Which of the following is true about chi-square distribution?
A) It is a special distribution and is denoted by (C2).
B) It is characterized by degrees of freedom.
C) It is computed using the Excel function CHISQ.INV.TEST.
D) It has a left-tail area equal to the expected value of the sample.
If a simulation has multiple output variables that are related to one another, the
distributions of all output variables can be viewed on a single Risk Solver Platform
chart called a(n)
________.
A) trend chart
B) sensitivity chart
C) overlay chart
D) box-whisker chart
The manager at Soul Walk Inc., a shoe manufacturing company, wants to set a new
price (P) for a shoe model to maximize total profit. The demand (
D) as a function of price is represented as:
D = 1,500 – 2.5P
The total cost (C) as a function of demand is represented as:
C = 3,200 + 3.5D
Which of the following is a model for total profit as a function of price?
A) (1,508.75 price) – (2.5 price2) – 8,450
B) (3.5 price2) + 3,200 – (1925.50 price)
C) (1,250 price) + (5 price2) – 8,320
D) [4521 + (4.5 price)] price – 9684.25
Below is a payoff table that lists four mortgage options:
The probability of rates rising is 0.6, rates stable is 0.3, and rates falling is 0.1. Answer
the following questions by creating a decision tree.
Which of the following is considered the best expected value decision?
A) 1-year ARM
B) 3-year ARM
C) 5-year ARM
D) 30-year fixed
Below is the spreadsheet for a newsvendor model.
Answer the following question(s) using multiple parameterized simulations. The range
for the historical demand is 40-51. Assume a uniform integer distribution for demand,
and run 12 simulations for different purchase quantities. Use 5,000 trials and 1 for
random seed.
Which of the following values of purchase quantity shows the least mean profit?
A) 42
B) 45
C) 48
D) 51
Stone Age Surfboards is a small manufacturer of two types of popular low-tide
surfboards, the Graystone and the Lava models. The manufacturing process consists of
two departments: fabrication and finishing. The fabrication department has 8 skilled
workers, each of whom works 9.25 hours per day. The finishing department has 5
workers, each of whom works a 6 -hour shift per day. Each pair of Graystone
surfboards requires 2.5 labor hours in the fabrication department and 2 labor hours in
finishing. The Lava model requires 4.2 labor-hours in fabrication and 3.6 labor-hours in
finishing. The company operates 6 days a week. It makes a per unit profit of $40 on the
Graystone model and $60 on the Lava model. The company anticipates selling at least
twice as many Lava models as Graystone models.
What is the Allowable Increase for Lava surfboards produced?
A) 30
B) 24
C) 12
D) 18
Sheila joined Simsin Tradings at the age of 36 with a starting salary of $ 75,000. She
expects a salary increase of 5 percent every year. Her retirement plan requires her to
pay 9 percent of her salary, while the company matches it at 32 percent. She expects an
annual return of 7 percent on her retirement portfolio. Using a predictive model for
Sheila’s first five years, calculate the following, assuming that the salary increases at the
same rate every year, and the return of interest does not change.
Calculate the employer contribution in Sheila’s fourth year at Simsin.
A) $546.98
B) $703.26
C) $2,500.47
D) $2,160
Which of the following approaches provided by the Analytic Solver Platform can
automatically run multiple optimizations while varying model parameters within a
predefined range?
A) sensitivity analysis
B) breakdown analysis
C) parameter analysis
D) uncertainty analysis
Consider the spreadsheet for a Newsvendor Model.
Which of the following cells is defined as the uncertain function cell?
A) B12
B) B14
C) B15
D) B17
Pickson Luthiers Corporation makes four models of electric guitars, ScarCT, Dela Mort,
Warax, and Invazen. Each guitar must flow through five departments, assembly,
painting, sound testing, inspection, and packaging. The table below shows the relevant
data. Production rates are shown in units/hour. (ScarCT is assembled elsewhere).
Pickson wants to determine how many guitars to make to maximize monthly profit.
According to the linear optimization model, what is the net profit per unit on Dela
Mort?
A) $205,200
B) $108
C) $680
D) $90
Which of the following is true of covariance, between two variables, when one of the
deviations from the mean is positive and the other is negative?
A) the degree of linear association is high between the two variables
B) there is no covariance between the two variables
C) the covariance will be negative
D) the covariance will be positive
Below is the spreadsheet for an economic order quantity model.
Assume that the distribution of demand is normal with a mean of 20,000 and standard
deviation of 2,000.
What is the coefficient of variation obtained from the simulation results?
A) 0.28
B) 0.10
C) 0.45
D) 0.60
Shirley Templeton is a real estate agent for Paralol Realty. Shirley is given the
responsibility to manage potential customers for 5 of the Realty’s bungalows. These 5
bungalows are situated in close proximity. In order to make traveling easier, Shirley
decides to move to a location closer to the 5 bungalows. The table below gives the
location (X and Y coordinates) of the 5 bungalows along with the number of trips she
would have to make to each bungalow. Create a nonlinear model based on the data
given in the table below noting that the objective is to reduce the weighted distance
between Shirley’s accommodation and the 5 bungalows.
According to the model, what is the Y-coordinate for the location of Shirley’s new
accommodation?
A) 91.16 B) 25.08 C) 98.21 D) 54.62
Jonathan Reese is considering three stocks in which to invest with a fixed budget. The
table below provides information on Jonathan’s expected returns for each stock. The
table also provides information, collected from market researchers, on the
variance-covariance matrix of the individual stocks. He expects a total return of at least
10%.
Develop a quadratic optimization model to find the optimal allocation of the budget to
each stock, and variance calculations for squared terms and cross-products based on the
variance-covariance matrix.
According to the model, what is the squared term value for Stock 1 variance?
A) 0.00065
B) 0.00535
C) 0.01132
D) 0.00283
Remington Textiles has a mill that produces three types of fabrics on a make-to-order
basis. The mill operates on a 24/7 basis. The key decision facing the plant manager is
about the type of loom needed to process each fabric during the coming 12 weeks to
meet demands for the three fabrics and not exceed the capacity of the looms in the mill.
Two types of looms are used: Jaquard and Northrop. Jaquard looms can be used to
make all fabrics and are the only looms that can weave certain fabrics, such as plaids.
Demands, variable costs for each fabric, and production rates on the looms are given in
the table below. The mill has 10 Northrop looms and 2 Jaquard looms. Any fabrics that
cannot be woven in the mill because of limited capacity will be purchased from an
external supplier, finished at the mill, and sold at the selling price. In addition to
determining which looms to use to process the fabrics, the manager also needs to
determine which fabrics to buy externally.
From the Sensitivity Report, which of the following would reduce the total cost by
$1.568 for each additional hour of capacity for the Jaquard looms?
A) decreasing the Northrop loom cost per hour by $0.58
B) decreasing the Northrop loom capacity down by 534.4
C) increasing the Jaquard loom capacity up by 4896.5 hours
D) increasing the Jaquard loom capacity up by 4032 hours
The details of the clock sales at a supermarket for the past 6 weeks are shown in the
table below. The time series appears to be relatively stable, without trend, seasonal, or
cyclical effects. The simple moving average value of k is set at 2.
For the given data, what is the value of the simple moving average mean square error?
A) 0.21
B) 20.12
C) 14.25
D) 207.13
The payoff table given below lists four mortgage options:
The probability of rates rising is 0.6, rates stable is 0.3, and rates falling is 0.1.
Which of the following decisions has the largest expected payoff?
A) 1-year ARM
B) 3-year ARM
C) 5-year ARM
D) 30-year fixed
Which of the following statements is true of a triangular distribution?
A) We are required to know only the smallest and largest possible values that the
variable might assume.
B) These distributions depend on multiple parameters that one can easily identify based
on managerial knowledge and judgment.
C) The distribution has a limited range and can be skewed in either direction.
D) The distribution is very positively skewed, with no negative values.
The worldwide sales of cars from 1981-1990 are shown in the table below. Given: α =
0.2 and β = 0.15 (Hint: Use XLMiner)
Which of the following equations is the trend line equation for the given data? (Note:
the fitted model assumes that the years are numbered 1 through 10, not the actual
dates.)
A) 60.123x + 481.56
B) 48.16x + 481.86
C) 32.17x + 931.87
D) 57.15x + 503.81
Below is a spreadsheet for Trance Electronics.
Suppose that the project manager of Trance Electronics has identified the following
uncertain variables in the model and the distributions and parameters that describe
them, as follows: Market size: normal with mean of 20,000,000 units and standard
deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and
$800,000,000.
Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation
$30,000,000. Annual market growth factor: triangular with minimum = 2%,
maximum = 6%, and most likely = 3%.
Annual market share growth rate: triangular with minimum = 15%, maximum =
25%, and most likely = 20%.
The number of trials per simulation is equal to 10,000 at a Sim. Random Seed of 2. Run
the simulation and answer the following questions using the Risk Solver Platform.
What is the correlation of the R&D cost with the NPV with reference to the sensitivity
chart?
A) -0.404
B) 0.028
C) 0.908
D) -0.194
Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential
new drug. The total R&D costs are estimated to reach around $875,000,000 with
clinical trials mounting to $145,000,000. The current market size is estimated to be
around 3,000,000 and is expected to grow at 4 percent every year. The market share
Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25
percent each year for the next 4 years. A monthly prescription is anticipated to generate
revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is
assumed.
Calculate the projected profit for the third year.
A) $31,315,200
B) $2,373,996,000
C) $1,149,876,000
D) $1,494,838,800
Pickson Luthiers Corporation is studying where to locate a phone charging point on the
factory floor. The locations of five production cells are expressed as X– and
Y-coordinates on a rectangular grid of the factory layout. The daily demand for the
charging point (measured as the number of trips to the charging point) at each
production cell is also known. Because of the nature of the equipment layout in the
factory and for safety reasons, workers must travel along marked horizontal and vertical
aisles to access the charger. Thus, the distance from a cell to the charger is measured as
rectilinear distance.
The table below provides the relevant information.
The optimal location should minimize the total weighted distance between the charging
point and all production cells, where the weights are the daily number of trips to the
phone charging point.
According to the model, which of the following is the weighted distance between the
phone charger and Electricals cell?
A) 75.00
B) 125.00
C) 100.00
D) 112.50
Below is the table showing rate of shoes sold per day and the highest-priced shoe sold
that day for a one-week period. The rate of shoes sold per day (X) and the price of the
shoes (Y).
Use Excel to calculate the variance of X.
A) 271.33
B) 16.47
C) 49.57
D) 7.04
Consider the following spreadsheet for an outsourcing decision model.
We assume that the production (demand) volume is normally distributed with a mean of
1,000 and a standard deviation of 100. For the unit cost, select the triangular
distribution. It has a minimum value of $150, most likely value of $165, and a
maximum value of $190. The number of trials per simulation is equal to 5,000 at a Sim.
Random Seed of 1. Run the simulation and answer the following question(s) using the
Risk Solver Platform.
What is the value of mean obtained from the simulation results? [Hint: Choose the
nearest answer]
A) $18,385
B) $21,608
C) $14,894
D) $23,946
Use the data given below to answer the following question(s).
At a casino, a combination of two spinners is used to decide the winner based on the
sum of scores from spinning. The spinners each have four colored spaces – red, yellow,
blue, and green. Red = 1, Yellow = 2, Blue = 3, and Green = 4
What is the probability that the spinners land on colors summing up to exactly 3?
Following is the purchase order database of ‘The Chef Says So’, a restaurant in New
York, over the last quarter (April-June).
Describe how to and construct a line chart exhibiting the purchase order of ceramic
plates over the three months.
Compare between a prediction interval and a confidence interval.
Construct a PivotChart to visualize the purchase order total units for steel forks and
ceramic bowls within each region.
Which of the following is true of the parameters of a beta distribution function?
C) The parameters of the distribution function, α and β, can be negative.
D) The values of the parameters do not affect the skewness of the distribution.
E) If either parameter is 1.0 and the other is lesser than 1.0, the distribution takes an “L”
shape.
F) If the parameter β exceeds the other parameter α, the distribution is positively
skewed.
What is a service level?
Explain how a two-way data table is created.
Give an account of biased and unbiased estimators in sampling methods.