Deck 5: Advanced Linear Programming Applications

Question 1

DEA is used to measure the relative efficiency of two (or more) units in different industries, such as a bank and a school.

Answer 1

False

Question 2

If a pure strategy solution exists for a two-person, zero-sum game, it is the optimal solution to the game.

Answer 2

True

Question 3

A DEA linear programming model involving 4 input measures and 3 output measures will have

A) 7 constraints.
B) 8 constraints.
C) 12 constraints.
D) 13 constraints.

Answer 3

B

Question 4

If the inputs of the composite unit in DEA are greater than the inputs for an individual unit, then the composite is more efficient.

Question 5

It is possible for DEA to show all operating units to be relatively inefficient.

Question 6

If it is optimal for both players in a two-person, zero-sum game to select one strategy and stay with that strategy regardless of what the other player does, the game

A) has more than one equilibrium point.
B) will have alternating winners.
C) will have no winner.
D) has a pure strategy solution.

Question 7

Revenue management methodology was originally developed for

A) a cruise line.
B) an airline.
C) a car rental company.
D) a hotel chain.

Question 8

Modern revenue management systems maximize revenue potential for an organization by helping to manage

A) pricing strategies.
B) reservation policies.
C) short-term supply decisions.
D) All of the alternatives are correct.

Question 9

In a two-person, zero-sum, pure-strategy game, there is no advantage to either player to switch from its strategy even if one of the players discovers the other player's strategy in advance.

Question 10

A linear programming application used to measure the relative efficiency of operating units with the same goals and objectives is

A) game theory.
B) asset allocation.
C) data envelopment analysis.
D) revenue management.

Question 11

The goal of portfolio models is to create a portfolio that provides the best balance between risk and return.

Question 12

The composite unit in DEA

A) has as output a weighted average of the outputs of the individual units.
B) has as input a weighted average of the inputs of the individual units.
C) has outputs greater than or equal to the outputs of any individual unit.
D) All of the alternatives are correct.

Question 13

To develop a portfolio that provides the best return possible with a minimum risk, the linear programming model will have an objective function which

A) minimizes the maximum risk.
B) minimizes total risk.
C) maximizes return and minimizes risk.
D) maximizes the minimum return.

Question 14

DEA will show all but one operating unit to be relatively inefficient in the case where an operating unit producing the most of every output and also consumes the least of every input.

Question 15

The overall goal of portfolio models is to create a portfolio that provides the best balance between

A) short-term and long-term investments.
B) gains and losses.
C) risk and return.
D) liquidity and stability.

Question 16

For a two-person, zero-sum, mixed-strategy game, it is necessary to solve the LP for each player in order to learn both players' optimal strategies.

Question 17

Revenue management methodology was originally developed for the banking industry.

Question 18

In data envelopment analysis, the percentage of an individual operating unit's resources that are available to the composite operating unit is the

A) efficiency index.
B) saddle point.
C) maximin.
D) minimax.

Question 19

In portfolio models, risk is minimized by diversification.

Question 20

DEA does not necessarily identify the operating units that are relatively efficient.

Question 21

Consider a two-person, zero-sum game where the payoffs listed below are the winnings for Company X. Identify the pure strategy solution. What is the value of the game?

Question 22

Portfolio manager Max Gaines needs to develop an investment portfolio for his conservative clients. His task is to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the portfolio provides the best return possible with a minimum risk. Formulate the maximin linear program.

Question 23

Consider a two-person, zero-sum game where the payoffs listed below are the winnings for Player A. Identify the pure strategy solution. What is the value of the game?

Question 24

In game theory, the player seeking to maximize the value of the game selects a maximax strategy.

Question 25

The analysis of a two-person, zero-sum game begins with checking to see whether a pure strategy exists.

Question 26

The Eastern Washington County School Corporation is interested in comparing educational performance at four elementary schools and has hired you to prepare a DEA model to do so. After detailed conversations with the corporation administrative staff and the building principals, you have isolated the following input and output measurements:
Data is collected for each school on each measure
Develop the DEA model that would evaluate the efficiency of Ralston Elementary School.

Question 27

Revenue management methodology can be applied in the case of nonperishable assets.

Question 28

Consider the following two-person, zero-sum game. Payoffs are the winnings for Company X. Formulate the linear program that determines the optimal mixed strategy for Company X.

Question 29

In a revenue management model, dual prices tell reservation agents the revenue loss associated with overbooking each ODIF.

Question 30

Portfolio manager Max Gaines needs to develop an investment portfolio for his clients who are willing to accept a moderate amount of risk. His task is to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the portfolio provides an annual return of no less than 3%. Formulate the appropriate linear program.