Question;SECTION I: MULTIPLE-CHOICE (10 possible points);Please complete the following;statements or questions by placing the appropriate letter in the blank adjacent;to the item number. The value of each;correct answer is 2 points.;1. Identification and definition of a;problem;A. cannot be done until alternatives are;proposed.;B. is the first step of decision making.;C. is;the final step of decision making.;D. requires;consideration of multiple criteria.;2.The;quantitative analysis approach requires;A. the;manager?s prior experience with a similar problem.;B.;a relatively uncomplicated problem.;C.;mathematical expressions for the relationships.;D.;each of the above is true.;3.A;decision tree;A. presents;all decision alternatives first and follows them with all states of nature.;B. presents all states of nature first and;follows them with all decision alternatives.;C. alternates the decision alternatives and;states of nature.;D. arranges decision alternatives and states of;nature in their natural chronological order.;4.Which of the methods for decision making;without probabilities best protects the decision maker from;undesirable results?;A. the optimistic approach;B. the conservative approach;C.;minimum regret;D. minimax regret;5.Decision variables;A. tell how much or how many of something to;produce, invest, purchase, hire, etc.;B. represent the values of the constraints.;C.;measure the objective function.;D. must;exist for each constraint.;BSC400 MIDTERM EXAM;Page 2;SECTION II: MATCHING (10 possible points);Please match the numbered terms with their definitions by;placing the letter that identifies the best definition in the blank space next;to the term. The value of each correct;answer is 1 point.;1. Breakeven Point;2. Constraints;3. Decision Strategy;4. Linear Program;5. Moving Averages;6. Objective Function;7. Regression Analysis;8. Risk Analysis;9. Time Series;10. Trend;A. A mathematical;model with a linear objective function, a set of constraints, and nonnegative;variables.;B. The mathematical;expression that defines the quantity to be maximized or minimized.;C. A set of;observations measured at successive points in time or over successive periods;of time.;D. The gradual shift;or movement of the time series to relatively higher or lower values over a long;period of time.;E. A statistical technique used to develop a;mathematical equation showing how variables are related.;F. Restrictions or;limitations imposed on a problem.;G. The study of the;possible payoffs and probabilities associated with a decision alternative or a;decision strategy.;H. A;smoothing method that uses the average of the most recent n data values in the time series as the forecast for;the next period.;I. The;volume at which total revenue equals total cost.;J. A;strategy involving a sequence of decisions and chance outcomes to provide the;optimal solution to a decision;problem.;BSC400;MIDTERM EXAM;Page;3;SECTION;III. ESSAY/SHORT ANSWER QUESTIONS;(35 possible points);Please;answer each of the following questions.;1.;INTRODUCTION(10 Possible Points);Explain the difference between quantitative and qualitative analysis;from the manager?s point of view.;2. DECISION;ANALYSIS (10 possible points);Give;an example from your own work experience, or make up an example, of how;Decision Analysis could be used to;determine;an optimal strategy. Briefly describe;several decision alternatives you, as the decision maker, would be faced with;and;possible uncertain or risk-filled future events you would need to consider.;3. FORECASTING (15 possible points);A.;What is the difference between Quantitative forecasting methods and;Qualitative forecasting methods?;B. Under;what circumstances would it be more appropriate to use quantitative rather than;qualitative forecasting;methods?;BSC400 MIDTERM EXAM;Page;4;3. FORECASTING (Cont.);C. Give an example of a situation when using;quantitative forecasting would be appropriate.;SECTION;IV: PROBLEMS (45 possible points);PROBLEM;1: LINEAR PROGRAMMING MODEL DEVELOPMENT (20 possible points);A;manufacturer makes two products, doors and windows. Each must be processed through two work;areas. Work area #1 has 60 hours of;available production time. Work area #2;has 48 hours of available production time. Manufacturing of a door requires 4;hours in work area #1 and 2 hours in work area #2. Manufacturing of a window requires 2 hours in;work area #1 and 4 hours in work area #2.;Profit is $8 per door and $6 per window.;As you respond to the following questions, please note that you are only;setting the problem up. A solution to;determine the number of doors and windows to be manufactured and the resulting;profit is NOT necessary.;1. Define the decision variables that will;tell how many units to build (doors and windows).;2.;Develop an objective function that will maximize;profits.;3.;Develop production constraints for work areas #1 and;#2.;BSC400 MIDTERM EXAM;Page;5;PROBLEM 2: DECISION ANALYSIS (25 possible points);Lakewood Fashion must decide how many lots of assorted ski;wear to order for its three stores.;Information on prices, sales, and inventory costs has led to the;following payoff table, in thousands;Demand;Order Size____Low_____Medium_____High;1 Lot 12 15 15;2 Lots 9 25 35;3 Lots 6 35 60;REQUIRED;1. What decision;should be made by an optimist?;2. What decision;should be made by a conservative?;3. What decision;should be made by using minimax regret?;4. Unrelated to this;problem, which approach do you personally prefer ? optimistic, conservative, or;minimax;regret? Explain.
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