ELM416 - DSS - Prof. Dr. Tarek H.

Abou-El-Enien

Exercises (1)
Chapter (1) – Introduction
Choose the correct answer :
1) A model is a functional relationship that includes:
A) variables.
B) parameters.
C) equations.
D) all of the above

2) Which of the following is an equation or an inequality that expresses a resource restriction in a

mathematical model?
A) a decision variable
B) an objective function
C) a constraint
D) a parameter

3) There is considerable overlap in the scientific method and management science techniques.
Which of the following steps is shared between them?
A) observation
B) problem definition
C) model construction
D) implementation

4) Which of the following is incorrect with respect to the use of models in decision making?
A) They improve understanding of the problem.
B) They promote subjectivity in decision making.
C) They are generally easy to use.
D) They provide a systematic approach to problem solving.

5) The field of management science:

A) approaches decision making irrationally with techniques based on the scientific method.
B) is another name for management or human resources management.
C) concentrates on the use of quantitative methods to assist managers in decision making.
D) is completely separate and distinct from all other disciplines.

6) The processes of problem observation:

A) cannot be done until alternatives are proposed.
B) requires consideration of multiple criteria.
C) is the first step of decision making.
D) is the final step of problem solving.
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

7) The limits of the problem and the degree to which it pervades other units in the organization
must be included during the ________ step of the management science process.
A) observation
B) definition
C) solution
D) implementation

8) ________ involves determining the functional relationship between variables, parameters, and
equations.
A) Problem observation
B) Problem definition
C) Model construction
D) Model solution

9) Which steps of the management science process can either be a recommended decision or
information that helps a manager make a decision?
A) model implementation
B) problem definition
C) model solution
D) problem formulation

10) The result of an effective decision-making process should be monitored in order to:
A) reveal the break-even point.
B) reveal errors in the implementation.
C) keep fixed and variable costs distinct.
D) change the scientific method.

11) Which of these disciplines typically does not fall under the umbrella of analytics?
A) information systems
B) statistics
C) management science
D) operations management

12) The indicator that results in total revenues being equal to total cost is called the:
A) marginal cost.
B) marginal volume.
C) break-even point.
D) profit mix.

13) Variable cost:

A) depends on the number of units produced.
B) plus marginal cost equals fixed cost.
C) is equal to total cost in deterministic models.
D) is the same as average cost.
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

14) The components of break-even analysis are:

A) cost and profit.
B) volume and cost.
C) volume, cost and profit.
D) volume and profit.

15) ________ are generally independent of the volume of units produced and sold.
A) Fixed costs
B) Variable costs
C) Profits
D) Average cost

16) The purpose of break-even analysis is to determine the number of units of a product to sell
that will:
A) appeal to the consumer.
B) result in a profit.
C) result in a loss.
D) result in zero profit.

17) Variable cost does not include:

A) raw materials and resources.
B) staff and management salaries.
C) material handling and freight.
D) direct labor and packaging.

18) Which variable is not a component of break-even analysis?

A) fixed costs
B) variable costs
C) number of employees
D) number of customers

19) At the break-even point:

A) total revenue equals total cost.
B) profit is maximized.
C) revenue is maximized.
D) costs are minimized.

20) If the price increases, but fixed and variable costs do not change, the break-even point:
A) decreases.
B) increases.
C) remains the same.
D) may increase or decrease, depending on sales.
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

21) If the price decreases, but fixed and variable costs do not change, the break-even point:
A) decreases.
B) increases.
C) remains the same.
D) may increase or decrease, depending on sales.

22) The term ________ refers to testing how a problem solution reacts to changes in one or more
of the model parameters.
A) graphical solution
B) decision analysis
C) sensitivity analysis
D) break-even analysis

23) If fixed costs decrease, but variable cost and price remain the same, the break-even point:
A) decreases.
B) increases.
C) remains the same.
D) may increase or decrease depending on sales.

24) If fixed costs increase, but variable cost and price remain the same, the break-even point:
A) decreases.
B) increases.
C) remains the same.
D) may increase or decrease depending on sales.

25) Administrators at a university will charge students $175 to attend freshman orientation. It costs
$10,000 to reserve a room, hire extra security, and bring in a moonwalk. Assume it costs $15 per
student for the administrators to provide the course materials. How many students would have to
register for orientation for the university to break even?
A) 54.25
B) 58
C) 56
D) 62.5

26) A university is planning a seminar. It costs $3000 to reserve a room, hire an instructor, and
bring in the equipment. Assume it costs $25 per student for the administrators to provide the course
materials. If we know that 20 people will attend, what price should be charged per person to break
even?
A) $120
B) $150
C) $175
D) $200
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

27) A university is planning an online seminar. It costs $30 to live stream an instructor from
Elbonia. Assume it costs $25 per student for the administrators to provide the course materials. If
we know that 20 people will attend, what price should be charged per person to break even?
A) $55
B) $15
C) $26.50
D) $75.75

28) It costs $50,000 to start a production process. Variable cost is $25 per unit and revenue is $45
per unit. What is the break-even point?
A) 1000 units
B) 1111 units
C) 2000 units
D) 2500 units

29) It costs $6,000 to start a production process. Variable cost is $2 per unit and revenue is $5 per
unit. What is the break-even point?
A) 1000 units
B) 1111 units
C) 2000 units
D) 2500 units

Yowzah Bids
Yowzah receives bids from four companies we'll call A, B, C, and D to supply product for the
coming year. René Descartes, the Yowzah VP of Plotting takes the bids and creates this graph to
bring to the next executive meeting.
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

30) The company with the lowest variable cost is:

A) A.
B) B.
C) C.
D) D.

31) The company with the highest variable cost is:

A) A.
B) B.
C) C.
D) D.

32) Over the range of demand shown by this graph, which action would completely remove one
of the potential suppliers from consideration?
A) lowering A's fixed cost by 10%
B) raising B's variable cost by 10%
C) raising C's variable and fixed costs by 10%
D) lowering D's fixed cost by 25%

33) Which of these changes would have no effect on which supplier is chosen in the output range
of 0 units to 20,000 units?
A) Variable costs fall 10% for all bidders.
B) Fixed costs rise 10% for all bidders.
C) Companies A and B swap their figures for fixed costs.
D) Companies C and D swap their figures for fixed costs.

34) Which level of anticipated demand is least sensitive to variations in fixed and variable cost
estimates?
A) 5,000
B) 10,000
C) 15,000
D) 20,000

35) Company A has a fixed cost of 75,000 and a variable cost of 15. Company B's fixed cost is
90,000 and variable cost is 11. At what point is Yowzah indifferent between the two bidders?
A) 3,250
B) 3,500
C) 3,750
D) 4,000

36) Yowzah receives a frantic call from company C. Evidently the fixed cost they quoted was in
rupees rather than dollars. If the current exchange rate is 60 rupees to the dollar, what is the net
effect of an updated analysis?
A) Company C is the bidder of choice throughout the range depicted in the graph.
B) Company C has the highest total cost throughout the range depicted in the graph.
C) Company C has the highest fixed cost of all four companies.
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

D) Even beyond the range depicted in the graph, company C would be the bidder of choice.

37) Which of the following statements is false?

A) Decision models selectively describe the managerial situation.
B) Decision models consider all factors from the real world.
C) Decision models designate performance measures that reflect objectives.
D) Decision models designate decision variables.

38) Decision support systems and sensitivity analysis are useful management science tools for
answering the question:
A) by when?
B) who else?
C) how much?
D) what if?

39) A difficult aspect of using spreadsheets to solve management science problems is:
A) obtaining the solution to standard management science problems.
B) data entry.
C) performing sensitivity analysis.
D) setting up a spreadsheet with complex models and formulas.

40) A technique that assumes certainty in its solution is referred to as:

A) stochastic.
B) probabilistic.
C) deterministic.
D) parametric.

41) Classification of management science techniques does not recognize:

A) linear mathematical programming.
B) probabilistic techniques.
C) network techniques.
D) computer programming.

42) Linear mathematical programming techniques assume that all parameters in the models are:
A) known with certainty.
B) unknown.
C) predictable.
D) unpredictable.

44) Which one of the following techniques is not a mathematical programming technique?
A) linear programming models
B) transportation models
C) analytical hierarchy process
D) integer linear programming technique
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

45) The analytical hierarchy process is used to:

A) convert qualitative problems into quantitative problems
B) minimize the number of levels in an organization
C) choose among several alternatives
D) determine the optimal route between two points

46) Which of these techniques is typically considered part of the operations realm rather than the
management science realm?
A) forecasting
B) queuing
C) networks
D) routing

47) Which one of the following management science methods is not a probabilistic technique?
A) assignment models
B) decision analysis
C) queuing analysis
D) statistical analysis

48) A baker uses organic flour from a local farmer in all of his baked goods. For each batch of
bread (x1), he uses 4 pounds of flour. For a batch of cookies (x2), he uses 3 pounds, and for a
batch of muffins (x3) he uses 2 pounds. The local farmer can supply him with no more than 24
pounds per week. The constraint that represents this condition is:
A) x1 ≤ 8, x2 ≤ 8, x3 ≤ 8.
B) x1 + x2 + x3 ≥ 24.
C) x1 + x2 + x3 ≤ 24.
D) 4x1 + 3x2 + 2x3 ≤ 24.

49) A baker uses organic flour from a local farmer in all of his baked goods. For each batch of
bread (x1), he uses 4 pounds of flour. For a batch of cookies (x2), he uses 3 pounds, and for a
batch of muffins (x3) he uses 2 pounds. The local farmer can supply him with no more than 24
pounds per week. At most, the baker could make:
A) 4 batches of bread.
B) 2 pounds of muffins.
C) 8 batches of cookies.
D) 24 pounds of flour.

50) A baker uses organic flour from a local farmer in all of his baked goods. For each batch of
bread (x1), he uses 4 pounds of flour. For a batch of cookies (x2), he uses 3 pounds, and for a
batch of muffins (x3) he uses 2 pounds. The local farmer can supply him with no more than 24
pounds per week. Which of these combinations can be made with the available flour?
A) 3 batches of bread, 3 batches of cookies, and 3 batches of muffins
B) 2 batches of bread, 4 batches of cookies, and 2 batches of muffins
C) 3 batches of bread, 4 batches of cookies, and 2 batches of muffins
D) 2 batches of bread, 1 batches of cookies, and 1 batches of muffins
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

51) An objective function:

A) shows where the break-even point is.
B) describes how much of a resource can be used.
C) can represent costs or profits.
D) describes something to be maximized.

52) Larry's Fish Market buys salmon (S) for $5 per pound and a local whitefish (W) for $3.50
per pound. Larry wants to minimize his cost, but he cannot spend more than $160. The objective
function that minimizes these costs for Larry is:
A) 5S + 3.5W ≤ 160.
B) Min 5S + 3.5 W.
C) Max 5S + 3.5 W.
D) Min 5S + 3.5W ≥ 160.

53) It's time to buy pet food again and Lisa heads to the grocery store with $40 in her purse,
leaving her seven hungry cats and four hungry dogs at home. Dog food costs $1 per can and cat
food costs $0.50 per can. Dogs eat two full cans of food each day but cats eat only one can. Lisa
would like to buy enough food to last through her three-day weekend. What is an appropriate
objective function for this scenario?
A) Min Z = 1D + 0.5C
B) Min Z = 2D + 1C
C) Min Z = D + C ≤ 40
D) Min Z = D + C ≥ 3

54) It's time to buy pet food again and Lisa heads to the grocery store with $40 in her purse, leaving
her seven hungry cats and four hungry dogs at home. Dog food costs $1 per can and cat food costs
$0.50 per can. Dogs eat two full cans of food each day but cats eat only one can. Lisa would like
to buy enough food to last through her three-day weekend. What is one appropriate constraint for
this scenario?
A) 7C + 4D ≥ 3
B) 1C + 2D ≤ 40
C) .5C + 1D ≤ 40
D) 7C + 4D ≥ 1.5

55) Marriott used which of the following management science techniques to help improve profit
by $120 million over two years?
A) optimization, decision analysis, and forecasting
B) forecasting, queuing theory, and inventory analysis
C) queuing theory, optimization, and inventory analysis
D) forecasting, simulation, and optimization
 ELM416 - DSS - Prof. Dr. Tarek H. Abou-El-Enien

56) Which of these is a typical attribute of a decision support system?

A) interactive
B) intranet
C) integrated
D) insubordinate

57) Instantaneous information about business transactions is achievable through the use of:
A) point of sale systems and CPM
B) point of sale systems and EDI
C) decision support systems and EDI
D) decision support systems and CPM

58) Which of these decision support systems is the most comprehensive with respect to an entire
organization?
A) an Excel spreadsheet
B) an ERP
C) QM for Windows
D) OLAP