1) Even though it is often the case that no cash outflows result when demand exceeds
capacity, __________ can nevertheless be experienced in those circumstances.
A.foreorder costs
B.service costs
C.shortage costs
D.holding costs
E.setup costs
2) Which of the following principles emphasizes that actions should make the
community as a whole better off?
A.The Rights Principle
B.The Fairness Principle
C.The Virtue Principle
D.The Common Good Principle
E.The Utilitarian Principle
3) Use of simple linear regression analysis assumes that:
A.variations around the line are nonrandom.
B.deviations around the line are normally distributed.
C.predictions can easily be made beyond the range of observed values of the predictor
variable.
D.all possible predictor variables are included in the model.
E.the variance of error terms (deviations) varies directly with the predictor variable.
4) A plot below the lower control limit on the range chart:
(I) should be ignored since lower variation is desirable.
(II) may be an indication that process variation has decreased.
(III) should be investigated for assignable cause.
A.I and II
B.I and III
C.II and III
D.II only
E.I, II, and III
5) Which of the following is not a form of risk reduction in project management?
A.backup system
B.outsourcing
C.risk sharing
D.scenario analysis
E.selection analysis
6) The new owner of a beauty shop is trying to decide whether to hire one, two, or three
beauticians. She estimates that profits next year (in thousands of dollars) will vary with
demand for her services, and she has estimated demand in three categories, low,
medium, and high.
If she uses the minimax regret criterion, how many beauticians will she decide to hire?
A.one
B.two
C.three
D.either one or two
E.either two or three
7) As compared to rigid automation, the benefits of flexible manufacturing systems
include:
A.reduced labor requirements.
B.higher efficiency.
C.larger batch sizes.
D.significantly lower fixed costs.
E.significantly lower variable costs.
8) Consider the following decision scenario:
If you feel that P(#1) = .4, P(#2) = .3, P(#3) = .2, and P(#4) = .1, what is your expected
value of perfect information?
9) When developing probabilistic estimates of project duration, it is necessary to know
which of the following?
A.the mean and variance of every activity
B.the mean and variance of activities on the critical path
C.the standard deviation of activities on the critical path
D.each activity’s probability of completion
E.the distribution of activity times
10) Weekly demand for a particular item averages 30 units, with a standard deviation of
4. This item is managed with a fixed-order-interval model. The order interval is three
weeks, and this item has a certain lead time of one week. The desired service level is
97.5 percent. Assume that it is now time to place another order, and there are 43 units
on hand. How many units should be ordered?
A.120
B.93
C.136
D.46
E.84
11) Suppose a project is subject to the following risk events (each with a given
probability of occurring and a cost associated with that occurrence):
Given these, Event _____ should probably get the most attention and Event _____
should probably get the least.
A.II; IV
B.III; IV
C.I; III
D.I; II
E.II; III
12) Determining the worst payoff for each alternative and choosing the alternative with
the “best worst” is the approach called:
A.minimin.
B.maximin.
C.maximax.
D.minimax regret.
E.Laplace.
13) A risk avoider would want ______ safety stock.
A.less
B.more
C.the same
D.zero
E.50 percent
14) Which of the following are typically in play in a circumstance in which yield
management is worthwhile?
(I) Perishable capacity
(II) Ample finished goods storage
(III) Demand variability
(IV) Low holding costs
A.I, II, and IV only
B.I and III only
C.III only
D.II and III only
E.II, III, and IV only
15) A Virginia county is considering whether to pay $50,000 per year to lease a prisoner
transfer facility in a prime location near Washington, D.C. They estimate it will cost
$50 per prisoner to process the paperwork at this new location. The county is paid a $75
commission for each new prisoner they process. What would be the county’s annual
profit if they were to process 4,000 prisoners per year at this new location?
A.$0
B.$75,000
C.$50,000
D.$100,000
E.$300,000