Abstract
The purpose of analysis is to produce and communicate effectively and clearly helpful insights about a problem. Good analysis begins with good architecture and good housekeeping of the analysis structure, elements, relationships, and style.
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A straight line is likely not the best model for this. My inclination would be to use an absorption model in which sales start slowly during the market introduction phase, ramp up quickly at some point as the market matures, then level off as the remaining amounts of demand are realized. This approach is easily accomplished with the following function: SCurv = function(y0, time, time.to.peak) {this.s.curve = 1 / (1 + (y0 / (1 - y0)) ^ (2 * time/time.to.peak - 1)) }, where y0 is the initial absorption as a fraction of the total, time is an index across which the absorption responds, and time.to.peak is the amount of time it takes to go from y0 to 1 - y0.
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We should on occasion be surprised by the results of a model, creating an opportunity for us to explore unanticipated sources of value and risk. A model that tells us exactly what we anticipate is redundant. A model that produces results that are beyond credibility is probably not a good model. A good model needs to be logically valid, yet produce results that give us interesting, unanticipated insights.
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© 2018 Robert D. Brown III
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Brown III, R.D. (2018). Setting Up the Analysis. In: Business Case Analysis with R. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4842-3495-2_2
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DOI: https://doi.org/10.1007/978-1-4842-3495-2_2
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