Business Decision Modeling Final
Exam
Course Introduction
Business Decision Modeling introduces students to quantitative and analytical methods used to support and improve decision-making processes in business environments. The course covers fundamental concepts such as decision analysis, optimization, simulation, and risk assessment, emphasizing the application of mathematical models and spreadsheet-based tools. Students will learn how to formulate business problems, analyze data, evaluate alternatives, and make informed decisions under uncertainty. Real-world case studies and practical exercises provide hands-on experience in using decision models to address complex business challenges, enhancing students problem-solving and critical-thinking skills.
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Introduction to Management Science A Modeling and Case Studies Approach With Spreadsheets
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Chapter 1: Introduction
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Q1) Which of the following are components of a mathematical model for decision making?
A)Decision variables.
B)An objective function.
C)Constraints.
D)Parameters.
E)All of the above.
Answer: E
Q2) Sensitivity analysis is used to check the effect of changes in the model.
Multiple Choice Questions
A)True
B)False
Answer: True
Q3) The discovery of the simplex method in 1947 was the beginning of management science as a discipline.
A)True
B)False
Answer: False
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Chapter 2: Linear Programming: Basic Concepts
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Q1) What is the objective function?
A)P = 4A + 1B.
B)P = 0.25A + 1B.
C)P = 1A + 4B.
D)P = 1A + 1B.
E)P = 0.25A + 0.5B.
Answer: C
Q2) What is the daily profit when producing the optimal amounts?
A)$960.
B)$1,560.
C)$1,800.
D)$1,900.
E)$2,520.
Answer: B
Q3) Linear programming problems always involve either maximizing or minimizing an objective function.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Linear Programming: Formulation and Applications
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Q1) Blending problems are a special type of mixed linear programming problems. A)True
B)False
Answer: True
Q2) A key assumption of linear programming is that the equation for each of the output cells,including the target cell,can be expressed as a SUMPRODUCT (or SUM)function.
A)True
B)False
Answer: True
Q3) Using techniques to test the initial versions of a model to identify errors and omissions is called:
A)model validation.
B)model enrichment.
C)model enhancement.
D)model debugging.
E)None of the above.
Answer: A
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Chapter 4: The Art of Modeling With Spreadsheets
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Q1) When sketching out a spreadsheet,it is important to have determined the formulas for all of the output cells.
A)True
B)False
Q2) What are some ways to distinguish data cells,changing cells,output cells,and target cells on a spreadsheet?
A)Borders.
B)Shading.
C)Color.
D)All of the above.
E)a and c only.
Q3) The auditing tools can be used to trace the cells that make reference to a particular cell.
A)True
B)False
Q4) If two managers are given the same business problem to analyze with a spreadsheet,their spreadsheet models will likely be almost identical.
A)True
B)False
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Chapter 5: What-If Analysis for Linear Programming
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Sample Questions
Q1) Solver Table can be used to easily investigate the changes in any number of data cells.
Multiple Choice Questions
A)True
B)False
Q2) A shadow price tells how much a decision variable can be increased or decreased without changing the value of the solution.
A)True
B)False
Q3) Which of the following are benefits of what-if analysis?
A)It pinpoints the sensitive parameters of the model.
B)It gives the new optimal solution if conditions change.
C)It tells management what policy decisions to make.
D)All of the above.
E)None of the above.
Q4) If the change to a right-hand side is within the allowable range,the solution will remain the same.
A)True
B)False
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Chapter 6: Network Optimization Problems
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Sample Questions
Q1) What is the objective of a maximum flow problem?
A)Maximize the amount flowing through a network.
B)Maximize the profit of the network.
C)Maximize the routes being used.
D)Maximize the amount produced at the origin.
E)None of the above.
Q2) A minimum cost flow problem is a special type of:
A)linear programming problem.
B)transportation problem.
C)spanning tree problem.
D)transshipment problem.
E)maximum flow problem.
Q3) All network optimization problems actually are special types of linear programming problems.
A)True
B)False
Q4) Any node where the net amount of flow generated is fixed at zero is a transshipment node.
A)True
B)False
Page 8
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Chapter 7: Using Binary Integer Programming to Deal With
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Sample Questions
Q1) A problems where all the variables are binary variables is called a pure BIP problem.
A)True
B)False
Q2) Binary integer programming problems can answer which types of questions?
A)Should a project be undertaken?
B)Should an investment be made?
C)Should a plant be located at a particular location?
D)All of the above.
E)None of the above.
Q3) A linear programming formulation is not valid for a product mix problem when there are setup costs for initiating production.
A)True
B)False
Q4) If choosing one alternative from a group excludes choosing all of the others then these alternatives are called mutually exclusive.
A)True
B)False
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Chapter 8: Nonlinear Programming
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Sample Questions
Q1) The risk for a portfolio is decreased when the particular stocks tend to move up and down together.
A)True
B)False
Q2) If the data cells are in column D and the changing cells are in column C,which of the following are linear formulas in a spreadsheet?
A)SUMPRODUCT(D1:D6,C1:C6)
B)SUMPRODUCT(C1:C3,C4:C6)
C)SUM(C1:C6)
D)All of the above.
E)a and c only.
Q3) In problems where the objective is to minimize the total cost of the activities,an activity is said to have decreasing marginal returns if the slope of its cost graph never increases but sometimes decreases as the level of the activity increases.
A)True
B)False
Q4) A quadratic programming problem is a special type of linear programming problem.
A)True
B)False
Page 10
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Chapter 9: Decision Analysis
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Sample Questions
Q1) The equally likely criterion assigns a probability of 0.5 to each state of nature.
A)True
B)False
Q2) Which one of the following statements is not correct when making decisions?
A)The sum of the state of nature probabilities must be 1.
B)Every probability must be greater than or equal to 0.
C)All probabilities are assumed to be equal.
D)Probabilities are used to compute expected values.
E)Perfect information assumes that the state of nature that will actually occur is known.
Q3) What is the expected payoff for the optimum decision alternative?
A)50,000 copies.
B)40,000 copies.
C)32,000 copies.
D)30,500 copies.
E)10,500 copies.
Q4) Most people occupy a middle ground and are classified as risk neutral.
A)True
B)False
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Chapter 10: Cd Supplement - Decision Analysis
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Sample Questions
Q1) The maximin strategy is:
A)Buy.
B)Rent.
C)Lease.
D)High.
E)Low.
Q2) Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the criterion called:
A)minimin.
B)maximin.
C)maximax.
D)maximum likelihood.
E)Bayes decision rule.
Q3) The maximin approach involves choosing the alternative that has the "best worst" payoff.
A)True
B)False
Q4) The minimax regret criterion is a conservative criterion.
A)True
B)False
Page 12
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Chapter 11: Forecasting
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Sample Questions
Q1) What is the forecast for this year using exponential smoothing with \(\alpha\) = 0.2,if the forecast for two weeks ago was 90?
A)49.
B)50.
C)52.
D)65.
E)78.
Q2) Which of the following would be considered a possible drawback of using executive opinions to develop a forecast?
A)It is difficult to interpret the results.
B)Responsibility is diffused for the forecast.
C)Extensive use of computers is needed.
D)It brings together the knowledge of top managers.
E)Forecasters are sometimes overly influenced by recent events.
Q3) Which of the following is not a type of judgmental forecasting?
A)Managerial opinion.
B)Sales force composite.
C)Time-series analysis.
D)The Delphi method.
E)Consumer market survey.
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Chapter 12: Queueing Models
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Sample Questions
Q1) Choosing the number of servers in a system involves finding an appropriate trade-off between the cost of the servers and the amount of waiting.
Multiple Choice Questions
A)True
B)False
Q2) What is the minimum number of servers needed to achieve an average time in the system of less than three minutes?
A)2.
B)3.
C)4.
D)5.
E)6.
Q3) A queueing system is said to be in a "steady state" when customers arrive at a constant rate,that is,without any variability.
A)True
B)False
Q4) The cost of customer waiting is easy to estimate.
A)True
B)False
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Chapter 13: CD Supplement - Additional Queueing Models
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Q1) The utilization factor for the finite queue variation must be less than 1 in order for the system to reach a steady state.
A)True
B)False
Q2) The finite calling population queueing model is appropriate when the potential calling population is relatively small.
A)True
B)False
Q3) Given the same utilization factor,waiting time in the queue will be less for a finite queue than the corresponding value for the M/M/s model.
A)True
B)False
Q4) When designing a queueing system with a finite queue,one important decision is how much waiting room to provide.
A)True
B)False
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Chapter 14: Computer Simulation: Basic Concepts
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Q1) With the speed of computers,it is not necessary to limit the amount of factors considered in a simulation.
A)True B)False
Q2) Simulation is basically an optimizing technique. A)True B)False
Q3) Simulation enables a decision maker to experiment with a system and observe its behavior.
A)True B)False
Q4) Random observations can be generated in Excel by using the VLOOKUP function. A)True B)False
Q5) Managers can use simulation to obtain optimal answers for a wide range of problems.
A)True B)False
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Chapter 15: CD Supplement - the Inverse Transformation
Method for Generating Random Observations
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Q1) Excel's RAND()function is designed specifically for applying the inverse transformation method to any discreet probability distribution.
A)True
B)False
Q2) The inverse transformation method can be used to generate random observations from a probability distribution.
A)True
B)False
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Chapter 16: Computer Simulation With Crystal Ball
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Sample Questions
Q1) Crystal Ball can be used to fit a discrete distribution to data.
A)True
B)False
Q2) The custom distribution can be used for which of the following types of random values?
A)Sets of discrete values.
B)A range of discrete values.
C)A continuous distribution.
D)Combinations of a,b,and c.
E)All of the above.
Q3) The custom distribution in Crystal Ball allows only discrete distributions to be entered.
A)True
B)False
Q4) The normal distribution has a fixed upper and lower bound.
A)True
B)False
Q5) A forecast cell refers to a random input cell.
A)True
B)False
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Chapter 17: CD - Solution Concepts for Linear Programming
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Sample Questions
Q1) The simplex method only considers adjacent corner points.
A)True
B)False
Q2) An optimal solution must lie on the boundary of the feasible region.
A)True
B)False
Q3) Most linear programming problems have just one optimal solution.
A)True
B)False
Q4) The ability to solve large problems with the simplex method is limited primarily by:
A)the number of decision variables.
B)the size of the parameters in the model.
C)the number of functional constraints.
D)the software package chosen.
E)None of the above.
Q5) The simplex method is a specific type of interior-point algorithm.
A)True
B)False
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Chapter 18: CD - Transportation and Assignment Problems
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Q1) It is not possible to solve a transportation problem that has \(\le\) instead of = signs for the supply constraints.
A)True
B)False
Q2) Which of the following is not information needed to use the transportation model?
A)Capacity of the sources.
B)Demand of the destinations.
C)Unit shipping costs.
D)Unit shipping distances.
E)All of the above.
Q3) In an assignment problem,every destination has a demand of 0 or 1.
A)True
B)False
Q4) Transportation problems are concerned with distributing commodities from sources to destinations in such a way as to minimize the total distribution cost.
A)True
B)False
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Chapter 19: CD - Pertcpm Models for Project Management
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Sample Questions
Q1) The expected duration of this project is:
A)12.
B)17.
C)20.
D)36.
E)77.
Q2) An activity in a project network cannot begin until all of the activities leading into that activity have been completed.
A)True
B)False
Q3) The path with the greatest slack is:
A)A-E-H.
B)B-H.
C)A-D-G.
D)C-F-H.
E)C-I-J.
Q4) If two paths are tied for the longest duration,both would be considered to be critical paths.
A)True
B)False
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Chapter 20: CD - Goal Programming
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Sample Questions
Q1) Preemptive goal programming is more appropriate the weighted goal programming when there are major differences in the importance of the goals.
A)True
B)False
Q2) Goal programming problems cannot be easily reformulated as linear programming problems and,therefore,require a special algorithm to solve.
A)True
B)False
Q3) Weighted goal programming provides a way of striving toward several objectives simultaneously.
A)True
B)False
Q4) Which of the following are changing cells in a goal programming formulation?
A)Activity levels.
B)Deviations from the goals.
C)The weighted sum of deviations.
D)All of the above.
E)a and b only.
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Chapter 21: CD - Inventory Management With Known Demand
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Sample Questions
Q1) JIT refers to a production system in which goods arrive for processing just as the preceding batch is completed.
A)True
B)False
Q2) In the basic EOQ model,annual setup cost is equal to:
A)the EOQ multiplied by setup cost.
B)the EOQ divided by setup cost.
C)setup cost multiplied by the ratio of the annual demand to the EOQ.
D)setup cost multiplied by the ratio of the EOQ to annual demand.
E)setup cost multiplied by annual demand.
Q3) In the basic EOQ model,if annual demand is 50,holding cost is $2,and setup cost is $15,EOQ is approximately:
A)11.
B)20.
C)24.
D)28.
E)375.
Q4) Administrative costs provide a strong incentive to place larger orders.
A)True
B)False
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Chapter 22: CD - Inventory Management With Uncertain Demand
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Sample Questions
Q1) If average demand for an inventory item is 200 units per day,lead time is three days,and safety stock is 100 units,the reorder point is:
A)100 units.
B)200 units.
C)300 units.
D)600 units.
E)700 units.
Q2) A multiechelon inventory system is a system with multiple echelons of inventory where each echelon is used to replenish the inventories at the various sites of the next lower echelon.
A)True
B)False
Q3) The reorder point equals the average sales during lead time plus the number of backlogged items.
A)True
B)False
Q4) Variability in demand and/or lead time can be compensated for by safety stock.
A)True
B)False
24
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