SECTION I: MULTIPLE-CHOICE (10 possible points)
Please complete the following
statements or questions by placing the appropriate letter in the blank adjacent
to the item number. The value of each
correct answer is 2 points.
____ 1. Identification and definition of a
problem
A. cannot be done until alternatives are
proposed.
B. is the first step of decision making.
C. is
the final step of decision making.
D. requires
consideration of multiple criteria.
____ 2.The
quantitative analysis approach requires
A. the
manager’s prior experience with a similar problem.
B.
a relatively uncomplicated problem.
C.
mathematical expressions for the relationships.
D.
each of the above is true.
____ 3.A
decision tree
A. presents
all decision alternatives first and follows them with all states of nature.
B. presents all states of nature first and
follows them with all decision alternatives.
C. alternates the decision alternatives and
states of nature.
D. arranges decision alternatives and states of
nature in their natural chronological order.
____ 4.Which of the methods for decision making
without probabilities best protects the decision maker from
undesirable results?
A. the optimistic approach
B. the conservative approach
C.
minimum regret
D. minimax regret
____ 5.Decision variables
A. tell how much or how many of something to
produce, invest, purchase, hire, etc.
B. represent the values of the constraints.
C.
measure the objective function.
D. must
exist for each constraint.
BSC400 MIDTERM EXAM
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SECTION II: MATCHING (10 possible points)
Please match the numbered terms with their definitions by
placing the letter that identifies the best definition in the blank space next
to the term. The value of each correct
answer is 1 point.
____ 1. Breakeven Point
____ 2. Constraints
____ 3. Decision Strategy
____ 4. Linear Program
____ 5. Moving Averages
____ 6. Objective Function
____ 7. Regression Analysis
____ 8. Risk Analysis
____ 9. Time Series
____ 10. Trend
A. A mathematical
model with a linear objective function, a set of constraints, and nonnegative
variables.
B. The mathematical
expression that defines the quantity to be maximized or minimized.
C. A set of
observations measured at successive points in time or over successive periods
of time.
D. The gradual shift
or movement of the time series to relatively higher or lower values over a long
period of time.
E. A statistical technique used to develop a
mathematical equation showing how variables are related.
F. Restrictions or
limitations imposed on a problem.
G. The study of the
possible payoffs and probabilities associated with a decision alternative or a
decision strategy.
H. A
smoothing method that uses the average of the most recent n data values in the time series as the forecast for
the next period.
I. The
volume at which total revenue equals total cost.
J. A
strategy involving a sequence of decisions and chance outcomes to provide the
optimal solution to a decision
problem.
BSC400
MIDTERM EXAM
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SECTION
III. ESSAY/SHORT ANSWER QUESTIONS
(35 possible points)
Please
answer each of the following questions.
1.
INTRODUCTION(10 Possible Points)
Explain the difference between quantitative and qualitative analysis
from the manager’s point of view.
2. DECISION
ANALYSIS (10 possible points)
Give
an example from your own work experience, or make up an example, of how
Decision Analysis could be used to
determine
an optimal strategy. Briefly describe
several decision alternatives you, as the decision maker, would be faced with
and
possible uncertain or risk-filled future events you would need to consider.
3. FORECASTING (15 possible points)
A.
What is the difference between Quantitative forecasting methods and
Qualitative forecasting methods?
B. Under
what circumstances would it be more appropriate to use quantitative rather than
qualitative forecasting
methods?
BSC400 MIDTERM EXAM
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3. FORECASTING (Cont.)
C. Give an example of a situation when using
quantitative forecasting would be appropriate.
SECTION
IV: PROBLEMS (45 possible points)
PROBLEM
1: LINEAR PROGRAMMING MODEL DEVELOPMENT (20 possible points)
A
manufacturer makes two products, doors and windows. Each must be processed through two work
areas. Work area #1 has 60 hours of
available production time. Work area #2
has 48 hours of available production time. Manufacturing of a door requires 4
hours in work area #1 and 2 hours in work area #2. Manufacturing of a window requires 2 hours in
work area #1 and 4 hours in work area #2.
Profit is $8 per door and $6 per window.
As you respond to the following questions, please note that you are only
setting the problem up. A solution to
determine the number of doors and windows to be manufactured and the resulting
profit is NOT necessary.
1. Define the decision variables that will
tell how many units to build (doors and windows).
2.
Develop an objective function that will maximize
profits.
3.
Develop production constraints for work areas #1 and
#2.
BSC400 MIDTERM EXAM
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PROBLEM 2: DECISION ANALYSIS (25 possible points)
Lakewood Fashion must decide how many lots of assorted ski
wear to order for its three stores.
Information on prices, sales, and inventory costs has led to the
following payoff table, in thousands:
_________Demand_________
Order Size____Low_____Medium_____High
1 Lot 12 15 15
2 Lots 9 25 35
3 Lots 6 35 60
REQUIRED:
1. What decision
should be made by an optimist?
2. What decision
should be made by a conservative?
3. What decision
should be made by using minimax regret?
4. Unrelated to this
problem, which approach do you personally prefer – optimistic, conservative, or
minimax
regret? Explain.
