saint gba334 MIDTERM EXAM latest 2017

MIDTERM EXAM

Question 1

When the smoothing constant ? = 1, the exponential smoothing model is equivalent to the naïve forecasting model.

Question options:

True

False

Question 2

Which of the following statements is false concerning the hypothesis testing procedure for a regression model?

Question options:

An ? level must be selected.

The null hypothesis is that the true slope coefficient is equal to zero.

The alternative hypothesis is that the true slope coefficient is not equal to zero.

The null hypothesis is rejected if the adjusted r2 is above the critical value.

The F-test statistic is used.

Question 3

Given three statistically independent events (A,B,C), the joint probability of P(ABC) = P(A) × P(B) × P(C).

Question options:

True

False

Question 4

Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

summary output

Based on the information above, the null hypothesis that the slope is zero can be rejected.

Question options:

True

False

Question 5

A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What is the optimal EOQ?

Question options:

50 bags

2500 bags

100 bags

5000 bags

200 bags

Question 6

A production process is known to produce a particular item in such a way that five percent of these are defective. If two items are randomly selected as they come off the production line, what is the probability that both are defective (assuming that they are independent)?

Question options:

0.1000

0.0025

0.0100

0.0250

0.2000

Question 7

The number of phone calls coming into a switchboard in the next five minutes will either be 0, 1, 2, 3, 4, 5, or 6. The probabilities are the same for each of these (1/7). If X is the number of calls arriving in a five-minute time period, what is the mean of X?

Question options:

4

2

None of the above

5

3

Question 8

An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a blue chip on the first draw and a yellow chip on the second draw?

Question options:

0.027

0.210

0.700

0.300

Question 9

Which of the following is true regarding a regression model with multicollinearity, a high r2 value, and a low F-test significance level?

Question options:

The significance level for the F-test is not valid.

The model is not a good prediction model.

The high value of r2 is due to the multicollinearity.

The significance level tests for the coefficients are not valid.

The interpretation of the coefficients is valuable.

Question 10

A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What is the optimal number of orders per year?

Question options:

500

300

100

200

400

Question 11

The Department of Motor Vehicles (DMV) can service customers at a rate of 20 per hour (or 1/3 per minute) when it comes to license renewals. The service time follows an exponential distribution. What is the probability that it will take less than three minutes for a particular customer to get a license renewal?

Question options:

1

0

0.5

0.632

0.368

Question 12

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

Refer to the payoff table. Using the maximax criterion, what would be the highest expected payoff?

Question options:

$124

$145

$110

$120

$100

Question 13

Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

Refer to the payoff table. What is the expected value of perfect information (EVPI)? Assume P(S1) = 0.5 and P(S2) = 0.25.

Question options:

$0

$35

$20

$15

$11.25

Question 14

The correlation coefficient resulting from a particular regression analysis was 0.25. What was the coefficient of determination?

Question options:

-0.5

None of the above

There is insufficient information to answer the question.

0.0625

0.5

Question 15

The maximin criterion is an optimistic approach to decision making.

Question options:

True

False

Question 16

A seasonal index of __________ indicates that the season is average.

Question options:

10

1

0.5

0

100

Question 17

Time-series models attempt to predict the future by using historical data.

Question options:

True

False

Question 18

A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000's) based on the different scenarios faced by the manager.

Alternative Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

Using the information above, which alternative should be chosen based on the maximax criterion?

Question options:

Buy 3 machines

Buy 2 machines

Buy 1 machine

Question 19

A consulting firm has received two Super Bowl tickets from one of its clients. To be fair, the firm is randomly selecting two different employee names to "win" the tickets. There are six secretaries, five consultants and four partners in the firm. Which of the following statements is false?

Question options:

The probability of a secretary winning a ticket on the first draw is 6/15.

The probability of a consultant winning a ticket on the first draw is 1/3.

The probability of a secretary winning a ticket on the second draw given that a consultant won a ticket on the first draw is 6/15.

The probability of two secretaries winning both tickets is 1/7.

The probability of a partner winning a ticket on the second draw given that a secretary won a ticket on the first draw is 4/14.

Question 20

An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing three yellow chips?

Question options:

0.027

0.013

0.333

0.210

Question 21

A medium-term forecast typically covers a two- to four-year time horizon.

Question options:

True

False

Question 22

Which of the following terms is interchangeable with quantitative analysis?

Question options:

Statistics

Management science

Economics

None of the above

Financial analysis

Question 23

Given the following distribution:

Outcome

Value of

Random Variable

Probability

A

1

.4

B

2

.3

C

3

.2

D

4

.1

The expected value is 3.

Question options:

True

False

Question 24

Our department store is having a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none.

Using the above information, what is the probability of selling no personal computers? Hint: Let the probability of selling none equal x.

Question options:

0.1

0.08

0.05

0.2

Question 25

If the assumptions of regression have been met, errors plotted against the independent variable will typically show patterns.

Question options:

True

False

Question 26

Assume that you have tried three different forecasting models. For the first, the MAD = 2.5, for the second, the MSE = 10.5, and for the third, the MAPE = 2.7. We can then say:

Question options:

the third method is the best.

the second method is the best.

methods one and three are preferable to method two.

None of the above

method two is least preferred.

Question 27

Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

summary output

Referring to the information above, what is the value of the correlation coefficient?

Question options:

0.483

0.695

0.474

55.278

Question 28

The condition of improper data yielding misleading results is referred to as:

Question options:

uncontrollable variable.

none of the above.

break-even point.

garbage in, garbage out.

postoptimality.

Question 29

A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What is the Reorder point (ROP)?

Question options:

100

15

5

500

20

Question 30

What is the correct equation for computing the expected value of perfect information (EVPI)?

Question options:

None of the above

EVPI = expected value without sample information - expected value with sample information.

EVPI = expected value under risk for best alternative - expected value under certainty.

EVPI = expected value under certainty - expected value under risk for best alternative.

EVPI = expected value with sample information - expected value without sample information.

Question 31

A scatter diagram is a graphical depiction of the relationship between the dependent and independent variables.

Question options:

True

False

Question 32

The best model is a statistically significant model with a high r-square and few variables.

Question options:

True

False

Question 33

A seasonal index of 1 means that the season is average.

Question options:

True

False

Question 34

Our department store is having a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none.

Using the above information, what is the probability of selling two personal computers? Hint: Let the probability of selling none equal x.

Question options:

0.27

0.33

0.3

0.24

Question 35

The probability, P, of any event or state of nature occurring is greater than or equal to 0 and less than or equal to 1.

Question options:

True

False

Question 36

A large school district is reevaluating its teachers' salaries. They have decided to use regression analysis to predict mean teachers' salaries at each elementary school. The researcher uses years of experience to predict salary. The resulting regression equation was:

Y = 24,266.98 + 1,289.10X, where Y = salary, X = years of experience

Assume a teacher has five years of experience. What is the forecasted salary?

Question options:

$30,712.48

$29,712.08

$29,688.28

$31,688.88

Question 37

Our department store is having a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none.

Using the above information, what is the probability of selling all three personal computers? Hint: Let the probability of selling none equal x.

Question options:

0.44

0.4

0.36

0.32

Question 38

If two events are mutually exclusive, then:

Question options:

All of the above

the joint probability is equal to 0.

if one occurs, the other cannot occur.

their probabilities can be added.

they may also be collectively exhaustive.

Question 39

Which of the following methods tells whether the forecast tends to be too high or too low?

Question options:

MSE

Bias

MAPE

Decomposition

MAD

Question 40

Our department store is having a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none.

Using the above information, what is the probability of selling one personal computer? Hint: Let the probability of selling none equal x.

Question options:

0.1

0.3

0.24

0.2

Question 41

If the standard deviation of demand is 10 and the desired service level is 0.90, then what is the safety stock?

Question options:

23.3

10

16.5

12.8

9

Question 42

Determining the average payoff for each alternative and choosing the one with the best payoff is the approach called:

Question options:

Laplace

minimax regret

expected monetary value

maximax

maximin

Question 43

If a bucket has three black balls and seven green balls, and we draw balls without replacement, the probability of drawing a green ball is independent of the number of balls previously drawn.

Question options:

True

False

Question 44

A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000's) based on the different scenarios faced by the manager.

Alternative Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

Using the information above, which alternative should be chosen based on the criterion of realism with alpha = 0.8?

Question options:

Buy 3 machines

Buy 2 machines

Buy 1 machine

Question 45

A moving average forecasting method is a causal forecasting method.

Question options:

True

False

Question 46

There is no relationship between variables unless the data points lie in a straight line.

Question options:

True

False

Question 47

Model variables can be controllable or uncontrollable.

Question options:

True

False

Question 48

A local ice cream shop sells 10,000 cones of vanilla-flavored ice cream each year. The cones are ordered from an outside supplier and it takes 5 days for each shipment of cones to arrive. Ordering costs are estimated at $15 per order. Carrying costs are $5 per cone per year. Assume that the ice cream shop is open 250 days a year. What is the optimal EOQ for ice cream cones?

Question options:

186.75

122..47

244.95

81.65

Question 49

One purpose of regression is to understand the relationship between variables.

Question options:

True

False

Question 50

A measurable quantity that may vary, or is subject to change, and can be controlled is known as a(n) __________.

Question options:

solution

decision variable

parameter

algorithm

none of the above.