Applied Management Science
Exam Questions
Course Introduction
Applied Management Science explores the use of quantitative and analytical methods to solve complex business problems and improve decision-making processes. The course covers key techniques such as linear programming, decision analysis, forecasting, simulation, and project management, emphasizing their practical application in areas like operations, finance, marketing, and resource allocation. Students will learn to apply these methods using real-world case studies and software tools, developing skills to analyze data, create models, and provide actionable recommendations for organizational effectiveness and efficiency.
Recommended Textbook
Spreadsheet Modeling and Decision Analysis 7th Edition by Cliff Ragsdale
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Page 2
Chapter 1: Introduction to Modeling and Decision Analysis
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Sample Questions
Q1) A mathematical model is considered to be "valid" when
A)it accurately represents the relevant characteristics of the object or decision.
B)it has passed a validation test.
C)it replicates all aspects of the object or decision.
D)the left-hand and right-hand sides of expressions are equal.
Answer: A
Q2) The essence of decision analysis is:
A)breaking down complex situations into manageable elements.
B)choosing the best course of action among alternatives.
C)finding the root cause of why something has gone wrong.
D)thinking ahead to avoid negative consequences.
Answer: B
Q3) The notion that every problem is also an opportunity is reflected in the term A)probortunity.
B)formulation.
C)simulation.
D)business opportunity.
Answer: A
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3
Chapter 2: Introduction to Optimization and Linear Programming
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Sample Questions
Q1) Solve the following LP problem graphically by enumerating the corner points.
MAX: <sup>4 X</sup><sub>1 </sub><sup>+ 3 X</sup><sub>2</sub>
Subject to: <sup>6 X</sup><sub>1 </sub><sup>+ 7 X</sup><sub>2 </sub><sup> 84</sup>
X<sub>1 </sub> 10
X<sub>2 </sub> 8 X<sub>1</sub>,X<sub>2 </sub> 0
Answer: Obj = 50.28
X<sub>1 </sub>= 10
X<sub>2 </sub>= 3.43
Q2) Solve the following LP problem graphically by enumerating the corner points.
MAX: <sup>2 X</sup><sub>1 </sub><sup>+ 7 X</sup><sub>2</sub>
Subject to: <sup>5 X</sup><sub>1 </sub><sup>+ 9 X</sup><sub>2 </sub><sup> 90</sup>
9 X<sub>1 </sub>+ 8 X<sub>2 </sub> 144
X<sub>2 </sub> 8 X<sub>1</sub>,X<sub>2 </sub> 0
Answer: Obj = 63.20
X<sub>1 </sub>= 3.6
X<sub>2 </sub>= 8
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Chapter 3: Modeling and Solving Lp Problems in a Spreadsheet
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Sample Questions
Q1) Which of the following describes Data Envelopment Analysis DEA).
A)DEA finds the most effective company among some set of companies.
B)DEA determines if a company is converting inputs to outputs as effectively as possible.
C)DEA determines how effective a company converts inputs to outputs compared to other companies.
D)DEA compares how effective a company converts inputs to outputs compared to a benchmark composite of all companies.
Answer: C
Q2) Models which are setup in an intuitively appealing,logical layout tend to be the most
A)Reliable
B)Modifiable
C)Auditable
D)Organized
Answer: C
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Page 5
Chapter 4: Sensitivity Analysis and the Simplex Method
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Q1) A manager should consider how sensitive the model is to changes in all of the following except
A)differential coefficients.
B)objective function coefficients.
C)constraint coefficients.
D)right-hand side values for constraints.
Q2) When a solution is degenerate the shadow prices and their ranges
A)may be interpreted in the usual way but they may not be unique.
B)must be disregarded.
C)are always valid and unique.
D)are always understated
Q3) All of the following are true about a variable with a negative reduced cost in a maximization problem except
A)its objective function coefficient must increase by that amount in order to enter the basis.
B)it is at its simple lower bound.
C)it has surplus resources.
D)the objective function value will decrease by that value if the variable is increased by one unit.
Q4) Refer to Exhibit 4.1.Are there alternate optimal solutions to this problem?
Page 6
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Chapter 5: Network Modeling
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Q1) The idea that the total flow into a node must be consumed at a node and the remainder must flow out of a node is referred to as:
A)the conservation of flow principle
B)the node-arc incidence matrix
C)a directed chain
D)integrality constraint
Q2) Which method is preferred for solving minimal spanning tree problems?
A)linear programming
B)transshipment models
C)simulation
D)manual algorithms
Q3) In generalized network flow problems
A)solutions may not be integer values.
B)flows along arcs may increase or decrease.
C)it can be difficult to tell if total supply is adequate to meet total demand.
D)all of these.
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Chapter 6: Integer Linear Programming
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Sample Questions
Q1) Refer to Exhibit 6.1.What formula should go in cell D15 of the above Excel spreadsheet?
Q2) A company will be able to obtain a quantity discount on component parts for its three products,X<sub>1</sub>,X<sub>2 </sub>and X<sub>3 </sub>if it produces beyond certain limits.To get the X<sub>1 </sub>discount it must produce more than 50 X<sub>1</sub>'s.It must produce more than 60 X<sub>2</sub>'s for the X<sub>2 </sub>discount and 70 X<sub>3</sub>'s for the X<sub>3 </sub>discount.How many binary variables are required in the formulation of this problem?
A)3
B)6
C)9 D)12
Q3) Binary decision variables:
A)are either 0 or 1
B)must be integers
C)may be continuous
D)may be negative
Q4) Refer to Exhibit 6.2.What formula would go into cells B11:E11 and cells F8:F10?
Q5) Refer to Exhibit 6.2.What formula would go into cell E14?
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Chapter 7: Goal Programming and Multiple Objective
Optimization
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Q1) A manager wants to ensure that he does not exceed his budget by more than $1000 in a goal programming problem.If the budget constraint is the third constraint in the goal programming problem which of the following formulas will best ensure that the manager's objective is met?
A)\(\text { MIN } d_{3}^{+}\)
B)\(\mathrm{d}_{3}^{-} \geq 1000\)
C)\(\mathrm{d}_{3}{ }^{+}=1000\)
D)\(\mathrm{d}_{3}{ }^{+} \leq 1000\)
Q2) Goal programming problems
A)typically include a set of multiple goals
B)cannot include hard constraints
C)consist of soft constraints only
D)must have a single objective function
Q3) Goal programming GP)is:
A)iterative
B)inaccurate
C)static
D)all of the above
Q4) Refer to Exhibit 7.4.What formulas should go in cell E26 of the spreadsheet?
Page 9
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Chapter 8: Nonlinear Programming and Evolutionary Optimization
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Sample Questions
Q1) In the GRG algorithm the initial solution is called the A)originating point.
B)insertion point.
C)zero point.
D)starting point.
Q2) A construction company just purchased a 300 × 300 foot lot upon which they plan to build an office building.They need at least 60,000 ft<sup>2 </sup>of office floor space.Zoning regulations require each floor be 10 feet high and the building not exceed 65 ft in height.Further,parking space must equal at least 30% of the total floor space available.The company's cost accountant uses a 60% factor of the building height and a 1% factor of any story's floor area to calculate the total building cost in millions of dollars). Formulate the NLP for the problem.
Q3) Refer to Exhibit 8.1.What formula is used in cell D12 of the spreadsheet for this problem?
A)=SUMPRODUCTB3:C3,B12:C12)
B)=SUMPRODUCTB4:C4,B12:C12)
C)=SUMPRODUCTB5:C5,B12:C12)
D)=SUMPRODUCTB7:C7,B12:C12)
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Chapter 9: Regression Analysis
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Q1) Refer to Exhibit 9.4.Based on the data in the table which is the best model for the charity to use? Explain which values you used to reach your conclusion.
Q2) A pattern resulting from random variation or unexplained causes is called
A)noise
B)trend
C)seasonality
D)time series
Q3) The <sub>1</sub><sub> </sub>term indicates
A)the average change in Y for a unit change in X.
B)the Y value for a given value of X.
C)the change in observed X for a given change in Y.
D)the Y value when X equals zero.
Q4) The R<sup>2</sup><sup> </sup>statistic
A)varies between 1 and 1.
B)compares the regression sum of squares to the total sum of squares.
C)accounts for the number of parameters in the regression model.
D)is the ratio of the error sum of squares to the regression sum of squares.
Q5) Refer to Exhibit 9.1.Provide a rough 95% confidence interval on the number of labor hours for a batch of 5 parts.
Page 11
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Chapter 10: Data Mining
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Sample Questions
Q1) Refer to Exhibit 10.1.The university has received applications from several new students and would like to predict which group they would fall into.What is the discriminant score for a student with a Quantitative score of 686 and a Verbal score of 601.Use five 5)significant figures in your coefficients.
A)1.29 ? discriminant score ? 1.30
B)1.69 ? discriminant score ? 1.70
C)2.69 ? discriminant score ? 2.70
D)6.05 ? discriminant score ? 6.06
Q2) Refer to Exhibit 10.1.How many observations are classified correctly?
A)11
B)9
C)17
D)20
Q3) Refer to Exhibit 10.2.What is the quantitative test score value of the group centroid for group 2?
A)697.71
B)647.86
C)587.67
D)650.43
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Page 12
Chapter 11: Time Series Forecasting
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Sample Questions
Q1) Forecasting into distant future periods
A)is unreliable
B)is expensive
C)is easy
D)assumes changing data patterns
Q2) As the number of periods in the forecast,k,increases
A)the moving average prediction will be smoother.
B)it is harder to get a good forecast.
C)the forecast will respond more quickly to changes in the data.
D)the moving average will increase in value.
Q3) Refer to Exhibit 11.11.What formula should be entered in cell H3 to compute the Seasonal Forecast value for year 1 Quarter 1?
A)=F3*VLOOKUPB3,$B$18:$C$21,2)
B)=F3*HLOOKUPB3,$B$18:$B$21,2)
C)=F3*VLOOKUPB3,$B$18:$B$21,2)
D)=F3*VLOOKUPB3,$C$18:$C$21,2)
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Page 13
Chapter 12: Introduction to Simulation Using Analytic Solver
Platform
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Q1) Using the information in Exhibit 12.3,what formula should go in cell C9 and copied to C10:C21 of the MODEL sheet to compute units received?
A)=COUNT$J$8:J8,A9)*$D$4
B)=COUNTIF$J$8:J8,A8)*$C$4
C)=COUNTIF$J$8:J8,A9)*$D$5
D)=COUNTIF$J$8:J8,A9)*$D$4
Q2) Risk needs to be analyzed using models in order to
A)make decisions better than those based on informed guesses
B)obtain a feasible solution
C)obtain an optimal solution
D)confound the decision-making process
Q3) Inventory position is defined as
A)ending inventory + outstanding orders
B)ending inventory backorders
C)outstanding orders on hand inventory
D)ending inventory
Q4) What function should be used for generating random numbers from a normal distribution with mean and standard deviation between the values of a and b only?
Page 14
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Chapter 13: Queuing Theory
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Sample Questions
Q1) The service times for a grocery store with one checkout line have a mean of 3 minutes and a standard deviation of 20 seconds.Customer arrivals at the checkout stand follow a Poisson distribution.What type of system is it?
A)M/G/1
B)M/D/1
C)G/M/1
D)M/M/1
Q2) The M/D/1 model results can be derived from which of the following systems?
A)M/M/1 with = 0
B)M/G/1 with = 0
C)M/G/1 with = 0
D)M/M/2 with finite queue length.
Q3) Refer to Exhibit 13.1.What is the probability that a customer can go directly into service without waiting in line?
A)0.00
B)0.25
C)0.75
D)1.00
Q4) Refer to Exhibit 13.7.What is the Kendall notation for this system?
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Chapter 14: Decision Analysis
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Sample Questions
Q1) Every nonprobabilistic method has a weakness for decision making.Which of the following is incorrect regarding a method and its weakness?
A)The maximax method ignores potentially large losses.
B)The maximin method ignores potentially large payoffs.
C)The minimax regret method can lead to inconsistent decisions.
D)All of these are correct.
Q2) Refer to Exhibit 14.9.What decision should be made according to the minimax regret decision rule?
Q3) Refer to Exhibit 14.10.Complete the table using the expected monetary value decision rule and indicate which decision should be made according to that rule.
Q4) Refer to Exhibit 14.8.What formula should go in cell C7 and get copied to D7:E7 of the Summary worksheet to compute the Weighted Average Score?
A)=SUMPRODUCTC4:E4,$G$4:$G$6)
B)=SUMPRODUCTC4:C6,$C$5:$C$7)
C)=SUMPRODUCT$G$4,$G$6)
D)=SUMPRODUCTC4:C6,$G$4:$G$6)
Q5) Refer to Exhibit 14.12.What is the decision maker's certainty equivalent for this problem?
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Chapter 15: Project Management Online
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Sample Questions
Q1) CPM and PERT differ because of
A)activity time estimates
B)cost calculations
C)precedence relationship
D)network diagram
Q2) The longest path through a network is comprised of the activities.
A)longest
B)essential
C)mandatory
D)critical
Q3) One of PERT's bold assumptions is that
A)individual activity times are independent of each other.
B)individual activity times are dependent of each other.
C)individual activity times are constant.
D)individual activity times can be added together.
Q4) Refer to Exhibit 15.5.What formula should go in cell H3 of the Costs spreadsheet to compute Crash Cost Per Day?
Q5) Refer to Exhibit 15.5.If the following project must be completed by day 18 at minimum cost how do we change the LP model?
Page 17
Q6) Refer to Exhibit 15.4.Draw the CPM network for this problem.Use AON notation.
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