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

:
True
False

: 2
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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
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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
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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
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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
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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
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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
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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
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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