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Introduction
MULTIPLE CHOICE
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 the above is true.
ANSWER: d
TOPIC: Introduction
3. Decision 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.
ANSWER: a
TOPIC: Problem solving and decision making
4. Decision 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.
ANSWER: c
TOPIC: Problem solving and decision making
1
2 Chapter 1 Introduction
7. A physical model that does not have the same physical appearance as the object being modeled is
a. an analog model.
b. an iconic model.
c. a mathematical model.
d. a qualitative model.
ANSWER: a
TOPIC: Model development
9. When 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.
ANSWER: c
TOPIC: Model development
10. 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 mix.
ANSWER: a
TOPIC: Break-even analysis
12. George Dantzig is important in the history of management science because he developed
a. the scientific management revolution.
b. World War II operations research teams.
c. the simplex method for linear programming.
d. powerful digital computers.
ANSWER: c
TOPIC: Introduction
TRUE/FALSE
1. The process of decision making is more limited than that of problem solving.
ANSWER: True
TOPIC: Problem solving and decision making
2. The terms ‘stochastic’ and ‘deterministic’ have the same meaning in quantitative analysis.
ANSWER: False
TOPIC: Model development
3. The volume that results in marginal revenue equaling marginal cost is called the break-even point.
ANSWER: False
TOPIC: Problem solving and decision making
4. Problem solving encompasses both the identification of a problem and the action to resolve it.
ANSWER: True
TOPIC: Problem solving and decision making
5. The decision making process includes implementation and evaluation of the decision.
4 Chapter 1 Introduction
ANSWER: False
TOPIC: Problem solving and decision making
6. The most successful quantitative analysis will separate the analyst from the managerial team until after the
problem is fully structured.
ANSWER: False
TOPIC: Quantitative analysis
7. The value of any model is that it enables the user to make inferences about the real situation.
ANSWER: True
TOPIC: Model development
9. The feasible solution is the best solution possible for a mathematical model.
ANSWER: False
TOPIC: Model solution
10. A company seeks to maximize profit subject to limited availability of man-hours. Man-hours is a
controllable input.
ANSWER: False
TOPIC: Model development
11. Frederick Taylor is credited with forming the first MS/OR interdisciplinary teams in the 1940’s.
ANSWER: False
TOPIC: Introduction
12. To find the choice that provides the highest profit and the fewest employees, apply a single-criterion
decision process.
ANSWER: False
TOPIC: Problem solving and decision making
13. The most critical component in determining the success or failure of any quantitative approach to decision
making is problem definition.
ANSWER: True
TOPIC: Quantitative analysis
14. The first step in the decision making process is to identify the problem.
ANSWER: True
TOPIC: Introduction
15. All uncontrollable inputs or data must be specified before we can analyze the model and recommend a
decision or solution for the problem.
ANSWER: True
TOPIC: Quantitative analysis
17. If you are deciding to buy either machine A, B, or C with the objective of minimizing the sum of labor,
material and utility costs, you are dealing with a single-criterion decision.
ANSWER: True
TOPIC: Problem solving and decision making
Chapter 1 Introduction 5
18. Model development should be left to quantitative analysts; the model user's involvement should begin at
the implementation stage.
ANSWER: False
TOPIC: Problem solving and decision making
19. A feasible solution is one that satisfies at least one of the constraints in the problem.
ANSWER: False
TOPIC: Model solution
20. A toy train layout designed to represent an actual railyard is an example of an analog model.
ANSWER: False
TOPIC: Model development
SHORT ANSWER
2. Explain the difference between quantitative and qualitative analysis from the manager's point of view.
TOPIC: Quantitative analysis and decision making
3. Explain the relationship among model development, model accuracy, and the ability to obtain a solution
from a model.
TOPIC: Model solution
4. What are three of the management science techniques that practitioners use most frequently? How can the
effectiveness of these applications be increased?
TOPIC: Methods used most frequently
5. What steps of the problem solving process are involved in decision making?
TOPIC: Introduction
7. Explain the relationship between information systems specialists and quantitative analysts in the solution of
large mathematical problems.
TOPIC: Data preparation
PROBLEMS
1. A snack food manufacturer buys corn for tortilla chips from two cooperatives, one in Iowa and one in
Illinois. The price per unit of the Iowa corn is $6.00 and the price per unit of the Illinois corn is $5.50.
a. Define variables that would tell how many units to purchase from each source.
b. Develop an objective function that would minimize the total cost.
6 Chapter 1 Introduction
c. The manufacturer needs at least 12000 units of corn. The Iowa cooperative can supply up to 8000
units, and the Illinois cooperative can supply at least 6000 units. Develop constraints for these
conditions.
TOPIC: Model development
2. The relationship d = 5000 - 25p describes what happens to demand (d) as price (p) varies. Here, price can
vary between $10 and $50.
a. How many units can be sold at the $10 price? How many can be sold at the $50 price?
b. Model the expression for total revenue.
c. Consider prices of $20, $30, and $40. Which price alternative will maximize total revenue? What
are the values for demand and revenue at this price?
TOPIC: Model development
3. There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost
per unit is $25. The revenue per unit is projected to be $45.
a. Write an expression for total cost.
b. Write an expression for total revenue.
c. Write an expression for total profit.
d. Find the break-even point.
TOPIC: Break-even analysis
4. An author has received an advance against royalties of $10,000. The royalty rate is $1.00 for every book
sold in the United States, and $1.35 for every book sold outside the United States. Define variables for this
problem and write an expression that could be used to calculate the number of books to be sold to cover the
advance.
TOPIC: Break-even analysis
5. 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 $8500. If
students pay $420 to enroll in the course, how large would enrollment have to be for the university to break
even?
TOPIC: Break-even analysis
6. As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-
breakfast operation, the prospective owners have projected:
Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000
Variable cost per occupied room per night $ 20
Revenue per occupied room per night $ 75
a. Write the expression for total cost per month. Assume 30 days per month.
b. Write the expression for total revenue per month.
c. If there are 12 guest rooms available, can they break even? What percentage of rooms would need
to be occupied, on average, to break even?
TOPIC: Break-even analysis
7. Organizers of an Internet training session will charge participants $150 to attend. It costs $3000 to reserve
the room, hire the instructor, bring in the equipment, and advertise. Assume it costs $25 per student for the
organizers to provide the course materials.
a. How many students would have to attend for the company to break even?
b. If the trainers think, realistically, that 20 people will attend, then what price should be charged per
person for the organization to break even?
TOPIC: Break-even analysis
8. In this portion of an Excel spreadsheet, the user has given values for selling price, the costs, and a sample
volume. Give the cell formula for
a. cell E12, break-even volume.
b. cell E16, total revenue.
Chapter 1 Introduction 7
A B C D E
1
2
3
4 Break-even calculation
5
6 Selling price per unit 10
7
8 Costs
9 Fixed cost 8400
10 Variable cost per unit 4.5
11
12 Break-even volume
13
14 Sample calculation
15 Volume 2000
16 Total revenue
17 Total cost
18
19 Profit loss
9. A furniture store has set aside 800 square feet to display its sofas and chairs. Each sofa utilizes 50 sq. ft.
and each chair utilizes 30 sq. ft. At least five sofas and at least five chairs are to be displayed.
a. Write a mathematical model representing the store's constraints.
b. Suppose the profit on sofas is $200 and on chairs is $100. On a given day, the probability that a
displayed sofa will be sold is .03 and that a displayed chair will be sold is .05. Mathematically
model each of the following objectives:
1. Maximize the total pieces of furniture displayed.
2. Maximize the total expected number of daily sales.
3. Maximize the total expected daily profit.
TOPIC: Model development
10. 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.
a. Define decision variables that will tell how many units to build (doors and windows).
b. Develop an objective function that will maximize profits.
c. Develop production constraints for work area #1 and #2.
TOPIC: Model development
11. A small firm builds television antennas. The investment in plan and equipment is $200,000. The variable
cost per television antenna is $500. The price of the television antenna is $1000. How many television
antennas would be needed for the firm to break even?
TOPIC: Break-even analysis
12. As computer service center has the capacity to do 400 jobs per day. The expected level of jobs demanded
per day is 250 per day. The fixed cost of renting the computer process is $200 per day. Space rents for
8 Chapter 1 Introduction
$100 per day. The cost of material is $15 per unit of work and $.35 cents of labor per unit. What is the
break-even level of work?
TOPIC: Break-even analysis
13. To establish a driver education school, organizers must decide how many cars, instructors, and students to
have. Costs are estimated as follows. Annual fixed costs to operate the school are $30,000. The annual
cost per car is $3000. The cost per instructor is $11,000 and one instructor is needed for each car. Tuition
for each student is $350. Let x be the number of cars and y be the number of students.
a. Write an expression for total cost.
b. Write an expression for total revenue.
c. Write an expression for total profit.
d. The school offers the course eight times each year. Each time the course is offered, there are two
sessions. If they decide to operate five cars, and if four students can be assigned to each car, will
they break even?
TOPIC: Break-even analysis
14. Zipco Printing 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 jobs to schedule. The manager must decide what the job-
machine assignments should be.
a. How could a quantitative approach to decision making be used to solve this problem?
b. What would be the uncontrollable inputs for which data must be collected?
c. Define the decision variables, objective function, and constraints to appear in the mathematical
model.
d. Is the model deterministic or stochastic?
e. Suggest some simplifying assumptions for this problem.
TOPIC: Model development
15. Consider a department store that must make weekly shipments of a certain product from two different
warehouses to four different stores.
a. How could a quantitative approach to decision making be used to solve this problem?
b. What would be the uncontrollable inputs for which data must be gathered?
c. What would be the decision variables of the mathematical model? the objective function? the
constraints?
d. Is the model deterministic or stochastic?
e. Suggest assumptions that could be made to simplify the model.
TOPIC: Model development
SOLUTIONS TO PROBLEMS
8. a. =E9/(E6-E10)
b. =E15*E6
c. =E9+E10*E15
d. =E16-E17
14. a. A quantitative approach to decision making can provide a systematic way for deciding the job-
machine pairings so that total job processing time is minimized.
b. How long it takes to process each job on each machine, and any job-machine pairings that are
unacceptable.
c. Decision variables: one for each job-machine pairing, taking on a value of 1 if the pairing is
used and 0 otherwise.
Objective function: minimize total job processing time.
Constraints: each job is assigned to exactly one machine, and each machine be assigned no
more than one job.
d. Stochastic: job processing times vary due to varying machine set-up times, variable operator
performance, and more.
e. Assume that processing times are deterministic (known/fixed).
15. 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. Fixed costs and variable shipping costs; the demand each week at each store; the supplies each
week at each warehouse.
c. Decision variables--how much to ship from each warehouse to each store; objective function--
minimize total shipping costs; constraints--meet the demand at the stores without exceeding the
supplies at the warehouses.
d. Stochastic--weekly demands fluctuate as do weekly supplies; transportation costs could vary
depending upon the amount shipped, other goods sent with a shipment, etc.
e. Make the model deterministic by assuming fixed shipping costs per item, demand is constant at
each store each week, and weekly supplies in the warehouses are constant.
Exploring the Variety of Random
Documents with Different Content
the seed of the pious and the impious, of Daeva-worshipers and of
those who do not worship the Daevas, of sinners and non-sinners."
Such persons are "rather to be killed than poisonous snakes."
Hereupon Zarathustra proceeds to ascertain what are the penalties
for those who cohabit with women at seasons when the law requires
them to be separate. At the beginning of the nineteenth Fargard, we
have an account of the temptation of the prophet by the evil one, to
which allusion has been made in another place. Zarathustra seeks
for information as to the means of getting rid of impurities, and is
taught by Ahura-Mazda to praise the objects he has created. In the
latter part of the chapter we have a remarkable account of the
judgment of departed souls. In conclusion, we have a psalm of
praise recited by the prophet in honor of God, the earth, the stars,
the Gâthâs, and numerous other portions of the good creation.
There is little in the twentieth Fargard beyond the information that
Thrita was the first physician, and a formula of conjuration,
apparently intended to be used in order to drive away diseases. In
the twenty-first, we find praises of the cloud, the sun, and other
heavenly bodies. The last Fargard of the Vendidad differs widely
from the rest in its manner of representing Ahura-Mazda. It is, no
doubt, as Spiegel observes, of late origin. Ahura-Mazda complains of
the opposition he has encountered from Agra-Mainyus, who has
afflicted him with illness (whether in his own person, or in that of
mankind, is not clear). He calls upon Manthra-Çpenta, the Word, to
heal him, but that spirit declines, and a messenger is accordingly
sent to Airyama to summon him to the task.[82] Airyama commences
his preparations on an extensive scale, but at this point the Vendidad
breaks off, and we are left in doubt as to the result of his efforts.