Analysis and Forecasting Techniques Paper 7

1

In decision theory, those uncontrollable future events that can affect the outcome of a decision are






2

The Booster Club at Blair College sells hot dogs at home basketball games. The group has a frequency distribution of the demand for hot dogs per game and plans to apply the expected value decision rule to determine the number of hot dogs to stock. The Booster Club should select the demand level that






3

A company is simulating the actions of a government agency in which 50% of the time a recall of a product is required, 40% of the time only notification of the buyer about a potential defect is required, and 10% of the time no action on its part is required. Random numbers of 1 to 100 are being used. An appropriate assignment of random numbers for the recall category would be






4

Sweivel Company is preparing its budget and, taking into consideration the recent pace of economic recovery, has developed several sales forecasts and the estimated probability associated with each sales forecast. To determine the sales forecast to be used for budgeting purposes, which one of the following techniques should Sweivel use?






5

Bosworth, Inc., sells its product for $100 per unit while incurring variable operating costs of $60 per unit and $25,000,000 of fixed operating costs. The management team believes there is a 20% probability sales for the upcoming period will be 600,000 units, a 50% probability sales will be 800,000 units, and a 30% probability sales will be 1,000,000 units. The expected value of Bosworth’s operating profit for the upcoming period is






6

Brown Veterinary Clinic schedules weekend staff based on the number of animals being boarded. The clinic has a total of four staff members available to work on weekends. Based on state regulations, the clinic is required to have one staff member on site for up to 10 animals. Two staff members are required for 11-23 animals, three staff for 24-36 animals and all four staff members must work if there are 37-45 animals being boarded. The clinic has experienced the following average number of animals in the past 12 weekends.
Average Number of Animals ...Number of Weekends
12 ...............................................1
20 ...............................................4
25 ...............................................3
35 ...............................................2
40 ...............................................2
Using expected value analysis, how many staff members should the clinic schedule for each weekend during the upcoming month?






7

A quantitative technique useful in projecting a firm’s sales and profits is






8

A widely used approach that managers use to recognize uncertainty about individual items and to obtain an immediate financial estimate of the consequences of possible prediction errors is






9

Through the use of decision models, managers thoroughly analyze many alternatives and decide on the best alternative for the company. Often, the actual results achieved from a particular decision are not what was expected when the decision was made. In addition, an alternative that was not selected would have actually been the best decision for the company. The appropriate technique to analyze the alternatives by using expected inputs and altering them before a decision is made is






10

The process of evaluating the effect of changes in variables such as sales price or wage rates on the optimum solution in a linear programming application is called






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