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Exam I
BA 301
Spring 2003
S.K. Norman
Version 1
1
Exam I
Spring 2003
Select the best answer. 3 Points each.
1.
Which of the following is NOT typically an operations function at a retail store like WalMart?
a. Ordering for a department
b. Assembling data for the annual report
c. Designing the layout of a new store
d. Scheduling checkout personnel
2.
Which of the following products is likely to be produced in a batch/assembly process?
a. paper
b. soda
c. tooth fillings
d. washing machines
3.
Which of the following is not a typical attribute of goods?
a. output can be inventoried
b. often easy to automate
c. high customer interaction
d. output can be resold
4.
Putnam Investments of Boston offers a wide range of mutual funds through independent brokers. To
gain a competitive advantage over other mutual fund companies, Putnam now provides brochures
and prospectuses of their mutual funds to brokers within 24 hours of request. This is an example of
a. Low-cost strategy
b. Mission strategy
c. Responsiveness strategy
d. Service strategy
5.
Which of the following are the primary functions of all business organizations?
a. operations, marketing, and human resources
b. marketing, human resources, and finance/accounting
c. marketing, quality control, and operations
d. marketing, operations, and finance/accounting
6.
The bread line at King Sooper’s is an example of a
a. Line/continuous process
b. Job shop process
c. Mass customization process
d. Batch/Assembly process
7.
Southwest Airlines has streamlined its facilities to minimize the cost of scheduling crew changes,
maintenance, and inventories of parts. This is an example of which OM strategy?
a. Low-cost strategy
b. Mission strategy
c. Responsiveness strategy
d. Service strategy
8.
The forecasting model that pools the opinions of a group of experts or managers is known as the
a. sales force composition model
b. multiple regression model
c. consumer market survey model
d. jury of executive opinion model
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Exam I
Spring 2003
Use this table to answer the next two questions:
States of Nature
0.60
0.40
Option High
Low
Buy
80
0
Rent
70
30
Lease
40
50
9.
For the table above, the optimistic decision is:
a. Buy
b. Rent
c. Lease
d. High
10.
For the table above, the conservative decision is:
a. Buy
b. Rent
c. Lease
d. High
11.
The primary purpose of the mean absolute deviation (MAD) in forecasting is to
a. estimate the trend line
b. eliminate forecast errors
c. measure forecast accuracy
d. seasonally adjust the forecast
12.
All of the following decisions fall within the scope of operations management except for
a. financial analysis
b. design of products and processes
c. location of facilities
d. quality management
13.
The lease at Theme Park, Inc. is about to expire. Management must decide whether to renew the
lease for another 10 years or to relocate near the site of a proposed motel. The town planning board
is currently debating the merits of granting approval to the motel. The motel approval/rejection
represent
a. The decision alternatives
b. The states of nature
c. The payoff table
d. An OM strategy
14.
The likelihood that a decision maker will ever receive a payoff precisely equal to the expected value
after making a decision is
a. 50/50 (near 50%)
b. low (near 0%)
c. dependent upon the number of alternatives
d. dependent upon the number of states of nature
15.
The dilemma, in the Prisoner’s Dilemma is
a. whether to confess or not to confess
b. that if both players confess then they both win
c. that if both players follow their best strategy they will be worse off than if they cooperate
d. whether to follow a strategy or play randomly
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Exam I
Spring 2003
16.
The demand for April was 1350. The forecast used for May was 1350. The demand in May was
1200. The forecast used for June was 1200. What time-series model was used to produce these
forecasts?
a. naive
b. moving average
c. exponential smoothing
d. regression analysis
17.
Tesco is a British discount chain. This statement is on their website: “To create value for our
customers, to earn their lifetime loyalty.” This statement is an example of
a. a strategy
b. a mission
c. a payoff
d. a service
18.
Consider 3 forecasting methods. Method A has a MAD of 10.5; Method B has a Mad of 13.6; and
method C has a MAD of 9.7. Which method should be chosen for the greatest accuracy?
a. Method A
b. Method B
c. Method C
d. It depends on which value of  is selected.
19.
Among department stores, Nordstrom has a reputation for highly personalized customer service.
This is an example of which OM strategy?
a. Low-cost strategy
b. Mission strategy
c. Quality strategy
d. Differentiation strategy
20.
Which of the following uses a job shop process strategy?
a. McDonald’s french fries
b. Bank of America consumer loan
c. Maytag appliances
d. Weyerhauser Paper Company copier paper
21.
Which of the following is not a stage in a product life cycle?
a. Growth
b. Capacity
c. Maturity
d. Introduction
22.
Mass customization has been developed to produce
a. high-volume, high-variety products
b. low-volume, high-variety products
c. high-volume, low-variety products
d. low-variety products at either high- or low-volume
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Exam I
Spring 2003
PROBLEMS – points vary from problem to problem.
23. (3 pts) A careful analysis of the cost of operating an automobile was conducted by a firm. The
following regression model was developed: Y = 4200 + 0.35X where Y is the annual cost and X is
the miles driven. If the car is driven 15,000 miles this year, what is the forecasted cost of operating
this automobile (rounded to the nearest dollar).
a. $4,205
b. $9,450
c. $26,000
d. $30,847
Use the decision tree below for the next 2 problems.
Payoffs
S1
0.30
$75,000
S2
0.70
$25,000
S1
0.30
$5,000
S2
0.70
$70,000
S1
0.30
$60,000
S2
0.70
$55,000
A
B
C
24.
(4 pts) For the decision tree above, determine the expected value for decision option A.
a. $25,000
b. $40,000
c. $50,000
d. $75,000
25.
(4 pts) For the decision tree above, the optimal decision and expected payoff is:
a. Decision A, $75,000
b. Decision B, $50,500
c. Decision B, $70,000
d. Decision C, $56,500
26.
(4 pts) Given an actual demand of 220 for Jan., a Jan. forecast value of 205, and an alpha of 0.3, the
exponential smoothing forecast for the next Feb. would be
a. 200.5
b. 209.5
c. 215.5
d. 224.5
27.
(4 pts) What is the forecast for May using a four-month moving average?
Nov. Dec. Jan. Feb. Mar. April
39
36
40
38 48
46
a. 38.3
b. 40.5
c. 41.2
d. 43.0
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Exam I
Spring 2003
Southlands Corporation’s decision to produce a new line of recreational products has resulted in the need to
construct either a small plant or a large plant. The selection of plant site depends on how the marketplace
reacts to the new product line. To conduct an analysis, marketing management has decided to view the
possible long-run demands as low, medium, or high. The following payoff table shows the projected profit
in millions of dollars. Use this information to answer the next 2 questions.
Decision
Alternatives
Small plant
Large plant
Long-Run Demand
0.2
0.6
0.2
Low Medium High
150
200
200
50
200
500
28.
(3 pts) Determine the best decision and payoff using the equally like criterion.
a. Small plant, $183
b. Small plant, $200
c. Large plant, $250
d. Large plant, $500
29.
(4 pts) Determine the EVoPI (expected value of perfect information) for Southlands Corporation’s
decision given in the previous question.
a. 20
b. 60
c. 230
d. 250
30.
(4 pts) Below is a table that contains the forecast and actual demand for the last six weeks.
Week Forecast Actual
1
108
104
2
107
109
3
103
108
4
106
107
5
103
106
6
100
107
Determine the MAD for these six weeks.
a. -2.3
b. 0.0
c. 2.3
d. 3.7
31.
(4 pts) An automobile dealership has determined that the number of cars sold is seasonal. Below is
last year’s demand. Determine the seasonal index for Q1.
Quarter Car Sales
Q1
260
Q2
311
Q3
479
Q4
422
a.
b.
c.
d.
0.18
0.71
1.30
1.15
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Exam I
Spring 2003
Formulas for Exam 1
EVoPI  EVwPI  MaxExpectedValue
Ft  Ft 1    At 1  Ft 1 
ActualDemand
AverageDemand
SeasonalIn dex 
MAD 
 ForecastErrors
n
 ForecastErrors 
MSE 
2
n
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