Decision Modeling
Midterm Exam
Course Introduction
Decision Modeling is a course that explores the application of quantitative and analytical methods to support effective decision-making in complex business environments. Through topics such as linear programming, decision analysis, simulation, and risk assessment, students learn to construct and analyze models that enhance managerial insight and guide strategic choices. The course emphasizes practical problem-solving, integrating software tools and case studies to address real-world scenarios in operations, finance, and resource management, ultimately equipping students with valuable skills for informed and rational decision processes.
Recommended Textbook
Business Analytics 1st Edition by James R. Evans
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Page 2
Chapter 1: Introduction to Business Analytics
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Q1) A trader who wants to predict short-term movements in stock prices is likely to use ________ analytics.
A)predictive
B)descriptive
C)normative
D)prescriptive
Answer: A
Q2) What is a database?
A)a collection of related files
B)simply a collection of data
C)a data file holding a single file
D)flat files used to store data
Answer: A
Q3) Which of the following is the mathematical model for deriving total cost of only manufacturing?
A)TC = VC + (C × Q)
B)TC = F + (C × Q)
C)TC = F + C
D)TC = F + (V × Q)
Answer: D
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Chapter 2: Analytics on Spreadsheets
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Q1) To find the largest quantity of items ordered from Rex Technologies, what Excel formula should be used in A12?
A)=COUNTIF(D4:D10)
B)=SUM(D4:D7)
C)=MAX(D4:D7)
D)=COUNT(D4:D7)
Answer: C
Q2) In a MATCH function, the default value for match_type = 0.
A)True
B)False
Answer: False
Q3) For which of the following MATCH functions must the values in the lookup_array be ordered in a descending order?
A)When match_type = -1
B)When match_type >1
C)When match_type = 0
D)When match_type = 1
Answer: A
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4
Chapter 3: Visualizing and Exploring Data
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Q1) How is a frequency distribution calculated for categorical and numerical data?
Answer: A frequency distribution is a table that shows the number of observations in each of several nonoverlapping groups.Categorical variables naturally define the groups in a frequency distribution.The frequencies may be expressed as a fraction, or proportion, of the total; this is called the relative frequency.A relative frequency distribution is a tabular summary of the relative frequencies of all categories.For numerical data that consist of a small number of discrete values, frequency distributions may be constructed in a similar way as done for categorical data; COUNTIF is used to count the frequencies of each value.A graphical depiction of frequency distributions for numerical data in the form of a column chart is called a histogram.
Q2) Which of the following observations is closest to the 87th percentile of costs per order?
A)75 SD104 screwdrivers for $183.00
B)66 N103 nuts for $114.84
C)73 B101 bolts for $1,200.12
D)49 S101 screws for $1,001.56
Answer: D
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Page 5
Chapter 4: Descriptive Statistical Measures
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Q1) Which of the following is the z-score equation for the ith observation?
A)Zt \(\sqrt { \frac { x _ { i } - \bar { x } } { s ^ { 2 } } }\)
B)Z \(\frac { x _ { i - \bar { x } } } { S }\)
C)Z = (x \(\bar{x}\) )S
D)Z = \(\frac{x_{i}}{s\left(x_{i}-\bar{x}\right)}\)
Q2) Which of the following describes standard deviation?
A)It is the average of the greatest and least values in the data set.
B)It is the square root of the variance.
C)It is the difference between the first and third quartiles of a data set.
D)It is the average of the squared deviations of the observations from the mean.
Q3) One of the properties of the mean is that the sum of the deviations of each observation from the mean is zero.
A)True
B)False
Q4) In statistical notation, the elements of a data set are typically labeled as ________.
A)summation operators
B)letters in capitals
C)Greek letters
D)subscripted variables
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Chapter 5: Probability Distributions and Data Modeling
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Q1) The binominal distribution:
A)is a discrete distribution used to model the number of occurrences in some unit of measure.
B)assumes that the average number of occurrences per unit is a constant and that occurrences are independent.
C)is symmetric irrespective of the value of the probability of success.
D)models n independent replications of a Bernoulli experiment, each with a probability p of success.
Q2) Use the multiplication law of probability to compute the probability that the respondent is male and prefers Math.
A)\(\frac{8}{75}\)
B)\(\frac{3}{8}\)
C)\(\frac{3}{225}\)
D)\(\frac{3}{15}\)
Q3) How can normal probabilities be computed using Excel? Given the cumulative probability, how can the value of the random variable be found?
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Page 7
Chapter 6: Sampling and Estimation
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Sample Questions
Q1) As the sample size increases, the width of the confidence interval decreases.
A)True
B)False
Q2) ________ involves selecting items from a population so that every subset of a given size has an equal chance of being selected.
A)Convenience sampling
B)Subjective sampling
C)Judgment sampling
D)Simple random sampling
Q3) Compare between a prediction interval and a confidence interval.
Q4) Which of the following is true of an unbiased estimator value?
A)The expected value will align perfectly with the population mean.
B)The expected value will not equal the population's parameters.
C)The expected value will not be greater than zero.
D)The expected value will equal the population's parameters.
Q5) Compare between the t-distribution and the standard normal distribution.
Q6) The simple random sampling method is the only statistical sampling method that does not include sampling errors.
A)True
B)False
Page 8
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Chapter 7: Statistical Inference
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Q1) Which of the following 2010 Excel functions computes the p-value for the chi-square test?
A)CHISQ.INV.RT
B)CHIDIST
C)CHI.SQ
D)CHISQ.TEST
Q2) The confidence coefficient is denoted by: A)
B)1C) D)1 -
Q3) Which of the following is true about determining the proper form of the hypotheses?
A)H is statistically proved true while testing
B)failure to reject H proves H wrong
C)H is always assumed to be true in testing
D)H is always assumed to be true in testing
Q4) Conduct the appropriate type of one-sample test-statistic to determine whether the average transportation charge is less than $430.Apply a decision rule using the observed level of significance and draw a conclusion.
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Chapter 8: Predictive Modeling and Analysis
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Sample Questions
Q1) In predictive analysis models, a second-order polynomial has only one hill or valley.
A)True
B)False
Q2) Calculate the daily sales during the discount sales period.
A)39.28
B)133.3
C)388.13
D)25.88
Q3) Calculate the economic value of a loyal customer for a company given that the customer purchases, on an average, worth $43worth per visit and comes three times a year.The company's gross profit margin is 35 per cent with a customer defection rate of 0.4.
Q4) Calculate the annual cost incurred for the second year.
A)$1,224,120,000
B)$884,520,000
C)$491,400,000
D)$638,820,000
Q5) Give an account of how data is used in predictive models.
Q6) How does a tornado chart help make sense of inputs in analyzing data and models?
Page 10
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Chapter 9: Regression Analysis
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Sample Questions
Q1) What is the estimated cost of raising a 10-inch wall?
A)1505.786
B)1103.578
C)968.6109
D)1123.008
Q2) ________ provide information about the unknown values of the true regression coefficients, accounting for sampling error.
A)Standard errors
B)Confidence intervals
C)Adjusted R Squares
D)P-values
Q3) The standard error may be assumed to be large if the data are clustered close to the regression line.
A)True
B)False
Q4) A good regression model has the fewest number of explanatory variables providing an adequate interpretation of the dependent variable.
A)True
B)False
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Chapter 10: Forecasting Techniques
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Sample Questions
Q1) What is the forecasted value for the 3 week?
A)53 phones
B)64 phones
C)71 phones
D)49 phones
Q2) What is the difference between the forecasted and the actual value for the 3 week?
A)5 phones
B)6 phones
C)4 phones
D)3 phones
Q3) Explain the significance of using double moving average and double exponential smoothing models.
Q4) A cyclical effect is one that repeats at fixed intervals of time, typically a year, month, week, or day.
A)True
B)False
Q5) Setting k = 3, determine the value of mean absolute percentage of error.
Q6) Write a short note on indicators and indexes used in forecasting.
Q7) What is simple exponential smoothing?
Page 12
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Chapter 11: Simulation and Risk Analysis
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Sample Questions
Q1) A normal distribution has a limited range and can be skewed in either direction.
A)True
B)False
Q2) Explain the concept of the "flaw of averages."
Q3) Which of the following statements is true of a triangular distribution?
A)We are required to know only the smallest and largest possible values that the variable might assume.
B)These distributions depend on multiple parameters that one can easily identify based on managerial knowledge and judgment.
C)The distribution has a limited range and can be skewed in either direction.
D)The distribution is very positively skewed, with no negative values.
Q4) Which of the following cells is defined as the uncertain function cell?
A)B12
B)B14
C)B15
D)B17
Q5) Uniform or triangular distributions are used in the absence of data.
A)True
B)False
Q6) Explain the process of running a simulation using Risk Solver Platform.
Page 13
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Chapter 12: Introduction to Data Mining
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Sample Questions
Q1) In the cause-and-effect modeling, internal metrics, such as employee satisfaction, productivity, and turnover are considered to be ________ measures.
A)logit
B)life
C)leading
D)lagging
Q2) Which of the following is included in the data mining approach of data exploration and reduction?
A)analyzing data to predict how to classify a new data element
B)identifying groups in which the elements of the groups are in some way similar
C)creating rules for target marketing based on association of variables
D)developing analytic models to describe the relationship between metrics
Q3) How are objects clustered in agglomerative hierarchical clustering?
Q4) Which of the following is true of a training data set?
A)They are primarily used to fine-tune models.
B)They provide the most realistic estimate for a model's performance.
C)They are used to build models where the data is unknown.
D)They have known outcomes.
Q5) Briefly explain classification as a data-mining tool with an example.
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Chapter 13: Linear Optimization
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Q1) What will be the total profit contribution from Lava surfboards?
A)$ 391.30
B)$ 521.74
C)$ 130.43
D)$ 276.65
Q2) Infeasible problems can occur when the demand requirement is higher than the available capacity.
A)True
B)False
Q3) What is the Allowable Increase for Lava surfboards produced?
A)30
B)24
C)12
D)18
Q4) If the unit profit on Graystone surfboards is increased by $10, what is the total profit generated?
A)$ 489.13
B)$ 521.74
C)$ 423.91
D)$ 554.35
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Chapter 14: Applications of Linear Optimization
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Sample Questions
Q1) According to the transportation model, which of the following is the amount shipped from Dallas to Houston?
A)0
B)175
C)1,180
D)750
Q2) Which of the following is the constraint for investment in low-priced and multinational funds?
A)X + X 0.35(750,000)
B) \(\frac{X_{1}+X_{2}}{750,000}\) 0.35(750,000)
C)X + X + X + X + X + X 0.35(750,000)
D) \(\frac{X_{1}+X_{2}}{750,000}\) 0.35
Q3) How does Solver handle simple lower bounds and upper bounds compared to ordinary constraints?
Q4) What is degeneracy in linear optimization? Give an example.
Q5) List out the different types of constraints that help model formulation.
Page 16
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Chapter 15: Integer Optimization
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Sample Questions
Q1) What is the importance of binary variables in integer optimization models?
Q2) What is the amount of cash used for Project 5?
A)$ 65,000
B)$ 117,000
C)$ 13,000
D)$ 110,000
Q3) Which of the following best defines a binary variable?
A)It is a general integer variable that is restricted to being between -1 and 1.
B)It is a general integer variable that is restricted to being a multiple of 2.
C)It is a general integer variable that is restricted to being between 0 and 1.
D)It is a general integer variable that is restricted to being greater than 2.
Q4) What is the total cost incurred?
A)$ 28,956
B)$ 35,233
C)$ 42,675
D)$ 47,864
Q5) To invoke the binary constraints on the variables, the option bin is chosen from the dropdown box in the Add Constraint dialog.
A)True
B)False
Page 17
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Chapter 16: Nonlinear and Non-Smooth Optimization
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Sample Questions
Q1) All quadratic optimization models have nonlinear constraints.
A)True
B)False
Q2) According to the model, what is the distance between Shirley's new accommodation and Bungalow 3?
A)54.62
B)25.08
C)36.53
D)23.12
Q3) According to the model, what is the expected total return on all stocks?
A)18%
B)10%
C)11%
D)12%
Q4) According to the model, what percentage of the budget should be allocated to Stock 1?
A)10%
B)25%
C)50%
D)40%
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Chapter 17: Optimization Models with Uncertainty
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Sample Questions
Q1) What is the coefficient of variation obtained from the simulation results? [Hint: Choose the approximate value.]
A)0.386
B)0.589
C)0.415
D)0.665
Q2) What is the increase in total cost?
A)$ 280
B)$ 590
C)$ 355
D)$ 450
Q3) What is a value at risk constraint?
Q4) Which of the following cells is defined with a triangular distribution?
A)B6
B)D6
C)B7
D)D7
Q5) What is a service level?
Q6) What are multiple parameterized simulations?
Q7) What is a conditional value at risk constraint?
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Chapter 18: Decision Analysis
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Q1) What is the probability that the drug will not reach the market? [Hint: Choose the approximate value.]
A)0.95
B)0.89
C)0.77
D)0.82
Q2) Which of the following is considered the best expected value decision?
A)1-year ARM
B)3-year ARM
C)5-year ARM
D)30-year fixed
Q3) What is the expected opportunity loss for the 3-year ARM?
A)$ 7,979.60
B)$ 3,959.40
C)$ 6,853.50
D)$ 8,621.40
Q4) What is the expected value of perfect information?
Q5) What are the three elements required to characterize decisions with uncertain consequences?
Page 20
Q6) Describe the steps involved in the construction of a decision tree.
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