What is the break-even point? What parameters are necessary to find it?
> Discuss the similarities and differences between minimization and maximization problems using the graphical solution approaches of LP.
> If the ROP is greater than the order quantity, explain how the ROP is implemented. Can the ROP be more than twice the order quantity, and, if so, how is such a situation handled?
> What is the ROP? How is it determined?
> What are some of the assumptions made in using the EOQ?
> Why wouldn’t a company always store large quantities of inventory to eliminate shortages and stockouts?
> Under what circumstances can inventory be used as a hedge against inflation?
> After watching a movie about a young woman who quit a successful corporate career to start her own baby food company, Julia Day decided that she wanted to do the same. In the movie, the baby food company was very successful. Julia knew, however, that it
> Briefly describe what is meant by ABC analysis. What is the purpose of this inventory technique?
> Briefly explain the marginal analysis approach to the single-period inventory problem.
> When using safety stock, how is the standard deviation of demand during the lead time calculated if daily demand is normally distributed but lead time is constant? How is it calculated if daily demand is constant but lead time is normally distributed? Ho
> Briefly describe what is involved in solving a quantity discount model.
> What assumptions are made in the production run model?
> What is the purpose of sensitivity analysis?
> Why is inventory an important consideration for managers?
> Explain how the number of seasons is determined when forecasting with a seasonal component.
> Explain what would happen if the smoothing constant in an exponential smoothing model was equal to zero. Explain what would happen if the smoothing constant was equal to one.
> Describe briefly the steps used to develop a forecasting system.
> In 1979, Steve Blake founded Blake Electronics in Long Beach, California, to manufacture resistors, capacitors, inductors, and other electronic components. During the Vietnam War, Steve was a radio operator, and it was during this time that he became pro
> Explain what information is provided by the F test.
> Morgan Arthur has spent the past few weeks determining inventory costs for Armstrong, a toy manufacturer located near Cincinnati, Ohio. She knows that annual demand will be 30,000 units per year and that the carrying cost will be $1.50 per unit per year.
> Harrington Health Food stocks 5 loaves of Neutro- Bread. The probability distribution for the sales of Neutro-Bread is listed in the following table. How many loaves will Harrington sell on average? NUMBER OF LOAVES SOLD PROBABILITY 0 ……………………………………………
> Explain how the adjusted r2 value is used in developing a regression model.
> Which of the following are probability distributions? Why? (a) RANDOM VARIABLE X PROBABILITY 2 ………………………………………….………….. 0.1 -1 ……………………………………………….…….. 0.2 0 …………………………………………………….. 0.3 1 ………………………………………………..….. 0.25 2 …………………………………………………….. 0.15 (b)
> Develop your own set of constraint equations and inequalities, and use them to illustrate graphically each of the following conditions: (a) an unbounded problem (b) an infeasible problem (c) a problem containing redundant constraints
> Under what condition is it possible for an LP problem to have more than one optimal solution?
> Let the annual demand for an arbitrary commodity be 1,000 units per year and the associated EOQ be 400 units per order. Under this circumstance, the number of orders per year would be (D>Q) = 2.5 orders per year. How can this be so?
> Discuss the major inventory costs that are used in determining the EOQ.
> What is the purpose of inventory control?
> What is the objective of JIT?
> What is the difference between the gross and the net material requirements plans?
> What is the overall purpose of MRP?
> What happens to the production run model when the daily production rate becomes very large?
> Discuss how the coefficient of determination and the coefficient of correlation are related and how they are used in regression analysis.
> What is MAD, and why is it important in the selection and use of forecasting models?
> Describe briefly the Delphi technique.
> What effect does the value of the smoothing constant have on the weight given to the past forecast and the past observed value?
> What are some of the problems and drawbacks of the moving average forecasting model?
> What is a qualitative forecasting model, and when is it appropriate?
> What is the difference between a causal model and a time-series model?
> Explain when a CMA (rather than an overall average) should be used in computing a seasonal index. Explain why this is necessary.
> In using the decomposition method, the forecast based on trend is found using the trend line. How is the seasonal index used to adjust this forecast based on trend?
> How is the impact of seasonality removed from a time series?
> A seasonal index may be less than one, equal to one, or greater than one. Explain what each of these values would mean.
> Discuss the use of dummy variables in regression analysis.
> Explain how a plot of the residuals can be used in developing a regression model.
> What is the SSE? How is this related to the SST and the SSR?
> What is the difference between prior and posterior probabilities?
> What information should be placed on a decision tree?
> What is the overall purpose of utility theory?
> C. W. Churchman once said that “mathematics … tends to lull the unsuspecting into believing that he who thinks elaborately thinks well.” Do you think that the best QA models are the ones that are most elaborate and complex mathematically? Why?
> How is the efficiency of sample information computed?
> What is the EVSI? How is this computed?
> Managers are quick to claim that quantitative analysts talk to them in a jargon that does not sound like English. List four terms that might not be understood by a manager. Then explain in nontechnical language what each term means.
> Describe how you would determine the best decision using the EMV criterion with a decision tree.
> What is a random variable? What are the various types of random variables?
> What is implementation, and why is it important?
> Describe the characteristics of a Bernoulli process. How is a Bernoulli process associated with the binomial distribution?
> Give some examples of various types of models. What is a mathematical model? Develop two examples of mathematical models.
> What techniques are used to solve decision-making problems under uncertainty? Which technique results in an optimistic decision? Which technique results in a pessimistic decision?
> Explain how a scatter diagram can be used to identify the type of regression to use.
> Describe the various approaches used in determining probability values.
> What is a time-series forecasting model?
> What is the meaning of least squares in a regression model?
> Beverly Mills has decided to lease a hybrid car to save on gasoline expenses and to do her part to help keep the environment clean. The car she selected is available from only one dealer in the local area, but that dealer has several leasing options to a
> Define opportunity loss. What decision-making criteria are used with an opportunity loss table?
> Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gasoline station. Susan’s problem is to decide how large her station should be. The annual r
> Mick Karra is the manager of MCZ Drilling Products, which produces a variety of specialty valves for oil field equipment. Recent activity in the oil fields has caused demand to increase drastically, and a decision has been made to open a new manufacturin
> In Problem 3-27, Farm Grown, Inc., has reason to believe the probabilities may not be reliable due to changing conditions. If these probabilities are ignored, what decision would be made using the optimistic criterion? What decision would be made using t
> Farm Grown, Inc., produces cases of perishable food products. Each case contains an assortment of vegetables and other farm products. Each case costs $5 and sells for $15. If there are any cases not sold by the end of the day, they are sold to a large fo
> Brilliant Color is a small supplier of chemicals and equipment that are used by some photographic stores to process 35mm film. One product that Brilliant Color supplies is BC-6. John Kubick, president of Brilliant Color, normally stocks 11, 12, or 13 cas
> In Problem 3-22, you helped Allen Young determine the best investment strategy. Now, Allen is thinking about paying for a stock market newsletter. A friend of Allen said that these types of letters could predict very accurately whether the market would b
> Mickey Lawson is considering investing some money that he inherited. The following payoff table gives the profits that would be realized during the next year for each of three investment alternatives Mickey is considering: (a) What decision would maxim
> In the Arnold’s Muffler example for the exponential distribution in this chapter, the average rate of service was given as 3 per hour, and the times were expressed in hours. Convert the average service rate to the number per minute and convert the times
> During normal business hours on the east coast, calls to the toll-free reservation number of the Nite Time Inn arrive at a rate of 5 per minute. It has been determined that the number of calls per minute can be described by the Poisson distribution. Find
> Nite Time Inn has a toll-free telephone number so that customers can call at any time to make a reservation. A typical call takes about 4 minutes to complete, and the time required follows an exponential distribution. Find the probability that a call tak
> Discuss the differences among decision making under certainty, decision making under risk, and decision making under uncertainty.
> For each of the following F values, determine whether the probability indicated is greater than or less than 1%: (a) P(F5,4 > 14) (b) P(F6,3 > 30) (c) P(F10,12 > 4.2) (d) P(F2,3 > 35) (e) P(F2,3 < 35)
> For each of the following F values, determine whether the probability indicated is greater than or less than 5%: (a) P(F3,4 > 6.8) (b) P(F7,3 > 3.6) (c) P(F20,20 > 2.6) (d) P(F7,5 > 5.1) (e) P(F7,5 < 5.1)
> The Jamis Corporation is involved with waste management. During the past 10 years, it has become one of the largest waste disposal companies in the Midwest, serving primarily Wisconsin, Illinois, and Michigan. Bob Jamis, president of the company, is cons
> Coren Chemical, Inc., develops industrial chemicals that are used by other manufacturers to produce photographic chemicals, preservatives, and lubricants. One of their products, K-1000, is used by several photographic companies to make a chemical that is
> A mortgage lender attempted to increase its business by marketing its subprime mortgage. This mortgage is designed for people with a less-than-perfect credit rating, and the interest rate is higher to offset the extra risk. In the past year, 20% of these
> Burger City is a large chain of fast-food restaurants specializing in gourmet hamburgers. A mathematical model is now used to predict the success of new restaurants based on location and demographic information for that area. In the past, 70% of all rest
> Policy Pollsters is a market research firm specializing in political polls. Records indicate in past elections, when a candidate was elected, Policy Pollsters had accurately predicted this 80% of the time and was wrong 20% of the time. Records also show,
> Market Researchers, Inc., has been hired to perform a study to determine if the market for a new product will be good or poor. In similar studies performed in the past, whenever the market actually was good, the market research study indicated that it wo
> A particular test for the presence of steroids is to be used after a professional track meet. If steroids are present, the test will accurately indicate this 95% of the time. However, if steroids are not present, the test will indicate this 90% of the ti
> Jim Sellers has been able to estimate his utility for a number of different values. He would like to use these utility values in making the decision in Problem 3-44: U(-$80,000) = 0, U(-$65,000) = 0.5, U(-$60,000) = 0.55, U(-$20,000) = 0.7, U(-$5,000) =
> What is an alternative? What is a state of nature?
> Jim Sellers is thinking about producing a new type of electric razor for men. If the market were favorable, he would get a return of $100,000, but if the market for this new type of razor were unfavorable, he would lose $60,000. Since Ron Bush is a good
> Patients arrive at the emergency room of Costa Valley Hospital at an average of 5 per day. The demand for emergency room treatment at Costa Valley follows a Poisson distribution. (a) Using Appendix C, compute the probability of exactly 0, 1, 2, 3, 4, an
> A new integrated computer system is to be installed worldwide for a major corporation. Bids on this project are being solicited, and the contract will be awarded to one of the bidders. As a part of the proposal for this project, bidders must specify how
> The time to complete a construction project is normally distributed with a mean of 60 weeks and a standard deviation of 4 weeks. (a) What is the probability the project will be finished in 62 weeks or less? (b) What is the probability the project will be
> Armstrong Faber produces a standard number-two pencil called Ultra-Lite. Since Chuck Armstrong started Armstrong Faber, sales have grown steadily. With the increase in the price of wood products, however, Chuck has been forced to increase the price of th
> Susan Williams has been the production manager of Medical Suppliers, Inc., for the past 17 years. Medical Suppliers, Inc., is a producer of bandages and arm slings. During the past 5 years, the demand for No-Stick bandages has been fairly constant. On av
> Steve Goodman, production foreman for the Florida Gold Fruit Company, estimates that the average sale of oranges is 4,700 and the standard deviation is 500 oranges. Sales follow a normal distribution. (a) What is the probability that sales will be greate
> An industrial oven used to cure sand cores for a factory manufacturing engine blocks for small cars is able to maintain fairly constant temperatures. The temperature range of the oven follows a normal distribution with a mean of 450 ℉ and a standard devi
> The Lubricant is an expensive oil newsletter to which many oil giants subscribe, including Ken Brown (see Problem 3-17 for details). In the last issue, the letter described how the demand for oil products would be extremely high. Apparently, the American
> The Technically Techno company has several patents for a variety of different flash memory devices that are used in computers, cell phones, and a variety of other things. A competitor has recently introduced a product based on technology very similar to
> Describe what is involved in the decision process.
> Although Ken Brown (discussed in Problem 3-17) is the principal owner of Brown Oil, his brother Bob is credited with making the company a financial success. Bob is vice president of finance. Bob attributes his success to his pessimistic attitude about bu
> The game of roulette is popular in many casinos around the world. In Las Vegas, a typical roulette wheel has the numbers 1–36 in slots on the wheel. Half of these slots are red, and the other half are black. In the United States, the roulette wheel typic
