Operations Management
Exam Answer Key
Course Introduction
Operations Management is a foundational course that explores the principles and techniques used to design, operate, and improve the processes that produce and deliver goods and services. Students learn how organizations transform inputs into outputs efficiently, focusing on areas such as process analysis, capacity planning, quality management, supply chain logistics, inventory control, and project management. Emphasis is placed on decision-making tools and strategies that enhance productivity, reduce costs, and ensure high-quality outcomes in both manufacturing and service environments. The course blends theoretical frameworks with practical applications, preparing students to tackle operational challenges in a rapidly evolving global business landscape.
Recommended Textbook
Practical Management Science 5th Edition by Wayne
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Page 2
L. Winston
Chapter 1: Introduction to Modeling
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Q1) Which of the following is not one of the reasons for the new-found relevance of management science models?
A)Modeling is an important way to think about problems in general
B)Modeling is often now a legal requirement
C)The business world is increasingly driven by numbers
D)Modeling helps develop intuition for problems
Answer: B
Q2) Verification is typically the most difficult phase of the modeling process, from a mathematical perspective.
A)True
B)False
Answer: False
Q3) Which of the following type of model is used when an appropriate equation or system of equations can be developed to represent the system?
A)Simulation model
B)Analytical model
C)Heuristic model
D)Spreadsheet model
Answer: B
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Chapter 2: Introduction to Spreadsheet Modeling
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Q1) Refer to Exhibit 2-2. Suppose instead that the company thinks it can reduce its variable cost rate. What rate would produce an NPV of $10,000?
Answer: Using Excel's Goal Seek function, the required variable cost rate would be $10.02 per unit of production.
Q2) The Excel tool for solving one equation with one unknown is:
A)Solver
B)Goal Seek
C)Trend function
D)NPV function
Answer: B
Q3) [Part 2] Refer to Exhibit 2-2. Use the same scatterplot constructed for the previous question, fit an exponential trendline to the data. What are the coefficients of the exponential model, and what is the MAPE of an exponential model forecast, compared to the company's forecast?
Answer: The exponential model fit produces a constant of 17.684 and an exponent of 0.115. Forecasting with this model and comparing against the company forecast results in a MAPE of 0.47%
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Chapter 3: Introduction to Optimization Modeling
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Q1) Common errors in LP models that exhibit unboundedness are a constraint that has been omitted or an input which is incorrect.
A)True
B)False
Answer: True
Q2) [Part 4] Refer to Exhibit 3-1. Obtain a sensitivity report for the model in Part 1. How much should the winemaker be willing to pay for an additional labor hour?
Answer: The shadow price for labor (shown below) indicates that an additional hour would increase profit by $0.625. The winemaker should be willing to pay up to this amount.
Variable Cells
11ecfb88_1701_076b_afbb_fd1b983c6dc4_TB6344_11
Constraints
11ecfb88_2089_5dfc_afbb_13d62bba8a57_TB6344_11
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Chapter 4: Linear Programming Models
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Q1) 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?
Q2) To specify that X1 must be at most 75% of the blend of X1, X2, and X3, we must have a constraint of the form
A)X1 0.75(X2 + X3)
B)X1 0.25(X1 + X2 + X3)
C)X1 0.75(X1 + X2 + X3)
D)0.75X1 X1 + X2 + X3
Q3) Aggregate planning models usually relate a beginning value in one period to an ending value from the previous period.
A)True
B)False
Q4) Refer to Exhibit 4-1. Suppose the hospital has 40 nurses and is not allowed to hire or fire any employees, and cannot temporarily schedule nurses on their on call days. Determine a schedule that maximizes the number of weekend days off received by the nurses.
Q5) Solver does not offer a sensitivity report for models with integer constraints. A)True B)False
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Chapter 5: Network Models
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Q1) The decision variables in transportation problems are:
A)profits
B)costs
C)flows
D)capacities
Q2) Refer to Exhibit 5-2. Based on their salaries, the engineer, tech 1, tech 2, and intern earn $90, $65, $65, and $45 per hourly, respectively. Change the firm's objective function to minimize staff costs and find the optimal assignment plan. Does it change from the base case?
Q3) It is useful to model network problems by listing all of the arcs and their corresponding flows in one long, comprehensive list.
A)True
B)False
Q4) Refer to Exhibit 5-2. Implement a LP model in Solver and determine the optimal monthly assignment plan for the firm. What is the total number of hours that will be assigned to projects each month?
Q5) Refer to Exhibit 5-3. Implement the appropriate model in Solver and determine the shortest path for Steve. How many total miles will he travel on his trip?
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Chapter 6: Optimization Models With Integer Variables
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Q1) The branch and bound algorithm uses:
A)lower bounds
B)upper bounds
C)both upper and lower bounds
D)neither upper or lower bounds
Q2) During the solution of a problem with the branch and bound algorithm, an incumbent solution represents an upper bound on the solution.
A)True
B)False
Q3) The higher the upper bound produced in the branch and bound solution process, the faster the algorithm will be.
A)True
B)False
Q4) The binary variables in the fixed cost models correspond to:
A)the number of units or products produced
B)the total profit
C)the amount of labor hours
D)a process for which a fixed cost occurs
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Chapter 7: Nonlinear Optimization Models
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Q1) In pricing models, elasticity of demand is an input with specifies the:
A)range of demand
B)level of demand
C)sensitivity of price to changes in demand
D)sensitivity of demand to changes in price
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) Refer to Exhibit 7-2. Formulate and solve a nonlinear optimization model to help this soda producer identify the best promotional strategies for its two products.
Q4) Solver is guaranteed to find the global minimum (if it exists) if the objective function is concave and the constraints are linear.
A)True
B)False
Q5) Refer to Exhibit 7-1. How many units of each product should the company produce? What prices should it charge, to maximize profit?
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Chapter 8: Evolutionary Solver: An Alternative Optimization
Procedure
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Q1) If the classification matrix from a discriminant analysis shows a high percentage of correct classification, then we can be confident that the classification will work well for other populations.
A)True
B)False
Q2) Which of the following is not a form of non-linear pricing?
A)Two-part tariff
B)Surplus value
C)Selling only single item packs or packs of n items
D)Charging one price for the first n items and another price for the rest
Q3) The initial set of chromosomes generated by a genetic algorithm is called the population.
A)True
B)False
Q4) Refer to Exhibit 8-1. This is an example of what type of optimization problem?
Q5) Refer to Exhibit 8-4. Formulate and solve a shortest-path model using Evolutionary Solver. What is the shortest distance Steve can travel and visit all cities? What is the route?
10
Q6) Refer to Exhibit 8-1. How should the train be loaded to minimize shortage and penalty costs?
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Chapter 9: Decision Making Under Uncertainty
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Q1) Refer to Exhibit 9-1. Suppose the farmer is uncertain about the reliability of the National Weather Service forecast. If he thinks the probability of a freeze occurring could be anywhere between 40% and 80%, would that change his decision?
Q2) Which of the following statements is true concerning decision tree conventions?
A)Time proceeds from right to left.
B)The trees are composed of circles, triangles and ovals.
C)The nodes represent points in time.
D)Probabilities of outcomes are shown to the right of the end nodes.
Q3) In general, the expected monetary value (EMV) of a decision will be equal to one of the possible payoffs.
A)True
B)False
Q4) The risk profile shows the probability distribution of monetary outcomes in both graphical and tabular form.
A)True
B)False
Q5) Refer to Exhibit 9-1. Find the highest cost of insulating the grapefruits for which the farmer prefers to insulate his crop.
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Chapter 10: Introduction to Simulation Modeling
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Q1) If x is a random number between 0 and 1, then we can use x to simulate a variable that is uniformly distributed between 100 and 200 using the formula:
A)100 + x
B)200 x
C)100 + 100x
D)200x
Q2) When n is reasonably large and p isn't too close to 0 or 1, the binomial distribution can be well approximated by which of the following distributions?
A)Uniform distribution
B)Normal distribution
C)Triangular distribution
D)None of these options
Q3) Refer to Exhibit 10-1. A little later on, management still believes the upper and lower bounds for the costs are $5M and $8M, but now they can also state that "we believe the most likely value is about $6.5M."
Q4) Refer to Exhibit 10-2. Use @RISK distributions to generate the three random variables for regional sales and derive a distribution for the total sales. What is the expected total sales?
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Chapter 11: Simulation Models
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Q1) In bidding models, the simulation output variable is the number of competitors who will bid.
A)True
B)False
Q2) [Part 4] Refer to Exhibit 11-2. Are there any simulations which indicated there was a chance of getting negative NPV? Briefly explain in one sentence.
Q3) Which of the following is typically not an application of simulation models?
A)Operations models
B)Financial models
C)Marketing models
D)Logistics models
Q4) In financial simulation models, we are typically more interested in the expected NPV of a project than in the extremes of the outcomes.
A)True
B)False
Q5) [Part 1] Refer to Exhibit 11-1. What is the deterministic next present value (NPV) of the project, including the required investment, assuming a 10% discount rate?
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Chapter 12: Inventory and Supply Chain Models
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Q1) The only real cost benefit from synchronizing orders for several products is reduced setup costs.
A)True
B)False
Q2) 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?
Q3) The opportunity cost of having money tied up in inventory is a type of ____ cost:
A)setup
B)production
C)carrying
D)penalty
Q4) Refer to Exhibit 12-2. Assuming there are no storage costs, formulate a Solver model and find the optimal order quantity.
Q5) Refer to Exhibit 12-1. Assuming there are no storage costs, formulate a Solver model and find the optimal order quantity.
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Chapter 13: Queuing Models
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Q1) Which of the following is not one of the types of service disciplines?
A)Longest-processing-time
B)First-come-first-served
C)Service-in-random-order
D)Last-come-first-served
Q2) [Part 3] Refer to Exhibit 13-1. Again assuming an exponential distribution with the parameter you obtained in Part 2, what is the probability that a customer interarrival time will be more than 2 minutes, but less than 5 minutes?
Q3) In a process where interarrival times are exponentially distributed, the time since the last arrival is irrelevant.
A)True
B)False
Q4) In an Erlang loss model, customers who arrive when all servers are busy are lost to the system.
A)True
B)False
Q5) Refer to Exhibit 13-3. What is the average length of time (in hours) spent waiting in line?
Q6) Refer to Exhibit 13-3. What is the average length of the waiting line?
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Chapter 14: Regression and Forecasting Models
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Q1) A "fan" shape in a scatterplot indicates:
A)nonconstant error variance
B)a nonlinear relationship
C)the absence of outliers
D)sampling error
Q2) The adjusted R2 adjusts R2 for:
A)non-linearity
B)outliers
C)low correlation
D)the number of explanatory variables in a multiple regression model
Q3) Which of the following is not one of the commonly used summary measures for forecast errors?
A)MAE (mean absolute error)
B)MFE (mean forecast error)
C)RMSE (root mean square error)
D)MAPE (mean absolute percentage error)
Q4) The residual is defined as the difference between the actual and predicted, or fitted values of the response variable.
A)True
B)False
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