Applied Management Science
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Course Introduction
Applied Management Science focuses on the practical application of quantitative and analytical methods to solve complex managerial problems and support decision-making in organizations. The course covers topics such as linear programming, decision analysis, forecasting, simulation, and inventory management. Students learn to model real-world business scenarios, interpret data, and use specialized software tools to optimize resources and processes, enabling more effective and efficient management of operations across various industries.
Recommended Textbook
Practical Management Science 5th Edition by Wayne L. Winston
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421 Verified Questions
421 Flashcards
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Chapter 1: Introduction to Modeling
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Sample Questions
Q1) The most frequent cause of a failed implementation of a model is:
A)the model is incorrect
B)the analyst fails to communicate how to use the model
C)the data for the model is unavailable
D)the model is too complex
Answer: B
Q2) Data are often not in the required form, in which case it is the analysts' job to gather the right data and put it into an appropriate format.
A)True
B)False Answer: True
Q3) In a descriptive model, the manager first wants to build a model that reflects the current situation.
A)True
B)False
Answer: True
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Chapter 2: Introduction to Spreadsheet Modeling
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Sample Questions
Q1) An important property of the exponential function is that:
A)if x changes by 1 unit, then y changes by a constant percentage that is approximately equal to the model constant b times 100%
B)if x changes by 1 unit, then y changes by a constant percentage that is approximately equal to the model constant b%
C)if x changes by 1%, then y changes by a constant percentage that is approximately equal to the model constant b times 100%
D)if x changes by 1%, then y changes by a constant percentage that is approximately equal to the model constant b%
Answer: A
Q2) Which of the following is not one of the required arguments for a VLOOKUP function?
A)The lookup table range
B)The value you want to compare to the values in the left column of the table
C)The index of the column you want the returned value to come from D)TRUE (for an approximate match) or FALSE (for an exact match)
Answer: D
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Chapter 3: Introduction to Optimization Modeling
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Sample Questions
Q1) Refer to Exhibit 3-2. What is the value of additional capacity on the polisher? How much increase and decrease in this capacity is possible before a change occurs in the optimal production schedule?
Answer: The value of additional capacity on the polisher is zero, since it is not binding. The allowable increase is unbounded, and the allowable decrease is 1000.
Q2) If the objective function has the equation {4x + 2y}, then the slope of the objective function line is 2.
A)True
B)False
Answer: True
Q3) Suppose a company sells two different products, x and y, for net profits of $6 per unit and $3 per unit, respectively. The slope of the line representing the objective function is: A)0.5
B) 0.5
C)2
D) 2
Answer: D
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Chapter 4: Linear Programming Models
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Sample Questions
Q1) The results of a sensitivity analysis with a dual objective model can be shown graphically using a:
A)scatterplot
B)tradeoff curve
C)trend diagram
D)bar chart
Q2) Refer to Exhibit 4-2. The project manager is evaluating options to complete the project early so that the company can earn a bonus. He has determined that the project schedule can be compressed into a six-month schedule, with the same total number of worker-months. In that case, the staffing requirements are as shown below.Develop an optimal staffing plan for the project under the accelerated schedule.
\[\begin{array} { c c c c c c c }
& { \text { Month of Project } } \\ & 1 & 2 & 3 & 4 & 5 & 6 \\ \text { Required } & 26 & 38 & 84 & 105 & 101 & 84 \end{array}\]
Q3) Refer to Exhibit 4-4. Assuming that all fertilizer produced can be sold, determine the optimal blending plan for the company. What is the maximum profit?
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Chapter 5: Network Models
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Q1) In network models of transportation problems, arcs represent the routes for getting a product from one node to another.
A)True
B)False
Q2) Refer to Exhibit 5-1. Suppose the Lakeview plant was required to run at capacity. How much more would the shipping plan cost Sinclair?
Q3) Which of the following is not an example of a condition that a more complex logistics model might include?
A)Multiple products
B)Multiple modes of transportation
C)Multiple time periods
D)Multiple objectives
Q4) In a typical network model representation of the transportation problem, the nodes indicate
A)roads
B)rail lines
C)geographic locations
D)rivers
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Chapter 6: Optimization Models With Integer Variables
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Sample Questions
Q1) Optimization software, including Solver, typically has more difficulty solving an integer programming problem, relative to a linear programming problem.
A)True
B)False
Q2) Refer to Exhibit 6-1. This problem is an example of what type of integer programming model?
Q3) The branch and bound algorithm uses:
A)lower bounds
B)upper bounds
C)both upper and lower bounds
D)neither upper or lower bounds
Q4) Refer to Exhibit 6-3. Formulate an integer programming model to identify a feasible deployment plan to the sales representatives. What is the minimum number of representatives that can cover this region? What are their home cities?
Q5) The higher the upper bound produced in the branch and bound solution process, the faster the algorithm will be.
A)True
B)False
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Chapter 7: Nonlinear Optimization Models
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Sample Questions
Q1) If you try different starting values for the changing cells and obtain different solutions:
A)you can be confident there is no solution
B)there must be a mistake in your objective function
C)there must be a mistake in one of your constraints
D)you can keep the best solution you have found and hope that it is indeed optimal
Q2) Refer to Exhibit 7-2. Suppose the producer can double the promotional budget. Formulate and solve a nonlinear optimization model to help this soda producer identify the best promotional strategies for its two products in that case. Does the change in profit justify the budget increase? Does the proportional amount spent promoting the two products remain the same?
Q3) The amount invested is one of the required inputs in a portfolio optimization model. A)True B)False
Q4) [Part 2] Refer to Exhibit 7-4. Determine the minimum variance portfolio that yields an expected annual return of at least 0.12. How has the portfolio changed from your answer in Part 1?
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Chapter 8: Evolutionary Solver: An Alternative Optimization
Procedure
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Sample Questions
Q1) Refer to Exhibit 8-4. Suppose Steve's company decides to locate a second salesperson in the region. Steve will now cover only Denver, Albuquerque, El Paso, Phoenix and Salt Lake City. The second salesperson will cover Los Angeles, San Diego, San Francisco, Portland, Seattle and Las Vegas. Formulate and solve shortest-path models for both salespersons. Is the total mileage for both salespersons more or less than in the case where Steve is the only salesperson?
Q2) A discriminant score is a weighted combination of the data for each member of a population, which is used to classify the members into groups.
A)True
B)False
Q3) If you let a genetic algorithm run long enough, it is guaranteed to find the solution to any optimization problem.
A)True
B)False
Q4) Refer to Exhibit 8-2. Explain why this problem typically requires Evolutionary Solver to obtain a solution.
Q5) Refer to Exhibit 8-4. Suppose Steve moves to Los Angeles. What is the shortest distance in this case?
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Chapter 9: Decision Making Under Uncertainty
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Sample Questions
Q1) Refer to Exhibit 9-1. Suppose the farmer is not risk-neutral, but instead his behavior can be modeled using an exponential utility function with a risk tolerance parameter of 100,000. What is the most he would be willing to pay for insulation in that case?
Q2) The risk profile shows the probability distribution of monetary outcomes in both graphical and tabular form.
A)True
B)False
Q3) Refer to Exhibit 9-2. Suppose that an actual (not perfectly reliable) credit report has the following characteristics based on historical data; in cases where the customer did not default on the approved loan, the probability of receiving a favorable recommendation on the basis of the credit investigation was 80%, while in cases where the customer defaulted on the approved loan, the probability of receiving a favorable recommendation on the basis of the credit investigation was 25%. Given this information, what are the posterior probabilities that default will and will not occur, given the credit report?
Q4) Refer to Exhibit 9-2. Should the credit union purchase the report if it costs $150?
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Chapter 10: Introduction to Simulation Modeling
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Sample Questions
Q1) If you add n lognormally distributed random numbers, the mean of the distribution for the sum is the sum of the individual means, and the variance of the distribution of the sum is the individual variances. This result is difficult to prove mathematically, but it is easy to demonstrate with simulation. To do so, run a simulation where you add three lognormally distributed random numbers, with means of 300, 700 and 100, and standard deviations of 20, 50, and 30, respectively. Your single output variable should be the sum of these three numbers. Verify with @RISK that the distribution of this output has a mean of 1,000 and standard deviation . \[\approx \sqrt { 202 + 502 + 302 } = 61.6\]
Q2) Which of the following statements is true regarding the Normal distribution?
A)It is always the appropriate distribution in simulation modeling
B)It does not permit negative values
C)There is a 95% chance that values will be within ± 2 standard deviations of the mean D)All of these options
Q3) Refer to Exhibit 10-2. What is the probability that the apparel company will exceed a profit at least $0.5M from the jacket line?
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Chapter 11: Simulation Models
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Sample Questions
Q1) A common distribution for modeling product lifetimes is the normal distribution
A)True
B)False
Q2) [Part 3] Refer to Exhibit 11-2. Briefly explain why designing the plant for the expected capacity is clearly not the optimal solution.
Q3) [Part 4] Refer to Exhibit 11-1. What does the distribution of the project NPV look like?
Q4) In cash flow models, we are typically interested in investigating:
A)the value at risk (VAR)
B)the net present value (NPV)
C)the amount of loans required to maintain a minimum cash balance
D)the interest on loans taken out by a firm
Q5) Value at risk (VAR) is an indicator of:
A)how much to bid for a project
B)the expected amount of loss for a project
C)what is nearly the worst possible outcome for a project
D)the required amount of investment required for a project
Q6) In warranty cost models, the key input random variable is product lifetime.
A)True
B)False
Page 13
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Chapter 12: Inventory and Supply Chain Models
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Sample Questions
Q1) Refer to Exhibit 12-3. Formulate a Solver model and find the optimal order quantity for the cotton sweaters. What is the optimal order? How much, if any, is the maximum backlog?
Q2) An order cycle begins each time an order arrives and ends just before the next order arrives.
A)True
B)False
Q3) Refer to Exhibit 12-3. Suppose the annual demand for the sweaters is not known with certainty, but rather is estimated to be normally distributed with mean 26,000 and standard deviation 2,000. Formulate a Solver model to find the optimal (R,Q) policy by minimizing the North Slope's expected annual cost. What is the policy, and what is the total annual cost?
Q4) The only real cost benefit from synchronizing orders for several products is reduced setup costs.
A)True
B)False
Q5) Refer to Exhibit 12-2. Suppose there is a storage cost of $1 per unit. Make the appropriate change to your Solver model and find the optimal order quantity in that case. Does the unit purchasing price change?
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Chapter 13: Queuing Models
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Sample Questions
Q1) In a process where interarrival times are exponentially distributed, the time since the last arrival is irrelevant.
A)True
B)False
Q2) Refer to Exhibit 13-3. What percentage of all customers have to spend at least some small amount of time waiting in line?
Q3) Refer to Exhibit 13-3. What is the average length of the waiting line?
Q4) Refer to Exhibit 13-3. What is the average length of time (in hours) spent waiting in line?
Q5) [Part 2] Refer to Exhibit 13-1. Assuming an exponential distribution with the parameter you obtained in Part 1, what is the probability that a customer interarrival time will be less than 2 minutes?
Q6) Almost all queuing systems are alike in that customers enter a system, possibly wait in one or more queues, get served, and then depart.
A)True
B)False
Q7) Refer to Exhibit 13-4. What percentage of customers do not wait in the queue?
Q8) Refer to Exhibit 13-2. How many of the servers are busy on average?
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Chapter 14: Regression and Forecasting Models
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Q1) A time series can consist of four different components: trend, seasonal, cyclical, and random (or noise).
A)True
B)False
Q2) Refer to Exhibit 14-2. Identify and interpret the percentage of variation explained (R2) for the model.
Q3) In regression analysis, the variable we are trying to explain or predict is called the
A)independent variable
B)dependent variable
C)regression variable
D)statistical variable
Q4) When using the moving average method, you must select ____ which represent(s) the number of terms in the moving average.
A)a smoothing constant
B)the explanatory variables
C)an alpha value
D)a span
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