Name:______
Section:______
Exam 1
(white)
BA 301
Fall 2001
S.K. Norman
Please show all work.
Credit will not be given for unsupported work.
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Name:______
Section:______
12
BA 301 S.K. Norman
Multiple Choice (44 pts)
Select the BEST answer.
1. Operations management is applicable
a. mostly to the service sector
b. mostly to the manufacturing sector
c. to manufacturing and service sectors
d. to services exclusively
e. none of the above
2. Which of the following are the primary functions of all organizations?
a. operations, marketing, and human resources
b. marketing, human resources, and finance/accounting
c. marketing, quality control, and operations
d. marketing, operations, and finance/accounting
e. research and development, finance/accounting, and purchasing
3. The fundamental purpose of an organization's mission statement is to
a. define the organization's purpose in society
b. define the operational structure of the organization
c. generate good public relations for the organization
d. define the functional areas required by the organization
e. create a good human relations climate in the organization
4. The ability of an organization to produce goods or services that have some uniqueness in their characteristics is
a. time-based competition
b. competing on productivity
c. competing on flexibility
d. competing on differentiation
e. mass customization
5. Multinational organizations can shop from country to country and cut costs through
a. lower wage scales
b. lower indirect labor costs
c. less stringent regulations
d. lower taxes and tariffs
e. all of the above
6. Forecasts
a. become more accurate with longer time horizons
b. are more accurate for individual items than for groups of items
c. are rarely perfect
d. all of the above
e. none of the above
7. The forecasting model that pools the opinions of a group of experts or managers is known as the
a. sales force composition model
b. multiple regression model
c. consumer market survey model
d. jury of executive opinion model
e. management coefficients model
8. What is the approximate forecast for May using a four-month moving average?
Nov. Dec. Jan. Feb. Mar. April
39 36 40 38 47 46
a. 38
b. 41
c. 42
d. 43
e. 46
9. Given an actual demand of 103, a previous forecast value of 97, and an alpha of Ý4, the exponential smoothing forecast for the next period would be
a. 94.6
b. 97.4
c. 99.4
d. 100.0
e. 103.0
10. A careful analysis of the cost of operating an automobile was conducted by a firm. The following regression model was developed:
Y = 4000 + 0.20X
where Y is the annual cost and X is the miles driven.
If the car is driven 15,000 miles this year, what is the forecasted cost of operating this automobile.
a. $7,000
b. $4,003
c. $55,000
d. $26,000
e. None of the above
11. What type of forecasting is used at Tupperware?
a. Moving average.
b. Exponential smoothing.
c. Regression analysis.
d. None of the above.
e. All of the above.
12. An operations manager is not likely to be involved in
a. the identification of customers' wants and needs
b. the design of products and services to satisfy customers' wants and needs
c. the quality of products and services to satisfy customers' wants and needs
d. work scheduling to meet the due dates promised to customers
e. forecasting sales
13. Select the FALSE statement regarding differences between goods and services?
a. Services are generally produced and consumed simultaneously, tangible goods are not.
b. Services tend to be more knowledge-based than products.
c. Products tend to have a more inconsistent product definition than services.
d. Services tend to have higher customer interaction than goods.
e. none of the above are FALSE.
14. A strategy is
a. a broad statement of purpose
b. a simulation used to test various product line options
c. a plan for cost reduction
d. an action plan to achieve the mission
e. a set of opportunities in the marketplace
15. Response-based competitive advantage can be
a. flexible response
b. reliable response
c. quick response
d. all of the above
e. none of the above
16. NAFTA, passed in 1993, seeks to
a. curb illegal immigration from Mexico to the United States
b. substitute cheap labor in Mexico for expensive labor in the United States
c. phase out all trade and tariff barriers between the United States and Mexico
d. phase out all trade and tariff barriers between the United States, Canada, and Mexico
e. all of the above are NAFTA goals
17. Forecasts are usually classified by time horizon into three categories
a. finance/accounting, marketing, and operations
b. strategic, tactical, and operational
c. short-range, medium-range, and long-range
d. exponential smoothing, regression, and time series
e. departmental, organizational, and industrial
18. As you can see in the following table, demand for heart transplant surgery at Washington General Hospital has increased steadily in the past few years:
Year / 1 / 2 / 3 / 4 / 5 / 6Transplants / 45 / 50 / 52 / 56 / 58 / ?
Below is part of the output from a regression analysis.
SUMMARY OUTPUTRegression Statistics
Multiple R / 0.9885
R Square / 0.9771
Adjusted R Square / 0.9695
Standard Error / 0.8944
Observations / 5
ANOVA
df / SS / MS / F / Significance F
Regression / 1 / 102.4 / 102.4 / 128 / 0.001481065
Residual / 3 / 2.4 / 0.8
Total / 4 / 104.8
Coefficients / Standard Error / t Stat / P-value / Lower 95%
Intercept / 42.6 / 0.9381 / 45.4118 / 0.0000 / 39.6146
X Variable 1 / 3.2 / 0.2828 / 11.3137 / 0.0015 / 2.2999
The appropriate equation to predict the demand for transplants for year 6 is:
a. Y = 3 + 4X
b. Y = 102.4 + 0.8X
c. Y = 0.9885 + 0.9771X
d. Y = 42.6 + 3.2X
e. None of the above
19. Which time series model below assumes that demand in the next period will be equal to the most recent period's demand?
a. naive approach
b. moving average approach
c. weighted moving average approach
d. exponential smoothing approach
e. regression analysis
20. Which time series model uses past forecasts and past demand data to generate a new forecast?
a. naive
b. moving average
c. weighted moving average
d. exponential smoothing
e. regression analysis
21. In the Prisoner’s Dilemma, what is the dilemma?
a. If you confess, you will definitely go to jail.
b. If you don’t confess, you will definitely not go to jail.
c. If both you and Lucifer go with your best strategy, you will both be worse off than if you had cooperated and not chosen your best strategy.
d. If you and Lucifer cooperate, you will be worse off than if you had gone with your best strategy.
e. None of the above.
22. In the Lego example, the shadow price for large bricks was $6 with an allowable increase of 2. Which of the following statements is false.
a. Our profit will increase by $6 if we can obtain another large brick.
b. Our profit will increase by $18 if we can obtain 3 more bricks.
c. We might want more than 2 large bricks; there is not enough information to know for sure.
d. The maximum we want to pay for a large brick is $6.
e. All statements are true.
Problems (56 pts)
23. (6 pts) Earl Shell owns his own Sno-Cone business and lives 30 miles from a beach resort. The sale of Sno-Cones is highly dependent upon his location and upon the weather. At the resort, he will profit $150 per day in fair weather, $20 per day in bad weather. At home, he will profit $65 in fair weather, $40 in bad weather. Assume that on any particular day, the weather service suggests a 45 percent chance of foul weather (and therefore a 55 percent chance of fair weather).
Construct Earl's decision tree. (Do not calculate the expected values – just draw the decision tree.)
24. (12 pts) Southlands Corporation’s decision to produce a new line or recreational products has resulted in the need to construct either a small plant or a large plant. The selection of plant site depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demands as low, medium, or high. The following payoff table shows the projected profit in millions of dollars.
Alternatives / Long-Run Demand
Low / Medium / High
Small plant / 100 / 400 / 1000
Large plant / 300 / 400 / 400
a) Recommend a DECISION using the optimistic approach and give the PAYOFF. (4 pts)
b) Recommend a DECISION using the conservative approach and give the PAYOFF. (4 pts)
c) Recommend a DECISION using the equally likely approach and give the PAYOFF. (4 pts)
25. (12 pts) Susan Williams is a concessionaire for the local ballpark. She has developed a table of conditional values for the various stocking decisions and the size of the crowd. The probability for a large crowd is 0.3, for an average crowd is 0.5, and for a small crowd is 0.2.
Alternatives / Size of crowd
Large / Average / Small
Large inventory / $15,000 / $12,000 / $-2,000
Average inventory / $12,000 / $10,000 / $5,000
Small inventory / $8,000 / $4,000 / $6,000
a) Determine the maximum expected value and the decision that provides the maximum expected value. (6 pts)
b) Determine the expected value of perfect information (EvoPI as used in class and EVPI from the text). (6 pts)
26. (13 pts) Liva’s Lumber, Inc., manufactures three types of plywood. The table below summarizes the production hours per unit in each of three production operations and other data for the problem. The company wants to determine the amount of each grade to produce in order to maximize profit.
A / B / C
I / 2 / 2 / 4 / 800
II / 5 / 5 / 2 / 300
III / 10 / 3 / 2 / 500
Profit/Unit / $30 / $20 / $10
a) Define the decision variables. (3 pts)
b) Formulate the linear program. (10 pts)
27. (13 pts) Kelson’s Sporting Equipment, Inc. makes two different models of baseball gloves: a regular glove and a catcher’s mitt. The firm has 900 hours of production time available in its cutting and sewing department, 300 hours available in its finishing department, and 100 hours available in its packaging and shipping department. The production time requirements and the profit contribution for each product are:
Cut&Sew / Finishing / Packaging
Regular glove / 1 / 0.5 / 0.1 / $5
Catcher’s mitt / 1.5 / 0.3 / 0.2 / $8
The Excel Solver Answer and Sensitivity Reports are given on the next page. Use these reports to answer the following questions.
a) (3 pts) What is the optimal solution?
b) (5 pts) Two additional hours of finishing time have become available. Calculate the new profit.
c) (5 pts) Kelson has just hired an additional worker that could be assigned to any of the three departments. If an hour of this worker’s time results in an additional hour production time, where is it most profitable to place this worker? Why?
Microsoft Excel 9.0 Answer ReportWorksheet: [Book1]Sheet1
Report Created: 9/19/2001 12:43:09 PM
Target Cell (Max)
Cell / Name / Original Value / Final Value
$E$10 / Profit Total Profit / 0 / 4500
Adjustable Cells
Cell / Name / Original Value / Final Value
$C$8 / Glove: Regular / 0 / 500
$D$8 / Glove: Catcher / 0 / 250
Constraints
Cell / Name / Cell Value / Formula / Status / Slack
$E$3 / Cut & Sew LHS / 875 / $E$3<=$F$3 / Not Binding / 25
$E$4 / Finishing LHS / 300 / $E$4<=$F$4 / Binding / 0
$E$5 / Packaging LHS / 100 / $E$5<=$F$5 / Binding / 0
Microsoft Excel 9.0 Sensitivity Report
Worksheet: [Book1]Sheet1Report Created: 9/19/2001 12:43:09 PM
Adjustable Cells
Final / Reduced / Objective / Allowable / Allowable
Cell / Name / Value / Cost / Coefficient / Increase / Decrease
$C$8 / Glove: Regular / 500 / 0 / 5 / 15 / 1
$D$8 / Glove: Catcher / 250 / 0 / 8 / 2 / 6
Constraints
Final / Shadow / Constraint / Allowable / Allowable
Cell / Name / Value / Price / R.H. Side / Increase / Decrease
$E$3 / Cut & Sew LHS / 875 / 0 / 900 / 1E+30 / 25
$E$4 / Finishing LHS / 300 / 2.5 / 300 / 40 / 200
$E$5 / Packaging LHS / 100 / 37.5 / 100 / 3.6 / 40
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