1) A decision maker’s worst option has an expected value of $1,000, and her best option
has an expected value of $3,000. With perfect information, the expected value would be
$5,000. The decision maker has discovered a firm that will, for a fee of $1,000, make
her position-risk free. How much better off will her firm be if she takes this firm up on
its offer?
A.$5,000
B.$4,000
C.$3,000
D.$2,000
E.$1,000
2) Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2.
Option B has a payoff of $12,500 in environment 1 and $17,500 in environment 2.
Once the probability of environment 2 exceeds ______, option A becomes the better
choice.
A..33
B..67
C..45
D..50
E..55
3) Linear programming to produce an aggregate plan:
A.will produce the best plan if accurate inputs are used.
B.is the most widely used technique.
C.is easy to implement.
D.will produce a plan that may not be the best plan.
E.requires an Excel spreadsheet.
4) The manager of the Quick Stop Corner Convenience Store (which never closes) sells
four cases of Stein beer each day. Order costs are $8.00 per order, and Stein beer costs
$.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three
days from the time they are placed. Daily holding costs are equal to 5 percent of the
cost of the beer.
If he were to order 16 cases of Stein beer at a time, what would be the daily total
inventory costs, EXCLUDING the cost of the beer?
A.$2.00
B.$4.00
C.$1.28
D.$3.28
E.$2.56
5) An MRP system that is updated periodically to account for all changes which have
occurred within a given time interval is called a(n) ________ system.
A.pegging
B.planned order release
C.net-change
D.regenerative
E.exception report
6) The Operations Manager for Shadyside Savings & Loan orders cash from her home
office for her very popular “BIG BUCKS” automated teller machine, which only
dispenses $100 bills. She estimates that this machine dispenses an average of 12,500
bills per month, and that carrying a bill in inventory costs 10 percent of its value
annually. She knows that each order for these bills costs $300 for clerical and armored
car delivery costs, and that order lead time is six days. What is the economic order
quantity?
A.600 bills
B.3,000 bills
C.949 bills
D.6,215 bills
E.12,500 bills
7) Using dynamic pricing in response to capacity variability to ensure that perishable
inventory is not wasted is known as:
A.yield management.
B.profit minimization.
C.capacity loading.
D.demand optimization.
E.perishability avoidance.
8) An MRP system whose records are updated continuously is referred to as a(n):
A.regenerative system.
B.batch-type system.
C.Plossl-Wright system.
D.net-change system.
E.gross-change system.
9) A quality inspector for Alpha-Beta Co. is concerned about the quality of the batch of
several thousand blank DVD disks which his company produced this week and is
preparing to ship. If, based on his acceptance sample, he decides to ship this batch
without inspection, which type error would be possible?
A.inspector’s error
B.producer’s error
C.Type I error
D.Type II error
E.both Type I and Type II errors
10) Vendor analysis has the greatest potential for savings for items which have:
A.low cost per unit.
B.low annual cost-volume.
C.high cost per unit.
D.high annual usage.
E.high annual cost-volume.