Strategic Decision Making
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Course Introduction
Strategic Decision Making explores the processes and frameworks behind making high-impact decisions within organizations. The course examines theoretical models, cognitive biases, risk assessment, and the use of quantitative and qualitative tools to evaluate alternatives and forecast outcomes. Through case studies and simulations, students learn to integrate information, manage uncertainty, and make sound decisions in complex, dynamic environments, preparing them to navigate strategic challenges in leadership and management roles.
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Practical Management Science 6th Edition by Wayne L. Winston
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14 Chapters
421 Verified Questions
421 Flashcards
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Chapter 1: Introduction to Modeling
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Sample Questions
Q1) In a descriptive model,the manager first wants to build a model that reflects the current situation.
A)True
B)False
Answer: True
Q2) In modeling situations where it is not possible to write an equation for an output in terms of the inputs,there may still be a mathematical procedure for calculating outputs from inputs.
A)True
B)False
Answer: True
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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Sample Questions
Q1) Which of the following is a useful tool for investigating what-if questions
A) Data tables
B) VLOOKUP function
C) Formula auditing
D) SUMPRODUCT function
Answer: A
Q2) [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%
Q3) A shortcut for establishing absolute references is pressing the F9 key.
A)True
B)False
Answer: False
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4
Chapter 3: Introduction to Optimization Modeling
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Sample Questions
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) Suppose the shadow price for a constraint is $12 and the allowable increase and decrease for the right hand side of the constraint are 25 (increase)and 10 (decrease).If the right hand side of that constraint were to increase by 10 the shadow price changes.
A)True
B)False
Answer: False
Q3) If the objective function has the equation {4x<sub>1</sub>+ 2x<sub>2</sub>},then the slope of the objective function line is 2.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Linear Programming Models
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Sample Questions
Q1) 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
Q2) Refer to Exhibit 4-2.Determine the optimal staffing plan for the project.
Q3) The results of a sensitivity analysis with a dual objective model can be shown graphically using a:
A) scatterplot
B) tradeoff curve
C) trend diagram
D) bar chart
Q4) Refer to Exhibit 4-3.Determine the optimal processing plan for the meat market.
Q5) Refer to Exhibit 4-1.Suppose the hospital is experiencing a budget crunch and needs to use the nurses' on call day to temporarily staff the emergency room.Use Solver to formulate and solve the hospital's problem.
Q6) Refer to Exhibit 4-1.Use Solver to formulate and solve the hospital's problem.
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Chapter 5: Network Models
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Sample Questions
Q1) In transportation problems,shipments between supply points or between demand points are possible.
A)True
B)False
Q2) The flow balance constraint for each transshipment node in a network flow model has the form Flow in = Flow out.
A)True
B)False
Q3) In an optimized shipping plan,most of the shipments occur on the low-cost routes,but this is not always the case.
A)True
B)False
Q4) In network models of transportation problems,arcs represent the routes for getting a product from one node to another.
A)True
B)False
Q5) Refer to Exhibit 5-1.Suppose the Lakeview plant was required to run at capacity.How much more would the shipping plan cost Sinclair
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Chapter 6: Optimization Models With Integer Variables
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Sample Questions
Q1) 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
Q2) Optimization software,including Solver,typically has more difficulty solving an integer programming problem,relative to a linear programming problem.
A)True
B)False
Q3) Refer to Exhibit 6-2.Suppose the shipping capacity for all routes is 3000 tons per month.What is Sinclair's optimal shipping plan in that case
What is the total cost in that case
Q4) During the solution of a maximization problem with the branch and bound algorithm,an incumbent solution represents an upper bound on the solution.
A)True
B)False
Q5) Refer to Exhibit 6-1.Which items should she take with her to her new home
What is the value of these items
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Chapter 7: Nonlinear Optimization Models
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Sample Questions
Q1) Relative to linear optimization models,nonlinear optimization models are typically more difficult to solve.
A)True
B)False
Q2) Which of the following is not one of the common types of nonlinear models
A) Pricing models.
B) Advertising and response selection models.
C) Network flow models.
D) Portfolio optimization models.
Q3) If a convex function is multiplied by a negative constant,the result:
A) is convex
B) is concave
C) could be either convex or concave, depending on the value of the constant
D) is linear
Q4) 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
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Chapter 8: Evolutionary Solver: An Alternative Optimization
Procedure
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Sample Questions
Q1) Refer to Exhibit 8-1.How should the train be loaded to minimize shortage and penalty costs
Q2) Genetic algorithms are not guaranteed to be fast,but they make up for it by being flexible.
A)True
B)False
Q3) The objective function in a genetic algorithm is called a:
A) chromosome
B) fitness function
C) population
D) generation
Q4) Refer to Exhibit 8-1.This is an example of what type of optimization problem
Q5) Mutations are useful for getting a genetic algorithm "unstuck".
A)True
B)False
Q6) 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
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Chapter 9: Decision Making Under Uncertainty
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Sample Questions
Q1) Refer to Exhibit 9-2.What should the credit union do What is their expected profit
Q2) For a risk averse decision maker,the certainty equivalent is less than the expected monetary value (EMV).
A)True
B)False
Q3) All problems related to decision making under uncertainty have three common elements:
A) the mean, median, and mode
B) the set of decisions, the cost of each decision and the profit that can be made from each decision
C) the set of possible outcomes, the set of decision variables and the constraints
D) the set of decisions, the set of possible outcomes, and a value model that prescribes results
Q4) The denominator of Bayes' rule:
A) is the same as the simple probability of an outcome O.
B) decomposes the probability of the new information I into all possibilities.
C) is sometimes called the law of complementary probabilities.
D) is unique for each possible outcome.
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Chapter 10: Introduction to Simulation Modeling
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Sample Questions
Q1) Which of the following statements is true regarding the Normal distribution
A) It is always the appropriate distribution in simulation modeling
B) It does not permit negative values
C) There is a 95% chance that values will be within ± 2 standard deviations of the mean
D) All of these options
Q2) It is usually fairly straightforward to predict the shape of the output distribution from the shape(s)of the input distribution(s).
A)True
B)False
Q3) Refer to Exhibit 10-2.Total sales is a product of three different types of input distributions.What does the output distribution look like What is the standard deviation of the total sales
What are the 5th and 95th percentiles of this distribution
Q4) Discrete distributions are sometimes used in place of continuous distributions:
A) because they are more accurate
B) because they are simpler
C) when we don't know the mean and variance of the distribution
D) when we need to generate a histogram
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Chapter 11: Simulation Models
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Sample Questions
Q1) [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
Q2) The RISKSIMTABLE function is used to summarize the results of a single simulation of product lifetime.
A)True
B)False
Q3) Suppose we compare the difference between the NPV of a financial model in which the means are entered for all input random variables and the NPV of a financial model in which the most likely values are entered for all input random variables.If we see a large difference between the NPV's,this illustrates:
A) the value at risk (VAR)
B) the effect of randomness
C) the flaw of averages
D) the bias of the analyst
Q4) A tornado chart lets us see which random input has the most effect on a specified output in a financial model.
A)True
B)False
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Chapter 12: Queueing Models
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Sample Questions
Q1) The mean and standard deviation of an exponential distribution are both equal to the parameter .
A)True
B)False
Q2) As the traffic intensity approaches 1:
A) there is no waiting
B) waiting lines stabilize
C) waiting lines grow extremely rapidly
D) at least one server will be idle
Q3) In an Erlang loss model,customers who arrive when all servers are busy are lost to the system.
A)True
B)False
Q4) The server utilization U in an M/M/s system is always the same as the traffic intensity.
A)True
B)False
Q5) Refer to Exhibit 12-3.What is the average length of time (in hours)spent waiting in line
Q6) Refer to Exhibit 12-3.What is the average length of the waiting line
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Chapter 13: Regression and Forecasting Models
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Sample Questions
Q1) 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)
Q2) In regression analysis,the variable we are trying to explain or predict is called the
A) independent variable
B) dependent variable
C) regression variable
D) statistical variable
Q3) The adjusted R<sup>2</sup> is used primarily to monitor whether extra explanatory variables really belong in a multiple regression model.
A)True
B)False
Q4) Refer to Exhibit 13-2.Interpret each of the estimated regression coefficients of the regression model above.
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Chapter 14: Data Mining
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Sample Questions
Q1) Better classification methods should improve lift,which is the increase in purchases gained through marketing to people with the highest probability of purchasing.
A)True
B)False
Q2) If the probability of a restaurant being successful is 10% then the odds of it failing are 10 to 1.
A)True
B)False
Q3) See Exhibit 14.1 - How likely would a 40 year old,200 pound father of 2 children be to have the illness
Q4) The function INDEX(A1:E5,4,3)would return the value in cell C4.
A)True
B)False
Q5) Today's organizations rely on their quantitative experts,who have access to large amounts of data,to make sense of it in a timely manner.
A)True
B)False
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