Mid Term

1.Deterministic techniques assume that no uncertainty exists in model parameters.

Answer
True

False

2. An

inspector correctly identifies defective products 90% of the time. For the next 10
products, the probability that he makes fewer than 2 incorrect inspections is 0.736.
Answer
True

False

3. A continuous

random variable may assume only integer values within a given interval.

Answer
True

False

4. A decision

tree is a diagram consisting of circles decision nodes, square probability

nodes, and branches.
Answer

True

False

5. Question 5

Excel can only be used to simulate systems that can be represented by continuous
random variables.
Answer
True

False

Question 6

Starting conditions have no impact on the validity of a simulation model.

Answer
True

False

Question 7

Data cannot exhibit both trend and cyclical patterns.

Answer
True

False

Question 8

Qualitative methods are the least common type of forecasting method for the long-term
strategic planning process.
Answer
True

False

Question 9

Assume that it takes a college student an average of 5 minutes to find a parking spot in
the main parking lot. Assume also that this time is normally distributed with a standard
deviation of 2 minutes. What time is exceeded by approximately 75% of the college
students when trying to find a parking spot in the main parking lot?
Answer

3.7
minut
es
5.8
minut
es
6.4
minut
es
9.2
minutes

Question 10

__________ is a measure of dispersion of random variable values about the

expected value.
Answer

Standard deviation
Range
The z-score (the standard score)
All of the above
Question 11

The __________ is the expected value of the regret for each decision.
Answer

expected value
expected opportunity loss

expected value of perfect information

none of the above
Question 12

Developing the cumulative probability distribution helps to determine

Answer

the coefficient of variation

data sets
random number ranges
all of the above
Question 13

Two hundred simulation runs were completed using the probability of a machine
breakdown from the table below. The average number of breakdowns from the
simulation trials was 1.93 with a standard deviation of 0.20.
No. of
breakdowns
per week

Probability

Cumulative
probability

.10

.10

.25

.35

.36

.71

.22

.93

.07

1.00

What is the probability of 2 or fewer breakdowns?

Answer

.10
.25
.35
.71
Question 14

Random numbers generated by a __________ process instead of a

__________ process are pseudorandom numbers.

Answer

physical / physical
physical / mathematical
mathematical / physical
mathematical / mathematical
Question 15

Consider the following frequency of demand:

If the simulation begins with 0.8102, the simulated value for demand would be
Answer

1
2
3
4
Question 16

__________ is a category of statistical techniques that uses historical data to

predict future behavior.
Answer

Qualitative methods
Regression
Time series
Quantitative methods
Question 17

Given the following data on the number of pints of ice cream sold at a local ice
cream store for a 6-period time frame:

If the forecast for period 5 is equal to 275, use exponential smoothing with = .
40 to compute a forecast for period 7.
Answer

273
277
267.8
286.2
Question 18

Which of the following possible values of alpha would cause exponential

smoothing to respond the most slowly to sudden changes in forecast errors?
Answer

.01
.10
.50
.90
Question 19

__________ is the difference between the forecast and actual demand.

Answer

Forecast mistake
Forecast error
MAD
Forecast accuracy
Question 20

In exponential smoothing, the closer alpha is to __________, the greater the

reaction to the most recent demand.
Answer

-1
0
1
-1 or 1
Question 21

Consider the following demand and forecast.

Period

Demand Forecast

10

12

15

18

22

20

If MAD = 2, what is the forecast for period 4?

Answer

21
22
23
none of the above
Question 22

__________ is absolute error as a percentage of demand.

Answer

Cumulative error
MAD
MAPD
Average error
Question 23

Coefficient of determination is the percentage of the variation in the

__________ variable that results from the __________ variable.
Answer

dependent, dependent
independent, dependent
dependent, independent
independent, independent
Question 24

Consider the following graph of sales.

Which of the following characteristics is exhibited by the data?

Answer

Trend only
Trend plus seasonal
Seasonal only
None of the above
Question 25

A loaf of bread is normally distributed with a mean of 22 oz and a standard

deviation of 0.5 oz. What is the probability that a loaf is larger than 21 oz?
Round your answer to four places after the decimal.
Answer

Question 26

A life insurance company wants to estimate their annual payouts. Assume that
the probability distribution of the lifetimes of the participants is approximately a
normal distribution with a mean of 68 years and a standard deviation of 4 years.
What proportion of the plan recipients would receive payments beyond age 75?
Round your answer to four places after the decimal.
Answer

Question 27

An online sweepstakes has the following payoffs and probabilities. Each person
is limited to one entry.

The probability of winning at least $1,000.00 is ________.

Answer

5 points

Question 28

A fair die is rolled 8 times. What is the probability that an even number (2,4, 6)
will occur between 2 and 4 times? Round your answer to four places after the
decimal.
Answer

Question 29

The local operations manager for the IRS must decide whether to hire 1, 2, or 3
temporary workers. He estimates that net revenues will vary with how well
taxpayers comply with the new tax code. The following payoff table is given in
thousands of dollars (e.g. 50 = $50,000).

If he uses the maximin criterion, how many new workers will he hire?
Answer

Question 30

An investor is considering 4 different opportunities, A, B, C, or D. The payoff for

each opportunity will depend on the economic conditions, represented in the
payoff table below.
Economic Condition
Poor Average Good Excellent
Investment (S1) (S2) (S3) (S4)
A 50 75 20 30
B 80 15 40 50

C -100 300 -50 10

D 25 25 25 25
If the probabilities of each economic condition are 0.5, 0.1, 0.35, and 0.05
respectively, what is the highest expected payoff?
Answer

Question 31

Given the following random number ranges and the following random number
sequence: 62, 13, 25, 40, 86, 93, determine the average demand for the
following distribution of demand.
Random
Demand
Number Ranges
5

00-14

15-44

45-69

70-84

85-99

Answer

Question 32

Robert wants to know if there is a relation between money spent on gambling and
winnings.

What is the coefficient of determination? Note: please report your answer with 2 places
after the decimal point.
Answer

Question 33

This is the data from the last 4 weeks:

Use the equation of the regression line to forecast the increased sales for when the
number of ads is 10.
Answer

Question 34

The following data summarizes the historical demand for a product.

Month

Actual
Demand

March

20

April

25

May

40

June

35

July

30

August

45

Use exponential smoothing with = .2 and the smoothed forecast for July is 32.
Determine the smoothed forecast for August.
Answer

Question 35

Consider the following annual sales data for 2001-2008.

Year

Sales

2001

2002

2003

10

2004

2005

14

2006

18

2007

17

2008

20

Calculate the correlation coefficient . Use four significant digits after the decimal.
Answer

Question 36

The following sales data are available for 2003-2008.

Determine a 4-year weighted moving average forecast for 2009, where weights are W1
= 0.1, W2 = 0.2, W3 = 0.2 and W4 = 0.5.
Answer

Question 37

Daily highs in Sacramento for the past week (from least to most recent) were: 95, 102,
101, 96, 95, 90 and 92. Develop a forecast for today using a 2 day moving average.
Answer

Question 38

Given the following data on the number of pints of ice cream sold at a local ice cream
store for a 6-period time frame:

Compute a 3-period moving average for period 4. Use two places after the decimal.
Answer

Question 39

Daily highs in Sacramento for the past week (from least to most recent) were: 95, 102,
101, 96, 95, 90 and 92. Develop a forecast for today using a weighted moving average,
with weights of .6, .3 and .1, where the highest weights are applied to the most recent
data.
Answer

Question 40

The following sales data are available for 2003-2008 :

Year

Sales

Forecast

2003

2004

12

10

2005

14

15

2006

20

22

2007

16

18

2008

25

21

Calculate the absolute value of the average error. Use three significant digits after the
decimal.
Answer