Analytical Decision Tools

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

1

A medium-term forecast is considered to cover what length of time?

1 Month to 1 Year

Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent). Forecast sales for the next day using a twoday moving average.

14

A person is using the normal distribution to determine the safety stock for a product. The Z value of 1.65 would be associated with what service level?

95 Percent

A healthcare executive is using regression to predict total revenues. She has decided to include both patient length of stay and insurance type in her model. Insurance type can be grouped into the following categories: Medicare, Medicaid, Managed Care, Self-Pay, and Charity. Which of the following is true?

?? (NOT: Neither binary nor dummy variables are necessary for the regression model)

A(n) ________ model is one that is accurate and correctly represents the problem or system under investigation.

?? (NOT: Optimal)

Which of the following factors is (are) not included in carrying cost?

?? (NOT: Obsolescence)

Which of the following is not a characteristic of trend projections?

A negative intercept term always implies that the dependent variable is decreasing over time.

In a good regression model the residual plot shows

A random pattern

Decision trees are particularly useful when

A sequence of decisions must be made

The two common techniques for drawing PERT networks are ________.

AON and AOA

Bayes' theorem enables decision makers to revise probabilities based on

Additional Information

Inventory

All of These

Managers use the network analysis of PERT and CPM to help them

All of These

Which of the following statement(s) are true regarding the advantages of mathematical modeling?

All of These

Sensitivity analyses are used to examine the effects of changes in

All of these

The work breakdown structure involves identifying the ________ for each activity.

All of these

How are decision tables organized?

Alternatives down the left, states of nature on top, payoffs inside

Slack time in a network is the

Amount of time that an activity can be delayed without delaying the entire project.

In a maximization problem, when one or more of the solution variables and the profit can be made infinitely large without violating any constraints, the linear program has

An unbounded solution

Sensitivity analysis of EOQ refers to

Analysis of how much the EOQ will change if different input values are used.

Daniel Trumpe has computed the EOQ for a product he sells to be 400 units. However, due to recent events he has a cash flow problem. Therefore, he orders only 100 units each time he places an order. Which of the following is true for this situation?

Annual ordering cost will be higher than annual holding cost.

Which of the following is not a property of linear programs?

At least two separate feasible regions

A constraint with zero slack or surplus is called a

Binding Constraint

As the service level increases,

Carrying cost increases at an increasing rate.

In decision theory, we call the payoffs resulting from each possible combination of alternatives and outcomes ________.

Conditional Values

Which of the following is not acceptable as a constraint in a linear programming problem (maximization)?

Constraint 4 (X + Y + Z <= 150)

Reducing the overall activity time is based on which of the following steps?

Crashing activities on the critical path based on lowest cost/week

CPM stands for ________.

Critical Path Method

An analytic and systematic approach to the study of decision making is referred to as

Decision Theory

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

Decision Variable

Which of the following is not one of the steps in formulating a linear program?

Define the decision variables

Models that do not involve risk or chance are

Deterministic Models

(T/F) A dummy variable can be assigned up to three values.

False

(T/F) A high correlation always implies that one variable is causing a change in the other variable.

False

(T/F) The process of isolating linear trend and seasonal factors to develop a more accurate forecast is called regression.

False

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

Garbage in, garbage out

In a PERT network, the latest (activity) start time is the

Latest time that an activity can be started without delaying the entire project.

The "point at which to reorder" depends directly on which of the following?

Lead-time

As one increases the number of periods used in the calculation of a moving average,

Less emphasis is placed on more recent data

Which of the following is a technique used to determine forecasting accuracy?

Mean Absolute Percent Error

In making inventory decisions, the purpose of the basic EOQ model is to

Minimize the sum of carrying costs and ordering costs

A(n) ________ is a representation of reality or a real-life situation.

Model

A feasible solution to a linear programming problem

Must satisfy all of the problem's constraints simultaneously

A measurable quantity that is inherent in the problem is called a(n)

Parameter

The critical path of a network is the

Path with zero slack

Another name for a decision table is a ________.

Payoff Table

The diagram below illustrates data with a

Positive Correlation Coefficient

In picking the smoothing constant for an exponential smoothing model, we should look for a value that

Produces values which compare well with actual values based on a standard measure of error.

The EOQ model without the instantaneous receipt assumption is commonly called the

Production Run Model

If the addition of a constraint to a linear programming problem does not change the solution, the constraint is said to be

Redundant

In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.

Risk

The three decision-making environments are decision making under ________.

Risk, Certainty, and Uncertainty

Extra inventory that is used to avoid stockouts is known as

Safety Stock

A graphical plot with sales on the Y axis and time on the X axis is a

Scatter Diagram

The ability to examine the variability of a solution due to changes in the formulation of a problem is an important part of the analysis of the results. This type of analysis is called ________ analysis.

Sensitivity

In the construction of decision trees, which of the following shapes represents a decision node?

Square

Expected monetary value (EMV) is

The average or expected monetary outcome of a decision if it can be repeated a large number of times.

Which of the following is an assumption of the regression model?

The errors are independent

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

The significance level tests for the coefficients are not valid.

If one changes the contribution rates in the objective function of an LP,

The slope of the isoprofit or isocost line will change

In PERT, we assume that

The total time to complete all activities on the critical path is described by a normal distribution.

When a constraint line bounding a feasible region has the same slope as an isoprofit line,

There may be more than one optimum solution

Trying various approaches and picking the one that results in the best decision is called

Trial and Error Method

(T/F) A scatter diagram is a graphical depiction of the relationship between the dependent and independent variables.

True

(T/F) Models can help us analyze a problem and sell a decision to those who must implement it.

True

(T/F) One purpose of regression is to predict the value of one variable based on the other variable.

True

Which of the following is not considered to be one of the components of a time series?

Variance

The first step in planning and scheduling a project is to develop the ________.

Work breakdown structure

If computing a causal linear regression model of Y = a + bX and the resultant r2 is very near zero, then one would be able to conclude that

Y=a+bx is not a good forecasting method