1) Budgets are computed using only ES times.
2) PERT is a deterministic analysis tool allowing for precise times of activities within a
project.
3) A correctly formulated linear program, when solved with the simplex algorithm, will
always yield a single optimal solution.
4) Busy highways are often analyzed with the maximal-flow technique.
5) In Markov analysis, the row elements of the transition matrix must sum to 1.
6) A goal of many waiting line problems is to help a firm find the ideal level of services
that minimize the cost of waiting and the cost of providing the service.
7) We cannot multiply a 1 x m matrix by an n x m matrix.
8) Multiple regression may be used to forecast both trend and seasonal components
present in a time series.
9) The Quantitative Analysis Approach consists of six steps.
10) Given the pipeline fluid flows indicated below, determine the maximum flow from
Node 1 to Node 5.
A) 250
B) 300
C) 350
D) 450
E) None of the above
11) Sam the Vet is running a rabies vaccination clinic for dogs at the local grade school.
Sam can vaccinate a dog every 3 minutes. It is estimated that the dogs will arrive
independently and randomly throughout the day at a rate of 1 dog every 6 minutes,
according to a Poisson distribution. Also assume that Sam’s vaccinating times are
exponentially distributed.
(a) Find the probability that Sam is idle.
(b) Find the proportion of time that Sam is busy.
(c) Find the average number of dogs receiving or waiting to be vaccinated.
(d) Find the average number of dogs waiting to be vaccinated.
(e) Find the average time a dog waits before getting vaccinated.
(f) Find the average amount (mean) of time a dog spends between waiting in line and
getting vaccinated.
12) Consider the following payoff table.
Based upon these probabilities, a person would select Alternative 2. Suppose there is
concern about the accuracy of these probabilities. It can be stated that Alternative 2 will
remain the best alternative as long as the probability of A is at least
A) 0.33.
B) 0.50.
C) 0.40.
D) 0.60.
E) None of the above
13) A prediction equation for sales and payroll was performed using simple linear
regression. In the regression printout shown below, which of the following statements
is/are not true?
A) Payroll is a good predictor of Sales based on α= 0.05.
B) There is evidence of a positive linear relationship between Sales and Payroll based
on α = 0.05.
C) Payroll is not a good predictor of Sales based on = 0.01.
D) The coefficient of determination is equal to 0.833333.
E) Payroll is the independent variable.
14) Which of the following statements concerning ABC analysis is false?
A) Class B items typically account for 20 percent of the company’s business in dollars.
B) There are typically less class A items in stock than class B.
C) Class C items typically account for 70 percent of the company’s inventory items.
D) Class C items tend to have more complex inventory policies than Class B items.
E) Class B items typically account for 20 percent of the company’s items in inventory.
15) Upon completion of an Analytic Hierarchy Process analysis, the CR = 0.047, thus
A) the decision makers’ answers are relatively consistent.
B) the decision makers’ should consider reevaluating their pairwise comparisons.
C) no conclusion is available for this value of the CR.
D) the decision maker has made near perfectly consistent pairwise comparisons.
E) None of the above
16) Table 8-5
Each coffee table produced by Timothy Kent Designers nets the firm a profit of $9.
Each bookcase yields a $12 profit. Kent’s firm is small and its resources limited. During
any given production period (of 1 week), 10 gallons of varnish and 12 lengths of high
quality redwood are available. Each coffee table requires approximately 1 gallon of
varnish and 1 length of redwood. Each bookcase takes 1 gallon of varnish and 2 lengths
of wood.
T = number of tables produced each week
B = number of bookcases produced each week
Referring to Table 8-5, if we were to frame this as a linear programming problem, the
objective function would be
A) maximize 9B + 12T.
B) maximize 9T + 12B.
C) minimize 10T + 10B.
D) maximize 12T + 10B.
E) None of the above
17) Consider the material tree structure for material A. Assume 10 units are needed.
(a) How many units of B are needed?
(b) How many units of C are needed?
(c) How many units of D are needed?
(d) How many units of E are needed?
(e) How many units of F are needed?
18) =
A) 11
B) -11
C) 15
D) 4
E) None of the above
19) If in an absorbing state, the probability of being in an absorbing state in the future is
A) 0%.
B) 25%.
C) 50%.
D) 75%.
E) 100%.
20) Table M7-1
According to Table M7-1, it is currently profitable to produce some units of X1 and the
current profit per unit of X1 is $20. What is the lowest value that this could be to allow
this variable to remain in the basis?
A) 8
B) 16
C) 20
D) 30
E) None of the above
21) Harry Sprague makes custom bowling balls. His fixed cost is $255,000, variable
cost is $45.50, and selling price is $55.50. To what value must he reduce his variable
cost if he wants a break-even point of 10,000 units?
A) $39
B) $37
C) $35
D) $30
E) None of the above
22) Table 15-1
Refer to Table 15-1. The average range of a process for packaging cereal is 1.1 ounces.
If the sample size is 10, find the upper control chart limit for the range chart.
A) 0.245
B) 1.955
C) 1.777
D) 0.223
E) None of the above
23) At a university with 1,000 business majors, there are 200 business students enrolled
in an introductory statistics course. Of these 200 students, 50 are also enrolled in an
introductory accounting course. There are an additional 250 business students enrolled
in accounting but not enrolled in statistics. If a business student is selected at random,
what is the probability that the student is enrolled in neither accounting nor statistics?
A) 0.45
B) 0.50
C) 0.55
D) 0.05
E) None of the above
24) Table 13-1
The table below represents the probability distribution for machine breakdowns in a day
of operation.
According to Table 13-1, what is the probability of at least one breakdown?
A) 0.2
B) 0.3
C) 0.5
D) 0.8
E) 0.85
25) Colonel Motors (an automobile company) has prepared a marketing campaign for
its best selling car. The focus of the campaign is quality, and it is claimed that 97
percent of the purchasers of this car have no complaints in the first year. You and your
sister Kim have each purchased one of these cars.
(a) What is the probability that neither of you has a complaint about the car in the first
year if the advertising claim is true?
(b) What is the probability that exactly one of you has a complaint about the car in the
first year if the advertising claim is true?
26) Bayes’ theorem enables decision makers to revise probabilities based on
A) perfect information.
B) knowing, ahead of time, the actual outcome of the decision.
C) additional information.
D) measurements of utility.
E) None of the above
27) List at least two game theory applications.
28) Explain what is meant by a Monte Carlo simulation.
29) With regard to queuing theory, define what is meant by balking.
30) Mark M. Upp has just been fired as the university bookstore 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 60 percent
chance that demand will be high. He assigns the following utilities to the different
profits:
U(50,000) = 0.72U(-10,000) = 0.22
U(80,000) = 1U(-30,000) = 0
Using expected utility theory, what should Mark do?
31) Describe the shipping problem linear programming application.
32) The U.S. government award for quality achievement is called the ________.