Midterm Exam

FIN 610 Midterm Exam 

 

Instructions: Write your name on your exam.                       

STUDENT NAME:______________________

The exam is individual work. It is to be your work and your work alone, with no assistance from classmates, family, friends or others.  Your completed exam is due by 11:59 PM, (upload to your Assignments folder) by March 12. Exams submitted late will be penalized 5 points for each day up to three days late.  Exams received more than three days after the due date will automatically receive an F.  Furthermore, by proceeding with the exam you are agreeing not to share the exam content or your answers with anyone, including students who may take FIN 610 in the future.

 Please fill in (use capital letters) your best choice for each question on the attached answer sheet and post it in your assignment folder—by the due date—-March 12

 

 

 

Please read the questions carefully; there may be a little more to it than might be obvious at first reading. If you find a question challenging, try to take the question in parts, working from what you know to what you are trying to solve.

 

 

 

  1. Frank’s Dogs has beginning net fixed assets of $480 and ending net fixed assets of $530. Assets valued at $300 were sold during the year. Depreciation was $40. What is the amount of capital spending? 
    A. $10
    B. $50
    C. $90
    D. $260
    E. $390


 

 

Please use the following Income Statement and Balance sheet for Questions 2 to 6

 

 

 

 

Income Statement for Fair Company

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 $     9,610

 

 

 

 

 

less

COGS

 $     6,310

 

 

 

 

 

less

Depreciation

 $     1,370

 

 

 

 

 

 

Gross Income

 $     1,930

 

 

 

 

 

less

S,G&A

 $              

 

 

 

 

 

 

EBIT

 $     1,930

 

 

 

 

 

less

Interest Expense

 $        630

 

 

 

 

 

 

taxable income

 $     1,300

 

 

 

 

 

 

Taxes

 $        455

 

 

 

 

 

 

Net Income

 $        845

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet for Fair Company

 

 

 

 

 

 

Assets

 

 

 

Liabilities and Shareholder Equity

 

 

 

 

2015

2016

 

 

2015

2016

 

Cash

310

405

 

Accounts Payable

2720

2570

 

Accounts receivable

2640

3055

 

Notes Payable

100

0

 

Inventory

3275

3850

 

total current

2820

2570

 

Pre-paid expenses

0

0

 

Long-term debt

7875

8100

 

total current

 $     6,225

 $   7,310

 

Common Stock

5000

5250

 

Next fixed assets (PPE)

 $   10,960

10670

 

Retained Earnings

1490

2060

 

 

Total Assets

$   17,185

$ 17,980

 

 

 

 $      17,185

 $      17,980

 

 

 

 

 

 

 

 

 

                                     
  1. What is the operating cash flow for 2016? 
    A. $845
    B. $1,930
    C. $2,215
    D. $2,845
    E. $3,060

 

  1. The 2015 equity multiplier ratio is : 
    A. 11.53
    B. 3.44
    C. 2.65
    D. 1.00
    E. cannot compute with numbers given
  2. What are the accounts receivable turnover?

A. 10.3
B. 3.44
C. 3.15
D. 3.37
E. cannot compute with numbers given

  1. What is the debt ratio for 2016?

A. 80.7%
B. 55.0%
C. 59.3%
D. 60.7%
E. cannot compute with numbers given

  1. What is the ROE (Return on Equity) for 2016?

A. 22.72%
B. 13.02%
C. 59.80%
D. 18.75%
E. 11.56%

 

 

  1. The Ajax Co. just decided to save $1,500 a month for the next five years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 3.25% interest compounded monthly. It deposits the first $1,500 today. What is the value of this investment in 5 years? 
    A. $82,964.59
    B. $97,847.3
    C. $83,428.87
    D. $83,687.23
    E. $84,998.01

 

8. You are scheduled to receive annual payments of $10,000 for each of the next 25 years. Your interest rate is 8.5%. What is the value of this stream of payments?
A. $778,699
B. $900,217.67
C. $1,000,567.88
D. $786,677.92
E. cannot answer with given information

9. Consider a bond which pays 7% annually and has 8 years to maturity. The market requires an interest rate of 8% on bonds of this risk. What is this bond’s price? 
A. $ 942.53
B. $ 911.52
C. $ 941.74
D. $1,064.81
E. None of the above.

10. A General Co. bond has an 8% coupon and pays interest annually. The face value is $1,000 and the current market price is $1,020.50. The bond matures in 20 years. What is the yield to maturity? 
A. 7.79%
B. 7.82%
C. 8.00%
D. 8.04%
E. 8.12%

11. All else equal, the payback period for a project will decrease whenever the: 
A. duration of a project is lengthened.
B. cash inflows are moved earlier in time.
C. assigned discount rate decreases.
D. required return for a project increases.
E. initial cost increases.

 

 

12. Graphing the NPVs of mutually exclusive projects over different discount rates helps demonstrate: 
A. how decisions concerning mutually exclusive projects are derived.
B. how the incremental IRR varies with changes in the discount rate.
C. how the payback period and the initial cash outflow of a project are related.
D. how the duration of a project affects the decision as to which project to accept.
E. how the profitability index and the net present value are related.

 

 

13. Matt is analyzing two mutually exclusive projects of similar size and has prepared the following data. Both projects have 5 year lives.
  
Matt has been asked for his best recommendation given this information. His recommendation should be to accept: 
A. project B because it has the shortest payback period.
B. project A and reject project B based on their net present values.
C. both projects as they both have positive net present values.
D. project B and reject project A based on their average accounting returns.
E. project B and reject project A based on both the payback period and the average accounting return.

 

 

14. What is the net present value of a project with the following cash flows and a required return of 12%?
   
A. -$287.22
B. -$177.62
C. $177.62
D. $204.36
E. $287.22


15. What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 12.5%.
   
A. $-218.68
B. $-124.46
C. $-76.10
D. $549.65
E. $671.02

 

16. You are considering the following two mutually exclusive projects that will not be repeated. The required rate of return is 11.25% for project A and 10.75% for project B. Which project should you accept and why?

Year

Cash Flow

Project A

Cash Flow

Project B

0

-$48,000

-$126,900

1

$18,400

$69,700

2

$31,300

$80,900

3

$11,700

$0

 

A. project A; because its NPV is about $335 more than the NPV of project B
B. project A; because it has the higher required rate of return
C. project B; because it has the largest total cash inflow
D. project B; because it returns all its cash flows within two years
E. project B; because it is the largest sized project

 

 


17.   It will cost $2,600 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart? 
A. .86 years
B. 1.46 years
C. 1.86 years
D. 2.46 years
E. 2.86 years

18. Jamestown Ltd. currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land ten years ago at a cost of $250,000. Today, the land is valued at $425,000. The grading and excavation work necessary to build on the land will cost $15,000. The company currently has some unused equipment which it currently owns valued at $60,000. This equipment could be used for producing awnings if $5,000 is spent for equipment modifications. Other equipment costing $780,000 will also be required. What is the amount of the initial cash flow for this expansion project? 

A. $800,000
B. $1,050,000
C. $1,110,000
D. $1,225,000
E. $1,285,000

 

 

19. A project will increase sales by $140,000 and cash expenses by $95,000. The project will cost $200,000 and be depreciated using the straight-line method to a zero book value over the 5-year life of the project. The company has a marginal tax rate of 34%. What is the yearly value of the depreciation tax shield? 

A. $8,500
B. $13,600
C. $22,500
D. $25,000
E. $37,750

 

20. Leslie’s Unique Clothing Stores offers a common stock that pays an annual dividend of $2.00 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn 12% return on your equity investments? 
A. $10.00
B. $13.33
C. $16.67
D. $18.88
E. $20.00

 

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Midterm Exam

1. A scatter diagram is useful to determine if a relationship exists between two variables. (Points : 2)

True

False

 

 

Question 2.2. Consider the following gasoline data:

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174 

 

Referring to the information above, what is the seasonal index for third quarter? (Points : 2)

1.017

1.175

.985

.977

 

 

Question 3.3. If two events are mutually exclusive, the probability of both events occurring is simply the sum of the individual probabilities. (Points : 2)

True

False

 

 

Question 4.4. Determining the average payoff for each alternative and choosing the one with the best payoff is the approach called: (Points : 2)

maximax

maximin

Laplace

minimax regret

expected monetary value

 

 

Question 5.5. Enrollment in a particular class for the last four semesters has been 122, 128, 100, and 155 (listed from oldest to most recent). The best forecast of enrollment next semester, based on a three-semester moving average, would be: (Points : 2)

116.7

126.3

168.3

135.0

127.7

 

 

Question 6.6. Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent). Forecast sales for the next day using a two-day weighted moving average where the weights are 3 and 1 are: (Points : 2)

14.5

13.5

14

12.25

12.75

 

 

Question 7.7. The probability, P, of any event or state of nature occurring is greater than or equal to 0 and less than or equal to 1. (Points : 2)

True

False

 

 

Question 8.8. In a scatter diagram, the dependent variable is typically plotted on the horizontal axis. (Points : 2)

True

False

 

 

Question 9.9. Which of the following represents the underlying linear model for hypothesis testing? (Points : 2)

Y = b0 + b1 X + ε

Y = b0 + b1 X

Y = β0 + β1 X + ε

Y = β0 + β1 X

None of the above

 

 

Question 10.10. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing three yellow chips? (Points : 2)

0.013

0.210

0.333

0.027

 

 

Question 11.11. The economic order quantity (EOQ) formula assumes that all input data are known with certainty. (Points : 2)

True

False

 

 

Question 12.12. Suppose that you believe that a cubic relationship exists between the independent variable X (of time) and the dependent variable Y. Which of the following would represent a valid linear regression model? (Points : 2)

Y = b0 + b1 X, where X = time3

Y = b0 + b1 X3, where X = time

Y = b0 + 3b1 X, where X = time3

Y = b0 + 3b1 X, where X = time

Y = b0 + b1 X, where X = time1/3

 

 

Question 13.13. Which of the following statements provides the best guidance for model building? (Points : 2)

If the value of r2 increases as more variables are added to the model, the variables should remain in the model, regardless of the magnitude of increase.

If the value of the adjusted r2 increases as more variables are added to the model, the variables should remain in the model.

If the value of r2 increases as more variables are added to the model, the variables should not remain in the model, regardless of the magnitude of the increase.

If the value of the adjusted r2 increases as more variables are added to the model, the variables should not remain in the model.

None of the statements provide accurate guidance.

 

 

Question 14.14. Error is the difference in the actual value and the predicted value. (Points : 2)

True

False

 

 

Question 15.15. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Referring to the information above, based on his model, each additional family member increases the predicted costs by how much? (Points : 2)

$110.47

$16.83

$93.64

$127.30

 

 

Question 16.16. A measurable quantity that may vary, or is subject to change, and can be controlled is known as a(n) __________. (Points : 2)

decision variable

algorithm

parameter

solution

none of the above.

 

 

Question 17.17. What is the correct equation for computing the expected value of perfect information (EVPI)? (Points : 2)

EVPI = expected value under risk for best alternative – expected value under certainty.

EVPI = expected value under certainty – expected value under risk for best alternative.

EVPI = expected value with sample information – expected value without sample information.

EVPI = expected value without sample information – expected value with sample information.

None of the above

 

 

Question 18.18. A probability is a numerical statement about the chance that an event will occur. (Points : 2)

True

False

 

 

Question 19.19. Assume that you have tried three different forecasting models. For the first, the MAD = 2.5, for the second, the MSE = 10.5, and for the third, the MAPE = 2.7. We can then say: (Points : 2)

the third method is the best.

the second method is the best.

methods one and three are preferable to method two.

method two is least preferred.

None of the above

 

 

Question 20.20. The expected value of a probability distribution is: (Points : 2)

the measure of the spread of the distribution.

the variance of the distribution.

the average value of the distribution.

the probability density function.

the range of continuous values from point A to point B, inclusive.

 

 

Question 21.21. Saying that a set of events is mutually exclusive and collectively exhaustive implies that one and only one of the events can occur on any trial. (Points : 2)

True

False

 

 

Question 22.22. The equation P(A|B) = P(AB)/P(B) is: (Points : 2)

the marginal probability.

the formula for a conditional probability.

the formula for a joint probability.

only relevant when events A and B are collectively exhaustive.

none of the above

 

 

Question 23.23. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a blue chip on the first draw and a yellow chip on the second draw? (Points : 2)

0.027

0.210

0.300

0.700

 

 

Question 24.24. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. What is the expected value under certainty? Assume P(S1) = 0.5 and P(S2) = 0.25. (Points : 2)

$101.25

$103.33

$108.33

$116.25

$136.25

 

 

Question 25.25. A controllable variable is also called: (Points : 2)

a parameter.

a decision variable.

a mathematical model.

a measurable quantity.

none of the above.

 

 

Question 26.26. The number of cell phone minutes used by high school seniors follows a normal distribution with a mean of 500 and a standard deviation of 50. What is the probability that a student uses fewer than 400 minutes? (Points : 2)

0

0.023

0.159

0.977

None of the above

 

 

Question 27.27. The classical method of determining probability is: (Points : 2)

subjective probability.

marginal probability.

objective probability.

joint probability.

conditional probability.

 

 

Question 28.28. Summing the error values in a regression model is misleading because negative errors cancel out positive errors. (Points : 2)

True

False

 

 

Question 29.29. Determining the worst payoff for each alternative and choosing the alternative with the “best of the worst” is the approach called: (Points : 2)

maximax

maximin

Laplace

minimax regret

expected monetary value

 

 

Question 30.30. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. Using the maximax criterion, what would be the highest expected payoff? (Points : 2)

$145

$124

$120

$110

$100

 

 

Question 31.31. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a yellow chip on the second draw given that a blue chip was drawn on the first draw. (Points : 2)

0.027

0.210

0.300

0.700

 

 

Question 32.32. Consider the following gasoline data:

 

 

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174

Referring to the information above, suppose we expect year 3 to have annual demand of 800. What is the forecast value for the first quarter in year 3? (Points : 2)

180.85

170.36

172.00

186.00

 

 

Question 33.33. Assume that you have an urn containing 10 balls of the following description:

 

4 are white (W) and lettered (L)

2 are white (W) and numbered (N)

3 are yellow (Y) and lettered (L)

1 is yellow (Y) and numbered (N)

 

If you draw a lettered ball (L), the probability that this ball is white (W) is 0.571. (Points : 2)

True

False

 

 

Question 34.34. The fewer the periods over which one takes a moving average, the more accurately the resulting forecast mirrors the actual data of the most recent time periods. (Points : 2)

True

False

 

 

Question 35.35. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Based on the information above, the null hypothesis that the slope is zero can be rejected. (Points : 2)

True

False

 

 

Question 36.36. Which of the following is not classified as a qualitative forecasting model? (Points : 2)

Exponential smoothing

Delphi method

Jury of executive opinion

Sales force composite

Consumer market survey

 

 

Question 37.37. If the sale of ice cream and pizza are independent, then as ice cream sales decrease by 60 percent during the winter months, pizza sales will: (Points : 2)

increase by 60 percent.

increase by 40 percent.

decrease by 60 percent.

decrease by 40 percent.

be unrelated.

 

 

Question 38.38. Given three statistically independent events (A,B,C), the joint probability of P(ABC) = P(A) × P(B) × P(C). (Points : 2)

True

False

 

 

Question 39.39. Consider the following gasoline data:

 

 

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174

Referring to the information above, suppose we expect year 3 to have annual demand of 800. What is the forecast value for the second quarter in year 3? (Points : 2)

186.00

175.34

182.64

175.00

 

 

Question 40.40. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

 

Alternative Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

 

Refer to the information above. Assume that based on historical bids with the defense contractor, the plant manager believes that there is a 65% chance that the bid will be accepted and a 35% chance that the bid will be rejected.

 

What is the expected value under certainty? (Points : 2)

1.05

1.95

17.25

27.75

 

 

Question 41.41. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Referring to the information above, what percent of the variation in medical expenses is explained by the size of the family? (Points : 2)

48.3%

49.6%

50.6%

51.3%

 

 

Question 42.42. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. Using the expected monetary value (EMV) criterion, what is the highest attainable expected profit? Assume P(S1) = 0.5 and P(S2) = 0.25. (Points : 2)

$101.25

$103.33

$108.33

$125

$145

 

 

Question 43.43. The maximin criterion is an optimistic approach to decision making. (Points : 2)

True

False

 

 

Question 44.44. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. What is the expected value of perfect information (EVPI)? Assume P(S1) = 0.5 and P(S2) = 0.25. (Points : 2)

$0

$11.25

$15

$20

$35

 

 

Question 45.45. Consider the following gasoline data:

 

 

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174

 

Referring to the information above, what is the seasonal index for fourth quarter? (Points : 2)

1.017

1.175

.977

.899

 

 

Question 46.46. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Referring to the information above, the significance F-test, is this model a good prediction equation? (Points : 2)

Yes

No

 

 

Question 47.47. A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What is the Reorder point (ROP)? (Points : 2)

20

100

5

500

15

 

 

Question 48.48. Model variables can be controllable or uncontrollable. (Points : 2)

True

False

 

 

Question 49.49. The number of cars passing through an intersection in the next five minutes can usually be described by the: (Points : 2)

normal distribution.

uniform distribution.

exponential distribution.

Poisson distribution.

None of the above

 

 

Question 50.50. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

 

Alternative Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

 

Using the information above, which alternative should be chosen based on the maximin criterion? (Points : 2)

Buy 1 machine

Buy 2 machines

Buy 3 machines

 

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Midterm Exam

  1. This is a formal essay and should be formatted according to APA guidelines. You do not need to include an abstract.
  2. Write a 750-word (minimum) essay addressing one of the topics described below. You must meet the minimum word count to get full credit.
  3. Your essays must include quotes from each text used to get full credit. Be sure to quote, cite, and reference from the text(s) using appropriate APA format.
  4.  Choose any song you wish (contemporary is fine). Look up the lyrics using a website such as http://www.azlyrics.com/ orhttp://www.elyrics.net/ (Make sure to cite the source you use!). Using AT LEAST one verse and the refrain, discuss the lyrics in terms of poetry. Be SURE to discuss the following: content (story), including poetic components such as alliteration, simile, metaphor, and personification. In addition, identify the rhyme scheme, and include imagery (symbolic or literal). Be sure to use examples from the song. Be sure to cite the song according to APA and cite all quotes using APA format.

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275 words per page

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Midterm Exam

1. A scatter diagram is useful to determine if a relationship exists between two variables. (Points : 2)

True

False

 

 

Question 2.2. Consider the following gasoline data:

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174 

 

Referring to the information above, what is the seasonal index for third quarter? (Points : 2)

1.017

1.175

.985

.977

 

 

Question 3.3. If two events are mutually exclusive, the probability of both events occurring is simply the sum of the individual probabilities. (Points : 2)

True

False

 

 

Question 4.4. Determining the average payoff for each alternative and choosing the one with the best payoff is the approach called: (Points : 2)

maximax

maximin

Laplace

minimax regret

expected monetary value

 

 

Question 5.5. Enrollment in a particular class for the last four semesters has been 122, 128, 100, and 155 (listed from oldest to most recent). The best forecast of enrollment next semester, based on a three-semester moving average, would be: (Points : 2)

116.7

126.3

168.3

135.0

127.7

 

 

Question 6.6. Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent). Forecast sales for the next day using a two-day weighted moving average where the weights are 3 and 1 are: (Points : 2)

14.5

13.5

14

12.25

12.75

 

 

Question 7.7. The probability, P, of any event or state of nature occurring is greater than or equal to 0 and less than or equal to 1. (Points : 2)

True

False

 

 

Question 8.8. In a scatter diagram, the dependent variable is typically plotted on the horizontal axis. (Points : 2)

True

False

 

 

Question 9.9. Which of the following represents the underlying linear model for hypothesis testing? (Points : 2)

Y = b0 + b1 X + ε

Y = b0 + b1 X

Y = β0 + β1 X + ε

Y = β0 + β1 X

None of the above

 

 

Question 10.10. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing three yellow chips? (Points : 2)

0.013

0.210

0.333

0.027

 

 

Question 11.11. The economic order quantity (EOQ) formula assumes that all input data are known with certainty. (Points : 2)

True

False

 

 

Question 12.12. Suppose that you believe that a cubic relationship exists between the independent variable X (of time) and the dependent variable Y. Which of the following would represent a valid linear regression model? (Points : 2)

Y = b0 + b1 X, where X = time3

Y = b0 + b1 X3, where X = time

Y = b0 + 3b1 X, where X = time3

Y = b0 + 3b1 X, where X = time

Y = b0 + b1 X, where X = time1/3

 

 

Question 13.13. Which of the following statements provides the best guidance for model building? (Points : 2)

If the value of r2 increases as more variables are added to the model, the variables should remain in the model, regardless of the magnitude of increase.

If the value of the adjusted r2 increases as more variables are added to the model, the variables should remain in the model.

If the value of r2 increases as more variables are added to the model, the variables should not remain in the model, regardless of the magnitude of the increase.

If the value of the adjusted r2 increases as more variables are added to the model, the variables should not remain in the model.

None of the statements provide accurate guidance.

 

 

Question 14.14. Error is the difference in the actual value and the predicted value. (Points : 2)

True

False

 

 

Question 15.15. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Referring to the information above, based on his model, each additional family member increases the predicted costs by how much? (Points : 2)

$110.47

$16.83

$93.64

$127.30

 

 

Question 16.16. A measurable quantity that may vary, or is subject to change, and can be controlled is known as a(n) __________. (Points : 2)

decision variable

algorithm

parameter

solution

none of the above.

 

 

Question 17.17. What is the correct equation for computing the expected value of perfect information (EVPI)? (Points : 2)

EVPI = expected value under risk for best alternative – expected value under certainty.

EVPI = expected value under certainty – expected value under risk for best alternative.

EVPI = expected value with sample information – expected value without sample information.

EVPI = expected value without sample information – expected value with sample information.

None of the above

 

 

Question 18.18. A probability is a numerical statement about the chance that an event will occur. (Points : 2)

True

False

 

 

Question 19.19. Assume that you have tried three different forecasting models. For the first, the MAD = 2.5, for the second, the MSE = 10.5, and for the third, the MAPE = 2.7. We can then say: (Points : 2)

the third method is the best.

the second method is the best.

methods one and three are preferable to method two.

method two is least preferred.

None of the above

 

 

Question 20.20. The expected value of a probability distribution is: (Points : 2)

the measure of the spread of the distribution.

the variance of the distribution.

the average value of the distribution.

the probability density function.

the range of continuous values from point A to point B, inclusive.

 

 

Question 21.21. Saying that a set of events is mutually exclusive and collectively exhaustive implies that one and only one of the events can occur on any trial. (Points : 2)

True

False

 

 

Question 22.22. The equation P(A|B) = P(AB)/P(B) is: (Points : 2)

the marginal probability.

the formula for a conditional probability.

the formula for a joint probability.

only relevant when events A and B are collectively exhaustive.

none of the above

 

 

Question 23.23. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a blue chip on the first draw and a yellow chip on the second draw? (Points : 2)

0.027

0.210

0.300

0.700

 

 

Question 24.24. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. What is the expected value under certainty? Assume P(S1) = 0.5 and P(S2) = 0.25. (Points : 2)

$101.25

$103.33

$108.33

$116.25

$136.25

 

 

Question 25.25. A controllable variable is also called: (Points : 2)

a parameter.

a decision variable.

a mathematical model.

a measurable quantity.

none of the above.

 

 

Question 26.26. The number of cell phone minutes used by high school seniors follows a normal distribution with a mean of 500 and a standard deviation of 50. What is the probability that a student uses fewer than 400 minutes? (Points : 2)

0

0.023

0.159

0.977

None of the above

 

 

Question 27.27. The classical method of determining probability is: (Points : 2)

subjective probability.

marginal probability.

objective probability.

joint probability.

conditional probability.

 

 

Question 28.28. Summing the error values in a regression model is misleading because negative errors cancel out positive errors. (Points : 2)

True

False

 

 

Question 29.29. Determining the worst payoff for each alternative and choosing the alternative with the “best of the worst” is the approach called: (Points : 2)

maximax

maximin

Laplace

minimax regret

expected monetary value

 

 

Question 30.30. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. Using the maximax criterion, what would be the highest expected payoff? (Points : 2)

$145

$124

$120

$110

$100

 

 

Question 31.31. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a yellow chip on the second draw given that a blue chip was drawn on the first draw. (Points : 2)

0.027

0.210

0.300

0.700

 

 

Question 32.32. Consider the following gasoline data:

 

 

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174

Referring to the information above, suppose we expect year 3 to have annual demand of 800. What is the forecast value for the first quarter in year 3? (Points : 2)

180.85

170.36

172.00

186.00

 

 

Question 33.33. Assume that you have an urn containing 10 balls of the following description:

 

4 are white (W) and lettered (L)

2 are white (W) and numbered (N)

3 are yellow (Y) and lettered (L)

1 is yellow (Y) and numbered (N)

 

If you draw a lettered ball (L), the probability that this ball is white (W) is 0.571. (Points : 2)

True

False

 

 

Question 34.34. The fewer the periods over which one takes a moving average, the more accurately the resulting forecast mirrors the actual data of the most recent time periods. (Points : 2)

True

False

 

 

Question 35.35. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Based on the information above, the null hypothesis that the slope is zero can be rejected. (Points : 2)

True

False

 

 

Question 36.36. Which of the following is not classified as a qualitative forecasting model? (Points : 2)

Exponential smoothing

Delphi method

Jury of executive opinion

Sales force composite

Consumer market survey

 

 

Question 37.37. If the sale of ice cream and pizza are independent, then as ice cream sales decrease by 60 percent during the winter months, pizza sales will: (Points : 2)

increase by 60 percent.

increase by 40 percent.

decrease by 60 percent.

decrease by 40 percent.

be unrelated.

 

 

Question 38.38. Given three statistically independent events (A,B,C), the joint probability of P(ABC) = P(A) × P(B) × P(C). (Points : 2)

True

False

 

 

Question 39.39. Consider the following gasoline data:

 

 

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174

Referring to the information above, suppose we expect year 3 to have annual demand of 800. What is the forecast value for the second quarter in year 3? (Points : 2)

186.00

175.34

182.64

175.00

 

 

Question 40.40. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

 

Alternative Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

 

Refer to the information above. Assume that based on historical bids with the defense contractor, the plant manager believes that there is a 65% chance that the bid will be accepted and a 35% chance that the bid will be rejected.

 

What is the expected value under certainty? (Points : 2)

1.05

1.95

17.25

27.75

 

 

Question 41.41. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Referring to the information above, what percent of the variation in medical expenses is explained by the size of the family? (Points : 2)

48.3%

49.6%

50.6%

51.3%

 

 

Question 42.42. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. Using the expected monetary value (EMV) criterion, what is the highest attainable expected profit? Assume P(S1) = 0.5 and P(S2) = 0.25. (Points : 2)

$101.25

$103.33

$108.33

$125

$145

 

 

Question 43.43. The maximin criterion is an optimistic approach to decision making. (Points : 2)

True

False

 

 

Question 44.44. Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3.

S1 S2 S3

A $60 $145 $120

B $75 $125 $110

C $95 $85 $130

 

Refer to the payoff table. What is the expected value of perfect information (EVPI)? Assume P(S1) = 0.5 and P(S2) = 0.25. (Points : 2)

$0

$11.25

$15

$20

$35

 

 

Question 45.45. Consider the following gasoline data:

 

 

 

Quarter 1, Year 1, Year 2 

1, 150, 156

2, 140, 148

3, 185, 201

4, 160, 174

 

Referring to the information above, what is the seasonal index for fourth quarter? (Points : 2)

1.017

1.175

.977

.899

 

 

Question 46.46. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

 

Click here to view an Excel version of this output

 

Midterm Essay #3

 

Referring to the information above, the significance F-test, is this model a good prediction equation? (Points : 2)

Yes

No

 

 

Question 47.47. A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What is the Reorder point (ROP)? (Points : 2)

20

100

5

500

15

 

 

Question 48.48. Model variables can be controllable or uncontrollable. (Points : 2)

True

False

 

 

Question 49.49. The number of cars passing through an intersection in the next five minutes can usually be described by the: (Points : 2)

normal distribution.

uniform distribution.

exponential distribution.

Poisson distribution.

None of the above

 

 

Question 50.50. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

 

Alternative Bid Accepted Bid Rejected

Buy 1 machine $10 $5

Buy 2 machines $30 $4

Buy 3 machines $40 $2

 

Using the information above, which alternative should be chosen based on the maximin criterion? (Points : 2)

Buy 1 machine

Buy 2 machines

Buy 3 machines

 

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Midterm Exam

  1. This is a formal essay and should be formatted according to APA guidelines. You do not need to include an abstract.
  2. Write a 750-word (minimum) essay addressing one of the topics described below. You must meet the minimum word count to get full credit.
  3. Your essays must include quotes from each text used to get full credit. Be sure to quote, cite, and reference from the text(s) using appropriate APA format.
  4.  Choose any song you wish (contemporary is fine). Look up the lyrics using a website such as http://www.azlyrics.com/ orhttp://www.elyrics.net/ (Make sure to cite the source you use!). Using AT LEAST one verse and the refrain, discuss the lyrics in terms of poetry. Be SURE to discuss the following: content (story), including poetic components such as alliteration, simile, metaphor, and personification. In addition, identify the rhyme scheme, and include imagery (symbolic or literal). Be sure to use examples from the song. Be sure to cite the song according to APA and cite all quotes using APA format.

Just in case you need an assignment done, hire us. Using our writing services will make your life easier because we deliver exceptional results. Use us to get an A!

We are the Best!

course-preview

275 words per page

You essay will be 275 words per page. Tell your writer how many words you need, or the pages.


12 pt Times New Roman

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Any citation style

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course-preview

275 words per page

You essay will be 275 words per page. Tell your writer how many words you need, or the pages.


12 pt Times New Roman

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Midterm Exam

Question

Question 1. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

Alternative

Bid Accepted

Bid Rejected

Buy 1 machine

$10

$5

Buy 2 machine

$30

$4

Buy 3 machine

$40

$2

Using the information above, which alternative should be chosen based on the maximax criterion?

Buy 1 machine

Buy 2 machines

Buy 3 machines

Question 2. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

Alternative Bid Accepted Bid Rejected 

Buy 1 machine $10 $5 

Buy 2 machines $30 $4 

Buy 3 machines $40 $2 

Refer to the information above. Assume that based on historical bids with the defense contractor, the plant manager believes that there is a 65% chance that the bid will be accepted and a 35% chance that the bid will be rejected.

What is the expected value under certainty?

a. 1.05

b. 1.95

c. 17.25

d. 27.75

Question 3. “The probability of event B, given that event A has occurred” is known as a __________ probability.

continuous

marginal

simple

joint

conditional

Question 4. Assume that you have an urn containing 10 balls of the following description:

4 are white (W) and lettered (L)

2 are white (W) and numbered (N)

3 are yellow (Y) and lettered (L)

1 is yellow (Y) and numbered (N)

If you draw a numbered ball (N), the probability that this ball is white (W) is 0.60.

True

False

Question 5. What is the formula for the break-even point of a simple profit model?

Fixed cost / variable cost per unit

(Selling price per unit — variable cost per unit) / fixed cost

Fixed cost / (selling price per unit —variable cost per unit)

Fixed cost / (variable cost per unit —selling price per unit)

Selling price per unit — (fixed cost / variable cost per unit)

Question 6. Arrivals in a university advising office during the week of registration are known to follow a Poisson distribution with an average of four people arriving each hour. What is the probability that exactly four people will arrive in the next hour?

0.1813

0.1865

0.1923

0.1954

P(X=4) = 0.1954

Question 7. The economic order quantity (EOQ) formula assumes that all input data are known with certainty.

True

False

Question 8. The use of “expert opinion” is one way to approximate subjective probability values.

True

False

Question 9. Properties of the normal distribution include:

a continuous bell-shaped distribution.

a discrete probability distribution.

the number of trials is known and is either 1, 2, 3, 4, 5, etc.

the random variable can assume only a finite or limited set of values.

use in queuing.

Question 10. Expressing profits through the relationship among unit price, fixed costs, and variable costs is an example of:

a sensitivity analysis model.

a quantitative analysis model.

a postoptimality relationship.

a parameter specification model.

none of the above.

Question 11. A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. What are the total annual holding costs?

a. $500

b. $1000

c. $20

d. $750

e. $250

Question 12. A plant manager is considering buying additional stamping machines to accommodate increasing demand. The alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000’s) based on the different scenarios faced by the manager.

Alternative

Bid Accepted

Bid Rejected

Buy 1 machine

$10

$5

Buy 2 machine

$30

$4

Buy 3 machine

$40

$2

Using the information above, which alternative should be chosen based on the Laplace criterion?

Buy 1 machine

Buy 2 machines

Buy 3 machines

Question 13. Determining the average payoff for each alternative and choosing the one with the best payoff is the approach called:

maximax

maximin

Laplace

minimax regret

expected monetary value

Question 14. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

Regression Statistics

Multiple   R

0.8590

R   Square

0.7379

Adjusted   R Square 

0.7182

Standard   Error

952.3605

Observations   

18

ANOVA

df

SS

MS

F

Significance   F

Regression

3

1.32E+08

43977657

48.48745

1.21E-07

Residual

14

12697866

906990.4

Total   

17

1.45E+08

Intercept   

Coefficients

Standard   Error

t   Stat

P-value

X1

144.91

1025.911

0.141246

0.889688

X2

11.63

1.247247

9.330762

2.19E-07

X3

-13.70

8.786907

-1.55916

0.141272

-9.11

1.166068

7.810781

1.81E-06

Referring to the information above, based on his model, each additional family member increases the predicted costs by how much?

$110.47

$16.83

$93.64

$127.30

Question 15. A controllable variable is also called:

a parameter.

a decision variable.

a mathematical model.

a measurable quantity.

none of the above.

Question 16. A seasonal index of __________ indicates that the season is average.

10

100

0.5

0

1

Question 17. In the exponential smoothing with trend adjustment forecasting method, missing something is the:

slope of the trend line.

new forecast.

Y-axis intercept.

independent variable.

trend smoothing constant.

Question 18. Assume that you have an urn containing 10 balls of the following description:

4 are white (W) and lettered (L)

2 are white (W) and numbered (N)

3 are yellow (Y) and lettered (L)

1 is yellow (Y) and numbered (N)

If you draw a lettered ball (L), the probability that this ball is white (W) is 0.571.

True

False

Question 19. The condition of improper data yielding misleading results is referred to as:

garbage in, garbage out.

break-even point.

uncontrollable variable.

postoptimality.

none of the above.

Question 20. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

Click here to view an Excel version of this output

Referring to the information above, what percent of the variation in medical expenses is explained by the size of the family?

48.3%

49.6%

50.6%

51.3%

Question 21. Our department store is having a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none. 

Using the above information, what is the probability of selling no personal computers? Hint: Let the probability of selling none equal x.

0.05

0.08

0.1

0.2

Question 22. A medium-term forecast is considered to cover what length of time?

2-4 weeks

1 month to 1 year

2-4 years

5-10 years

20 years

Question 23. If two events are mutually exclusive, then:

their probabilities can be added.

they may also be collectively exhaustive.

the joint probability is equal to 0.

if one occurs, the other cannot occur.

All of the above

Question 24. Arrivals at a fast-food restaurant follow a Poisson distribution with a mean arrival rate of 16 customers per hour. What is the probability that in the next hour there will be exactly 12 arrivals?

0.0000

0.0661

0.7500

0.1322

None of the above

Question 25. The Department of Motor Vehicles (DMV) can service customers at a rate of 20 per hour (or 1/3 per minute) when it comes to license renewals. The service time follows an exponential distribution. What is the probability that it will take less than three minutes for a particular customer to get a license renewal?

0.5

0

1

0.368

0.632

Question 26. Demand for soccer balls at a new sporting goods store is forecasted using the following regression equation: Y = 98 + 2.2X where X is the number of months that the store has been in existence.Let April be represented by X= 4. April is assumed to have a seasonality index of 1.15. What is the forecast for soccer ball demand for the month of April (rounded to the nearest integer)?

123

107

100

115

None of the above

Question 27. The best model is a statistically significant model with a high r-square and few variables.

True

False

Question 28. Historical data indicates that only 20% of cable customers are willing to switch companies. If a binomial process is assumed, then in a sample of 20 cable customers, what is the probability that no more than three customers would be willing to switch their cable?

0.85

0.15

0.20

0.411

0.589

Question 29. A seasonal index of 1 means that the season is average.

True

False

Question 30. Which of the following is true regarding a regression model with multicollinearity, a high r2 value, and a low F-test significance level?

The model is not a good prediction model.

The high value of r2 is due to the multicollinearity.

The interpretation of the coefficients is valuable.

The significance level tests for the coefficients are not valid.

The significance level for the F-test is not valid.

Question 31. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

Click here to view an Excel version of this output

Referring to the information above, the significance F-test, is this model a good prediction equation?

Yes

No

Question 32. The length of time that it takes the tollbooth attendant to service each driver can typically be described by the:

normal distribution.

uniform distribution.

exponential distribution.

Poisson distribution.

None of the above

Question 33. Time-series models attempt to predict the future by using historical data.

True

False

Question 34. Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15 (listed from oldest to most recent). Forecast sales for the next day using a two-day weighted moving average where the weights are 3 and 1 are:

14.5

13.5

14

12.25

12.75

Question 35. Our department store is having a sale on personal computers, of which three are in stock (no rain checks). There is a certain probability of selling none. The probability of selling one is twice as great as the probability of selling none. The probability of selling two is three times the probability of selling none. Finally, the probability of selling all the personal computers is four times as great as the probability of selling none. 

Using the above information, what is the probability of selling all three personal computers? Hint: Let the probability of selling none equal x.

0.4

0.32

0.36

0.44

Question 36. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output.

Regression   Statistics

Multiple   R

0.695

R   Square

0.483

Adjusted   R Square 

0.474

Standard   Error

55.275

Observations   

21

ANOVA

df

SS

MS

F

Significance   F

Regression

1

99929.47

99929.47

32.70311

0.00016

Residual

19

58057.48

3055.657

Total   

20

157987

Coefficients

Standard   Error

t   Stat

P-value

Intercept

110.47

35.53407

3.109087

0.0057

X

16.83

0.819024

5.718663

0.00016

Referring to the information above, what is the value of the correlation coefficient?

55.278

0.695

0.483

0.474

Question 37. Loss of goodwill must be included in stockout costs.

True

False

Question 38. The probability, P, of any event or state of nature occurring is greater than or equal to 0 and less than or equal to 1.

True

False

Question 39. As one increases the number of periods used in the calculation of a moving average:

greater emphasis is placed on more recent data.

less emphasis is placed on more recent data.

the emphasis placed on more recent data remains the same.

it requires a computer to automate the calculations.

one is usually looking for a long-term prediction.

Question 40. Which of the following methods tells whether the forecast tends to be too high or too low?

MAD

MSE

MAPE

Decomposition

Bias

Question 41. A moving average forecasting method is a causal forecasting method.

True

False

Question 42. One purpose of regression is to understand the relationship between variables.

True

False

Question 43. When demand is constant, the Reorder point (ROP) is a function of demand and lead time.

True

False

Question 44. Which of the following is not classified as a qualitative forecasting model?

Exponential smoothing

Delphi method

Jury of executive opinion

Sales force composite

Consumer market survey

Question 45. Consider the following gasoline data:

Click here to view an Excel version of this table.

Referring to the information above, what is the seasonal index for fourth quarter?

1.017

1.175

.977

.899

Question 46. The classical method of determining probability is:

subjective probability.

marginal probability.

objective probability.

joint probability.

conditional probability.

Question 47. A consulting firm has received two Super Bowl tickets from one of its clients. To be fair, the firm is randomly selecting two different employee names to “win” the tickets. There are six secretaries, five consultants and four partners in the firm. Which of the following statements is false?

The probability of a secretary winning a ticket on the first draw is 6/15.

The probability of a secretary winning a ticket on the second draw given that a consultant won a ticket on the first draw is 6/15.

The probability of a consultant winning a ticket on the first draw is 1/3.

The probability of two secretaries winning both tickets is 1/7.

The probability of a partner winning a ticket on the second draw given that a secretary won a ticket on the first draw is 4/14.

Question 48. The EMV that a person is willing to give up in order to avoid the risk associated with a gamble is referred to as the:

risk premium.

certainty equivalent.

EVPI.

EVwPI.

EVSI.

Question 49. Enrollment in a particular class for the last four semesters has been 120, 126, 110, and 130 (listed from oldest to most recent). What is the enrollment forecast for next semester using exponential smoothing with an alpha = 0.2. Assume that an initial forecast for the first semester was 120 (so the forecast and the actual were the same).

118.96

121.17

130

120

None of the above

Question 50. An urn contains seven blue and three yellow chips. If the drawing of chips is done with replacement, what is the probability of drawing a blue chip on the second draw given that a yellow chip was drawn on the first draw?

a. 0.027

b. 0.210

c. 0.300

d. 0.700

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