Reference no: EM133039964

1. At the break-even point?

a. Total revenue equals total cost.

b. Fixed cost is minimized.

c. Revenue is maximized.

d. Profit is zero.

e. both answers (a) and (d) are correct.

2. In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.

A) risk

B) utility

C) certainty

D) probability

E) uncertainty

3. Bayes' theorem enables decision makers to revise probabilities based on

A) perfect information.

B) knowing, ahead of time, the actual outcome of the decision.

C) additional information.

D) measurements of utility.

E) None of the above

4. Which of the following is an assumption of the regression model?

A) The errors are independent.

B) The errors are not normally distributed.

C) The errors have a standard deviation of zero.

D) The errors have an irregular variance.

E) The errors follow a cone pattern.

5. A consulting firm has received 2 Super Bowl playoff tickets from one of its clients. To be fair, the firm is randomly selecting two different employee names to "win" the tickets. There are 6 secretaries, 5 consultants, and 4 partners in the firm. Which of the following statements is true?

A) The probability of two secretaries winning is the same as the probability of a secretary winning on the second draw given that a consultant won on the first draw.

B) The probability of a secretary and a consultant winning is the same as the probability of a secretary and secretary winning.

C) The probability of a secretary winning on the second draw given that a consultant won on the first draw is the same as the probability of a consultant winning on the second draw given that a secretary won on the first draw.

D) The probability that both tickets will be won by partners is the same as the probability that a consultant and secretary will win.

E) None of the above is true.

6. Decision trees are particularly useful when

A) perfect information is available.

B) formulating a conditional values table.

C) the opportunity loss table is available.

D) a sequence of decisions must be made.

E) all possible outcomes and alternatives are not known.

7. Which of the following variables is considered random or probabilistic?

a. last year's marketing budget.

b. last week's sales data.

c. future interest rates.

d. historical stock prices.

e. None of the above.

8. In decision analysis when constructing a utility curve,

A) a comparison is made of the different amounts of money at different times.

B) the certainty of a certain amount is compared with the willingness to gamble that amount on a larger amount.

C) one takes the risk out of gambling.

D) inflation plays a critical part in the evaluation.

E) None of the above

9. The expected value of sample information (EVSI) can be used to

A) establish a maximum amount to spend on additional information.

B) calculate conditional probabilities.

C) establish risk avoidance.

D) provide points on a utility curve.

E) None of the above

10. Properties of the normal distribution include

A) a continuous bell-shaped distribution for which the mean, median and mode overlap.

B) a discrete probability distribution.

C) the number of trials is known and is either 1, 2, 3, 4, 5, etc.

D) the random variable can assume only a finite or limited set of values.

E) use in queuing.

11. The dean of students of a university is planning to charge students $150 to attend a summer freshmen's seminar course. It cost $3000 to reserve a room, hire an instructor, and bring in the necessary presentation equipment. Assume it costs $25 per student for the dean to provide the course materials. How many students would have to register for the seminar for the university to break-event? a. 16. b. 18. c. 20. d. 24. e. 30. 12. Assume that you have tried three different forecasting models. For the first, the MAD = 2.5, for the second, the MSE = 10.5, and for the third, the MAPE = 2.7. We can then say:

A) the third method is the best.

B) the second method is the best.

C) methods one and three are preferable to method two.

D) method two is least preferred.

E) None of the above

13. When does P(A|B) = P(A)?

A) when A and B are mutually exclusive

B) when A and B are statistically independent

C) when A and B are statistically dependent

D) when A and B are collectively exhaustive

E) when P(B) = 0

14. Which of the following statement(s) are true regarding the advantages of quantitative analysis approach in using modeling (or management science modeling)?

A) Models can accurately represent reality (given that certain assumptions are met).

B) Models can help decision makers formulate problems.

C) Models can save time.

D) Models may be the only way to solve some large and complex problems in a timely manner.

E) All of the above

15. If computing a causal linear regression model of Y = a + bX and the resultant r2 is very near zero, then one would be able to conclude that

A) Y = a + bX is a good forecasting method.

B) Y = a + bX is not a good forecasting method.

C) a multiple linear regression model is a good forecasting method for the data.

D) a multiple linear regression model is not a good forecasting method for the data.

E) None of the above

16. Which of the following is true about the expected value of perfect information?

A) It is the amount you would pay for any sample study.

B) It is calculated as EMV minus EOL.

C) It is calculated as expected value with perfect information minus maximum EMV.

D) It is the amount charged for marketing research.

E) None of the above

17. EKA company manufactures a small plastic toy for children. Each toy is sold for $15. The unit production cost of the toy is $3. The fixed monthly cost of operating the manufacturing facility is $3000. How many toys have to be sold in a month to breakevent?

a. 330.

b. 200.

c. 250.

d. 500.

e. 1000.

18. A conditional probability P(B|A) is equal to its marginal probability P(B) if

A) it is a joint probability.

B) statistical dependence exists.

C) statistical independence exists.

D) the events are mutually exclusive.

E) P(A) = P(B).

19. The three decision-making environments are decision making under ________.

A) utility, risk, and certainty

B) utility, risk, and uncertainty

C) utility, certainty, and uncertainty

D) utility, equity, and certainty

E) risk, certainty, and uncertainty

20. The ABC Corporation is considering introducing a new product, which will require buying new equipment for a monthly payment of $5,000. Each unit produced can be sold for $20.00. ABC incurs a variable cost of $10.00 per unit. Suppose that ABC would like to realize a monthly profit of $50,000. How many units must they sell each month to realize this profit? A) 500 units B) 450 units C) 4500 units D) 5000 units E) 5500 units 21. A pessimistic decision making criterion is

A) maximax.

B) equally likely.

C) maximin.

D) decision making under certainty.

E) minimax regret.

22. Which of the following is an equation to determine the break-even point (BEP) in units?

A) BEP = fixed cost / selling price per unit - variable cost per unit)

B) BEP = fixed cost / (selling price per unit - variable cost per unit)

C) BEP = variable cost / (selling price per unit - fixed cost)

D) BEP = variable cost / (fixed cost - selling price per unit) E) BEP = fixed cost / (selling price per unit + variable cost per unit)

23. Which of the following equalities is correct?

A) SST = SSR + SSE

B) SSR = SST + SSE

C) SSE = SSR + SST

D) SST = SSC + SSR

E) SSE = Actual Value - Predicted Value

24. In Bayesian analysis, conditional probabilities are also known as which of the following?

A) anterior probabilities

B) posterior probabilities

C) prior probabilities

D) marginal probabilities

E) joint probabilities

25. A judgmental forecasting technique that uses decision makers, staff personnel, and respondent to determine a forecast is called

A) exponential smoothing.

B) the Delphi method.

C) jury of executive opinion.

D) sales force composite.

E) consumer market survey.

26. Which of the following is a technique used to determine forecasting accuracy?

A) exponential smoothing

B) moving average

C) regression

D) Delphi method

E) mean absolute percent error

27. The expected value of a probability distribution is

A) the measure of the spread of the distribution.

B) the variance of the distribution.

C) the average value of the distribution.

D) the probability density function.

E) the range of continuous values from point A to point B, inclusive.

28. Bayes' theorem is used to calculate

A) revised probabilities.

B) joint probabilities.

C) prior probabilities.

D) subjective probabilities.

E) marginal probabilities.

29. Which of the following is considered a causal method of forecasting?

A) exponential smoothing

B) moving average

C) Holt's method

D) Delphi method

E) None of the above

30. Expected monetary value (EMV) is

A) the average or expected monetary outcome of a decision if it can be repeated a large number of times.

B) the average or expected value of the decision, if you know what would happen ahead of time.

C) the average or expected value of information if it were completely accurate.

D) the amount you would lose by not picking the best alternative.

E) a decision criterion that places an equal weight on all states of nature.

31. Which of the following is not considered to be one of the components of a time series?

A) trend

B) seasonality

C) variance

D) cycles

E) random variations

32. If two events are mutually exclusive, then

A) their probabilities can be added.

B) they may also be collectively exhaustive.

C) the joint probability is equal to 0.

D) if one occurs, the other cannot occur.

E) All of the above

33. The term Opportunity Loss is most closely related to

A) Maximin regret.

B) Maximax regret.

C) Minimax regret.

D) Minmin regret.

E) None of the above.

34. The length of time that it takes the tollbooth attendant to service each driver can typically be described by the

A) normal distribution.

B) uniform distribution.

C) exponential distribution.

D) Poisson distribution.

E) None of the above

35. A market research survey is available for $10,000. Using a decision tree analysis, it is found that the expected monetary value with no survey is $62,000. If the expected value of sample information is -$7,000, what is the expected monetary value with the survey?

A) $45,000

B) $62,000

C) -$17,000

D) $55,000

E) None of the above

36. Which one of these is not an element (or method) used in forecasting?

A) low cost.

B) time series data.

C) measure of errors.

D) moving averages.

E) Delphi Method.

37. Data that have large variation will result in:

A) a low MAD but a high MSE.

B) a high MAD but a low MSE.

C) a high MAD and a high MSE.

D) a low MAD and a low MSE.

E) an equal MAD and MSE.

38. Which of the following refers to decision making under risk?

A) EVPI.

B) Minimax regret.

C) Maximin.

D) Maximax.

E) Laplace.

39. Which of the following statement is not true about moving averages and exponential smoothing?

A) Both tend to lag changes in a time series.

B) Both smooth data.

C) Both involve relatively fairly simple calculations.

D) Both can be used to obtain seasonal index numbers.

E) Both are relatively easy to interpret.

40. P(A U B) is the probability of which of the following events will occur?

A) A

B) B

C) A and B

D) A or B or both

E) None of the above