SAINT GBA334 midterm exam 100% correct

A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternaties are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternatie are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

Alternatie Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

Using the information aboe, which alternatie should be chosen based on the maximax criterion?

: Buy 1 machine

Buy 2 machines

Buy 3 machines

: 2 of 2

Question 2. Question : A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternaties are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternatie are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

Alternatie Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

Refer to the information aboe. Assume that based on historical bids with the defense contractor, the plant manager beliees that there is a 65% chance that the bid will be accepted and a 35% chance that the bid will be rejected.

What is the expected alue under certainty?

: 1.05

1.95

17.25

27.75

: 2 of 2

Question 3. Question : “The probability of eent B, gien that eent A has occurred” is known as a __________ probability.

: continuous

marginal

simple

joint

conditional

: 2 of 2

Question 4. Question : Assume that you hae an urn containing 10 balls of the following description:

4 are white (W) and lettered (L)

2 are white (W) and numbered (N)

3 are yellow (Y) and lettered (L)

1 is yellow (Y) and numbered (N)

If you draw a numbered ball (N), the probability that this ball is white (W) is 0.60.

: True

False

: 2 of 2

Question 5. Question : What is the formula for the break-een point of a simple profit model?

: Fixed cost / ariable cost per unit

(Selling price per unit — ariable cost per unit) / fixed cost

Fixed cost / (selling price per unit — ariable cost per unit)

Fixed cost / (ariable cost per unit — selling price per unit)

Selling price per unit — (fixed cost / ariable cost per unit)

: 2 of 2

Question 6. Question : Arrials in a uniersity adising office during the week of registration are known to follow a Poisson distribution with an aerage of four people arriing each hour. What is the probability that exactly four people will arrie in the next hour?

: 0.1813

0.1865

0.1923

0.1954

: 2 of 2

Question 7. Question : The economic order quantity (EOQ) formula assumes that all input data are known with certainty.

: True

False

: 2 of 2

Question 8. Question : The use of “expert opinion” is one way to approximate subjectie probability alues.

: True

False

: 2 of 2

Question 9. Question : Properties of the normal distribution include:

: a continuous bell-shaped distribution.

a discrete probability distribution.

the number of trials is known and is either 1, 2, 3, 4, 5, etc.

the random ariable can assume only a finite or limited set of alues.

use in queuing.

: 2 of 2

Question 10. Question : Expressing profits through the relationship among unit price, fixed costs, and ariable costs is an example of:

: a sensitiity analysis model.

a quantitatie analysis model.

a postoptimality relationship.

a parameter specification model.

none of the aboe.

: 2 of 2

Question 11. Question : A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What are the total annual holding costs?

: $500

$1000

$20

$750

$250

: 2 of 2

Question 12. Question : A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternaties are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternatie are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

Alternatie Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

Using the information aboe, which alternatie should be chosen based on the Laplace criterion?

: Buy 1 machine

Buy 2 machines

Buy 3 machines

: 2 of 2

Question 13. Question : Determining the aerage payoff for each alternatie and choosing the one with the best payoff is the approach called:

: maximax

maximin

Laplace

minimax regret

expected monetary alue

: 2 of 2

Question 14. Question : Bob White is conducting research on monthly expenses for medical care, including oer-the-counter medicine. His dependent ariable is monthly expenses for medical care while his independent ariable is number of family members. Below is his Excel output.

Click here to iew an Excel ersion of this output

Referring to the information aboe, based on his model, each additional family member increases the predicted costs by how much?

: $110.47

$16.83

$93.64

$127.30

: 2 of 2

Question 15. Question : A controllable ariable is also called:

: a parameter.

a decision ariable.

a mathematical model.

a measurable quantity.

none of the aboe.

: 2 of 2

Question 16. Question : A seasonal index of __________ indicates that the season is aerage.

: 10

100

0.5

0

1

: 2 of 2

Question 17. Question : In the exponential smoothing with trend adjustment forecasting method, missing something is the:

: slope of the trend line.

new forecast.

Y-axis intercept.

independent ariable.

trend smoothing constant.

: 0 of 2

Question 18. Question : Assume that you hae an urn containing 10 balls of the following description:

4 are white (W) and lettered (L)

2 are white (W) and numbered (N)

3 are yellow (Y) and lettered (L)

1 is yellow (Y) and numbered (N)

If you draw a lettered ball (L), the probability that this ball is white (W) is 0.571.

: True

False

: 2 of 2

Question 19. Question : The condition of improper data yielding misleading results is referred to as:

: garbage in, garbage out.

break-een point.

uncontrollable ariable.

postoptimality.

none of the aboe.

: 2 of 2

Question 20. Question : Bob White is conducting research on monthly expenses for medical care, including oer-the-counter medicine. His dependent ariable is monthly expenses for medical care while his independent ariable is number of family members. Below is his Excel output.

Click here to iew an Excel ersion of this output

Referring to the information aboe, what percent of the ariation in medical expenses is explained by the size of the family?

: 48.3%

49.6%

50.6%

51.3%

: 2 of 2

Question 21. Question : Our department store is haing a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none.

Using the aboe information, what is the probability of selling no personal computers? Hint: Let the probability of selling none equal x.

: 0.05

0.08

0.1

0.2

: 2 of 2

Question 22. Question : A medium-term forecast is considered to coer what length of time?

: 2-4 weeks

1 month to 1 year

2-4 years

5-10 years

20 years

: 2 of 2

Question 23. Question : If two eents are mutually exclusie, then:

: their probabilities can be added.

they may also be collectiely exhaustie.

the joint probability is equal to 0.

if one occurs, the other cannot occur.

All of the aboe

: 2 of 2

Question 24. Question : Arrials at a fast-food restaurant follow a Poisson distribution with a mean arrial rate of 16 customers per hour. What is the probability that in the next hour there will be exactly 12 arrials?

: 0.0000

0.0661

0.7500

0.1322

None of the aboe

: 2 of 2

Question 25. Question : The Department of Motor ehicles (DM) can serice customers at a rate of 20 per hour (or 1/3 per minute) when it comes to license renewals. The serice time follows an exponential distribution. What is the probability that it will take less than three minutes for a particular customer to get a license renewal?

: 0.5

0

1

0.368

0.632

: 2 of 2

Question 26. Question : Demand for soccer balls at a new sporting goods store is forecasted using the following regression equation: Y = 98 + 2.2X where X is the number of months that the store has been in existence. Let April be represented by X = 4. April is assumed to hae a seasonality index of 1.15. What is the forecast for soccer ball demand for the month of April (rounded to the nearest integer)?

: 123

107

100

115

None of the aboe

: 2 of 2

Question 27. Question : The best model is a statistically significant model with a high r-square and few ariables.

: True

False

: 2 of 2

Question 28. Question : Historical data indicates that only 20% of cable customers are willing to switch companies. If a binomial process is assumed, then in a sample of 20 cable customers, what is the probability that no more than three customers would be willing to switch their cable?

: 0.85

0.15

0.20

0.411

0.589

: 2 of 2

Question 29. Question : A seasonal index of 1 means that the season is aerage.

: True

False

: 2 of 2

Question 30. Question : Which of the following is true regarding a regression model with multicollinearity, a high r2 alue, and a low F-test significance leel?

: The model is not a good prediction model.

The high alue of r2 is due to the multicollinearity.

The interpretation of the coefficients is aluable.

The significance leel tests for the coefficients are not alid.

The significance leel for the F-test is not alid.

: 2 of 2

Question 31. Question : Bob White is conducting research on monthly expenses for medical care, including oer-the-counter medicine. His dependent ariable is monthly expenses for medical care while his independent ariable is number of family members. Below is his Excel output.

Click here to iew an Excel ersion of this output

Referring to the information aboe, the significance F-test, is this model a good prediction equation?

: Yes

No

: 2 of 2

Question 32. Question : The length of time that it takes the tollbooth attendant to serice each drier can typically be described by the:

: normal distribution.

uniform distribution.

exponential distribution.

Poisson distribution.

None of the aboe

: 2 of 2

Question 33. Question : Time-series models attempt to predict the future by using historical data.

: True

False

: 2 of 2

Question 34. Question : Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent). Forecast sales for the next day using a two-day weighted moing aerage where the weights are 3 and 1 are:

: 14.5

13.5

14

12.25

12.75

: 2 of 2

Question 35. Question : Our department store is haing a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none.

Using the aboe information, what is the probability of selling all three personal computers? Hint: Let the probability of selling none equal x.

: 0.4

0.32

0.36

0.44

: 2 of 2

Question 36. Question : Bob White is conducting research on monthly expenses for medical care, including oer-the-counter medicine. His dependent ariable is monthly expenses for medical care while his independent ariable is number of family members. Below is his Excel output.

Click here to iew an Excel ersion of this output

Referring to the information aboe, what is the alue of the correlation coefficient?

: 55.278

0.695

0.483

0.474

: 2 of 2

Question 37. Question : Loss of goodwill must be included in stockout costs.

: True

False

: 2 of 2

Question 38. Question : The probability, P, of any eent or state of nature occurring is greater than or equal to 0 and less than or equal to 1.

: True

False

: 2 of 2

Question 39. Question : As one increases the number of periods used in the calculation of a moing aerage:

: greater emphasis is placed on more recent data.

less emphasis is placed on more recent data.

the emphasis placed on more recent data remains the same.

it requires a computer to automate the calculations.

one is usually looking for a long-term prediction.

: 2 of 2

Question 40. Question : Which of the following methods tells whether the forecast tends to be too high or too low?

: MAD

MSE

MAPE

Decomposition

Bias

: 2 of 2

Question 41. Question : A moing aerage forecasting method is a causal forecasting method.

: True

False

: 2 of 2

Question 42. Question : One purpose of regression is to understand the relationship between ariables.

: True

False

: 2 of 2

Question 43. Question : When demand is constant, the Reorder point (ROP) is a function of demand and lead time.

: True

False

: 2 of 2

Question 44. Question : Which of the following is not classified as a qualitatie forecasting model?

: Exponential smoothing

Delphi method

Jury of executie opinion

Sales force composite

Consumer market surey

: 2 of 2

Question 45. Question : Consider the following gasoline data:

Click here to iew an Excel ersion of this table.

Referring to the information aboe, what is the seasonal index for fourth quarter?

: 1.017

1.175

.977

.899

: 2 of 2

Question 46. Question : The classical method of determining probability is:

: subjectie probability.

marginal probability.

objectie probability.

joint probability.

conditional probability.

: 2 of 2

Question 47. Question : A consulting firm has receied two Super Bowl tickets from one of its clients. To be fair, the firm is randomly selecting two different employee names to “win” the tickets. There are six secretaries, fie consultants and four partners in the firm. Which of the following statements is false?

: The probability of a secretary winning a ticket on the first draw is 6/15.

The probability of a secretary winning a ticket on the second draw gien that a consultant won a ticket on the first draw is 6/15.

The probability of a consultant winning a ticket on the first draw is 1/3.

The probability of two secretaries winning both tickets is 1/7.

The probability of a partner winning a ticket on the second draw gien that a secretary won a ticket on the first draw is 4/14.

: 2 of 2

Question 48. Question : The EM that a person is willing to gie up in order to aoid the risk associated with a gamble is referred to as the:

: risk premium.

certainty equialent.

EPI.

EwPI.

ESI.

: 2 of 2

Question 49. Question : Enrollment in a particular class for the last four semesters has been 120, 126, 110, and 130 (listed from oldest to most recent). What is the enrollment forecast for next semester using exponential smoothing with an alpha = 0.2? Assume that an initial forecast for the first semester was 120 (so the forecast and the actual were the same).

: 118.96

121.17

130

120

None of the aboe

: 2 of 2

Question 50. Question : An urn contains seen blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a blue chip on the second draw gien that a yellow chip was drawn on the first draw?

: 0.027

0.210

0.300

0.700

: 2 of 2

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