Question 1

When using decision tree analysis

Accepted Answer

A)  the sum of the expected payoffs must always equal zero. 
B)  round nodes represent decision points. 
C)  there must be more square nodes than round nodes. 
D)  probabilities for all branches leaving a chance node must sum to 1.0. 
A)  the sum of the expected payoffs must always equal zero. 
B)  round nodes represent decision points. 
C)  there must be more square nodes than round nodes. 
D)  probabilities for all branches leaving a chance node must sum to 1.0.

Question 2

Luvmatics plans to produce a new product. Three different models are planned: the Regular, Large, and Jumbo. The fixed costs depend on which of two locations are used; in San Francisco the fixed costs would be $2.5 million per year, but in Tuttle the fixed costs would be $1.2 million. Sale prices and variable costs for the three models are shown in the table.
 $$\begin{array} { | l | c | c | c | } 
\hline \text { Table A 1 } & & { \text { Model } } \
\hline \text {  } & \text { Regular } & \text { Large } & \text { Jumbo } \
\text { Variable Cost} & \$ 5 \text { /unit }& \$ 7 \text { /unit } & \$ 10 / \text { unit } \
\text { Sale Price } & \$ 25 / \text { unit } & \$ 41 \text { /unit } & \$ 68 / \text { unit } \
\hline
\end{array}$$
-Use the information in Table A.1.What is the difference in break-even points for the Large model between Tuttle and San Francisco?

Accepted Answer

A)  Fewer than 25,000 units 
B)  Between 25,000 units and 40,000 units 
C)  Between 40,000 units and 55,000 units 
D)  More than 55,000 units 
A)  Fewer than 25,000 units 
B)  Between 25,000 units and 40,000 units 
C)  Between 40,000 units and 55,000 units 
D)  More than 55,000 units

Question 3

The ________ is the volume at which total revenues equal total costs.

Accepted Answer

The answer of The ________ is the volume at which...

Question 4

In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
 $$\begin{array} { | l | l | l | } 
\text { Alternative } & \text { Slow Promotion } & \begin{array} { l } 
\text { Fast } \
\text { Promotion }
\end{array} \
\hline \text { A High-flying consultant } & ( \$ 180,000 ) & \$ 600,000 \
\text { B. Utility analyst } & \$ 200,000 & \$ 400,000 \
\text { C. Research assistant } & \$ 250,000 & \$ 260,000 \
\hline
\end{array}$$
-Use the information in Table A.3 and the minimax regret decision rule.The maximum regret is

Accepted Answer

A)  less than $300,000 if the high-flying consultant job is selected. 
B)  less than $300,000 if the utility analyst job is selected. 
C)  less than $300,000 if the research assistant job is selected. 
D)  lowest for the research assistant job. 
A)  less than $300,000 if the high-flying consultant job is selected. 
B)  less than $300,000 if the utility analyst job is selected. 
C)  less than $300,000 if the research assistant job is selected. 
D)  lowest for the research assistant job.

Question 5

The decision rule ________ is also referred to as the pessimist's criterion.

Accepted Answer

The answer of The decision rule ________ is also referred...

Question 6

In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
 $$\begin{array} { | l | l | l | } 
\text { Alternative } & \text { Slow Promotion } & \begin{array} { l } 
\text { Fast } \
\text { Promotion }
\end{array} \
\hline \text { A High-flying consultant } & ( \$ 180,000 ) & \$ 600,000 \
\text { B. Utility analyst } & \$ 200,000 & \$ 400,000 \
\text { C. Research assistant } & \$ 250,000 & \$ 260,000 \
\hline
\end{array}$$
-Use the information in Table A.3 and the expected-value rule.Which statement is TRUE?

Accepted Answer

A)  The expected value of the consultant job is more than $300,000. 
B)  The expected value of the utility analyst job is more than $300,000. 
C)  The expected value of the research assistant job is less than $250,000. 
D)  The job with the highest expected value is the research assistant. 
A)  The expected value of the consultant job is more than $300,000. 
B)  The expected value of the utility analyst job is more than $300,000. 
C)  The expected value of the research assistant job is less than $250,000. 
D)  The job with the highest expected value is the research assistant.

Question 7

A manufacturing firm is considering an entirely new product that will require additional capital equipment,training,and an addition to their existing facility that will cost $50,000 per year.The projected retail price is $45 per unit,and the variable cost of production is $12.50.What is the break-even for this product? Solve using both the graphical and algebraic approaches.

Accepted Answer

Q = @#LAT-DLM& = 153

Question 8

A single factory produces two different products during each half of the year with equivalent fixed cost; from January through June they produce Product A and from July through December they produce Product B.Product A costs twice as much to produce and is sold at twice the price of Product B.Derive an expression relating the break-even quantity of Product A to that of Product B.

Accepted Answer

QA = @#LAT-DLM& 
QB = @#LAT-DLM& 
FA = FB (same fa

Question 9

The decision rule in decision making under uncertainty that would be best for the manager who has high expectations would be

Accepted Answer

A)  maximin. 
B)  maximax. 
C)  Laplace. 
D)  minimax regret. 
A)  maximin. 
B)  maximax. 
C)  Laplace. 
D)  minimax regret.

Question 10

A payoff table shows the amount for each alternative if each possible event occurs.

Accepted Answer

A) True 
 B)False

Question 11

Which condition would result in invalidating an application of break-even analysis?

Accepted Answer

A)  The variable cost to produce a unit is less than one percent of the fixed cost to run the plant. 
B)  The purchasing department both offers quantity discounts to customers and receives quantity discounts from suppliers. 
C)  The variable cost to produce a unit is within one percent of the sale price. 
D)  The labor to manufacture the item is free. 
A)  The variable cost to produce a unit is less than one percent of the fixed cost to run the plant. 
B)  The purchasing department both offers quantity discounts to customers and receives quantity discounts from suppliers. 
C)  The variable cost to produce a unit is within one percent of the sale price. 
D)  The labor to manufacture the item is free.

Question 12

The break-even point is the volume at which the total revenues equal total cost.

Accepted Answer

A) True 
 B)False

Question 13

The variable cost is the portion of total cost that remains constant regardless of changes in levels of production.

Accepted Answer

A) True 
 B)False

Question 14

Commodore is debating whether to produce the printed circuit boards for a new line of video cameras or outsource their production to a company that specializes in this operation.Strictly from a cost standpoint,production of the circuit boards would definitely be outsourced if

Accepted Answer

A)  the variable cost of producing the circuit boards is lower than the buy option. 
B)  the production volumes are greater than Commodore's break-even quantity. 
C)  the production volumes are less than Commodore's break-even quantity. 
D)  the production volumes are the same for making and buying the circuit boards. 
A)  the variable cost of producing the circuit boards is lower than the buy option. 
B)  the production volumes are greater than Commodore's break-even quantity. 
C)  the production volumes are less than Commodore's break-even quantity. 
D)  the production volumes are the same for making and buying the circuit boards.

Question 15

In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
 $$\begin{array} { | l | l | l | } 
\text { Alternative } & \text { Slow Promotion } & \begin{array} { l } 
\text { Fast } \
\text { Promotion }
\end{array} \
\hline \text { A High-flying consultant } & ( \$ 180,000 ) & \$ 600,000 \
\text { B. Utility analyst } & \$ 200,000 & \$ 400,000 \
\text { C. Research assistant } & \$ 250,000 & \$ 260,000 \
\hline
\end{array}$$
-Use the information in Table A.3.Which alternative is best,given the matrix payoff?

Accepted Answer

A)  The A alternative would be chosen using the maximin decision rule. 
B)  The B alternative would be chosen using the maximax decision rule. 
C)  The C alternative would be chosen using the Laplace decision rule. 
D)  The C alternative would be chosen using the maximin decision rule. 
A)  The A alternative would be chosen using the maximin decision rule. 
B)  The B alternative would be chosen using the maximax decision rule. 
C)  The C alternative would be chosen using the Laplace decision rule. 
D)  The C alternative would be chosen using the maximin decision rule.

Question 16

By definition,the maximax and maximin criteria cannot result in the selection of a common alternative in decision making under uncertainty.

Accepted Answer

A) True 
 B)False

Question 17

A "Little Sis" restaurant has been opened as a prototype to test the concept of a smaller facility with a limited menu.Experience during the first two years was as follows:
$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Annual volume } \
\text { (customer visits) }
\end{array} & \begin{array} { c } 
\text { Total Cost } ( \$ ) \
\text { (fixed plus variable cost) }
\end{array} \
\hline \text { Year 1 } & 40,000 & 600,000 \
\text { Year 2 } & 60,000 & 700,000 \
\hline
\end{array}$$
The average sale is $10 per customer.Use the following partially completed graph to determine the break-even quantity graphically.Then refine your solution by solving it algebraically.(Show your work for credit.)

Accepted Answer

A)  The break-even quantity is fewer than or equal to 30,000 customer visits. 
B)  The break-even quantity is more than 30,000 customer visits and fewer than or equal to 50,000 visits. 
C)  The break-even quantity is more than 50,000 visits and fewer than or equal to 70,000 visits. 
D)  The break-even quantity is more than 70,000 customer visits. 
A)  The break-even quantity is fewer than or equal to 30,000 customer visits. 
B)  The break-even quantity is more than 30,000 customer visits and fewer than or equal to 50,000 visits. 
C)  The break-even quantity is more than 50,000 visits and fewer than or equal to 70,000 visits. 
D)  The break-even quantity is more than 70,000 customer visits.

Question 18

A new product will sell in the market for $12.It costs $7 (unit variable cost)to manufacture on a new lathe machine.If the break-even quantity is 10,000 units,what is the annual fixed cost involved in acquiring the machine and in paying other fixed costs?

Accepted Answer

A)  Less than $40,000 
B)  Greater than $40,000 but less than or equal to $55,000 
C)  Greater than $55,000 but less than or equal to $70,000 
D)  Greater than $70,000 
A)  Less than $40,000 
B)  Greater than $40,000 but less than or equal to $55,000 
C)  Greater than $55,000 but less than or equal to $70,000 
D)  Greater than $70,000

Question 19

Fixed cost is the portion of the total cost that remains constant regardless of changes in levels of output.

Accepted Answer

A) True 
 B)False

Question 20

Mantel Incorporated began producing its new line of dolls at its Connecticut plant in December of year 0.In year 1,it produced 30,000 dolls at a total cost of $385,000.In year 2,its production increased to 80,000 dolls at a total cost of $885,000.Assuming the cost structure was the same for both years,what must be the variable cost (c)and the fixed cost (F)per doll?

Accepted Answer

A)  F is less than $80,000, and c is greater than $7. 
B)  F is greater than $60,000, and c is less than $5. 
C)  F is less than $100,000, and c is greater than $9. 
D)  F is greater than $110,000, and c is less than $6. 
A)  F is less than $80,000, and c is greater than $7. 
B)  F is greater than $60,000, and c is less than $5. 
C)  F is less than $100,000, and c is greater than $9. 
D)  F is greater than $110,000, and c is less than $6.

When using decision tree analysis

The ________ is the volume at which total revenues equal total costs.

The decision rule ________ is also referred to as the pessimist's criterion.

The decision rule in decision making under uncertainty that would be best for the manager who has high expectations would be

A payoff table shows the amount for each alternative if each possible event occurs.

Which condition would result in invalidating an application of break-even analysis?

The break-even point is the volume at which the total revenues equal total cost.

The variable cost is the portion of total cost that remains constant regardless of changes in levels of production.

Commodore is debating whether to produce the printed circuit boards for a new line of video cameras or outsource their production to a company that specializes in this operation.Strictly from a cost standpoint,production of the circuit boards would definitely be outsourced if

By definition,the maximax and maximin criteria cannot result in the selection of a common alternative in decision making under uncertainty.

A new product will sell in the market for $12.It costs $7 (unit variable cost)to manufacture on a new lathe machine.If the break-even quantity is 10,000 units,what is the annual fixed cost involved in acquiring the machine and in paying other fixed costs?

Fixed cost is the portion of the total cost that remains constant regardless of changes in levels of output.

Creating Customer Value through Operations

Supply Chain Management

Process Configuration

Capacity

Inventory Management

Quality and Process Improvement

Lean Systems

Managing Projects

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Financial Analysis

Work Measurement

Learning Curve Analysis

Computer-Integrated Manufacturing

Acceptance Sampling Plans

Simulation

Special Inventory Models

Linear Programming

Waiting Lines

Filters

Exam 13: Decision Making

When using decision tree analysis

The ________ is the volume at which total revenues equal total costs.

The decision rule ________ is also referred to as the pessimist's criterion.

The decision rule in decision making under uncertainty that would be best for the manager who has high expectations would be

A payoff table shows the amount for each alternative if each possible event occurs.

Which condition would result in invalidating an application of break-even analysis?

The break-even point is the volume at which the total revenues equal total cost.

The variable cost is the portion of total cost that remains constant regardless of changes in levels of production.

Commodore is debating whether to produce the printed circuit boards for a new line of video cameras or outsource their production to a company that specializes in this operation.Strictly from a cost standpoint,production of the circuit boards would definitely be outsourced if

By definition,the maximax and maximin criteria cannot result in the selection of a common alternative in decision making under uncertainty.

A new product will sell in the market for $12.It costs $7 (unit variable cost)to manufacture on a new lathe machine.If the break-even quantity is 10,000 units,what is the annual fixed cost involved in acquiring the machine and in paying other fixed costs?

Fixed cost is the portion of the total cost that remains constant regardless of changes in levels of output.

Creating Customer Value through Operations

Supply Chain Management

Process Configuration

Capacity

Inventory Management

Quality and Process Improvement

Lean Systems

Managing Projects

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Financial Analysis

Work Measurement

Learning Curve Analysis

Computer-Integrated Manufacturing

Acceptance Sampling Plans

Simulation

Special Inventory Models

Linear Programming

Waiting Lines

Filters