NOTE :

NMIMS Deemed University

MBA Core Trim II (2014-2015)
All Divisions ( Common Examination)
MID TERM Test
Decision Analysis and Modeling
1) All questions are compulsory.
2) Maximum marks are 30
3 Use of calculators is allowed.
4) Total duration is 90 Minutes
5) Make assumptions wherever necessary.

Q.1 A motorcycle manufacturer organizes a three day fair in 10 different areas. The number of
sales staff employed at each of these centres and the number of motorcycles sales booked
have a causal relationship. If the number of salesmen for the next fair is kept at 12, what
would be the expected sales bookings for the motorcycles? Is the forecast accurate? Calculate
coefficient of determination.
Salesmen
Motorcycle
s sold

6
135

9
163

7
151

9
159

10
171

4
105

6
145

5
101

7
155

7
145

(6 Marks)
Q. 2 The research department of Hindustan Lever has recommended to the marketing department
to launch three different types of shampoos. The marketing manager has to decide one of the
types of shampoo to be launched under the following estimated payoffs (in millions of Rs) for
various levels of sales:
Type of shampoo
Egg shampoo
Clinic shampoo
Deluxe shampoo

15,000
30
40
55

Estimated level of sales (Units)

10,000
5,000
10
10
15
5
20
3

What will be the marketing managers decision if the following criterion were
applied?
a. Maximin
b. Maximax
c. Laplace
d. Regret

(4 Marks)
Q.3 The number of pizzas ordered on Friday evenings between 5:30 and 6:30 at a pizza delivery
location for the last 10 weeks is shown below. Use exponential smoothing with smoothing
constants of .2 and .8 to forecast a value for week 11.
Compare your forecasts using MSE. Which smoothing constant would you prefer?
58, 46, 55, 39, 42, 63, 54, 55, 61, 52
(5 Marks)

Q. 4 Quarterly billing for water usage is shown below.

Year
Quarter
1
2
3
4
a.
b.

1
64
103
152
73

2
66
103
160
72

3
68
104
162
78

4
73
120
176
88

Find the seasonal index for each quarter.

If the trend line for deseasonalised data is y = 1.3245x + 92.645 with R = 0.778
find the forecast for first two quarters of the fifth year.
(7 Marks)

Q. 5 A national boutique chain sells a wide range of high quality customized fashion goods. One
particular outfit is bought in at Rs 80 and sold at Rs 130. The mean holding costs(average cost to
store an outfit till it is sold) per season per outfit work out at Rs 5 and it costs Rs 800 to order
and receive goods in stock. The manufacturers require orders in advance and once a batch has
been made. It is not possible to be staggered over the fashion season.
When a customer buys an outfit, she tries the outfit for size and design alterations or adjustments,
if any are made, and she collects the outfit a day or so later. Generally, if a outfit is out of stock at
one boutique, it can be readily obtained from another branch, usually in matter of hours.
However, if the chain as a whole runs out of an item, then not only is the profit not earned, bur
Rs 20 profit that comes from the extras the customer buy is also lost. Should a chain overbuy for
a season, then it is expected that the chain will be able to dispose of the surplus outfits at Rs 50
each. The pattern of the past sales of a comparable outfit shows the following probability
distribution for the chain as a whole:
Outfits Sold
Probability
1100
0.3
1200
0.4
1300
0.2
1400
0.1
The problem facing the management accountants of the chain is to decide on how many outfits to
order for the season ahead in order to maximize the expected profit. Help the management make
a decision. Also find expected value for perfect information of the demand.
(8 Marks)