Applied Statistics in Business
Exam Materials
Course Introduction
Applied Statistics in Business explores the fundamental principles and techniques of statistical analysis as they relate to real-world business scenarios. Students will learn to collect, analyze, interpret, and present data to inform decision-making processes within organizations. Through practical applications, case studies, and the use of statistical software, the course covers topics such as descriptive statistics, probability distributions, hypothesis testing, regression analysis, and forecasting. By the end of the course, students will be equipped with quantitative skills to solve business problems and to make data-driven decisions in diverse business environments.
Recommended Textbook
Quantitative Methods for Business 12th Edition by David R. Anderson
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1066 Verified Questions
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Chapter 1: Introduction
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Sample Questions
Q1) All uncontrollable inputs or data must be specified before we can analyze the model and recommend a decision or solution for the problem.
A)True
B)False
Answer: True
Q2) George Dantzig is important in the history of management science because he developed
A)the scientific management revolution.
B)World War II operations research teams.
C)the simplex method for linear programming.
D)powerful digital computers.
Answer: C
Q3) The quantitative analysis approach requires
A)the manager's prior experience with a similar problem.
B)a relatively uncomplicated problem.
C)mathematical expressions for the relationships.
Answer: C
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Page 3
Chapter 2: Introduction to Probability
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Sample Questions
Q1) If P(A|B)= .4,then
A)P(B|A) = .6
B)P(A)*P(B) = .4
C)P(A) / P(B) = .4
D)None of the alternatives is correct.
Answer: D
Q2) Which of the following is not a proper sample space when all undergraduates at a university are considered?
A)S = {in-state, out-of-state}
B)S = {freshmen, sophomores}
C)S = {age under 21, age 21 or over}
D)S = {a major within business, no business major}
Answer: B
Q3) P(A|B)= 1 F1F1F1S1 F1F1F10 P(B|A)for all events A and B.
A)True
B)False
Answer: False
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Chapter 3: Probability Distributions
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Sample Questions
Q1) In order to measure the dispersion of a random variable,look at its
A)standard deviation.
B)mean.
C)expected value.
D)average.
Answer: A
Q2) A light bulb manufacturer claims his light bulbs will last 500 hours on the average.The lifetime of a light bulb is assumed to follow an exponential distribution.
a.What is the probability that the light bulb will have to replaced within 500 hours?
b.What is the probability that the light bulb will last more than 1000 hours?
c.What is the probability that the light bulb will last between 200 and 800 hours?
Answer: a..632
b..135
c..468
Q3) A manufacturer of computer disks has a historical defective rate of .001.What is the probability that in a batch of 1000 disks,2 would be defective?
Answer: .1840
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Chapter 4: Decision Analysis
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Sample Questions
Q1) Characterize each of the non-probabilistic approaches to decision making (i.e.minimin,minimax,maximin,and maximax)in terms of it relating to a minimization or maximization problem and whether it is a pessimistic or optimistic approach.
Q2) The expected value of an alternative can never be negative.
A)True
B)False
Q3) For a maximization problem,the conservative approach is often referred to as the A)minimax approach
B)maximum approach
C)maximax approach
D)minimin approach
Q4) The difference between the expected value of an optimal strategy based on sample information and the "best" expected value without any sample information is called the A)information sensitivity
B)expected value of sample information
C)expected value of perfect information
D)efficiency of sample information
Q5) How can a good decision maker "improve" luck?
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Chapter 5: Utility and Game Theory
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Sample Questions
Q1) A risk neutral decision maker will have a linear utility function.
A)True
B)False
Q2) Consider the following two-person zero-sum game.Assume the two players have the same three strategy options.The payoff table below shows the gains for Player A. \[\begin{array}{l}
\begin{array} { | c | c c c c | }
&&\text { Player B }\\
{ \text { Plaver } \mathrm { A } } & \text { Strategy } b _ { 1 } & \text { Strategy } b _ { 2 }
& \text { Strategy } b _ { 3 } \\
\hline \text { Strategy }a _ { 1 } & 3 & 5 & - 2 \\
\text { Strategy }a _ { 2 } & - 2 & - 1 & 2 \\
\text { Strategy } a _ { 3 } & 2 & 1 & - 5 \\
\hline \end{array}
\end{array}\] Is there an optimal pure strategy for this game? If so,what is it? If not,can the mixed-strategy probabilities be found algebraically? What is the value of the game?
Q3) When and why should a utility approach be followed?
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Chapter 6: Times Series Analysis and Forecasting
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Sample Questions
Q1) The trend pattern is easy to identify by using A)a moving average
B)exponential smoothing
C)regression analysis
D)a weighted moving average
Q2) Use a four-period moving average to forecast attendance at baseball games.Historical records show 5346,7812,6513,5783,5982,6519,6283,5577,6712,7345
Q3) All of the following are true about a cyclical pattern except A)It is often due to multiyear business cycles.
B)It is often combined with long-term trend patterns and called trend-cycle patterns.
C)It usually is easier to forecast than a seasonal pattern due to less variability.
D)It is an alternating sequence of data points above and below the trend line.
Q4) Discuss the effects of using a small smoothing constant value and when it is most appropriate to use.Then,do the same for a large smoothing constant value.
Q5) What is a stable time series,and what forecasting methods are appropriate for one?
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Chapter 7: Introduction to Linear Programming
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Sample Questions
Q1) The constraint 5x<sub>1</sub> F1F1F1S1 F1F1F10 2x<sub>2</sub> F1F1F1S1 F1F1F10 0 passes through the point (20,50).
A)True
B)False
Q2) In a linear programming problem,the objective function and the constraints must be linear functions of the decision variables.
A)True B)False
Q3) Alternative optimal solutions occur when there is no feasible solution to the problem.
A)True B)False
Q4) In what part(s)of a linear programming formulation would the decision variables be stated?
A)objective function and the left-hand side of each constraint
B)objective function and the right-hand side of each constraint
C)the left-hand side of each constraint only
D)the objective function only
Q5) Explain what to look for in problems that are infeasible or unbounded.
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Chapter 8: Linear Programming: Sensitivity Analysis and Interpretation of Solution
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Sample Questions
Q1) For a minimization problem,a positive dual price indicates the value of the objective function will increase.
A)True
B)False
Q2) Any change to the objective function coefficient of a variable that is positive in the optimal solution will change the optimal solution.
A)True
B)False
Q3) If the dual price for the right-hand side of a F1F1F1S1 F1F1F10 constraint is zero,there is no upper limit on its range of feasibility.
A)True
B)False
Q4) The 100% Rule compares
A)proposed changes to allowed changes.
B)new values to original values.
C)objective function changes to right-hand side changes. D)dual prices to reduced costs.
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Chapter 9: Linear Programming Applications in Marketing, Finance,
and Operations
Management
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Sample Questions
Q1) A company makes two products,A and B.A sells for $100 and B sells for $90.The variable production costs are $30 per unit for A and $25 for B.The company's objective could be written as: Max 190x<sub>1</sub> F1F1F1S1 F1F1F10 55x<sub>2</sub>.
A)True
B)False
Q2) The marketing research model presented in the textbook involves minimizing total interview cost subject to interview quota guidelines.
A)True
B)False
Q3) It is improper to combine manufacturing costs and overtime costs in the same objective function.
A)True
B)False
Q4) The primary limitation of linear programming's applicability is the requirement that all decision variables be nonnegative.
A)True
B)False
Q5) Describe some common feature of multiperiod financial planning models.
Page 11
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Chapter 10: Distribution and Network Models
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Sample Questions
Q1) Define the variables and constraints necessary in the LP formulation of the maximal flow problem.
Q2) Which of the following is not true regarding an LP model of the assignment problem?
A)Costs appear in the objective function only.
B)All constraints are of the F1F1F1S1 F1F1F10 form.
C)All constraint left-hand side coefficient values are 1.
D)All decision variable values are either 0 or 1.
Q3) Define the variables and constraints necessary in the LP formulation of the transshipment problem.
Q4) Which of the following is NOT a characteristic of assignment problems?
A)costs appear in the objective function only
B)the RHS of constraints are all 1
C)the value of all decision variables is either 0 or 1
D)the signs of constraints are always <
Q5) Explain how the general linear programming model of the assignment problem can be modified to handle problems involving a maximization function,unacceptable assignments,and supply not equally demand.
Q6) How is the assignment linear program different from the transportation model?
Q7) How is the shortest-route problem like the transshipment problem?
Page 12
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Chapter 11: Integer Linear Programming
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Sample Questions
Q1) Rounded solutions to linear programs must be evaluated for A)feasibility and optimality.
B)sensitivity and duality.
C)relaxation and boundedness.
D)each of these choices are true.
Q2) If the optimal solution to the LP relaxation problem is integer,it is the optimal solution to the integer linear program.
A)True
B)False
Q3) In a model involving fixed costs,the 0 - 1 variable guarantees that the capacity is not available unless the cost has been incurred.
A)True
B)False
Q4) If the acceptance of project A is conditional on the acceptance of project B,and vice versa,the appropriate constraint to use is a
A)multiple-choice constraint.
B)k out of n alternatives constraint.
C)mutually exclusive constraint.
D)corequisite constraint.
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Chapter 12: Advanced Optimization Applications
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Sample Questions
Q1) In portfolio models,risk is minimized by diversification.
A)True
B)False
Q2) For a typical nonlinear problem,duals price are relatively insensitive to small changes in right-hand side values.
A)True
B)False
Q3) Because most nonlinear optimization codes will terminate with a local optimum,the solution returned by the codes will be the best solution.
A)True
B)False
Q4) A feasible solution is a global optimum if there are no other feasible solutions with a better objective function value in the immediate neighborhood.
A)True
B)False
Q5) Explain the logic of a DEA model.On what basis can the facility being evaluated be judged as relatively inefficient?
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Chapter 13: Project Scheduling: Pertcpm
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Sample Questions
Q1) When activity times are uncertain,
A)assume they are normally distributed.
B)calculate the expected time, using (a + 4m + b)/6.
C)use the most likely time.
D)calculate the expected time, using (a + m + b)/3.
Q2) The earliest start time rule
A)compares the starting times of all activities for successors of an activity.
B)compares the finish times for all immediate predecessors of an activity.
C)determines when the project can begin.
D)determines when the project must begin.
Q3) Constraints in the LP models for crashing decisions are required to compare the activity's earliest finish time with the earliest finish time of each predecessor.
A)True
B)False
Q4) PERT and CPM
A)are most valuable when a small number of activities must be scheduled.
B)have different features and are not applied to the same situation.
C)do not require a chronological relationship among activities.
D)have been combined to develop a procedure that uses the best of each.
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Chapter 14: Inventory Models
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Sample Questions
Q1) Which of the following is not implied when average inventory is Q/2,where Q is the order quantity?
A)An entire order quantity arrives at one time.
B)The previous order quantity is entirely depleted when the next order arrives.
C)An order quantity is depleted at a uniform rate over time.
D)Backorders are permitted.
Q2) In the EOQ model,the average inventory per cycle over many cycles is Q/2.
A)True
B)False
Q3) Constant demand is a key assumption of the EOQ model. A)True
B)False
Q4) What could be meant by service level? Why is a clear understanding of this term important?
Q5) Inventory models in which the rate of demand is constant are called A)fixed models.
B)deterministic models.
C)JIT models.
D)requirements models.
Q6) Explain the difference between a periodic and a continuous review system.
Page 16
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Chapter 15: Waiting Line Models
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Sample Questions
Q1) For an M/G/1 system with F1F1F1S1 F1F1F10 = 20 and F1F1F1S1 F1F1F10 = 35,with F1F1F1S1 F1F1F10 = .005,find
a.the probability the system is idle.
b.the average length of the queue.
c.the average number in the system.
Q2) For many waiting line situations,the arrivals occur randomly and independently of other arrivals and it has been found that a good description of the arrival pattern is provided by
A)a normal probability distribution.
B)an exponential probability distribution.
C)a uniform probability distribution.
D)a Poisson probability distribution.
Q3) If service time follows an exponential probability distribution,approximately 63% of the service times are less than the mean service time.
A)True
B)False
Q4) Give examples of systems you have seen in which a)blocked arrivals are cleared,and b)there is a finite calling population.
Q5) How can a system be changed to improve the service rate?
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Chapter 16: Simulation
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Q1) Simulation allows the user to specify certain desired results (for example,profit or service level values),and then the necessary model parameters and operating policies are determined.
A)True
B)False
Q2) A table of uniformly distributed random numbers should be read
A)from left to right.
B)from top to bottom.
C)diagonally, starting from the top left corner and moving to the bottom right.
D)in any consistent sequence.
Q3) A simulation model uses the mathematical expressions and logical relationships of the
A)real system.
B)computer model.
C)performance measures.
D)estimated inferences.
Q4) Trials of a simulation show what would happen when values of the probabilistic input change.
A)True
B)False
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Chapter 17: Markov Processes
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Q1) Henry,a persistent salesman,calls North's Hardware Store once a week hoping to speak with the store's buying agent,Shirley.If Shirley does not accept Henry's call this week,the probability she will do the same next week is .35.On the other hand,if she accepts Henry's call this week,the probability she will not do so next week is .20.
a.Construct the transition matrix for this problem.
b.How many times per year can Henry expect to talk to Shirley?
c.What is the probability Shirley will accept Henry's next two calls if she does not accept his call this week?
d.What is the probability of Shirley accepting exactly one of Henry's next two calls if she accepts his call this week?
Q2) A state i is a transient state if there exists a state j that is reachable from i,but the state i is not reachable from state j.
A)True
B)False
Q3) Give two examples of how Markov analysis can aid decision making.
Q4) What assumptions are necessary for a Markov process to have stationary transition probabilities?
Q5) Why is a computer necessary for some Markov analyses?
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