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1) The existence of non-negativity constraints in a two-variable linear program implies
that we are always working in the northwest quadrant of a graph.
2) The SSE measures the total variability in the independent variable about the
regression line.
3) The matrix of transition probabilities gives the conditional probabilities of moving
from one state to another.
4) In regression, there is random error that can be predicted.
5) An "infinite calling population" occurs when the likelihood of a new arrival depends
upon the number of past arrivals.
6) Table M2-1
The data below is a dynamic programming solution for a shortest route problem.
Using the data in Table M2-1, determine the minimum distance from point 1 to point 7.
A) 21
B) 22
C) 23
D) 24
E) 75
7) A plant manager considers the operational cost per hour of five machine alternatives.
The cost per hour is sensitive to three potential weather conditions: cold, mild, and
warm. The following table represents the operations cost per hour for each
alternative-state of nature combination:
Using the equally likely criterion, which alternative is best?
A) Machine 1
B) Machine 2
C) Machine 3
D) Machine 4
E) Machine 5
8) Consider the following linear programming problem:
Which of the following points (X,Y) is not feasible?
A) (50,40)
B) (20,50)
C) (60,30)
D) (90,10)
E) None of the above
9) Table 14-1
The following data consists of a matrix of transition probabilities (P) of three competing
companies, and the initial market share (0). Assume that each state represents a
company (Company 1, Company 2, Company 3, respectively) and the transition
probabilities represent changes from one month to the next.
Using the data in Table 14-1, determine Company 2's estimated market share in the next
period.
A) 0.26
B) 0.27
C) 0.28
D) 0.29
E) None of the above
10) Consider the following linear programming problem:
What is the optimum solution to this problem (X,Y)?
A) (0,0)
B) (50,0)
C) (0,100)
D) (400,0)
E) None of the above
11) A structure tree of the components in a product, with a description and the quantity
required to make each product is called a(n)
A) ERP system.
B) MRP system.
C) Master production schedule.
D) Bill of Materials.
E) Inventory Receipt.
12) In queuing analysis, total expected cost is the sum of expected ________ plus
expected ________.
A) service costs, arrival costs
B) facility costs, calling costs
C) calling cost, inventory costs
D) calling costs, waiting costs
E) service costs, waiting costs
13) Agile Bikes has manufacturing plants in Salt Lake City, Dallas, and Chicago. The
bikes are shipped to retail stores in Los Angeles, New York, Miami, and Seattle.
Information on shipping costs, supply, and demand is given in the following table:
What type of mathematical programming is required to solve this problem?
A) Linear programming
B) Integer programming
C) Mixed-integer programming
D) Zero-one integer programming
E) Nonlinear programming
14) Which of the following is a basic assumption of linear programming?
A) The condition of uncertainty exists.
B) Independence exists for the activities.
C) Proportionality exists in the objective function and constraints.
D) Divisibility does not exist, allowing only integer solutions.
E) Solutions or variables may take values from -∞ to +∞.
15) Table M7-3
According to Table M7-3, which is the final simplex tableau for a problem with two
variables and two constraints, what are the values for all the variables in this solution?
A) X1 = 20, X2 = 40, S1 = 0, S2 = 0
B) X1 = 0, X2 = 40, S1 = 0, S2 = 40
C) X1 = 0, X2 = 20, S1 = 0, S2 = 40
D) X1 = 0, X2 = 0, S1 = 0, S2 = 0
E) None of the above
16) In order for a linear programming problem to have multiple solutions, the solution
must exist
A) at the intersection of the non-negativity constraints.
B) on a non-redundant constraint parallel to the objective function.
C) at the intersection of the objective function and a constraint.
D) at the intersection of three or more constraints.
E) None of the above
17) Andre Candess manages an office supply store. One product in the store is
computer paper. Andre knows that 10,000 boxes will be sold this year at a constant rate
throughout the year. There are 250 working days per year and the lead-time is 3 days.
The cost of placing an order is $30, while the holding cost is $15 per box per year. If
Andre orders 500 boxes each time he orders from his supplier, what would his total
annual inventory cost be (holding cost plus ordering cost)?
A) $3,000
B) $4,350
C) $3,075
D) $3,750
E) None of the above
18) Table 14-2
The following data consists of a matrix of transition probabilities (P) of three competing
retailers, the initial market share (0). Assume that each state represents a retailer
(Retailer 1, Retailer 2, Retailer 3, respectively) and the transition probabilities represent
changes from one month to the next.
Using the data given in Table 14-2, find the market shares for the three retailers in
month 2.
A) (2) = (0.30, 0.60, 0.10)
B) (2) = (0.55, 0.33, 0.12)
C) (2) = (0.44, 0.43, 0.12)
D) (2) = (0.55, 0.12, 0.33)
E) (2) = (0.47, 0.40, 0.13)
19) Ivana Miracle wishes to invest up to her full inheritance of $300,000, and her goal
is to minimize her risk subject to an expected annual return of at least $30,000. She has
decided to invest her money in any of three possible waysCDs, which pay a guaranteed
6 percent; stocks, which have an expected return of 15 percent; and a money market
mutual fund, which is expected to return 8 percent. Risk factors are 1.0 for the CDs, 3.6
for the stocks, and 1.8 for the money market fund. Formulate this as a linear program.
20) What can be said about a correlation coefficient of +1?
21) Mark M. Upp has just been fired as the university book store manager for setting
prices too low (only 20 percent above suggested retail). He is considering opening a
competing bookstore near the campus, and he has begun an analysis of the situation.
There are two possible sites under consideration. One is relatively small, while the other
is large. If he opens at Site 1 and demand is good, he will generate a profit of $50,000.
If demand is low, he will lose $10,000. If he opens at Site 2 and demand is high he will
generate a profit of $80,000, but he will lose $30,000 if demand is low. He also has
decided that he will open at one of these sites. He believes that there is a 50 percent
chance that demand will be high. He assigns the following utilities to the different
profits:
For what value of utility for $50,000, U(50000), will Mark be indifferent between the
two alternatives?
22) Explain the difference between control charts for variables and attributes.
23) A small furniture manufacturer produces tables and chairs. Each product must go
through three stages of the manufacturing process: assembly, finishing, and inspection.
Each table requires 3 hours of assembly, 2 hours of finishing, and 1 hour of inspection.
Each chair requires 2 hours of assembly, 2 hours of finishing, and 1 hour of inspection.
The profit per table is $120, while the profit per chair is $80. Currently, each week there
are 200 hours of assembly time available, 180 hours of finishing time, and 40 hours of
inspection time. To keep a balance, the number of chairs produced should be at least
twice the number of tables. Also, the number of chairs cannot exceed six times the
number of tables. How many tables and chairs should the furniture manufacturer
produce to maximize profit?
24) Describe the truck loading linear programming application.
25) Describe the production scheduling linear programming application.
26) A mail order firm, AmazingCo, can use one of 3 shipping couriers. Ajax Shipping
charges $6 per pound and delivers in 2 days. Bilco Lanes charges $9 per pound but
guarantees next day delivery. The final courier, Hobo Ltd., charges only $3 per pound
but takes 4 days to deliver. AmazingCo has a quarterly budget of $280,000 and a
reputation for timely delivery. Formulate the linear program so that the firm delivers as
fast as possible within budget for 70,000 pounds of shipments per quarter.
