An information system consultant is bidding on a project that involves some uncertainty. Based on past experience, if all went well (probability 0.1), the project would cost $1.2 million to complete. If moderate debugging were required (probability 0.7), the project would probably cost $1.4 million. If major problems were encountered (probability 0.2), the project could cost $1.8 million. Assume that the firm is bidding competitively and the expectation of successfully gaining the job at a bid of $2.2 million is 0, at $2.1 million is 0.1, at $2.0 million is 0.2, at $1.9 million is 0.3, at $1.8 million is 0.5, at $1.7 million is 0.8, and at $1.6 million is practically certain.
a. Calculate the expected value for the given bids.
b. What is the best bidding decision?
> The Excel file Auto Survey contains a sample of data about vehicles owned, whether they were purchased new or used, and other types of data. Use the Descriptive Statistics tool to summarize the numerical data, find the correlations among each of the nume
> A national homebuilder builds single-family homes and condominium-style townhouses. The Excel file House Sales provides information on the selling price, lot cost, type of home, and region of the country (M = Midwest, S = South) for closings during 1 mon
> PLE has developed a prototype for a new snow blower for the consumer market. This can exploit the company’s expertise in small-gasoline-engine technology and also balance seasonal demand cycles in the North American and European markets to provide additi
> In the Excel file Call Center Data, how strongly is length of service correlated with starting age?
> For the Excel file Credit Risk Data, compute the correlation between age and months employed, age and combined checking and savings account balance, and the number of months as a customer and amount of money in the bank. Interpret your results
> Example 1.4 in Chapter 1 described a scenario for new product sales that can be characterized by a formula called a Gompertz curve: S = aebect. Develop a spreadsheet for calculating sales using this formula for t = 0 to 160 in increments of 10 when a = 1
> The actual delivery time from Giodanni’s Pizza is exponentially distributed with a mean of 20 minutes.a. What is the probability that the delivery time will exceed 30 minutes?b. What proportion of deliveries will be completed within 20 minutes?
> Using the data in the Excel file Student Grades, apply the Excel Regression tool using the midterm grade as the independent variable and the final exam grade as the dependent variable.a. Interpret all key regression results, hypothesis tests, and confide
> The Excel file Beverage Sales lists a sample of weekday sales at a convenience store, along with the daily high temperature. Compute the covariance and correlation between temperature and sales
> For the President’s Inn Guest Database file, find the average length of stay and number of guests. Is there any correlation between the size of the party and the length of stay?
> For the data in the Excel file Rin’s Gym, find the co-variances and correlations among height, weight, and BMI calculation
> Describe how to apply stratified sampling to sample from the Credit Risk Data file based on the different types of loans. Implement your process in Excel to choose a random sample consisting of 10% of the records for each type of loan
> In the Excel file Weddings, determine the correlation between the wedding costs and attendance
> Call centers have high turnover rates because of the stressful environment. The national average is approximately 50%. The director of human resources for a large bank has compiled data about 70 former employees at one of the bank’s call centers (see the
> PLE produces its most popular model of lawn tractor in its Kansas City and Santiago plants and ships these units to major distribution centers in Atlanta, Caracas, Melbourne, Mexico City, London, Shanghai, and Toronto. Unit shipping costs can be found in
> The Excel file Cell Phone Survey reports opinions of a sample of consumers regarding the signal strength, value for the dollar, and customer service for their cell phone carriers. Use PivotTables to find the following:a. The average signal strength by ty
> The Excel file Freshman College Data shows data for 4 years at a large urban university. Use PivotTables to examine differences in student high school performance and first-year retention among different colleges at this university. What conclusions do y
> A lightbulb is warranted to last for 5,000 hours. If the time to failure is exponentially distributed with a true mean of 4,750 hours, what is the probability that it will last at least 5,000 hours?
> Using PivotTables, compute the mean and standard deviation for each metric by year in the Excel file Freshman College Data. Are any differences apparent from year to year?
> In the Excel file Facebook Survey, find the average and median hours online/week and number of friends in the sample using the appropriate Excel functions. Compute the midrange and compare all measures of location
> For the Excel file Travel Expenses, use a PivotTable to find the average and standard deviation of expenses for each sales rep
> Using the data in the Excel file Demographics, apply the Excel Regression tool using unemployment rate as the dependent variable and cost of living index as the independent variable.a. Interpret all key regression results, hypothesis tests, and confidenc
> A pharmaceutical manufacturer has projected net profits for a new drug that is being released to the market over the next five years:Year ____________Net Profit1 …………………………. $(300,000,000)2 …………………………. $(145,000,000)3 ……………………….……. $50,000,0004 …………………….
> Using PivotTables, find the average and standard deviation of sales in the Sales Transactions database. Also, find the average sales by source (Web or e-mail). Do you think this information could be useful in advertising? Explain how and why or why not
> Number the rows in the Excel file Credit Risk Data to identify each record. The bank wants to sample from this database to conduct a more-detailed audit. Use the Excel Sampling tool to find a simple random sample of 20 unique records
> In the Excel file Cell Phone Survey, use PivotTables to find the average for each of the numerical variables for different cell phone carriers and gender of respondents
> The Excel file Internet Usage provides data about users of the Internet. Construct stacked bar charts that will allow you to compare any differences due to age or educational attainment and draw any conclusions that you can. Would another type of charts
> Using the data in the worksheet Consumer Transportation Survey, develop 95% confidence intervals for the following:a. The proportion of individuals who are satisfied with their vehicleb. The proportion of individuals who have at least one child
> Trade associations, such as the United Dairy Farmers Association, frequently conduct surveys to identify characteristics of their membership. If this organization conducted a survey to estimate the annual per-capita consumption of milk and wanted to be 9
> Call centers typically have high turnover. The director of human resources for a large bank has compiled data on about 70 former employees at one of the bank’s call centers in the Excel file Call Center Data. In writing an article about call center worki
> An investor estimates that there is a 1 in 10 chance that a stock purchase will lose 20% of its value, a 2 in 10 chance that it will break even, a 4 in 10 chance that it will gain 15%, and a 3 in 10 chance that it will gain 30%. What is the expected retu
> In the roulette example described in Problem 7, what is the probability that the outcome will be green twice in a row? What is the probability that the outcome will be black twice in a row?In Problem 7Roulette is played at a table similar to the one in F
> An investor estimates that there is a 1 in 10 chance that a stock purchase will lose 20% of its value, a 2 in 10 chance that it will break even, a 4 in 10 chance that it will gain 15%, and a 3 in 10 chance that it will gain 30%. What is the expected retu
> Part 1: The Performance Lawn Equipment database contains data needed to develop a pro forma income statement. Dealers selling PLE products all receive 18% of sales revenue for their part of doing business, and this is accounted for as the selling expense
> In the scenario in Problem 2, what is the probability of drawing an ace first followed by a 2? How does this differ if the first card is replaced in the deck? Clearly explain what formulas you use and why
> In the roulette example described in Problem 7, what is the probability that the outcome will be green twice in a row? What is the probability that the outcome will be black twice in a row?In Problem 7Roulette is played at a table similar to the one in F
> In the scenario in Problem 2, what is the probability of drawing an ace first followed by a 2? How does this differ if the first card is replaced in the deck? Clearly explain what formulas you use and why
> Four key marketing decision variables are price (P), advertising (A), transportation (T), and product quality (Q). Consumer demand (D) is influenced by these variables. The simplest model for describing demand in terms of these variables isD = k - pP + a
> Identify some business applications in which judgmental forecasting techniques such as historical analogy and the Delphi method would be useful
> Elizabeth Burke wants to develop a model to more effectively plan production for the next year. Currently, PLE has a planned capacity of producing 9,100 mowers each month, which is approximately the average monthly demand over the previous year. However,
> The demand for airline travel is quite sensitive to price. Typically, there is an inverse relationship between demand and price; when price decreases, demand increases and vice versa. One major airline has found that when the price (P) for a round trip b
> One of PLE’s manufacturing facilities produces metal engine housings from sheet metal for both mowers and tractors. Production of each product consists of five steps: stamping, drilling, assembly, painting, and packaging to ship to its
> Construct a column chart for the data in the Excel file State Unemployment Rates to allow comparison of the June rate with the historical highs and lows. Would any other charts be better to visually convey this information? Why or why not?
> An online bookseller is considering selling an e-reader but will only do so if they have evidence that the proportion of customers that will likely purchase one is at least 0.4. Based on a survey of 25 customers, it was found that 8 of them stated that t
> In the Excel file Facebook Survey, use a PivotTable to find the average and standard deviation of hours online/week and number of friends for females and males in the sample
> Historical data show that customers who download music from a popular Web service spend approximately $26 per month, with a standard deviation of $4. Find the probability that a customer will spend at least $20 per month. How much (or more) do the top 10
> One of PLE’s manufacturing plants supplies various engine components to manufacturers of motorcycles on a just-in-time basis. Planned production capacity for one component is 100 units per shift, and the plant operates one shift per day. Because of fluct
> Part 1: PLE originally produced lawn mowers, but a significant portion of sales volume over recent years has come from the growing small-tractor market. As we noted in the case in Chapter 1, PLE sells their products worldwide, with sales regions includin
> Mountain Ski Sports, a chain of ski-equipment shops in Colorado, purchases skis from a manufacturer each summer for the coming winter season. The most popular intermediate model costs $150 and sells for $275. Any skis left over at the end of the winter a
> In reviewing the PLE data, Elizabeth Burke noticed that defects received from suppliers have decreased (worksheet Defects After Delivery). Upon investigation, she learned that in 2010, PLE experienced some quality problems due to an increasing number of
> For the profit model developed in Example 11.2 in Chapter 11 and the Excel model in Figure 11.4, suppose that the demand is triangular with a minimum of 35,000, maximum of 60,000 and most likely value of 50,000; fixed costs are normal with a mean of $400
> The Schoch Museum (see Problem 17 in Chapter 11) is embarking on a 5-year fundraising campaign. As a nonprofit institution, the museum finds it challenging to acquire new donors as many donors do not contribute every year. Suppose that the museum has ide
> A manufacturer of mp3 players is preparing to set the price on a new model. Demand is thought to depend on the price and is represented by the modelD = 2,500 - 3PThe accounting department estimates that the total costs can be represented byC = 5,000 + 5D
> A supermarket has been experiencing long lines during peak periods of the day. The problem is noticeably worse on certain days of the week, and the peak periods sometimes differ according to the day of the week. There are usually enough workers on the jo
> In the Excel file Economic Poll, find the proportions of each categorical variable
> For the Hyde Park Surgery Center scenario described in Problem 33 in Chapter 11, suppose that the following assumptions are made. The number of patients served the first year is uniform between 1,300 and 1,700; the growth rate for subsequent years is tri
> Develop and analyze a simulation model for Koehler Vision Associates (KVA) in Problem 13 of Chapter 11 with the following assumptions. Assume that the demand is uniform between 110 and 160 per week and that anywhere between 10% and 20% of prospective pat
> The Executive Committee of Reder Electric Vehicles (see Problem 16 in Chapter 11) is debating whether to replace its original model, the REV-Touring, with a new model, the REV-Sport, which would appeal to a younger audience. Whatever vehicle chosen will
> A university believes that the average retirement age among the faculty is now 70 instead of the historical value of 65. A sample of 85 faculty found that the average of their expected retirement age is 68.4 with a standard deviation of 3.6. Can the univ
> Create a bubble chart for the first five colleges in the Excel file Colleges and Universities for which the x-axis is the Top 10% HS, y-axis is Acceptance Rate, and bubbles represent the Expenditures per Student
> Elizabeth Burke has identified some additional questions she would like you to answer.1. Are there significant differences in ratings of specific product/service attributes in the 2014 Customer Survey worksheet?2. In the worksheet On-Time Delivery, has t
> Develop a simulation model for a 3-year financial analysis of total profit based on the following data and information. Sales volume in the first year is estimated to be 100,000 units and is projected to grow at a rate that is normally distributed with a
> The Kelly Theater produces plays and musicals for a regional audience. For a typical performance, the theater sells at least 250 tickets and occasionally reaches its capacity of 600 seats. Most often, about 450 tickets are sold. The fixed cost for each p
> A plant manager is considering investing in a new $30,000 machine. Use of the new machine is expected to generate a cash flow of about $8,000 per year for each of the next 5 years. However, the cash flow is uncertain, and the manager estimates that the a
> Develop a Monte Carlo simulation model for the garage-band in Problem 7 in Chapter 11 with the following assumptions. The expected crowd is normally distributed with mean of 3,000 and standard deviation 400 (truncate the distribution to have a minimum of
> In the Sales Transactions database, find the proportion of customers who used PayPal and the proportion of customers who used credit cards. Also, find the proportion that purchased a book and the proportion that purchased a DVD
> The manager of the extended-stay hotel in Problem 27 of Chapter 11 believes that the number of rooms rented during any given week has a triangular distribution with minimum 32, most likely 38, and maximum 50. The weekly price is $950 and weekly operating
> Determine if there is evidence to conclude that the mean GPA of males who plan to attend graduate school is larger than that of females who plan to attend graduate school using the data in the Excel file Graduate School Survey
> Use the Newsvendor Model spreadsheet to set up and run a Monte Carlo simulation assuming that demand is Poisson with a mean of 45 but a minimum value of 40 (use the lower cutoff parameter in the distribution dialog to truncate the distribution and ensure
> O’Brien Chemicals makes three types of products: industrial cleaning, chemical treatment, and some miscellaneous products. Each is sold in 55-gallon drums. The selling price and unit manufacturing cost are shown below:Fixed costs are as
> Sturgill Manufacturing, Inc. needs to predict the numbers of machines and employees required to produce its planned production for the coming year. The plant runs three shifts continuously during the workweek, for a total of 120 hours of capacity per wee
> SPD Tax Service is a regional tax preparation firm that competes with such national chains as H&R Block. The company is considering expanding and needs a financial model to analyze the decision to open a new store. Key factors affecting this decision inc
> In reviewing your previous reports, several questions came to Elizabeth Burke’s mind. Use point and interval estimates to help answer these questions.1. What proportion of customers rate the company with “top box” survey responses (which is defined as sc
> The Excel file Economic Poll provides some demographic and opinion data on whether the economy is moving in the right direction. Convert this data into an Excel table, and filter the respondents who are homeowners and perceive that the economy is not mov
> J&G Bank receives a large number of credit-card applications each month, an average of 30,000 with a standard deviation of 4,000, normally distributed. Approximately 60% of them are approved, but this typically varies between 50% and 70%. Each customer c
> A national homebuilder builds single-family homes and condominium-style townhouses. The Excel file House Sales provides information on the selling price, lot cost, type of home, and region of the country (Midwest, South) for closings during 1 month. Cons
> In the Excel file Bicycle Inventory, find the proportion of bicycle models that sell for less than $200
> Cruz Wedding Photography (see Problem 15 in Chapter 11) believes that the average number of wedding bookings per year can be estimated by triangular distribution with a minimum of 10, maximum of 22, and most likely value of 15. One of the key variables i
> Waring Solar Systems provides solar panels and other energy-efficient technologies for buildings. In response to a customer inquiry, the company is conducting a feasibility study to determine if solar panels will provide enough energy to pay for themselv
> For the Moore Pharmaceuticals model, suppose that analysts have made the following assumptions:• R&D costs: Triangular ($500, $700, $800) in millions of dollars• Clinical trials costs: Triangular ($135, $150, $160) in millions of dollars• Market size: No
> Automobiles have different fuel economies (mpg), and commuters drive different distances to work or school. Suppose that a state Department of Transportation (DOT) is interested in measuring the average monthly fuel consumption of commuters in a certain
> Adam is 24 years old and has a 401(k) plan through his employer, a large financial institution. His company matches 50% of his contributions up to 6% of his salary. He currently contributes the maximum amount he can. In his 401(k), he has three funds. In
> The retirement planning model described in Chapter 11 (Example 11.11) assumes that the data in rows 5–8 of the spreadsheet are the same for each year of the model. Modify the spreadsheet to allow the annual salary increases and return on investment to ch
> Review the retirement-planning situation described in Chapter 11 (Example 11.11). Modify the spreadsheet to include the assumptions that the annual salary increase is triangular with a minimum of 1%, most likely value of 3%, and maximum value of 5%, and
> PLE collects a variety of data from special studies, many of which are related to the quality of its products. The company collects data about functional test performance of its mowers after assembly; results from the past 30 days are given in the worksh
> For the Excel file Credit Approval Decisions, find 95% confidence and prediction intervals for the credit scores and revolving balance of homeowners and nonhomeowners. How do they compare?
> The Excel file Restaurant Sales provides sample information on lunch, dinner, and delivery sales for a local Italian restaurant. Develop 95% prediction intervals for the daily dollar sales of each of these variables and also for the total sales dollars o
> The Excel file EEO Employment Report shows the number of people employed in different professions for various racial and ethnic groups. Find the proportion of men and women in each ethnic group for the total employment and in each profession
> A financial advisor believes that the proportion of investors who are risk–averse (i.e., try to avoid risk in their investment decisions) is at least 0.7. A survey of 32 investors found that 20 of them were risk-averse. Formulate and test the appropriate
> Using the data in the worksheet Consumer Transportation Survey, develop 95% and 99% prediction intervals for the following:a. The hours per week that an individual will spend in his or her vehicleb. The number of miles driven per week
> A study of nonfatal occupational injuries in the United States found that about 31% of all injuries in the service sector involved the back. The National Institute for Occupational Safety and Health (NIOSH) recommended conducting a comprehensive ergonomi
> The Excel file Facebook Survey provides data gathered from a sample of college students. Create a scatter diagram showing the relationship between Hours online/week and Friends
> A marketing study found that the mean spending in 15 categories of consumer items for 297 respondents in the 18–34 age group was $91.86 with a standard deviation of $50.90. For 536 respondents in the 35+ age group, the mean and standard deviation were $8
> Total marketing effort is a term used to describe the critical decision factors that affect demand: price, advertising, distribution, and product quality. Let the variable x represent total marketing effort. A typical model that is used to predict demand
> The Excel file Baseball Attendance shows the attendance in thousands at San Francisco Giants’ baseball games for the 10 years before the Oakland A’s moved to the Bay Area in 1968, as well as the combined attendance for both teams for the next 11 years. D
> Using data in the Excel file Colleges and Universities, find 95% confidence intervals for the median SAT for each of the two groups, liberal arts colleges and research universities. Based on these confidence intervals, does there appear to be a differenc
> For the Store and Regional Sales database, apply a four-traffic light icon set to visualize the distribution of the number of units sold for each store, where green corresponds to at least 30 units sold, yellow to at least 20 but less than 30, red to at
> Lily’s Gourmet Ice Cream Shop offers a variety of gourmet ice cream and shakes. Although Lily’s competes with other ice cream shops and frozen yogurt stores, none of them offer gourmet ice creams with a wide variety of different flavors. The shop is also
> A marketing study of 800 adults in the 18–34 age group reported the following information:• Spent less than $100 but more than $0 on children’s clothing per year: 50 responses• Spent $100–$499.99 on children’s clothing per year: 275 responses• Spent $500
> Tanner Park (see Problem 14 in Chapter 11) is a small amusement park that provides a variety of rides and outdoor activities for children and teens. In a typical summer season, the number of adult tickets sold has a normal distribution with a mean of 20,
