Question

Revenue estimation is a highly technical process for which accuracy is important especially for governments with mandates for balanced budgeting. Estimates that are too high will likely cause overspending early in the year followed by cutbacks to prevent a deficit – too low and programs will be needlessly reduced, and services will suffer. Three estimation methods are used: Deterministic Models, Simple trend extrapolation, and Multiple Regression and Simultaneous Regression Models. For each model, discuss: the circumstances under which the model is best used; and potential issues that may cause the model to lose accuracy.

Answer 1

Three estimation methods that are used are-

1. Deterministic Model- It is a model in which outcomes are precisely determined through known relationships among states and events, mathematical clarity offered by deterministic models. It is fully determined by the parameter values and the initial conditions. It determines the relationships between a movement outcome measure and the biomechanical factors that produce such a measure. Deterministic model loose accuracy when-

A- the material properties are not known.

B - when applied load are not deterministic

2. Extrapolation model - It is a model in which processing of estimating the value beyond the distinct range of the given variable.t is an important concept not only in Mathematics but also in other disciplines like Psychology, Sociology, Statistics etc. Best used in  real observed set of parameters in the models. The problem is we cant check the reliability of the data. Extrapolation can lead to odd and sometimes incorrect conclusions

3. Simultaneous Regression- It is a model in which all predictors or independent variables are entered into the equation at the same time. Each independent variable’s coefficient or weight is interpreted in the context of all of the other independent variables in the model at that time, Simultaneous regression loses accuracy because they have single dependent variable and one or more explanatory variable.