[SOLVED] A decision maker faced with four decision

> According to the 2017 Corporate Travel Index compiled by Business Travel News, the average daily cost for business travel in the United States rose to $321 per day (Executive Travel website, https://executivetravel.com/new-business-travel-study-says-aver

> Initial public offerings (IPOs) of stocks are on average underpriced. The standard deviation measures the dispersion, or variation, in the underpricing-overpricing indicator. A sample of 13 Canadian IPOs that were subsequently traded on the Toronto Stock

> Because of staffing decisions, managers of the Gibson-Marimont Hotel are interested in the variability in the number of rooms occupied per day during a particular season of the year. A sample of 20 days of operation shows a sample mean of 290 rooms occup

> Suppose on average a male shaver in Year 1 bought one razor handle and used 17 razor blades in a year and that the price relatives for Year 1 to Year 11 are as appears in the following table. Develop a Male Shaver Expense Index based on weighted price re

> Embassy Publishing Company received a sixchapter manuscript for a new college textbook. The editor of the college division is familiar with the manuscript and estimated a .65 probability that the textbook will be successful. If successful, a profit of $7

> Hemmingway, Inc. is considering a $50 million research and development (R&D) project. Profit projections appear promising, but Hemmingwayâs president is concerned because the probability that the R&D project will be successful i

> Warren Lloyd is interested in leasing a new car and has contacted three automobile dealers for pricing information. Each dealer offered Warren a closed-end 36-month lease with no down payment due at the time of signing. Each lease includes a monthly char

> An airline operates a call center to handle customer questions and complaints. The airline monitors a sample of calls to help ensure that the service being provided is of high quality. Ten random samples of 100 calls each were monitored under normal cond

> Over several weeks of normal, or in-control, operation, 20 samples of 150 packages each of synthetic-gut tennis strings were tested for breaking strength. A total of 141 packages of the 3000 tested failed to conform to the manufacturer’s specifications.

> Young Adult magazine states the following hypotheses about the mean age of its subscribers. H0: µ = 28 Ha: µ ≠ 28 If the manager conducting the test will permit a .15 probability of making a Type II error when the true mean age is 29, what sample size sh

> The Goodman Tire and Rubber Company periodically tests its tires for tread wear under simulated road conditions. To study and control the manufacturing process, 20 samples, each containing three radial tires, were chosen from different shifts over severa

> A quality control process monitors the weight per carton of laundry detergent. Control limits are set at UCL = 20.12 ounces and LCL = 19.90 ounces. Samples of size 5 are used for the sampling and inspection process. What are the process mean and process

> Temperature is used to measure the output of a production process. When the process is in control, the mean of the process is Âµ = 128.5 and the standard deviation is Ï = .4. a. Construct the x chart for this process if samples of

> A process sampled 20 times with a sample of size 8 resulted in x̅ = 28.5 and R̅ = 1.6. Compute the upper and lower control limits for the x̅ and R charts for this process.

> Twenty-five samples of 100 items each were inspected when a process was considered to be operating satisfactorily. In the 25 samples, a total of 135 items were found to be defective. a. What is an estimate of the proportion defective when the process is

> Twenty-five samples, each of size 5, were selected from a process that was in control. The sum of all the data collected was 677.5 pounds. a. What is an estimate of the process mean (in terms of pounds per unit) when the process is in control? b. Develop

> A domestic manufacturer of watches purchases quartz crystals from a Swiss firm. The crystals are shipped in lots of 1000. The acceptance sampling procedure uses 20 randomly selected crystals. a. Construct operating characteristic curves for acceptance nu

> To inspect incoming shipments of raw materials, a manufacturer is considering samples of sizes 10, 15, and 19. Use the binomial probabilities from Table 5 of Appendix B to select a sampling plan that provides a producer’s risk of α = .03 when p0 is .05 a

> Refer to the KALI problem presented in this section. The quality control manager requested a producer’s risk of .10 when p0 was .03 and a consumer’s risk of .20 when p1 was .15. Consider the acceptance sampling plan based on a sample size of 20 and an ac

> Repeat exercise 11 for the acceptance sampling plan with η = 20 and c = 1. What happens to the producer’s risk as the acceptance number c is increased? Explain Exercise 11: Consider an acceptance sampling plan with η = 20 and c = 0. Compute the producer

> A special industrial battery must have a life of at least 400 hours. A hypothesis test is to be conducted with a .02 level of significance. If the batteries from a particular production run have an actual mean use life of 385 hours, the production manage

> Consider an acceptance sampling plan with η = 20 and c = 0. Compute the producer’s risk for each of the following cases. a. The lot has a defect rate of 2%. b. The lot has a defect rate of 6%.

> For an acceptance sampling plan with η = 25 and c = 0, find the probability of accepting a lot that has a defect rate of 2%. What is the probability of accepting the lot if the defect rate is 6%?

> A process that is in control has a mean of µ = 12.5 and a standard deviation of σ = .8. a. Construct the x̅ control chart for this process if samples of size 4 are to be used. b. Repeat part (a) for samples of sizes 8 and 16. c. What happens to the limit

> An investment portfolio consists of four stocks. The purchase price, current price, and number of shares are reported in the following table. Construct a weighted average of price relatives as an index of the performance of the portfolio to date. Inter

> Compute the price relatives for the R&B Beverages products in exercise 5. Use a weighted average of price relatives to show that this method provides the same index as the weighted aggregate method. Exercise 5: R&B Beverages, Inc., provides a co

> The Mitchell Chemical Company produces a special industrial chemical that is a blend of three chemical ingredients. The beginning-year cost per pound, the ending-year cost per pound, and the blend proportions follow. a. Compute the price relatives for

> Price relatives for three items, along with base-period prices and usage, are shown in the following table. Compute a weighted aggregate price index for the current period.

> R&B Beverages, Inc., provides a complete line of beer, wine, and soft drink products for distribution through retail outlets in central Iowa. Unit price data for 2015 and 2018 and quantities sold in cases follow. Compute a weighted aggregate index

> Under the last-in, first-out (LIFO) inventory valuation method, a price index for inventory must be established for tax purposes. The quantity weights are based on year-ending inventory levels. Use the beginning-of-the-year price per unit as the base-per

> Fastenal, the largest fastener distributor in North America, procures an identical drive anchor from three independent suppliers that differ in unit price and quantity supplied. The relevant data for 2016 and 2018 are given in the following table, where

> Suppose the project director for the Hilltop Coffee study (see Section 9.3) asked for a .10 probability of claiming that Hilltop was not in violation when it really was underfilling by 1 ounce (µa = 2.9375 pounds). What sample size would have been recomm

> An item with a price relative of 132 cost $10.75 in 2018. Its base year was 2001. a. What was the percentage increase or decrease in cost of the item over the 17-year period? b. What did the item cost in 2001?

> An automobile dealer reports the Year 1 and Year 8 sales for three models in the following table. Compute quantity relatives and use them to develop a weighted aggregate quantity index for Year 8 using the two years of data.

> Heartland Express handles four commodities for a particular distributor. Total shipments for the commodities in the years 2000 and 2015, as well as the prices in the year 2000, are reported in the following table. Develop a weighted aggregate quantity

> Data on quantities of three items sold in Year 1 and Year 5 are given here along with the sales prices of the items in Year 1. Compute a weighted aggregate quantity index for Year 5.

> In 2017, Googleâs revenue broke $100 billion for the first time. The revenue for Google for the years 2010â2017 is shown in the following table (Statista website). Deflate the revenue in dollars based on the CPI (1982&

> Shipments of product from manufacturer to the retailer are tracked by the U.S. Census Bureau. The values of shipments for computer and electronic products for three consecutive years are shown in the table below, along with the CPI and PPI for each of th

> The average hourly wage rate for construction laborers in 2001 was $13.36. In 2017 construction laborers made $18.70 per hour. The CPI for 2001 was 177.1 and for 2017, 245.1. Calculate the percentage change in real hourly wages from 2001 to 2017.

> Registered nurses in 2007 made an average hourly wage of $30.04. In 2017, their hourly wage had risen to $35.36. Given that the CPI for 2007 was 207.3 and the 2017 CPI was 245.1, answer the following. a. Give the real wages for registered nurses for 2007

> The following table reports prices and usage quantities for two items in 2016 and 2018. a. Compute price relatives for each item in 2018 using 2016 as the base period. b. Compute an unweighted aggregate price index for the two items in 2018 using 2016

> In 2017, the American Red Cross had to make decisions related to preparations for Hurricane Irma, which was threatening the United States, including the state of Florida, Puerto Rico, and the U.S. Virgin Islands. To prepare for such disasters, organizati

> Consider the following hypothesis test. H0: µ = 20 Ha: µ ≠ 20 The population standard deviation is 10. Use α = .05. How large a sample should be taken if the researcher is willing to accept a .05 probability of making a Type II error when the actual popu

> Consider a variation of the PDC decision tree shown in Figure 19.5. The company must first decide whether to undertake the market research study. If the market research study is conducted, the outcome will either be favorable (F) or unfavorable (U). Assu

> The Lake Placid Town Council has decided to build a new community center to be used for conventions, concerts, and other public events, but considerable controversy surrounds the appropriate size. Many influential citizens want a large center that would

> A 2017 survey of sommeliers ranked the Finger Lakes region of New York state as the top wine region to visit (Thrillist web site). Finger Lakes vineyards typically specialize in growing grapes for white wines such as Chardonnay and Riesling. Seneca Hill

> The computer-gaming market in the United States is estimated at $18.5 billion as of 2017 (VentureBeat web site). Consider the case of Video Tech, a computer-gaming company located in San Jose, California. It is considering the production of one of two ne

> Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beach. Management must decide between a full price service using the companyâs new fleet of jet aircraft and a discount service using smaller capacity commuter

> Investment advisors estimated the stock market returns for four market segments: computers, financial, manufacturing, and pharmaceuticals. Annual return projections vary depending on whether the general economic conditions are improving, stable, or decli

> The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff tab

> To save on expenses, Rona and Jerry agreed to form a carpool for traveling to and from work. Rona preferred to use the somewhat longer but more consistent Queen City Avenue. Although Jerry preferred the quicker expressway, he agreed with Rona that they s

> In the following profit payoff table for a decision problem with two states of nature and three decision alternatives, the prior probabilities for s1 and s2 are P(s1) = .8 and P(s2) = .2. a. What is the optimal decision? b. Find the EVPI. c. Suppose th

> Consider the following hypothesis test. H0: µ ≥ 10 Ha: µ < 10 The sample size is 120 and the population standard deviation is 5. Use α = .05. If the actual population mean is 9, the probability of a Type II error is .2912. Suppose the researcher wants to

> Suppose that you are given a decision situation with three possible states of nature: s1, s2, and s3. The prior probabilities are P(s1) = .2, P(s2) = .5, and P(s3) = .3. With sample information I, P(I | s1) = .1, P(I | s2) = .05, and P(I | s3) = .2. Comp

> Lawsonâs Department Store faces a buying decision for a seasonal product for which demand can be high, medium, or low. The purchaser for Lawsonâs can order 1, 2, or 3 lots of the product before the season begins but ca

> Martinâs Service Station is considering entering the snowplowing business for the coming winter season. Martin can purchase either a snowplow blade attachment for the stationâs pick-up truck or a new heavy-duty snowplo

> More than 500 scripted television series were available for viewing in 2018 (Hollywood Reporter website). New series typically start by producing a pilot episode that can be evaluated by a network before it agrees to pick up the series for production. Ha

> Dante Development Corporation is considering bidding on a contract for a new office building complex. Figure 19.9 shows the decision tree prepared by one of Danteâs analysts. At node 1, the company must decide whether to bid on the cont

> The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. a. Construct a decision tree for this problem. b. Suppose that the decision maker obtains the probabilities P(s1) = .65,

> In a recent poll, six hundred adults were asked a series of questions about the state of the economy and their children’s future. One question was, “Do you expect your children to have a better life than you have had, a worse life, or a life about the sa

> A Pew Research Center survey asked adults if their ideal place to live would have a faster pace of life or a slower pace of life. A preliminary sample of 16 respondents showed 4 preferred a faster pace of life, 11 preferred a slower pace of life, and 1 s

> Are stock splits beneficial to stockholders? SNL Financial studied stock splits in the banking industry over an 18-month period. For a sample of 20 stock splits, 14 led to an increase in investment value, 4 led to a decrease in investment value, and 2 re

> The median annual income for families living in the United States is $56,200. Annual incomes in thousands of dollars for a sample of 50 families living in Chicago, Illinois, are shown. Use the sample data to see if it can be concluded that the families l

> Sparr Investments, Inc., specializes in tax-deferred investment opportunities for its clients. Recently Sparr offered a payroll deduction investment program for the employees of a particular company. Sparr estimates that the employees are currently avera

> In 2015 the median price of homes in Austin, Texas, was $248,640 (AustinHomeSearch website). A sample of 200 homes sold in the south Austin suburb of Westlake Hills found 111 homes with sales prices over $248,640 and 89 homes with sales prices under $248

> Net assets for the 50 largest stock mutual funds show a median of $15 billion. A sample of 10 of the 50 largest bond mutual funds follows. Using the median, can it be concluded that bond mutual funds are smaller and have fewer net assets than stock mu

> A student organization surveyed both current students and recent graduates to obtain information on the quality of teaching at a particular university. An analysis of the responses provided the following teaching-ability rankings. Do the rankings given b

> The rankings of a sample of professional golfers in both driving distance and putting are shown. What is the rank correlation between driving distance and putting for these golfers? Test for significance of the correlation coefficient at the .10 level of

> A national study by Harris Interactive, Inc., evaluated the top technology companies and their reputations. The following shows how 10 technology companies ranked in reputation and how the companies ranked in percentage of respondents who said they would

> The following data show the rankings of 11 states based on expenditure per student (ranked 1 highest to 11 lowest) and studentâteacher ratio (ranked 1 lowest to 11 highest). a. What is the rank correlation between expenditure per stud

> Consider the following two sets of rankings for six items. Note that in the first case the rankings are identical, whereas in the second case the rankings are exactly opposite. What value should you expect for the Spearman rank-correlation coefficient

> Consider the following set of rankings for a sample of 10 elements. a. Compute the Spearman rank-correlation coefficient for the data. b. Use Î± = .05 and test for significant rank correlation. What is your conclusion?

> The better-selling candies are often high in calories. Assume that the following data show the calorie content from samples of M&s, Kit Kat, and Milky Way candies. Test for significant differences among the calorie content of these three

> A large corporation sends many of its first-level managers to an off-site supervisory skills training course. Four different management development centers offer this course. The director of human resources would like to know whether there is a differenc

> Refer to exercise 48. Assume the firm selects a sample of 50 surveys and repeat parts (b) and (c). What observation can you make about how increasing the sample size affects the probability of making a Type II error? Exercise 48: Fowle Marketing Researc

> The median number of part-time employees at fast-food restaurants in a particular city was known to be 18 last year. City officials think the use of part-time employees may be increasing. A sample of nine fast-food restaurants showed that seven restauran

> The National Football League (NFL) holds its annual draft of the nationâs best college football players in April each year. Prior to the draft, various sporting news services project the players who will be drafted along with the order

> Forty-minute workouts of one of the following activities three days a week will lead to a loss of weight, assuming no change in calories consumed. The following sample data show the number of calories burned during 40-minute workouts for three different

> Three admission test preparation programs are being evaluated. The scores obtained by a sample of 20 people who used the programs provided the following data. Use the Kruskal-Wallis test to determine whether there is a significant difference among the th

> A sample of 15 consumers provided the following product ratings for three different products. Five consumers were randomly assigned to test and rate each product. Use the Kruskal-Wallis test and Î± = .05 to determine whether there is a signi

> Chicago Midway International Airport and Baltimore/Washington International Thurgood Marshall Airport were the U.S. airports with the worst percentage of delayed flights in 2015 (Travel+Leisure website, https://www.travelandleisure.com/slideshows/best-an

> A certain brand of microwave oven was priced at 10 stores in Dallas and 13 stores in San Antonio. The data follow. Use a .05 level of significance and test whether prices for the microwave oven are the same in the two cities. Dallas …………………………….. San An

> Police records show the following numbers of daily crime reports for a sample of days during the winter months and a sample of days during the summer months. Use a .05 level of significance to determine whether there is a significant difference between t

> Each year Bloomberg Businessweek publishes statistics on the worldâs 1000 largest companies. A companyâs price/earnings (P/E) ratio is the companyâs current stock price divided by the latest 12 months

> In 2018 a survey of 10,508 CEOs by PayScale. com, the range of annual salaries reported was from $73,187 to $336,550. But do CEO salaries differ across the two most populous states in the United States? Consider the salaries for CEOs who work for compani

> A production line operation is tested for filling weight accuracy using the following hypotheses. Hypothesis ………………………………… Conclusion and Action H0: µ = 16 …………………………….. Filling okay; keep running Ha: µ ≠ 16 …. Filling off standard; stop and adjust mach

> Sales personnel for Skillings Distributors submit weekly reports listing the customer contacts made during the week. A sample of 65 weekly reports showed a sample mean of 19.5 customer contacts per week. The sample standard deviation was 5.2. Provide 90%

> The gap between the earnings of men and women with equal education is narrowing but has not closed. Sample data for seven men and seven women with bachelor’s degrees are as follows. Data are shown in thousands of dollars. Men ……………………………….. Women 35.6 …

> Ten individuals participated in a taste test involving two brands of a product. Sample results show 7 preferred brand A, 2 preferred brand B, and 1 was unable to state a preference. With α = .05, test for a significant difference in the preferences for t

> Samples of starting annual salaries for individuals entering the public accounting and financial planning professions follow. Annual salaries are shown in thousands of dollars. a. Use a .05 level of significance and test the hypothesis that there is no d

> Two fuel additives are being tested to determine their effect on gasoline mileage. Seven cars were tested with additive 1 and nine cars were tested with additive 2. The following data show the miles per gallon obtained with the two additives. Use α = .05

> The Scholastic Aptitude Test (SAT) consists of three parts: critical reading, mathematics, and writing. Each part of the test is scored on a 200- to 800-point scale with a median of approximately 500. Scores for each part of the test can be assumed to be

> The Ladies Professional Golf Association (LPGA) ANA Inspiration tournament was held in April 2015 at the Mission Hills Country Club in Rancho Mirage, California. Shown here are first-round and second-round scores for a random sample of 13 golfers. Use &I

> A test was conducted for two overnight mail delivery services. Two samples of identical deliveries were set up so that both delivery services were notified of the need for a delivery at the same time. The hours required to make each delivery follow. Do t

> Percents of on-time arrivals for flights in the past two years were collected for 11 randomly selected airports. Data for these airports follow. Use Î± = .05 to test the hypothesis that there is no difference between the median percent of on

> A sample of 10 men was used in a study to test the effects of a relaxant on the time required to fall asleep. Data for 10 subjects showing the number of minutes required to fall asleep with and without the relaxant follow. Use a .05 level of significance

> Two fuel additives are tested to determine their effect on miles per gallon for passenger cars. Test results for 12 cars follow; each car was tested with both fuel additives. Use Î± = .05 and the Wilcoxon signed-rank test to see whether ther

> Young Adult magazine states the following hypotheses about the mean age of its subscribers. H0: µ = 28 Ha: µ ≠ 28 a. What would it mean to make a Type II error in this situation? b. The population standard deviation is assumed known at σ = 6 years and th

> Competition in the personal computer market is intense. A sample of 450 purchases showed 202 Brand A computers, 175 Brand B computers, and 73 other computers. Use a .05 level of significance to test the null hypothesis that Brand A and Brand B have the s

> Nielsen Media Research identified The Big Bang Theory and This is Us as the two top-rated prime-time television series. In a local television preference survey, 750 individuals were asked to indicate their favorite prime-time television series: Three hun

Question: A decision maker faced with four decision