GBA 334 MidTerm Examination
True or False?
3.What is the formula for the breakeven point of a simple profit model?
a. Fixed Cost / Variable Cost Per Unit
b. Selling Price Per Unit —Variable Cost Per Unit) / Fixed Cost
c. Fixed Cost / (Selling Price Per Unit —Variable Cost Per Unit)
d. Fixed Cost / (Variable Cost Per Unit — Selling Price Per Unit)
e. Selling Price Per Unit — (Fixed Cost / Variable Cost Per Unit)
4.If fixed cost is $10,000, variable cost is $4 and BEP units are 1,000. What is the selling cost?
5.Karen bakes pies for a living. She sells pies for $15 each. Her monthly fixed costs are $1200.
Each pie variable costs $2.50 in materials. Find the break – even number of pies that Karen must
make and sell each month. What is the revenue and cost at this number of pies?
6.Given the following distribution:
Outcome  Value of
Random Variable 
Probability 
A  1  .4 
B  2  .3 
C  3  .2 
D  4  .1 
The expected value is 3.
True or False?
7.A new young executive is perplexed at the number of interruptions that occur due to
Employee relations. She has decided to track the number of interruptions that occur during
each hour of her day. Over the last month, she has determined that between 0 and 3
interruptions occur during any given hour of her day. The data is shown below.
Number of Interruptions in 1 hour  Probability 
0 interruption  .5 
1 interruptions  .3 
2 interruptions  .1 
3 interruptions  .1 
On average, she should expect 0.8 interruptions per hour.
True or False?
8.
Workers  Skill  Nonskill  Union  Total 
Male  50  150  
Female  50  
Total  100  300 
9.Assume you have a normal distribution representing the likelihood of completion times.
The mean of this distribution is 10, and the standard deviation is 3. The probability of
completing the project in 8 or fewer days is the same as the probability of completing the
project in 18 days or more.
True or False?
10.A ________ is a numerical statement about the likelihood that an event will occur.
A) mutually exclusive construct
B) collectively exhaustive construct
C) variance
D) probability
E) standard deviation
11. The decision maker can control states of nature.
True or False?
12. Expected monetary value (EMV) is the average or expected monetary outcome of a decision
if it can be repeated a large number of times. True or False?
13. ____________________________________ is a measure of the maximum EMV as a result
of additional information.
14.George Golf is considering the purchase of two types of industrial robots. There are two states of
nature and they are Event 1(favorable) and Event 2 (unfavorable). The probability for Event 1 is 60%.
The probability of Event 2 is 40%. The Rob 1 (alternative 1) is a large robot capable of performing a
variety of tasks, including welding and painting. The payoff for Event 1 for Rob 1 (alternative 1) is
$50,000. The payoff for Event 2 for Rob 1 (alternative 1) is 30,000. The Rob 2 (alternative 2) is a
smaller and slower robot, but it has all the capabilities of Rob 1. The payoff for Event 1 is $30,000 for
Rob 2 (alternative 2). The payoff for Event 2 for Rob 2 (alternative 2) is $10,000. The robots will be
used to perform a variety of repair operations on large industrial equipment. Of course, George can
always do nothing and not buy any robots (alternative 3). The market for the repair operation could be
favorable (event 1) or unfavorable (event 2).
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If the probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd, determine:
(a) the alternative that provides the greatest expected monetary value (EMV)
(b) the expected value of perfect information (EVPI)
(a) Formulate this as a linear programming problem.
(b) Find the optimal solution.
(a) Formulate this as a linear programming problem.
(b) Find the solution that gives the maximum profit using either QM for Windows or Excel.
(a) the feasible region.
(b) the optimal value of the objective function.
(a) relationship (b) scatter (c) utility (d) decision tree (e) binary 

True False
24. What does the coefficient of correlation measure?
25. Thesales manager of a large apartment rental complex feels the demand for apartments may be related to the number of newspaper ads placed during the previous month. She has collected the data shown in the accompanying table.

Ads purchased Apartments leased
15 6
9 4
40 16
20 6
25 13
25 9
15 10
35 16
(a) Find the regression analysis model.
(b) If the number of ads is 30, we can estimate the number of apartments leased with the regression equation to be what?
(c) Determine the SSR.
(d) Determine the SST.
(e) Determine the SSE.
varied as follows:
Population Number of phones
Year (millions) (millions)
1 130 50
2 140 55
3 150 60
a. Determine the linear regression.
b. If in the fourth year the population is 170, what would be the predicted number of phones
(linear regression)?
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associated with the undertaking of this project. The product will sell for $4 a unit, and the
variable costs are $1.50. It is expected that 1,000 units will be sold.
a. What is the breakeven point?
b. What is the expected profit?
30. A construction company has a contract to complete a job in 180 days. It will have to pay
a penalty of $10,000 per day for each day beyond 180 days that it takes to complete the project.
There is a some uncertainty about how long it will take due to weather conditions, possible
strikes, etc. Management has assigned a normal probability distribution to the number of days
necessary to complete the project. This distribution has a mean of 170 days and a standard
deviation of 12 days. What is the probability that the job will be completed on time?
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