve a desired outcome.
In summary, prescriptive analysis asks: what metric or target must be achieved and/or what actions must be taken to reach a strategic objective? The most fitting choice is the one that specifies a revenue target needed for financial sustainability, as options b, c, and d focus more on outcomes, past performance, or trends rather than prescribing the necessary level of performance. thus, option a captures the prescriptive focus in this context.

Bicycle Coffee Shop is a local chain of coffee shops. With increased competition, they are analyzing the financial impacts of closing an existing location. A prescriptive analysis would answer which question?

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