QM 7003
Final Exam – Closed Book Part
Bus Decision Model代考 The survey would be a sophisticated questionnaire administered to a test market. It will cost S5,000.
(12) 1.Short Answer
a.For what kind of decision problem is the AHP most suited?
b.List the best ways to validate a simulation model.
c.When should simulation be used to model a decision problem?
(10) 2.Multiple Choice
1.Computer simulation models:
a.bchave like the real system.
b.are among the most frequently used management science tools.
c.offer the ability to make inferences about the real system.
d.all of the above are true.
2.The expected value of sample information:
a.is never more than the EVPI.
b.can be compared to the sample cost to judge whcther to sample. Bus Decision Model代考
c.is never negative.
d.all of the above are true.
3.Utility measures:
a.the appropriateness of the decision technique.
b.must be between 0 and 1.
c.the atude toward profit, loss, and risk.
4.The analytic hierarchy process:
a.is a single criterion, optimizing procedure.
b.can use subjective as well as quantitative assessments.
c.requires no input from the decision maker.
d.all of the above are true.
5.The expected value of perfect information:
a.is used with decisions under certainty.
b.is an upper bound on the amount one should be willing to pay to improve his/her knowledge about what state of nature will occur.
c.is another way of describing the expected return.
d.is a lower bound on the expected return.
6.In a real world simulation application the random numbers used from the computer are
a.uniformly distributed
b.not really random
c.will eventually repeat the series
d.all of the above
e.none of the above
7.The greatest number of contributions of the application of ORMS has been with respect to problems that are: Bus Decision Model代考
a.qualitative
b.deterministic
c.stochastic
d.under uncertainty
e.fuzzy
8.Consider a standard gamble with a .6 chance of winning 1000 and a .4 chance of losing 1500. The certainty equivalent of a risk averse person would be
a.0
b.positive
c.negative
d.100
e.none of the above
10.When solving an ILP with a MIN objective function, an upper bound for the optimal value of the original problem can always be found by:
a.solving the LP relaxation of the original problem and using the optimal value obtained
b.finding a feasible solution to the original problem and evaluating the objcctive function at this point
c.solving the LP relaxation of the original problem and rounding off fractional answers for the decision variables (rounding down if < .5; rounding up if≥.5); then evaluating the objective function at this point
d.None of the above
11.When solving and ILP with a MIN objective function, a lower bound for the optimal value of the original problem can always be found by: Bus Decision Model代考
a.solving the LP relaxation of the original problem and using the optimal value obtained
b.finding a feasible solution to the original problem and evaluating the objective function at this point
c.solving the LP relaxation of the original problem and rounding off fractional answers for the decision variables (rounding down if < .5; round up if > .5; then evaluating the objective function at this point
d.None of the above
12.
Then to ensure that project 1 or project 2 (but not both projects) is sclected, one would include the following constraints in the formulation:
a.x1+x2≤1
b.x1+x2=1
c.x1-x2≤1
d.x1-x2=1
13.
Then to model the statement “If we are going to expand one line, we are going to expand them both!” would be modeled as:
a.x1-x2=0
b.x1+x2=2
c.x1-x2≤0
d.x1-x2=0
14.In the STECO warehouse location problem, the constraint -200YA +xa1 +xaz +xa3+x4≤0 has the following effect:
a.If one unit is shipped from warehouse A, then as many as 200 units may be shipped.
b.IfYA = 1, then as many as 200 units may be shipped from warchouse A.
c.nonnegativity applies only to the deviational variables
d.None of the above.
15.In goal programming: Bus Decision Model代考
a.priorities are treated simultaneously.
b.prioritics provide a way of combining apples and oranges.
c.nonnegativity applies only to the deviational variables
d.None of the above.
16.If goal programming problem includes the fllowing constraint:
g1(x1,……xn.)+u1-v1.=b
and the objective function includes the fllowing terms:
V1+V1
then:
a.the priority approach is not being used. Bus Decision Model代考
b.the decision maker will want to make g1 as close as possible to b1, with equal disdain for either over- or under-achievement.
c.the problem is not correctly formulated.
d.None of the above.
17.That class of decision problems for which there is more than one state of nature and for which we make the assumption that the decision maker can arrive at a probability estimatc for the occurrence of cach of the various states of nature is called decision-making under:
a.certainty
b.risk
c.uncertainty
d.regret
18.Referring to Table 14-5: what investment option should he select if he uses the Laplace criterion?
ER(Port. A) = (1/3)(5000) + (1/3)(0) + (1/3)(-3000) = +$667
ER(Port. A) = (1/3)(5000) + (1/3)(0) + (1/3)(-3000) = +$667
ER(Bonds) = (1/3)(2000) + (1/3)(2000) + (1/3)(2000) = + $2000
INVEST IN THE BONDS
19.Referring to Table 14-5: what investment option should he select if he uses the maximin criterion?
(28) 2.An Idaho potato farmer is studying the risks associated with planting his/her potato crop. Based upon past experience, she asesses the fllowing poabiliti asocated with yiclds in ciwt per acre, and costs (for frtilizer,water, seed, and labor) per acre.
The profit per acre is (Price x Yield) – Cost.
The price and yield are not independent variables. A low yield gencrally means a shortage of potatoes, and the price riscs, and a high yicld means low prices. However, this relationship is not exact, as there are other factors besides yields that afect prices. Supposc that the yield and cost per acre are independent. Suppose, further, that price is related to yicld by the following cquation
Price= 15.5 – 0.056vield) + D
where D is a random variable indicating a deviation from the equation. D is uniformly dstributedbetween-1 and 1 and independent of yield and cost.:
For 5 simulation tials, estimnate the expected proft per acre, and the probability distribution for proft per acrte.What is the estimated probability that the farmer makes less than $100 per acre on her crop?
Use the random numbers given below for yild, cost, and D, respectively:
(29) 3.Jim sellers is thinking about producing a new type of electric razor for men. Bus Decision Model代考
If the market was successful, he would get a return of $1000,000, but if the market for this new type of razor was unsuccessful, he would lose $60,000. Since Ron Bush is a good friend of Jim Sellers, Jim is considering the possibility of using Bush Marketing Rescarch in order to gather additional information about the market for the razor. Bush has suggested that Jim either use a survey or a pilot study to test the market.
The survey would be a sophisticated questionnaire administered to a test market. It will cost S5,000. Another altermative is to actually run a pilot study. This would involve producing a limited number of the new razors and actually trying to sell them in two cities that are typical of American cities. The pilot study is more accurate, but is also more expensive. It will cost $20,000.Ron Bush has suggested that it would be a good idea for Jim to conduct either the survey or the pilot before Jim makes the decision concerning whether or not to produce the new razor. But Jim is not sure if the value of the survey or the pilot is worth the cost.
Jim estimates that the probability of a sccessful market without performing a survey or a pilot study is .5.Furthermore, the probility of a favorable survey result given a successful market for razors is .7, and the probability of a favorable survey result given an unsuccessful market for razors is .2. In addition, the probability of an unfavorable pilot study given an unsuccessful market is .9, and the probability of an unfavorable pilot study result given a successful market for razors is .2.
i.)Draw and evaluate the decision tree for Jim using EMV as the decision criteria.
ii.)State the recommended decision strategy.State the recommended decision strategy.
iii.)Calculate the EVPI.
iv.)Calculate both EVSI values.
i)Draw the hierarchy for this decision problem.
ii)Compute the priorities for each of the matrices.
iii)Determine an overall priority for each quarterback.
