Managerial Decision Analysis
Exam Questions
Course Introduction
Managerial Decision Analysis focuses on the quantitative and qualitative tools and techniques that managers use to make effective business decisions. The course covers frameworks for identifying problems, evaluating alternatives, and assessing risks and outcomes in complex and uncertain environments. Students will learn to apply decision-making models, such as cost-benefit analysis, decision trees, and simulation, as well as behavioral and organizational considerations that impact managerial judgment. Emphasis is placed on real-world applications, integrating data analysis and critical thinking to improve decision quality across a range of management scenarios.
Recommended Textbook Business Statistics A Decision Making Approach 8th Edition by David F. Groebner
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Page 2
Chapter 1: The Where, why, and How of Data Collection
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Sample Questions
Q1) A market research firm that surveys customers in a shopping mall by asking various people to respond to a short survey about a new product is performing convenience sampling.
A)True
B)False
Answer: True
Q2) The human resources department at a major high tech company recently conducted an employee satisfaction survey of 100 of its 3,000 employees.Data were collected on such variables as age,gender,marital status,current salary,level of overall satisfaction on a scale from 1 to 5,number of years with the company,and job title.Which of the variables would be considered to be qualitative data?
A)Gender,marital status,job satisfaction,and job title
B)Age
C)Years with the company
D)All variables listed are qualitative.
Answer: A
Q3) Open the data file on your CD-ROM called Computer Use.Indicate the level of data measurement for each variable in the data set.
Answer: 11ea7a43_e9c8_3189_89bd_79faeaa1d47b_TB3933_00
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Page 3
Chapter 2: Graphs,charts and Tablesdescribing Your Data
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Sample Questions
Q1) The difference between bar charts and histograms is that bar charts always show percentage while histograms always show frequency.
A)True
B)False
Answer: False
Q2) A scatter diagram is a line graph without the points connected by a line.
A)True
B)False
Answer: False
Q3) A histogram is an effective tool for graphically describing a joint frequency distribution.
A)True
B)False
Answer: False
Q4) One characteristic of a bar chart is:
A)the bars can be displayed either vertically or horizontally.
B)there can be no gaps between the bars.
C)it is used to display the distribution of a continuous variable.
D)it shows cumulative frequency.
Answer: A
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Chapter 3: Describing Data Using Numerical Measures
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Sample Questions
Q1) The owner of a local gasoline station has kept track of the number of gallons of regular unleaded sold at his station every day since he purchased the station.This morning,he computed the mean number of gallons.This value would be considered a statistic.
A)True
B)False
Answer: False
Q2) A recent study involving a sample of 3,000 vehicles in California showed the following statistics related to the number of miles driven per day: Q1 = 12 Q2 = 45 and Q3 = 56.Based on these data,we know that the distribution is skewed.
A)True
B)False
Answer: True
Q3) If a set of data has 1,500 values,the 30<sup>th</sup> percentile value will correspond to the 450<sup>th</sup> value in the data when the data have been arranged in numerical order.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Using Probability and Probability Distributions
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Sample Questions
Q1) Explain why it is possible for two managers to assess different values for the probability that a supplier will fail to deliver a shipment on time.
Q2) A dam on a river that holds back a water reservoir begins to leak.Engineers say that there is a 10 percent chance of the dam breaking if repairs are not made.This is an example of classical probability.
A)True
B)False
Q3) Mutually exclusive means that the occurrence of event A has no effect on the probability of the occurrence of event B,and independent means the occurrence of event A prevents the occurrence of event B.
A)True
B)False
Q4) An event is:
A)the list of possible outcomes that can occur from a selection or decision.
B)a collection of elementary events.
C)similar to an experiment but not controlled by the decision maker.
D)more frequently found in business than in other disciplines.
Q5) Explain what is meant by the term mutually exclusive events.Cite an example.
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Chapter 5: Discrete Probability Distributions
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Sample Questions
Q1) The time required to assemble two components into a finished part is recorded for each employee at the plant.The resulting random variable is an example of a continuous random variable.
A)True
B)False
Q2) The Swanson Auto Body business repaints cars that have been in an accident or which are in need of a new paint job.Its quality standards call for an average of 1.2 paint defects per door panel.Explain why there is a difference between the probability of finding exactly 1 defect when 1 door panel is inspected and finding exactly 2 defects when 2 doors are inspected.
Q3) The number of weeds that remain living after a specific chemical has been applied averages 1.3 per square yard and follows a Poisson distribution.Based on this,what is the probability that a 1-square yard section will contain less than 4 weeds?
A)0.0324
B)0.0998
C)Nearly 0.5000
D)0.9569
Q4) Explain what the expected value of a discrete random variable measures.
Q5) Under what conditions is the binomial distribution symmetric?
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Chapter 6: Introduction to Continuous Probability
Distributions
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Sample Questions
Q1) The Varden Packaging Company has a contract to fill 50-gallon barrels with gasoline for use by the U.S.Army.The machine that Varden uses has an adjustable device that allows the average fill per barrel to be adjusted as desired.However,the actual distribution of fill volume from the machine is known to be normally distributed with a standard deviation equal to 0.5 gallons.The contract that Varden has with the military calls for no more than 2 percent of all barrels to contain less than 49.2 gallons of gasoline.Suppose Varden managers are unwilling to set the mean fill at any level higher than 50 gallons.Given that,in order to meet the requirements,they will need to increase the standard deviation of fill volume.
A)True
B)False
Q2) The vehicle speeds on a city street have been determined to be normally distributed with a mean of 33.2 mph and a variance of 16.Based on this information,the probability that if three randomly selected vehicles are monitored and that two of the three will exceed the 35 mph speed limit is slightly greater than 0.18.
A)True
B)False
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Page 8
Chapter 7: Introduction to Sampling Distributions
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Sample Questions
Q1) If you are sampling from a very large population,a doubling of the sample size will reduce the standard error of the sampling distribution by one-fourth.
A)True
B)False
Q2) A sampling distribution for a sample of n = 4 is normally distributed with a standard deviation equal to 5.Based on this information,the population standard deviation, ,is equal to 10 mph.
A)True
B)False
Q3) One of the leading dot-com companies has found that the proportion of customers who come into its Web site that actually makes a purchase is 0.045.The company plans to see whether this rate still holds by selecting a random sample of 200 hits on its Web site.Given that the 0.045 rate still applies,what is the standard deviation of the sampling distribution?
A)Approximately 0.0147
B)About 0.0002
C)About 0.0354
D)Can't be determined without knowing the mean.
Q4) Explain what is meant by the concept of sampling distribution.
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Chapter 8: Estimating Single Population Parameters
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Sample Questions
Q1) An educational organization in California is interested in estimating the mean number of minutes per day that children between the age of 6 and 18 spend watching television per day.A previous study showed that the population standard deviation was 21.5 minutes.The organization selected a random sample of n = 200 children between the ages of 6 and 18 and recorded the number of minutes of TV that each person watched on a particular day.The mean time was 191.3 minutes.If the leaders of the organization wish to develop an interval estimate with 98 percent confidence,what critical value should be used?
A)z = 1.645
B)t = 2.38
C)Approximately z = 2.33
D)Can't be determined without knowing the margin of error.
Q2) The main purpose of a pilot sample in an application involving an estimate for a population mean is to determine what the margin of error will likely be.
A)True
B)False
Q3) The higher the level of confidence,the wider the confidence interval must be.
A)True
B)False
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Page 10
Chapter 9: Introduction to Hypothesis Testing
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Sample Questions
Q1) If a decision maker wishes to reduce the chance of making a Type II error,one option is to increase the sample size.
A)True
B)False
Q2) In a two-tailed hypothesis test for a population mean,an increase in the sample size will:
A)have no effect on whether the null hypothesis is true or false.
B)have no effect on the significance level for the test.
C)result in a sampling distribution that has less variability.
D)All of the above are true.
Q3) A contract calls for the mean diameter of a cylinder to be 1.50 inches.As a quality check,each day a random sample of n = 36 cylinders is selected and the diameters are measured.Assuming that the population standard deviation is thought to be 0.10 inch and that the test will be conducted using an alpha equal to 0.025,what would the probability of a Type II error be?
A)Approximately 0.1267
B)About 0.6789
C)0.975
D)Can't be determined without knowing the "true" population mean.
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Page 11
Chapter 10: Estimation and Hypothesis Testing for Two
Population Parameters
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Sample Questions
Q1) Suppose that a group of 10 people join a weight loss program for 3 months.Each person's weight is recorded at the beginning and at the end of the 3-month program.To test whether the weight loss program is effective,the data should be treated as:
A)independent samples using the normal distribution.
B)paired samples using the t-distribution.
C)independent samples using the t-distribution.
D)independent proportions.
Q2) When estimating the difference between two population means,when should the normal distribution be used and when should the t-distribution be used?
Q3) The NCAA is interested in estimating the difference in mean number of daily training hours for men and women athletes on college campuses.They want 95 percent confidence and will select a sample of 10 men and 10 women for the study.If the NCAA assumes that the population standard deviations are known,the critical value for the confidence interval is t = 2.1009.
A)True
B)False
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Page 12
Chapter 11: Hypothesis Tests and Estimation for Population
Variances
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Sample Questions
Q1) In a two-tailed hypothesis test involving two population variances,if the null hypothesis is true then the F-test statistic should be approximately equal to 1.0.
A)True
B)False
Q2) A consulting report that was recently submitted to a company indicated that a hypothesis test for a single population variance was conducted.The report indicated that the test statistic was 34.79,the hypothesized variance was 345 and the sample variance 600.However,the report did not indicate what the sample size was.What was it?
A)n = 100
B)Approximately n = 18
C)Approximately 21
D)Can't be determined without knowing what alpha is.
Q3) A first step in testing whether two populations have the same mean value using the t-distribution is to use the chi-square distribution to test whether the populations have equal variances.
A)True
B)False
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Page 13
Chapter 12: Analysis of Variance
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Sample Questions
Q1) In conducing one-way analysis of variance,the population distributions are assumed normally distributed.
A)True
B)False
Q2) In one-way analysis of variance,the within-sample variation is not affected by whether the null hypothesis is true on not.
A)True
B)False
Q3) A company has established an experiment with its production process in which three temperature settings are used and five elapsed times are used for each setting.The company then produces one product under each and measures the resulting strength of the product.This experimental design is called a randomized complete block design.
A)True
B)False
Q4) In a two-factor ANOVA,the minimum number of replications required in any cell is two,but all cells must have the same number of replications.
A)True B)False
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Chapter 13: Goodness-Of-Fit Tests and Contingency Analysis
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Sample Questions
Q1) In performing chi-square contingency analysis,to overcome a small expected cell frequency problem,we:
A)combine the categories of the row and/or column variables.
B)increase the sample size.
C)Both A and B.
D)None of the above.
Q2) Managers use contingency analysis to determine whether two categorical variables are independent of each other.
A)True
B)False
Q3) A lube and oil change business believes that the number of cars that arrive for service is the same each day of the week.If the business is open six days a week (Monday - Saturday)and a random sample of n = 200 customers is selected,the sum of the expected frequencies over the six days cannot be determined without seeing the actual sample data.
A)True
B)False
Q4) Contingency analysis is used only for numerical data.
A)True B)False
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Chapter 14: Introduction to Linear Regression and Correlation Analysis
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Sample Questions
Q1) Given a sample of data for use in simple linear regression,the values for the slope and the intercept are chosen to minimize the sum of squared errors.
A)True
B)False
Q2) When regression analysis is used for descriptive purposes,two of the main items of interest are whether the sign on the regression slope coefficient is positive or negative and whether the regression slope coefficient is significantly different from zero.
A)True
B)False
Q3) When using regression analysis for descriptive purposes,which of the following is of importance?
A)The size of the regression slope coefficient
B)The sign of the regression slope coefficient
C)The standard error of the regression slope coefficient
D)All of the above
Q4) Explain why it is important to construct scatter plots prior to conducting regression analysis.
Q5) Explain what is meant by the term least squares regression model.
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Chapter 15: Multiple Regression Analysis and Model Building
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Sample Questions
Q1) In a multiple regression,the dependent variable is house value (in '000$)and one of the independent variables is a dummy variable,which is defined as 1 if a house has a garage and 0 if not.The coefficient of the dummy variable is found to be 5.4 but the t-test reveals that it is not significant at the 0.05 level.Which of the following is true?
A)A garage increases the house value by $5,400.
B)A garage increases the house value by $5,400,holding all other independent variables constant.
C)The house value remains the same with or without a garage.
D)We need to include other dummy variables.
Q2) A model is a representation of an actual system.
A)True
B)False
Q3) The three components of the regression model building process are model specification,model fitting,and model diagnosis.
A)True
B)False
Q4) Explain the difference between forward stepwise regression (standard stepwise),forward selection,and all possible subsets regression approaches.
Page 17
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Chapter 16: Analyzing and Forecasting Time-Series Data
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Sample Questions
Q1) A plot of the time series with time on the horizontal axis is an effective means of assessing whether the series is linear or nonlinear.
A)True
B)False
Q2) A company has a monthly time series that regularly shows sales being higher in the summer months.This is an example of which component?
A)Trend
B)Seasonal
C)Cyclical
D)Random
Q3) It is possible to use linear regression analysis to develop a forecasting model for nonlinear data if we can effectively transform the data.
A)True
B)False
Q4) In order for a time series to exhibit a seasonal component,the data must be measured in periods as short or shorter than quarterly.
A)True
B)False
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Chapter 17: Introduction to Nonparametric Statistics
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Sample Questions
Q1) In conducting a Mann-Whitney U test when the sample size is greater than 20,the U test statistic can be assumed normally distributed.
A)True
B)False
Q2) In the Wilcoxon signed rank test using either small or large sample sizes,any value that equals the hypothesized median is discarded from the analysis.
A)True
B)False
Q3) If a decision maker wishes to test whether four independent populations have the same center and is unwilling to make the assumption that the populations are normally distributed with equal variances,she can use the Kruskal-Wallis test.
A)True
B)False
Q4) In a Mann-Whitney U test,if the sample sizes are large then the test statistic can be approximated by the student's t-distribution.
A)True
B)False
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Chapter 18: Introduction to Quality and Statistical Process
Control
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Sample Questions
Q1) A major airline is interested in monitoring customer satisfaction with its baggage handling process.To do so,each day the airline randomly selects 100 customers and surveys them to determine if they are satisfied or not with the service provided.After 20 samples,a total of 260 unsatisfied customers were surveyed.
a.If the airline wishes to use a control chart,which chart would you recommend and why?
b.Determine the 3-sigma control limits for the appropriate control chart.
Q2) Flowcharts are useful to help team members understand how the process works.
A)True
B)False
Q3) A p-chart would potentially be used to monitor the diameters of bolts made by a bolt manufacturing plant.
A)True
B)False
Q4) The tools of quality are a key part of Deming's 14 points.
A)True
B)False
Q5) Referring to the SPC chart signals that a process is out of control,what type of problem does each signal indicate? List the signals.
Page 20
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Chapter 19: Introduction to Decision Analysis
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Sample Questions
Q1) A payoff table and a decision tree both show the alternatives,states of nature,and payoffs,but the decision tree also shows the order of events.
A)True
B)False
Q2) When using the expected value criterion,the expected value for a given alternative is:
A)the amount the decision maker will receive if that alternative is chosen.
B)the amount the decision maker is most likely to receive if that alternative is chosen.
C)the average amount the decision maker would receive in the long run if the decision is repeated many times.
D)the amount by which the decision maker will regret choosing that alternative.
Q3) There are two main categories of decision criteria; nonprobabilistic and probabilistic.
A)True
B)False
Q4) In what type of situation is decision analysis most useful?
Q5) Discuss the advantages and disadvantages of the expected value criterion.
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