Stage 2 (2023) “Stolen Stars”
You are a financial modeler who works at an internet retail platform, which offers incentives to retailers based on their reviews. Due to a security breach, the data on the number of stars for one year has been temporarily lost. In addition, a news story about fake online reviews has gone live, and the CFO needs an urgent estimate of the incentive payment for that year to reassure shareholders.
This case focuses on creating a financial model and estimating the incentive payment for the year when there is some information about inputs, but not precise numbers. Therefore, you need to use available data and apply statistical techniques such as Bayes’ Rule, purity calculations, and classification trees to estimate the incentive payment for 2003 based on the distribution of stars in the 2002 reviews. The challenge is to make accurate estimates despite the lack of precise data for 2003 and potential differences in the distribution of reviews between 2002 and 2003.
This is an actual case study that was presented to the participants of the Financial Modeling World Cup 2023, Stage 2 (March 10-13).
The downloadable file consists of the following:
–Task: PDF file with Case Materials; PDF file with Questions
–Solution: Excel file with full Solution Model; PDF file with correct Answers in Bold