Operations Management
Midterm Exam
Course Introduction
Operations Management is a course that explores the fundamental principles, practices, and strategies involved in designing, producing, and delivering goods and services. Students will learn about key topics such as process analysis, quality management, supply chain coordination, inventory control, production planning, and the effective use of resources in both manufacturing and service organizations. Through case studies and analytical tools, the course emphasizes how operations management contributes to organizational efficiency and competitiveness, preparing students to address real-world challenges in a variety of business settings.
Recommended Textbook
Practical Management Science 6th Edition by Wayne
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Page 2
L. Winston
Chapter 1: Introduction to Modeling
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Q1) The best strategy for implementation of a model is to involve key people in the organization in the project when the model is ready for testing and verification.
A)True
B)False
Answer: False
Q2) Defining an organization's problem includes:
A) specifying the organization's objectives
B) collecting the organization's historical data
C) defining the model of the problem
D) sensitivity analysis
Answer: A
Q3) As models become larger and more complex,heuristic solutions are often adequate,even though they are not necessarily optimal solutions.
A)True
B)False
Answer: True
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Chapter 2: Introduction to Spreadsheet Modeling
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Q1) Refer to Exhibit 2-1.What are the two possible cases for the amount of t-shirts that will be sold to the used clothing vendor
How would you calculate this amount in a spreadsheet model
Answer: The company will either sell no t-shirts to the used clothing vendor (if it produces less than demand)or it will sell a surplus equal to the difference between production and demand (if it produces more than demand).This logic can be implemented in a spreadsheet model using an IF statement.
Q2) Refer to Exhibit 2-1.Suppose now that blank t-shirts can only be ordered from the wholesale vendor in batches of 50
How many t-shirts should the company order
Answer: We can again set up a one-way data table with net profit as the output and order as the input (with trial quantities of 600,650,700,750,and 800),which shows that the net profit is maximized at $5000 with an order of 750 shirts.
Q3) Trace Dependents and Trace Precedents are Formula Auditing commands.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Introduction to Optimization Modeling
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Q1) [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. 11ea5c70_d2ea_1563_945b_bf41540725d5_TB6954_00
Q2) If a constraint has the equation 5x<sub>1</sub>+ 2x<sub>2 </sub> 60,then the constraint line passes through the points (0,12)and (30,0).
A)True
B)False
Answer: False
Q3) Linear programming models have three important properties.They are:
A) optimality, additivity and sensitivity
B) optimality, linearity and divisibility
C) divisibility, linearity and nonnegativity
D) proportionality, additivity and divisibility
Answer: D
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Chapter 4: Linear Programming Models
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Q1) One way to solve a dual-objective problem is to use one objective as the target cell and constrain the other.
A)True
B)False
Q2) Refer to Exhibit 4-2.Suppose the bonus for completing the project three months early is $250,000.What would be the net bonus to the company,after adjusting for any difference in personnel costs under the accelerated schedule
Q3) Problems in which we must determine how to schedule employees to provide adequate service under the same situation each planning period are referred to as:
A) static scheduling problem
B) dynamic scheduling problem
C) transportation scheduling problem
D) All of these options
Q4) Refer to Exhibit 4-4.Suppose the company could acquire 1,000 pounds more of either nitrogen or phosphorous.Which should it choose What would be the resulting impact on profit
Q5) Refer to Exhibit 4-1.Use Solver to formulate and solve the hospital's problem.
Q6) Refer to Exhibit 4-2.Determine the optimal staffing plan for the project.
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Chapter 5: Network Models
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Q1) Refer to Exhibit 5-3.Suppose the roads leading into and out of Krickburg are unpaved,so Steve would only be able to travel half of his usual 60 mile/hour speed on those routes.Modify the model to account for this condition.Would the shortest path change from the base case solution
Q2) The decision variables in transportation problems are:
A) profits
B) costs
C) flows
D) capacities
Q3) In transportation problems,the three sets of input numbers that are required are capacities,demands and flows.
A)True
B)False
Q4) Refer to Exhibit 5-2.Suppose Tech 2 will not be available during the next month.Keeping the same number of design and construction plan projects,how many survey projects would the firm be able to do
What would be the revised assignment plan in that case
Q5) Refer to Exhibit 5-1.Implement the LP model in Solver and obtain the optimal shipping plan.What is the optimized cost
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Chapter 6: Optimization Models With Integer Variables
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Q1) The higher the upper bound produced for a maximization problem in the branch and bound solution process,the faster the algorithm will be.
A)True
B)False
Q2) Problems with a fixed cost that is incurred only if an activity is undertaken at a positive level are inherently nonlinear.
A)True
B)False
Q3) Any integer program involving 0 1 variables with ____ constraint(s)is called a knapsack problem.
A) three
B) two
C) one
D) zero
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) The amount invested is one of the required inputs in a portfolio optimization model.
A)True
B)False
Q2) 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
Q3) A function is convex if a line drawn connecting two points on the curve never lies below the curve.
A)True
B)False
Q4) Solver is guaranteed to solve certain types of nonlinear programming models.
A)True
B)False
Q5) 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
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Chapter 8: Evolutionary Solver: An Alternative Optimization
Procedure
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Q1) A traveling salesman problem with a starting city and 10 other cities that must be visited has 1,826,800 possible solutions.
A)True
B)False
Q2) Which of the following is true regarding Evolutionary Solver
A) It is efficient at handling constraints
B) A good starting is required to be successful finding a solution
C) It places more of a burden on you to specify certain parameters of the algorithm
D) Running it a second time for a problem should yield the same solution
Q3) The Evolutionary Solver setting that helps the algorithm explore a completely different area of the feasible region is:
A) convergence
B) mutation rate
C) population size
D) random seed
Q4) Refer to Exhibit 8-1.How should the train be loaded to minimize shortage and penalty costs
Q5) Refer to Exhibit 8-1.This is an example of what type of optimization problem
Page 10
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Chapter 9: Decision Making Under Uncertainty
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Q1) The expected value of perfect information (EVPI)is a largely irrelevant concept since perfect information is almost never available at any price.
A)True
B)False
Q2) For each possible decision and each possible outcome,the payoff table lists the associated monetary value.
A)True
B)False
Q3) Refer to Exhibit 9-1.Suppose the farmer is not risk-neutral,but instead his behavior can be modeled using an exponential utility function with a risk tolerance parameter of 100,000.What is the most he would be willing to pay for insulation in that case
Q4) 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.
Q5) Refer to Exhibit 9-2.Should the credit union purchase the report if it costs $150
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Page 11
Chapter 10: Introduction to Simulation Modeling
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Q1) The primary difference between simulation models and other types of spreadsheet models is that simulation models contain ____:
A) deterministic inputs
B) random numbers
C) output cells
D) constraints
Q2) 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."
Q3) Refer to Exhibit 10-2.What is the probability that the apparel company will exceed a profit at least $0.5M from the jacket line
Q4) RISKSIMTABLE is an @RISK function for running several simulations simultaneously,one for each setting of an input or decision variable.
A)True
B)False
Q5) Refer to Exhibit 10-1.Company management currently has no idea what the distribution of the construction cost is.All they can state is that "we think it will be somewhere between $5,000,000 and $8,000,000."
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Chapter 11: Simulation Models
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Q1) A marketing simulation model can be used to determine the expected profit under uncertain customer loyalty,but an optimization model must be used to determine the optimal amount to spend on increasing customer loyalty.
A)True
B)False
Q2) Which of the following is the most likely characteristic of a distribution that is to be used to develop a simulation model for estimating the time until failure of a product in a simulation model
A) Unbounded
B) Right skewed
C) Normal
D) Uniform
Q3) For an NPV simulation,the value at risk (VAR)is typically defined as the:
A) 5th percentile of the NPV distribution
B) 10th percentile of the NPV distribution
C) 90th percentile of the NPV distribution
D) 95th percentile of the NPV distribution
Q4) [Part 3] Refer to Exhibit 11-2.Briefly explain why designing the plant for the expected capacity is clearly not the optimal solution.
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Chapter 12: Queueing Models
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Q1) A queuing system where customers join a single line and then are served by the first available server are said to be:
A) in parallel
B) in series
C) random
D) networked
Q2) The decision to balk at entering a queuing system can be made by the customer or the system.
A)True
B)False
Q3) The two basic modeling approaches for queuing systems are optimization and simulation.
A)True
B)False
Q4) Refer to Exhibit 12-3.What is the average length of the waiting line
Q5) Refer to Exhibit 12-3.What percentage of all customers have to spend at least some small amount of time waiting in line
Q6) Refer to Exhibit 12-4.Use the M/M/s template to find the expected number of busy servers,and the expected fraction of time each server is busy
Page 14
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Chapter 13: Regression and Forecasting Models
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Q1) Refer to Exhibit 13-3.Use a moving average model to forecast these data,requesting 4 quarters of future forecasts.Use a span of 4 quarters.
Q2) The term autocorrelation refers to:
A) the analyzed data refers to itself
B) the sample is related too closely to the population
C) the data are in a loop (values repeat themselves)
D) time series variables are usually related to their own past values
Q3) When using the moving average method,you must select ____ which represent(s)the number of terms in the moving average.
A) a smoothing constant
B) the explanatory variables
C) an alpha value
D) a span
Q4) Winter's method is an exponential smoothing method,which is appropriate for a series with trend but no seasonality.
A)True
B)False
Q5) Refer to Exhibit 13-2.Use the information above to estimate the linear regression model.
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Chapter 14: Data Mining
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Q1) The last step of cluster analysis is to understand the shared characteristics of the observations in each cluster.
A)True
B)False
Q2) See Exhibit 14.1 - What kind of person is more likely to be diagnosed with the illness
Q3) Which of the following is false concerning a data warehouse
A) It is designed to study patterns in data.
B) It combines data from multiple sources.
C) It allows follow up responses to questions.
D) It supports the daily operations of the company.
Q4) The K-Means clustering algorithm :
A) becomes an optimization model for choosing the best cluster centers.
B) determines the best value of K.
C) has an objective that maximizes the sum of the dissimilarity measures.
D) cannot be directly implemented in Excel.
Q5) See Exhibit 14-2 Using Palisade's NeuralTools and the results from the prior problem,use the prediction data in this table to classify these 25 people as having been diagnosed with an illness or not.
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