Exam 1: Introduction to Managerial Decision Making

Suppose you have a decision model that contains the input variable "number of labor hours." You would like to test how the solution changes if a labor strike takes effect.This type of analysis is called sensitivity analysis.

The validity of input data is not a typical concern for analysts in decision modeling.

The ABC Corporation is considering introducing a new product,which will require buying new equipment for a monthly payment of $5,000.Each unit produced can be sold for $20.00.ABC incurs a variable cost of $10.00 per unit.Suppose that ABC anticipates selling 100 units of the new product next month.Moreover,they would like to realize a monthly profit of $5000.What should the selling price per unit be to realize this profit?

All of the following are considered typical roadblocks in defining a problem for Decision Analysts EXCEPT:

A decision model has the following input variables: Historical sales data and historical advertising budget.The model is considered to be probabilistic.

A measurable quantity that is inherent in a problem is known as a(n):

Suppose that the break-even point (BEP)for a given product is 200 units.This means that if 198 units are produced,then this product is not profitable.

Which of the following variables is considered non-random or deterministic?

Acquiring input data is part of:

Suppose that the break-even point (BEP)for a product is 300 units.This means if 310 units are produced,then this product is profitable.

A bakery sells its pies for $6.00 each.The bakery incurs a daily fixed cost of $500 which includes salaries and rental.The variable cost per pie is $2.50.Use Goal Seek to compute the number of pies (X)that must be baked daily in order to break even if the variable cost per pie increases to $3.00.

A bakery sells its pies for $6.00 each.The bakery incurs a daily fixed cost of $500 which includes salaries and rental.The variable cost per pie is $2.50.Set up this problem in Excel as shown below to compute the number of pies (X)that must be baked daily in order to break even.Model the problem mathematically without using Goal Seek.

Set up the following cell entries in Excel: $\begin{array} { | l | r | } \hline \text { Variable costhurit } & \$ 1.5 \\\hline \text { Fixed cost } & \$ 90 \\\hline \text { Bellirg price/urit } & \$ 3 \\\hline \text { Breakevern (urits) } & 60 \\\hline \text { Breakeven in dollars (\$) } & \$ 180 \\\hline\end{array}$ Using Goal Seek,what should the selling price per unit be in order to realize a breakeven amount of $200?

The ABC Corporation is considering introducing a new product,which will require buying new equipment for a monthly payment of $5,000.Each unit produced can be sold for $20.00.ABC incurs a variable cost of $10.00 per unit.What is ABC's monthly break-even amount in dollars?

Determining how much the solution will change if there are changes in the input data is part of:

The ABC Corporation is considering introducing a new product,which will require buying new equipment for a monthly payment of $5,000.Each unit produced can be sold for $20.00.ABC incurs a variable cost of $10.00 per unit.Suppose that ABC would like to realize a monthly profit of $50,000.How many units must they sell each month to realize this profit?

Models that have random variables as input data are considered to be deterministic.

Which of the following variables is considered random or probabilistic?

Which of the following is an equation to determine the break-even point (BEP)in units?

If all the values of the input variables in a decision model are known with certainty,then the model is considered to be deterministic.