Advanced Management Science Exam
Preparation Guide
Course Introduction
Advanced Management Science explores the application of quantitative analysis, mathematical modeling, and decision-making techniques to solve complex business problems. The course covers topics such as optimization, simulation, forecasting, and risk analysis, emphasizing evidence-based strategies in managerial planning and operations. Students learn to utilize advanced analytical tools and software to evaluate scenarios, allocate resources efficiently, and drive organizational effectiveness. Case studies and real-world examples illustrate how these scientific approaches inform executive decisions across various industries.
Recommended Textbook
Practical Management Science 5th Edition by Wayne L. Winston
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14 Chapters
421 Verified Questions
421 Flashcards
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Chapter 1: Introduction to Modeling
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Sample Questions
Q1) One of the advantages of spreadsheet models is that they allow managers to ask what-if questions.
A)True
B)False
Answer: True
Q2) In a descriptive model, the manager first wants to build a model that reflects the current situation.
A)True
B)False
Answer: True
Q3) Verification is typically the most difficult phase of the modeling process, from a mathematical perspective.
A)True
B)False
Answer: False
Q4) A good model should achieve the right balance between being too simple and too complex.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Introduction to Spreadsheet Modeling
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Sample Questions
Q1) Refer to Exhibit 2-1. Suppose that blank t-shirts can only be ordered from the wholesale vendor in batches of 100? How many t-shirts should the company order?
Answer: We can set up a one-way data table with net profit as the output and order as the input (with trial quantities of 500, 600, 700, 800, 900, and 1000), which shows that the net profit is maximized at $4900 with an order of 700 shirts.
Q2) Which of the following is a useful tool for understanding and troubleshooting a spreadsheet model?
A)Data tables
B)VLOOKUP function
C)Formula auditing
D)SUMPRODUCT function
Answer: C
Q3) A shortcut for establishing absolute references is pressing the F9 key.
A)True
B)False
Answer: False
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4
Chapter 3: Introduction to Optimization Modeling
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Sample Questions
Q1) Consider the following linear programming problem: The above linear programming problem: Maximize
4x1 + 2y2
Subject to:
4x1 + 2y2 40
2x1 + y2 20
X1, y2 0
A)has only one feasible solution
B)has more than one optimal solution
C)exhibits infeasibility
D)exhibits unboundedness
Answer: C
Q2) Refer to Exhibit 3-2. What is the incremental contribution associated with adding an hour of assembly time? Over what range of increase is the marginal value valid?
Answer: Incremental contribution is $2 per hour, with an allowable increase of 25 hours.
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Chapter 4: Linear Programming Models
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Sample Questions
Q1) Multiple optimal solutions are quite common in linear programming models.
A)True
B)False
Q2) If we round the optimal values in the changing cells of a linear programming model, this is a good approximation of the integer programming solution.
A)True
B)False
Q3) Refer to Exhibit 4-4. Assuming that all fertilizer produced can be sold, determine the optimal blending plan for the company. What is the maximum profit?
Q4) In aggregate planning models, we can model backlogging of demand by allowing a month's inventory to be negative.
A)True
B)False
Q5) [Part 2] Refer to Exhibit 4-3. What happens to the revenue when the optimal plan changes to the one given in Part 1?
Q6) Refer to Exhibit 4-2. Determine the optimal staffing plan for the project.
Q7) Refer to Exhibit 4-1. Use Solver to formulate and solve the hospital's problem.
Q8) Refer to Exhibit 4-3. Determine the optimal processing plan for the meat market.
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Chapter 5: Network Models
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Sample Questions
Q1) The flow balance constraint for each transshipment node in a network flow model has the form Flow in = Flow out.
A)True
B)False
Q2) Refer to Exhibit 5-2. Based on their salaries, the engineer, tech 1, tech 2, and intern earn $90, $65, $65, and $45 per hourly, respectively. Change the firm's objective function to minimize staff costs and find the optimal assignment plan. Does it change from the base case?
Q3) Refer to Exhibit 5-3. What general type of LP model can be applied to this problem? What modifications to the general type are required for this problem?
Q4) In transportation problems, shipments between supply points or between demand points are possible.
A)True
B)False
Q5) Refer to Exhibit 5-2. Implement a LP model in Solver and determine the optimal monthly assignment plan for the firm. What is the total number of hours that will be assigned to projects each month?
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Chapter 6: Optimization Models With Integer Variables
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Sample Questions
Q1) Refer to Exhibit 6-1. This problem is an example of what type of integer programming model?
Q2) In a model with 8 changing cells, all of which are constrained to be binary, the number of potentially feasible solutions is:
A)4
B)8
C)64 D)256
Q3) Rounding the solution of a linear programming to the nearest integer values provides an:
A)integer solution that is optimal
B)integer solution that is not optimal
C)integer solution that might be optimal
D)infeasible solution
Q4) Refer to Exhibit 6-2. What is Sinclair's optimal shipping plan? What is the total cost in that case?
Q5) Refer to Exhibit 6-2. Suppose the shipping capacity for all routes is 3000 tons per month. What is Sinclair's optimal shipping plan in that case? What is the total cost in that case?
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Chapter 7: Nonlinear Optimization Models
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Q1) Refer to Exhibit 7-4. Suppose you set the weights in the portfolio to a maximum of 0.45 for each stock. Is it possible to achieve a 12% return? What is the portfolio standard deviation in that case?
Q2) Solver is guaranteed to find the global minimum (if it exists) if the objective function is concave and the constraints are linear.
A)True
B)False
Q3) If you try different starting values for the changing cells and obtain different solutions:
A)you can be confident there is no solution
B)there must be a mistake in your objective function
C)there must be a mistake in one of your constraints
D)you can keep the best solution you have found and hope that it is indeed optimal
Q4) The sum of two concave functions is concave.
A)True
B)False
Q5) Refer to Exhibit 7-1. How many units of each product should the company produce? What prices should it charge, to maximize profit?
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Chapter 8: Evolutionary Solver: An Alternative Optimization
Procedure
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Sample Questions
Q1) In cluster analysis, the number of clusters is usually assigned ahead of time. A)True
B)False
Q2) The data used to classify members in a discriminant analysis is called a:
A)group
B)cluster
C)training sample
D)population
Q3) In Evolutionary Solver, the initial population is chosen randomly, so the starting solution you enter in the changing cells is irrelevant.
A)True
B)False
Q4) Refer to Exhibit 8-4. Suppose Steve's company decides to locate a second salesperson in the region. Steve will now cover only Denver, Albuquerque, El Paso, Phoenix and Salt Lake City. The second salesperson will cover Los Angeles, San Diego, San Francisco, Portland, Seattle and Las Vegas. Formulate and solve shortest-path models for both salespersons. Is the total mileage for both salespersons more or less than in the case where Steve is the only salesperson?
Q5) Refer to Exhibit 8-1. This is an example of what type of optimization problem?
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Chapter 9: Decision Making Under Uncertainty
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Sample Questions
Q1) Refer to Exhibit 9-1. Construct a risk profile and from that determine the probability that no additional cost is incurred if the decision to insulate at a cost of $20,000 is made.
Q2) All problems related to decision making under uncertainty have three common elements:
A)the mean, median, and mode
B)the set of decisions, the cost of each decision and the profit that can be made from each decision
C)the set of possible outcomes, the set of decision variables and the constraints
D)the set of decisions, the set of possible outcomes, and a value model that prescribes results
Q3) For a risk averse decision maker, the certainty equivalent is less than the expected monetary value (EMV).
A)True
B)False
Q4) Refer to Exhibit 9-1. Find the highest cost of insulating the grapefruits for which the farmer prefers to insulate his crop.
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Chapter 10: Introduction to Simulation Modeling
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Sample Questions
Q1) The primary difference between simulation models and other types of spreadsheet models is that simulation models contain ____:
A)deterministic inputs
B)random numbers
C)output cells
D)constraints
Q2) Refer to Exhibit 10-2. Total sales is a product of three different types of input distributions. What does the output distribution look like? What is the standard deviation of the total sales? What are the 5th and 95th percentiles of this distribution?
Q3) The RAND() function in excel models which of the following probability distributions?
A)Normal(0,1)
B)Uniform(0,1)
C)Normal( 1,1)
D)Uniform( 1,1).
Q4) Refer to Exhibit 10-1. A little later on, management still believes the upper and lower bounds for the costs are $5M and $8M, but now they can also state that "we believe the most likely value is about $6.5M."
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Chapter 11: Simulation Models
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Q1) In warranty cost models, the key input random variable is product lifetime.
A)True
B)False
Q2) A key input variable in many marketing models of customer loyalty is the:
A)Mean profit per customer
B)Number of customers
C)Churn rate
D)Time horizon
Q3) A common distribution for modeling product lifetimes is the normal distribution
A)True
B)False
Q4) [Part 3] Refer to Exhibit 11-2. Briefly explain why designing the plant for the expected capacity is clearly not the optimal solution.
Q5) RISKTARGET is a function that allows us to determine the cumulative probability of a particular value in an output distribution, such as the probability of meeting a due date in manufacturing.
A)True B)False
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Chapter 12: Inventory and Supply Chain Models
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Sample Questions
Q1) An order cycle begins each time an order arrives and ends just before the next order arrives.
A)True
B)False
Q2) Promoters of the Mulligan Golf tournament order sets of special edition clubs for $300 each that are sold during the tournament for $800 per set. Once the tournament is over, unsold sets are donated to the local Boys and Girls Clubs to be used by underprivileged youth. Based on past experience, they believe that demand for the sets will follow the Gamma distribution with alpha equal to 50 and beta equal to 20. How many sets of clubs should they order to maximize expected profit?
Q3) Which of the following is not one of the assumptions in an economic order quantity (EOQ) model?
A)Orders can be placed at any time
B)Demand is constant
C)Lead time for delivery of the product from the supplier is constant
D)Annual holding cost is constant
Q4) Refer to Exhibit 12-1. Assuming there are no storage costs, formulate a Solver model and find the optimal order quantity.
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Page 14
Chapter 13: Queuing Models
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Sample Questions
Q1) As the traffic intensity approaches 1:
A)there is no waiting
B)waiting lines stabilize
C)waiting lines grow extremely rapidly
D)at least one server will be idle
Q2) Which of the following is not one of the important issues defining types of arrivals in a queuing system?
A)Whether customers arrive one at a time or in batches.
B)Whether customers are all essentially alike or are in separate priority classes.
C)Whether customers have been through the system before or not
D)Whether customers will wait in line or not
Q3) Refer to Exhibit 13-2. What is the server utilization?
Q4) The mean and standard deviation of an exponential distribution are both equal to the parameter .
A)True
B)False
Q5) [Part 1] Refer to Exhibit 13-1. Is it reasonable to assume exponentially distributed interarrival times for the grocery store customers? If so, what is ?
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Chapter 14: Regression and Forecasting Models
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Sample Questions
Q1) The least squares line is the line that minimizes the sum of the residuals.
A)True
B)False
Q2) The percentage of variation explained R2 is the square of the correlation between the observed Y values and the fitted Y values.
A)True
B)False
Q3) Refer to Exhibit 14-2. Use the information above to estimate the linear regression model.
Q4) In reference to the equation , the value 0.10 is the expected change in Y per unit change in X.
\[\hat { Y } = - 0.70 + 0.10 X\]
A)True
B)False
Q5) A time series can consist of four different components: trend, seasonal, cyclical, and random (or noise).
A)True B)False
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