Saint GBA334 midterm exam

August 15th, 2017

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The following is a payoff table giving profits for various situations.

	State	Of	Nature
Alternatives	A	B	C
Alternative 1	100	120	180
Alternative 2	120	140	120
Alternative 3	200	100	50
Do Nothing	0	0	0

The probabilities for states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively. What decision should be made based on the minimax regret criterion?

(Points : 2.5) Alternative 1
Alternative 2
Alternative 3
Do Nothing
None of the above

Question 2. 2. Hampton sells handcrafted yard decorations at county fairs. The variable cost to make these is $20 each, and he sells them for $50. The cost to rent a booth at teh afir is $150. How many of these must Hampton sell to break even? (Points : 2.5)

50
20
150
5
None of the above

Question 3. 3.The following is a payoff table giving profits for various situations.

	State	Of	Nature
Alternatives	A	B	C
Alternative 1	100	120	180
Alternative 2	120	140	120
Alternative 3	200	100	50
Do Nothing	0	0	0

The probabilities for states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively. What decision should be made based on the equally likely criterion?

(Points : 2.5)

Alternative 1
Alternative 2
Alternative 3
Do Nothing
None of the above

Question 4. 4.The classical method of determining probability is

(Points : 2.5)

subjective probability.
marginal probability.
objective probability.
joint probability.
conditional probability.

Question 5. 5.Enrollment in a particular class for the last four semesters has been 120, 126, 110, and 130 (listed from oldest to most recent). Develop a forecast of enrollment 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).

(Points : 2.5)

118.96
121.17
130
120
None of the above

Question 6. 6.The dependent variable is also called the response variable.

(Points : 2.5)

True
False

Question 7. 7.The correlation coefficient resulting from a particular regression analysis was 0.58. What was the coefficient of determination?

(Points : 2.5)

0.3364
-0.3364
0.7616
-0.7616
There is insufficient information to answer the question.

Question 8. 8.What is the formula for the break-even point of a simple profit model?

(Points : 2.5)

Fixed Cost / Variable Cost Per Unit
(Selling Price Per Unit —Variable Cost Per Unit) / Fixed Cost
Fixed Cost / (Selling Price Per Unit —Variable Cost Per Unit)
Fixed Cost / (Variable Cost Per Unit — Selling Price Per Unit)
Selling Price Per Unit — (Fixed Cost / Variable Cost Per Unit)

Question 9. 9. The costs involved in a typical inventory model are order costs, management costs, and holding costs. (Points : 2.5)

True
False

Question 10. 10.Mean absolute deviation (MAD) is simply the sum of forecast errors.

(Points : 2.5)

True
False

Question 11. 11.A medium-term forecast is considered to cover what length of time?

(Points : 2.5)

2-4 weeks
1 month to 1 year
2-4 years
5-10 years
20 years

Question 12. 12.A store of Pizza Hut provides the following data on the quantity of pizzas sold during the month of January through July 2014, the price of a large pizza, and the advertising expenses.

Quantity Sold	Price	Advertising Expenses
8500	$10	$3,000
4800	14	1000
6500	12	1500
7800	11	2000
6000	13	1500
8000	10	2500
7000	11	1800

The regression output is as follow:

SUMMARY OUTPUT

Regression Statistics
Multiple R	0.98154
R Square	0.96342
Adjusted R Square	0.94513
Standard Error	301.7577
Observations	7

ANOVA
	df	SS	MS	F	Significance F
Regression	2	9592912	4796456	52.67491	0.001338
Residual	4	364230.8	91057.69
Total	6	9957143

	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	12460.58	3181.967	3.915998	0.017306	3626.02	21295.13
Price	-577.885	204.148	-2.83071	0.047311	-1144.69	-11.0789
Advertising Expenses	0.615385	0.458403	1.342454	0.250575	-0.65735	1.888115

Which of the following is correct about the relationship between quantity sold and the price of pizza? (Points : 2.5)

There is a positive relationhsip between quantity sold and price of pizza and the relationship is statistically significant at 1%.
There is a negative relationship between the quantity sold and the price of pizza and the relationship is statistically significant at 5%.
There is a negative relationship between quantity sold and the price of pizza but the relationship is not statistically significant.
There is insufficient information to answer the question.
None of the above.

Question 13. 13.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 moving average.

(Points : 2.5)

14
13
15
28
12.5

Question 14. 14.A model is a representation of a situation.

(Points : 2.5)

True
False

Question 15. 15.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 3 customers would be willing to switch their cable?

(Points : 2.5)

0.85
0.15
0.20
0.411
0.589

Question 16. 16. Purchasing department supplies comprise one of the “carrying cost factors.” (Points : 2.5)

True
False

Question 17. 17.The jury of executive opinion forecasting model uses the opinions of a small group of high-level managers, often in combination with statistical models, and results in a group estimate of demand.

(Points : 2.5)

True
False

Question 18. 18.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 have a seasonality index of 1.15. What is the forecast for soccer ball demand for the month of April (rounded to the nearest integer)?

(Points : 2.5)

123
107
100
115
None of the above

Question 19. 19.The economic order quantity helps one estimate the optimal number of units to purchase with each order.

(Points : 2.5)

True
False

Question 20. 20.Inventory

(Points : 2.5)

is any stored resource used to satisfy current or future need.
includes raw materials, work-in-process, and finished goods.
levels for finished goods are a direct function of demand.
needs from raw materials through finished goods can be reasonably determined, once finished goods demand is determined.
All of the above

Question 21. 21.Given two statistically independent events (A,B), the joint probability of P(AB) = P(A) + P(B).

(Points : 2.5)

True
False

Question 22. 22.The use of “expert opinion” is one way to approximate subjective probability values.

(Points : 2.5)

True
False

Question 23. 23.A store of Pizza Hut provides the following data on the quantity of pizzas sold during the month of January through July 2014, the price of a large pizza, and the advertising expenses.

Quantity Sold	Price	Advertising Expenses
8500	$10	$3,000
4800	14	1000
6500	12	1500
7800	11	2000
6000	13	1500
8000	10	2500
7000	11	1800

The regression output is as follow:

SUMMARY OUTPUT

Regression Statistics
Multiple R	0.98154
R Square	0.96342
Adjusted R Square	0.94513
Standard Error	301.7577
Observations	7

ANOVA
	df	SS	MS	F	Significance F
Regression	2	9592912	4796456	52.67491	0.001338
Residual	4	364230.8	91057.69
Total	6	9957143

	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	12460.58	3181.967	3.915998	0.017306	3626.02	21295.13
Price	-577.885	204.148	-2.83071	0.047311	-1144.69	-11.0789
Advertising Expenses	0.615385	0.458403	1.342454	0.250575	-0.65735	1.888115

What is the coefficient of determination?

(Points : 2.5)

0.98154
0.96342
0.94513
0.615385
None of the above

Question 24. 24.The following is a payoff table giving profits for various situations.

	State	Of	Nature
Alternatives	A	B	C
Alternative 1	100	120	180
Alternative 2	120	140	120
Alternative 3	200	100	50
Do Nothing	0	0	0

The probabilities for states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively. What decision would a pessimist make?

(Points : 2.5)

Alternative 1
Alternative 2
Alternative 3
Do Nothing
None of the above

Question 25. 25.Mark Achin sells 3,600 electric motors each year. The cost of these is $200 each, and demand is constant throughout the year. The cost of placing an order is $40, while the holding cost is $20 per unit per year. There are 360 working days per year and the lead-time is 5 days. If Mark orders 200 units each time he places an order, what would his total ordering cost be for the year?

(Points : 2.5)

$2,000
$2,720
$200
$720
None of the above

Question 26. 26.The objective of a(n) ________ system is to reduce costs by integrating all of the operations of a firm.

(Points : 2.5)

MRP
ERP
JIT
VMI
EOQ

Question 27. 27.The following is a payoff table giving profits for various situations.

	State	Of	Nature
Alternatives	A	B	C
Alternative 1	100	120	180
Alternative 2	120	140	120
Alternative 3	200	100	50
Do Nothing	0	0	0

The probabilities for states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively. What decision would an optimist make?

(Points : 2.5)

Alternative 1
Alternative 2
Alternative 3
Do Nothing
State of Nature A

Question 28. 28.The annual demand for a product is 1,000 units. The company orders 200 units each time an order is placed. The lead-time is 6 days, and the company has determined that 20 units should be held as a safety stock. There are 250 working days per year. What is the reorder point?

(Points : 2.5)

20
24
44
120
None of the above

Question 29. 29.The coefficient of determination resulting from a particular regression analysis was 0.7921. What was the correlation coefficient, assuming a positive linear relationship?

(Points : 2.5)

0.6274
-0.6274
0.89
-0.89
There is insufficient information to answer the question.

Question 30. 30.“The probability of event B, given that event A has occurred” is known as a ________ probability.

(Points : 2.5)

continuous
marginal
simple
joint
conditional

Question 31. 31. In making inventory decisions, the purpose of the basic EOQ model is to (Points : 2.5)

minimize carrying costs.
minimize ordering costs.
minimize the sum of carrying costs and ordering costs.
minimize customer dissatisfaction.
minimize stock on hand.

Question 32. 32.A store of Pizza Hut provides the following data on the quantity of pizzas sold during the month of January through July 2014, the price of a large pizza, and the advertising expenses.