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Test Bank for Quantitative Methods for Business 12th Edition by Anderson
Complete downloadable file at:
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Anderson

1. The field of management science

a. concentrates on the use of quantitative methods to assist in decision making.
 b. approaches decision making rationally, with techniques based on the scientific method.
c. is another name for decision science and for operations research.
d. each of these choices are true.
A!: " #T!: 1 T$#: %ntroduction

&. %dentification 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 problem solving.
d. requires consideration of multiple criteria.
A!: ' #T!: 1 T$#: #roblem s olving a nd d ecision m aking

(. "ecision alternatives
a. should be identified before decision criteria are established.
 b. are limited to quantitative solutions
c. are evaluated as a part of the problem definition stage.
d. are best generated by brain)storming.
A!: A #T!: 1 T$#: #roblem s olving a nd d ecision m aking

*. "ecision criteria
a. are the choices faced by the decision maker.
 b. are the problems faced by the decision maker.
c. are the ways to evaluate the choices faced by the decision maker.
d. must be unique for a problem.
A!: C #T!: 1 T$#: #roblem s olving a nd d ecision m aking

+. %n a multicriteria decision problem

a. it is impossible to select a single decision alternative.
 b. the decision maker must evaluate each alternative with respect to each criterion.
c. successive decisions must be made over time.
d. each of these choices are true.
A!: ' #T!: 1 T$#: #roblem s olving a nd d ecision m aking

. The quantitative analysis approach requires

a. the manager-s prior eperience with a similar problem.
 b. a relatively uncomplicated problem.
c. mathematical epressions for the relationships.
A!: C #T!: 1 T$#: /uantitative a nalysis and decision m aking

0. A physical model that does not have the same physical appearance as the obect being modeled is
a. an analog model.
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 b. an iconic model.
c. a mathematical model.
d. a qualitative model.
A!: A #T!: 1 T$#: 2odel d evelopment

3. %nputs to a quantitative model

a. are a trivial part of the problem solving process.
 b. are uncertain for a stochastic model.
c. are uncontrollable for the decision variables.
d. must all be deterministic if the problem is to have a solution.
A!: ' #T!: 1 T$#: 2odel d evelopment

4. 5hen the value of the output cannot be determined even if the value of the controllable input
is known, the model is
a. analog.
 b. digital.
c. stochastic.
d. deterministic.
A!: C #T!: 1 T$#: 2odel d evelopment

16. The volume that results in total revenue being equal to total cost is the
a. break)even point.
 b. marginal volume.
c. marginal cost.
d. profit mi.
A!: A #T!: 1 T$#: 'reak)even a nalysis

11. 2anagement science and operations research both involve

a. qualitative managerial skills.
 b. quantitative approaches to decision making.
c. operational management skills.
d. scientific research as opposed to applications.
A!: ' #T!: 1 T$#: %ntroduction

1&. 7eorge "ant8ig is important in the history of management science because he developed
a. the scientific management revolution.
 b. 5orld 5ar %% operations research teams.
c. the simple method for linear programming.
d. powerful digital computers.
A!: C #T!: 1 T$#: %ntroduction

1(. The first step in problem solving is

a. determination of the correct analytical solution procedure.
 b. definition of decision variables.
c. the identification of a difference between the actual and desired state of affairs.
d. implementation.
A!: C #T!: 1 T$#: #roblem s olving a nd d ecision m aking
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1*. #roblem definition
a. includes specific obectives and operating constraints.
 b. must occur prior to the quantitative analysis process.
c. must involve the analyst and the user of the results.
d. each of these choices are true.
A!: " #T!: 1 T$#: /uantitative a nalysis

1+. A model that uses a system of symbols to represent a problem is called

a. mathematical.
 b. iconic.
c. analog.
d. constrained.
A!: A #T!: 1 T$#: 2odel d evelopment

1. 5hich of the following is not one of the commonly used names for the body of knowledge
involving quantitative approaches to decision)making9
a. management science
 b. business analytics
c. operations research
d. efficiency studies
A!: " #T!: 1 T$#: %ntroduction

TRE/!A"#E

1. The process of decision making is more limited than that of problem solving.

A!: T #T!: 1 T$#: #roblem s olving a nd d ecision m aking

&. The terms -stochastic- and -deterministic- have the same meaning in quantitative analysis.

A!:  #T!: 1 T$#: 2odel d evelopment

(. The volume that results in marginal revenue equaling marginal cost is called the break)even point.

A!:  #T!: 1 T$#: #roblem s olving a nd d ecision m aking

*. #roblem solving encompasses both the identification of a problem and the action to resolve it.

A!: T #T!: 1 T$#: #roblem s olving a nd d ecision m aking

+. The decision making process includes implementation and evaluation of the decision.

A!:  #T!: 1 T$#: #roblem s olving a nd d ecision m aking

. The most successful quantitative analysis will separate the analyst from the managerial team until
after the problem is fully structured.

A!:  #T!: 1 T$#: /uantitative a nalysis

0. The value of any model is that it enables the user to make inferences about the real situation.
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A!: T #T!: 1 T$#: 2odel d evelopment

3. ;ncontrollable inputs are the decision variables for a model.

A!:  #T!: 1 T$#: 2odel d evelopment

4. The feasible solution is the best solution possible for a mathematical

model. A!:  #T!: 1 T$#: 2odel s olution

16. A company seeks to maimi8e profit subect to limited availability of man)hours. 2an)hours is
a controllable input.

A!:  #T!: 1 T$#: 2odel d evelopment

11. rederick Taylor is credited with forming the first 2!<$= interdisciplinary teams in the 14*6-

s. A!:  #T!: 1 T$#: %ntroduction

1&. To find the choice that provides the highest profit and the fewest employees, apply a
single)criterion decision process.

A!:  #T!: 1 T$#: #roblem s olving a nd d ecision m aking

1(. The most critical component in determining the success or failure of any quantitative approach
to decision making is problem definition.

A!: T #T!: 1 T$#: /uantitative a

nalysis 1*. The first step in the decision making process is

to identify the problem.

A!: T #T!: 1 T$#: %ntroduction

1+. All uncontrollable inputs or data must be specified before we can analy8e the model and recommend
a decision or solution for the problem.

A!: T #T!: 1 T$#: /uantitative a nalysis

1. %n quantitative analysis, the optimal solution is the mathematically)best solution.

A!: T #T!: 1 T$#: /uantitative a nalysis

10. %f you are deciding to buy either machine A, ', or C with the obective of minimi8ing the sum of
labor, material and utility costs, you are dealing with a single)criterion decision.

A!: T #T!: 1 T$#: #roblem s olving a nd d ecision m aking

13. 2odel development should be left to quantitative analysts> the model user-s involvement should
begin at the implementation stage.

A!:  #T!: 1 T$#: #roblem s olving a nd d ecision m aking

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14. A feasible solution is one that satisfies at least one of the constraints in the problem.

A!:  #T!: 1 T$#: 2odel s olution

&6. A toy train layout designed to represent an actual railyard is an eample of an analog model.

A!:  #T!: 1 T$#: 2odel d evelopment

#$%RT A&#'ER 

1. !hould the problem solving process be applied to all

problems9 A!:
Answer not provided.

#T!: 1 T$#: #roblem solving and decision making

&. ?plain the difference between quantitative and qualitative analysis from the manager-s point of view.

A!:
Answer not provided.

#T!: 1 T$#: /uantitative analysis and decision making

(. ?plain the relationship among model development, model accuracy, and the ability to obtain
a solution from a model.

A!:
Answer not provided.

#T!: 1 T$#: 2odel s olution

*. 5hat are three of the management science techniques that practitioners use most frequently9 @ow
can the effectiveness of these applications be increased9

A!:
Answer not provided.

#T!: 1 T$#: 2ethods used most frequently

+. 5hat steps of the problem solving process are involved in decision

making9 A!:
Answer not provided.

#T!: 1 T$#: /uantitative analysis and decision making

. 7ive three benefits of model development and an eample of each.

A!:
Answer not provided.
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#T!: 1 T$#: 2odel d evelopment

0. ?plain the relationship between information systems specialists and quantitative analysts in
the solution of large mathematical problems.

A!:
Answer not provided.

#T!: 1 T$#: "ata p reparation

3. "iscuss two developments that occurred during the post)5orld 5ar %% period that led to the
growth and use of quantitative methods in nonmilitary applications.

A!:
Answer not provided.

#T!: 1 T$#: %ntroduction

4. "iscuss at least three characteristics of a problem that make it a good candidate for using a
quantitative approach to analy8e it.

A!:
Answer not provided.

#T!: 1 T$#: /uantitative analysis and decision making

(R%B"EM

1. A snack food manufacturer buys corn for tortilla chips from two cooperatives, one in %owa and one in
%llinois. The price per unit of the %owa corn is +.+6 and the price per unit of the %llinois corn is .66.
a. "efine variables that would tell how many units to purchase from each source.
 b. "evelop an obective function that would minimi8e the total cost.
c. The manufacturer needs at least 1&666 units of corn. The %owa cooperative can supply
up to 3666 units, and the %llinois cooperative must supply at least 666 units. "evelop
constraints for these conditions.

A!:

a. Bet 1  the number of units from %owa

Bet &  the number of units from
%llinois
 b. 2in +.+1 D &
c. 1 D  & ³ 1&666
1
< 3666
1
³ 666

#T!: 1 T$#: 2odel d evelopment

&. The relationship d  +666 - &+p describes what happens to demand EdF as price EpF varies. @ere,
price can vary between 16 and +6.
a. @ow many units can be sold at the 16 price9 @ow many can be sold at the +6
price9
 b. 2odel the epression for total revenue.
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c. Consider prices of &6, (6, and *6. 5hich price alternative will maimi8e
total revenue9 5hat are the values for demand and revenue at this price9

A!:

a. or p  16, d  *0+6

or p  +6, d  (0+6
 b. T=  pE+666 - &+pF
c. or p  &6, T=  46,666
or p  (6, T=  1&0,+66
or p  *6, T=  16,666
'est price is p  *6. "emand  *666

#T!: 1 T$#: 2odel d evelopment

(. There is a fied cost of +6,666 to start a production process. $nce the process has begun,
the variable cost per unit is &+. The revenue per unit is proected to be *+.
a. 5rite an epression for total cost.
 b. 5rite an epression for total revenue.
c. 5rite an epression for total profit.
d. ind the break)even point.

A!:

a. CEF  +6666 D &+

 b. =EF  *+
c. #EF  *+ - E+6666 D &+F
d.   &+66

#T!: 1 T$#: 'reakeven a nalysis

*. An author has received an advance against royalties of 16,666. The royalty rate is 1.66
for every
 book sold in the ;nited !tates, and 1.(+ for every book sold outside the ;nited !tates. "efine
variables for this problem and write an epression that could be used to calculate the number of
books to be sold to cover the advance.

A!:
Bet 1  the number of books sold in the ;.!.
Bet &  the number of books sold outside the ;.!.

16666  1 1 D 1.(+&

#T!: 1 T$#: 'reakeven a nalysis

+. A university schedules summer school courses based on anticipated enrollment. The cost for
faculty compensation, laboratories, student services, and allocated overhead for a computer class is
3+66. %f students pay *&6 to enroll in the course, how large would enrollment have to be for the
university to
 break even9

A!:
?nrollment would need to be &1 students.
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#T!: 1 T$#: 'reakeven a nalysis

. As part of their application for a loan to buy Bakeside arm, a property they hope to develop as a
bed) and)breakfast operation, the prospective owners have proected:

2onthly fied cost Eloan payment, taes, insurance, maintenanceF 666

Gariable c ost p er o ccupied r oom p er n ight  &6
=evenue p er o ccupied ro om p er n ight  0+

a. 5rite the epression for total cost per month. Assume (6 days per month.
 b. 5rite the epression for total revenue per month.
c. %f there are 1& guest rooms available, can they break even9 5hat percentage of
rooms would need to be occupied, on average, to break even9

A!:

a. CEF  666 D &6E(6F EmonthlyF

 b. =EF  0+E(6F EmonthlyF
c. 'reak)even occupancy  (.* or * occupied rooms per night, so they have enough
rooms to break even. This would be a ((H occupancy rate.

#T!: 1 T$#: 'reakeven a nalysis

0. $rgani8ers of an %nternet training session will charge participants 1+6 to attend. %t costs (666 to
reserve the room, hire the instructor, bring in the equipment, and advertise. Assume it costs &+
per student for the organi8ers to provide the course materials.
a. @ow many students would have to attend for the company to break even9
 b. %f the trainers think, realistically, that &6 people will attend, then what price should
be charged per person for the organi8ation to break even9

A!:

a. CEF  (666 D &+

=EF  1+6
'reak)even students  &*
 b. Cost  (666 D &+E&6F
=evenue  &6p
'reak)even price  10+

#T!: 1 T$#: 'reakeven a nalysis

3. %n this portion of an ?cel spreadsheet, the user has given values for selling price, the costs, and
a sample volume. 7ive the cell formula for 
a. cell ?1&, break)even volume.
 b. cell ?1, total
revenue. c. cell ?10, total
cost.
d. cell ?14, profit<loss.

A ' C " ?
1
&
(
 * 'reak)even calculation Full fle at
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+
0 !elling pr ice pe r un it 16
3
Costs
4 i cost 3*66
16 Gariable c ost p er u nit *.+
11
1& 'reak)even v olume
1(
1* !ample c alculation
1+ Golume &666
1 Total r evenue
10 Total c ost
13
14 #rofit lo ss

A!:

a. ?4<E?)?16F
 b. ?1+I?
c. ?4D?16I?1+
d. ?1)?10

#T!: 1 T$#: !preadsheets for management science

4. A furniture store has set aside 366 square feet to display its sofas and chairs. ?ach sofa
utili8es +6 sq. ft. and each chair utili8es (6 sq. ft. At least five sofas and at least five chairs are to
be displayed.
a. 5rite a mathematical model representing the store-s constraints.
 b. !uppose the profit on sofas is &66 and on chairs is 166. $n a given day, the
probability that a displayed sofa will be sold is .6( and that a displayed chair will be
sold is .6+.
2athematically model each of the following obectives:
1. 2aimi8e the total pieces of furniture displayed.
&. 2aimi8e the total epected number of daily
sales. (.2aimi8e the total epected daily profit.

A!:

a. +6s D (6c
£ 366 s ³ +
c ³ +
 b. E1F 2a s D c
E&F 2a .6(s D .
6+c E(F 2a s D
+c

#T!: 1 T$#: 2odel d evelopment

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16. A manufacturer makes two products, doors and windows. ?ach must be processed through two work
areas. 5ork area J1 has 6 hours of available production time. 5ork area J& has *3 hours of
available
 production time. 2anufacturing of a door requires * hours in work area J1 and & hours in work area
J&. 2anufacturing of a window requires & hours in work area J1 and * hours in work area J&. #rofit
is
3 per door and  per window.
a. "efine decision variables that will tell how many units to build Edoors and windowsF.
 b. "evelop an obective function that will maimi8e profits.
c. "evelop production constraints for work area J1 and J&.

A!:

a. Bet "  the number of doors to build

Bet   the number of windows to
build
 b. #rofit  3" D 5
c. *" D &5 £ 6
&" D *5 £ *3

#T!: 1 T$#: 2odel d evelopment

11. A small firm builds television antennas. The investment in plan and equipment is &66,666. The
variable cost per television antenna is +66. The price of the television antenna is
1666. @ow many television antennas would be needed for the firm to break even9

A!:
*66 television antennae

#T!: 1 T$#: 'reakeven a nalysis

1&. As computer service center has the capacity to do *66 obs per day. The epected level of obs
demanded per day is &+6 per day. The fied cost of renting the computer process is &66 per
day.
!pace rents for 166 per day. The cost of material is 1+ per unit of work and .(+ cents of labor
per unit. 5hat is the break)even level of work9

A!:
&66 service units

#T!: 1 T$#: 'reakeven a nalysis

1(. To establish a driver education school, organi8ers must decide how many cars,
instructors, and students to have. Costs are estimated as follows. Annual fied costs to operate the
school are (6,666. The annual cost per car is (666. The cost per instructor is 11,666 and
one instructor is needed for each car. Tuition for each student is (+6. Bet  be the number of cars
and y be the number of students.
a. 5rite an epression for total cost.
 b. 5rite an epression for total revenue.
c. 5rite an epression for total profit.
d. The school offers the course eight times each year. ?ach time the course is offered,
there are two sessions. %f they decide to operate five cars, and if four students can be
assigned to each car, will they break even9

A!:

a. CEF  (6666 D 1*666

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 b. =EyF  (+6y
c. #E,yF  (+6y - E(6666 D 1*666F
d. ?ach car<instructor can serve up to E* students<sessionFE& sessions<courseFE3
courses<yearF  * students annually. ive cars can serve (&6 students. %f the
classes are filled, then profit for five cars is
  (+6E(&6F - E(6666 D 1*666E+FF  1&666
so the school can reach the break)even point.

#T!: 1 T$#: 'reakeven a nalysis

1*. Kipco #rinting operates a shop that has five printing machines. The machines differ in their
capacities to perform various printing operations due to differences in the machines- designs and
operator skill levels. At the start of the workday there are five printing obs to schedule. The
manager must decide what the ob)machine assignments should be.
a. @ow could a quantitative approach to decision making be used to solve this problem9
 b. 5hat would be the uncontrollable inputs for which data must be collected9
c. "efine the decision variables, obective function, and constraints to appear in
the mathematical model.
d. %s the model deterministic or stochastic9
e. !uggest some simplifying assumptions for this problem.

A!:

a. A quantitative approach to decision making can provide a systematic way for

deciding the ob)machine pairings so that total ob processing time is minimi8ed.
 b. @ow long it takes to process each ob on each machine, and any ob)machine
pairings that are unacceptable.
c. "ecision variables: one for each ob)machine pairing, taking on a value of 1 if the
pairing is used and 6 otherwise.
$bective function: minimi8e total ob processing time.
Constraints: each ob is assigned to eactly one machine, and each machine be assigned
no more than one ob.
d. !tochastic: ob processing times vary due to varying machine set)up times,
variable operator performance, and more.
e. Assume that processing times are deterministic Eknown<fiedF.

#T!: 1 T$#: 2odel d evelopment

1+. Consider a department store that must make weekly shipments of a certain product from two
different warehouses to four different stores.
a. @ow could a quantitative approach to decision making be used to solve this problem9
 b. 5hat would be the uncontrollable inputs for which data must be gathered9
c. 5hat would be the decision variables of the mathematical model9 the obective
function9 the constraints9
d. %s the model deterministic or stochastic9
e. !uggest assumptions that could be made to simplify the model.

A!:

a. A quantitative approach to decision making can provide a systematic way to

determine a minimum shipping cost from the warehouses to the stores.
 b. ied costs and variable shipping costs> the demand each week at each store> the
supplies
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each week at each warehouse.
c. "ecision variables))how much to ship from each warehouse to each store>
obective function))minimi8e total shipping costs> constraints))meet the demand at
the stores without eceeding the supplies at the warehouses.
d. !tochastic))weekly demands fluctuate as do weekly supplies> transportation costs
could vary depending upon the amount shipped, other goods sent with a shipment,
etc.
e. 2ake the model deterministic by assuming fied shipping costs per item, demand
is constant at each store each week, and weekly supplies in the warehouses are
constant.

#T!: 1 T$#: 2odel d evelopment

1. Three production processes ) A, ', and C ) have the following cost structure:

ied Cost Gariable

#rocess  per Lear  Cost
 per ;nit
A 1&6,666 (.66
' 46,666 *.66
C 36,666 *.+6

a. 5hat is the most economical process for a volume of 3,666 units9

 b. @ow many units per year must be sold with each process to have annual profits of +6,666 if the
selling price is .4+ per unit9
c. 5hat is the break)even volume for each process9

A!:
a. CEF  C D GCEF
#rocess A: CEF  1&6,666 D (.66E3,666F  1**,666 per
year #rocess ': CEF   46,666 D *.66E3,666F  1&&,666 per
year #rocess C: CEF   36,666 D *.+6E3,666F  11,666
per year 

#rocess C has the lowest annual cost for a production volume of 3,666 units.

 b. /  Eprofit D CF<Eprice ) GCF

#rocess A: /  E+6,666 D 1&6,666F<E.4+ ) (.66F  *(,6(3
units #rocess ': /  E+6,666 D  46,666F<E.4+ ) *.66F 
*0,*+3 units #rocess C: /  E+6,666 D  36,666F<E.4+ ) *.+6F
 +(,6& units

#rocess A requires the lowest production volume for an annual profit of

+6,666. c. At breakeven, profit Ethe preta profits per periodF is equal to 8ero.
/  C<Eprice ) GCF
#rocess A: /  1&6,666< E.4+ ) (.66F  (6,(36
units #rocess ': /   46,666< E.4+ ) *.66F 
(6,+64 units #rocess C: /   36,666< E.4+ ) *.+6F
 (&,+* units

#rocess A has the lowest break)even quantity, while #rocess 'Ms is almost as

low. #T!: 1 T$#: 'reakeven a nalysis

 Full fle at
https://testbanku.eu/
10. Nane #ersico, facility engineer at the ?l #aso plant of Computer #roducts Corporation EC#CF, is
studying a process selection decision at the plant. A new printer is to be manufactured and she must
decide whether the printer will be auto)assembled or manually assembled. The decision is
complicated
 by the fact that annual production volume is epected to increase by almost +6H over three years.
Nane has developed these estimates for two alternatives for the printer assembly process:

Auto) 2anual
Assembly Assembly
#rocess #rocess

Annual fi ed co st 46,666 &4,666

Gariable cost per &4.+ (1.4
product
?stimated annual production
Ein n umber o f p roductsF: Lear 1 1+&,666 1+&,666
Lear & 146,666 146,666
Lear ( &&+,666 &&+,666

a. 5hich production process would be the least)cost alternative in Lears 1, &, and (9
 b. @ow much would the variable cost per unit have to be in Lear & for the auto)assembly process to
 ustify the additional annual fied cost for the auto)assembly process over the manual assembly
 process9

A!:
a. CEF  fied cost D variable costEF
Lear 1:
CA   46,666 D &4.+E1+&,666F  +,13(,1&6
C2   &4,666 D (1.4E1+&,666F  +,63+,336 Eleast)cost
alternativeF Lear &:
CA   46,666 D &4.+E146,666F  ,(6,*66
C2   &4,666 D (1.4E146,666F  ,&46,166 Eleast)cost
alternativeF Lear (:
CA   46,666 D &4.+E&&+,666F  0,(*1,666 Eleast)cost
alternativeF C2   &4,666 D (1.4E&&+,666F  0,(44,&+6

 b. CA  C2
CA D vAE146,666F  C2 D v2E146,666F
46,666 D vE146,666F  &4,666 D (1.4E146,666F
vA  E&4,666 D , 6&1,166 ) 46,666F<146,666
vA  &4.*0 Eroughly a 6.(H reductionF

#T!: 1 T$#: Cost a nd v olume m odels