Probability Analysis Paper 2

1

The expected monetary value of an act is the






2

The expected value of perfect information is the






3

A company is considering three alternative machines to produce a new product. The cost structures (unit variable costs plus avoidable fixed costs) for the three machines are shown as follows. The selling price is unaffected by the machine used.
Single purpose machine $.60x + $20,000
Semiautomatic machine $.40x + $50,000
Automatic machine $.20x + $120,000
The demand for units of the new product is described by the following probability distribution.
Demand.. Probability
200,000 ..0.4
300,000 ..0.3
400,000 ..0.2
500,000 ..0.1
Ignoring the time value of money, the expected cost of using the semiautomatic machine is






4

A company is considering three alternative machines to produce a new product. The cost structures (unit variable costs plus avoidable fixed costs) for the three machines are shown as follows. The selling price is unaffected by the machine used.
Single purpose machine $.60x + $20,000
Semiautomatic machine $.40x + $50,000
Automatic machine $.20x + $120,000
The demand for units of the new product is described by the following probability distribution.
Demand.. Probability
200,000 ..0.4
300,000 ..0.3
400,000 ..0.2
500,000 ..0.1
Using the expected value criterion,






5

A computer store sells four computer models designated as P104, X104, A104, and S104. The store manager has made random number assignments to represent customer choices based on past sales data. The assignments are shown below.
Model ..Random Numbers
P104 ....0-1
X104 ....2-6
A104 ....7-8
S104 ....9
The probability that a customer will select model P104 is






6

A computer store sells four computer models designated as P104, X104, A104, and S104. The store manager has made random number assignments to represent customer choices based on past sales data. The assignments are shown below.
Model ..Random Numbers
P104 ....0-1
X104 ....2-6
A104 ....7-8
S104 ....9
In running a simulation of the computer demand, the following numbers are drawn in sequence: 2, 8, and 6. The simulation indicates that the third customer will purchase.






7

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






8

A quantitative technique useful in projecting a firmís sales and profits is






9

A car rental agency has a policy of replacing the tires on its car fleet as the tires wear out. Management wonders if there would be any cost savings if the tires are periodically replaced at one time on its fleet of 500 cars. The technique the car rental agency would find most useful is






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