When a manager notices an outlier during the cost estimation process, the appropriate response is to:
A) no response is required, unless multiple outliers are observed.
B) attempt to identify the reasons for the outlier.
C) divide the outlier by the standard deviation, before including the outlier in the regression model
D) re-collect all the data, as an outlier indicates that the data has been corrupted.

Question

Quizplus · Accepted Answer

The appropriate response when an outlier is noticed during cost estimation is to attempt to identify the reasons for the outlier. It may also be necessary to review the data collection process and ensure that the data is accurate. Ignoring the outlier may lead to inaccurate estimation results, while re-collecting all the data is unnecessary unless there are significant concerns about the quality of the data. Dividing the outlier by the standard deviation before including it in the regression model is not a recommended approach.

When a Manager Notices an Outlier During the Cost Estimation