Course Introduction
Business Decision Making
Practice Questions
Business Decision Making explores the frameworks, tools, and analytical approaches that managers use to evaluate options and make strategic choices within organizations. The course covers problem identification, data analysis, risk assessment, and the application of quantitative and qualitative decision-making methods. Students learn to recognize biases, consider ethical implications, and integrate financial, market, and operational information to support sound business decisions. By the end of the course, participants are equipped with the skills to make informed recommendations in complex and uncertain business environments.
Recommended Textbook
Business Analytics Data Analysis and Decision Making 5th Edition by S. Christian Albright
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Page 2
Chapter 1: Introduction to Data Analysis and Decision Making
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Sample Questions
Q1) Which of the following is an Excel add-in for performing what-if analyses?
A) PrecisionTree
B) TopRank
C) Solver
D) @Risk
E) StatTools
Answer: B
Q2) Which of the following would not be included under data analysis?
A) Measuring uncertainty
B) Data description
C) Data inference
D) Search for relationships
Answer: A
Q3) Data analysis includes
A) data description
B) data inference
C) the search for relationships in data
D) All of these options
Answer: D
Page 3
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Chapter
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Sample Questions
Q1) In the term "frequency table," frequency refers to the counts of observations in specified categories.
A)True
B)False
Answer: True
Q2) What measure of distribution relates to extreme events,such as a stock market crash?
A) asymmetric
B) kurtosis
C) negatively skewed
D) skewness
Answer: B
Q3) Cross-sectional data are data on a population at a distinct point in time,whereas time series data are data collected over time.
A)True
B)False
Answer: True
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Chapter 3: Finding Relationships Among Variables
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Sample Questions
Q1) The most common data format is
A) long
B) short
C) stacked
D) unstacked
Answer: C
Q2) The tool that provides useful information about a data set by breaking it down into categories is the
A) histogram
B) scatterplot
C) pivot table
D) spreadsheet
Answer: C
Q3) Correlation can be affected by the measurement scales applied to X and Y variables.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Probability and Probability Distributions
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Sample Questions
Q1) The probability that event A will not occur is denoted as \(P ( \bar { A } )\).
A)True
B)False
Q2) The number of people entering a shopping mall on a given day is an example of a discrete random variable.
A)True
B)False
Q3) The time students spend in a computer lab during one day is an example of a continuous random variable.
A)True
B)False
Q4) Suppose A and B are two events where P(A)= 0.5,P(B)= 0.4,and P(A and B)= 0.2,then P(B/A)= 0.5.
A)True
B)False
Q5) The law of large numbers is relevant to the estimation of A) objective probabilities
B) subjective probabilities
C) both objective and subjective probabilities
D) neither objective nor subjective probabilities
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Chapter 5: Normal, Binomial, Poisson,
and Exponential
Distributions
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Sample Questions
Q1) Which of the following equations shows the process of standardizing?
A)
\(E ( X ) = n p\)
B)
\(Z = ( X - \mu \mid \sigma )\)
C)
\(f ( X ) = 1 - \sigma ( \mu )\)
D)
\(E ( Y ) = \mu\)
Q2) A binomial distribution with n number of trials,and probability of success p can be approximated well by a normal distribution with mean np and variance \(\sigma ^ { 2 } = n p ( 1 - p ) \text { if } n p > 5 \text { and } n ( 1 - p ) > 5\)
A)True
B)False
Q3) A random variable X is normally distributed with a mean of 175 and a standard deviation of 50.Given that X = 150,its corresponding Z- score is -0.50.
A)True
B)False
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Chapter 6: Decision Making Under Uncertainty
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Sample Questions
Q1) Utility function is a function that encodes a person's or company's feelings toward risk.
A)True B)False
Q2) The expected value of perfect information (EVPI)is the most the decision maker would be willing to pay for the sample information.
A)True B)False
Q3) In making decisions,we choose the decision with the largest expected monetary value.
A)True
B)False
Q4) Mathematically,the utility function for risk adverse individuals is said to be _____________ and/or _______________.
A) decreasing,linear
B) decreasing,convex
C) increasing,linear
D) increasing,concave
E) increasing,decreasing
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Chapter 7: Sampling and Sampling Distributions
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Sample Questions
Q1) The approximate 95% confidence interval for a population mean is:
A)
\(x \pm \sigma / \sqrt { n }\)
B)
\(x \pm s / \sqrt { n }\)
C)
\[X \pm 2 \sigma / \sqrt { n }\]
D)
\(x \pm 2 s l \sqrt { n }\)
Q2) An unbiased estimate is a point estimate such that the mean of its sampling distribution is equal to the true value of the population parameter being estimated.
A)True
B)False
Q3) A list of all members of the population is called a:
A) sampling unit
B) probability sample
C) frame
D) relevant population
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9
Chapter 8: Confidence Interval Estimation
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Sample Questions
Q1) The approximate standard error of the point estimate of the population total is \(N s / \sqrt { n }\) .
A)True B)False
Q2) Samples of exam scores for employees before and after a training class would be examples of paired data
A)True B)False
Q3) Two independent samples of sizes 20 and 25 are randomly selected from two normal populations with equal variances.In order to test the difference between the population means,the test statistic is:
A) a standard normal random variable
B) approximately standard normal random variable
C) t-distributed with 45 degrees of freedom
D) t-distributed with 43 degrees of freedom
Q4) If two samples contain the same number of observations,then the data must be paired.
A)True B)False
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Chapter 9: Hypothesis Testing
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Sample Questions
Q1) A null hypothesis can only be rejected at the 10% significance level if and only if:
A) a 90% confidence interval includes the hypothesized value of the parameter
B) a 90% confidence interval does not include the hypothesized value of the parameter
C) the null hypothesis is biased
D) the null hypotheses includes sampling error
Q2) The hypothesis that an analyst is trying to prove is called the:
A) elective hypothesis
B) alternative hypothesis
C) optional hypothesis
D) null hypothesis
Q3) The analyst gets to choose the significance level \(a\) .It is typically chosen to be 0.50,but it is occasionally chosen to be 0.05.
A)True
B)False
Q4) The test statistic for a hypothesis test of a population proportion is the z-value. A)True
B)False
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Chapter 10: Regression Analysis: Estimating Relationships
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Sample Questions
Q1) The regression line \(\hat { Y } = 3 + 2.5 X\) Has been fitted to the data points (28,60), (20,50), (10,18),and (25,55).The sum of the squared residuals will be:
A) 20.25
B) 16.00
C) 49.00
D) 94.25
Q2) If a scatterplot of residuals shows a parabola shape,then a logarithmic transformation may be useful in obtaining a better fit
A)True
B)False
Q3) The percentage of variation (R<sup>2</sup>)ranges from A) 0 to +1
B) -1 to +1
C) -2 to +2
D) -1 to 0
Q4) The least squares line is the line that minimizes the sum of the residuals.
A)True
B)False
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Chapter 11: Regression Analysis: Statistical Inference
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Sample Questions
Q1) In order to test the significance of a multiple regression model involving 4 explanatory variables and 40 observations,the numerator and denominator degrees of freedom for the critical value of F are 4 and 35,respectively.
A)True
B)False
Q2) Suppose that one equation has 3 explanatory variables and an F-ratio of 49.Another equation has 5 explanatory variables and an F-ratio of 38.The first equation will always be considered a better model.
A)True
B)False
Q3) The t-value for testing \(H _ { 0 } : B _ { i } = 0\) Is calculated using which of the following equations:
A) n - k - 1
B) \(\sum \left( X _ { i } / Y _ { i } \right)\)
C) \(B _ { j } / s _ { i }\)
D)
\[b _ { i } / s _ { b _ { i } }\]
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Chapter 12: Time Series Analysis and Forecasting
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Q1) The time series component that reflects a long-term,relatively smooth pattern or direction exhibited by a time series over a long time period,is called seasonal.
A)True
B)False
Q2) If the span of a moving average is large - say,12 months - then few observations go into each average,and extreme values have relatively large effect on the forecasts.
A)True
B)False
Q3) A regression approach can also be used to deal with seasonality by using variables for the seasons.
A) smoothing B) response
C) residual D) dummy
Q4) Every form of exponential smoothing model has at least one smoothing constant,which is always between 0 and 1.
A)True
B)False
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Chapter 13: Introduction to Optimization Modeling
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Sample Questions
Q1) In most cases in solving linear programming problems,we want the decision variables to be:
A) equal to zero
B) nonnegative
C) nonpositive
D) All of these options
Q2) The term nonnegativity refers to the condition where:
A) the objective function cannot be less than zero
B) the decision variables cannot be less than zero
C) the right hand side of the constraints cannot be greater than zero
D) the reduced cost cannot be less than zero
Q3) When using the graphical solution method to solve linear programming problems,the set of points that satisfy all constraints is called the:
A) optimal region
B) feasible region
C) constrained region
D) logical region
Q4) There is often more than one objective in linear programming problems
A)True
B)False
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Chapter 14: Optimization Models
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Sample Questions
Q1) A minimum cost network flow model (MCNFM)has the following advantage relative to the special case of a simple transportation model:
A) a MCNFM does not require capacity restrictions on the arcs of the network
B) the flows in a general MCNFM don't all necessarily have to be from supply locations to demand locations
C) a MCNFM is generally easier to formulate and solve
D) All of these options
Q2) In a transportation problem,if it costs $4 per item to ship up to 200 items between cities,and $2 per item for each additional item,the proportionality assumption of LP is satisfied.
A)True
B)False
Q3) The flows in a general minimum cost network flow model (MCNFM)do all necessarily have to be from "left to right";that is,from supply points to demand points.
A)True
B)False
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16
Chapter 15: Introduction to Simulation Modeling
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Sample Questions
Q1) If a model contains uncertain outputs,it can be very misleading to build a deterministic model by using the means of the inputs to predict an output.This is called the:
A) Law of Large Numbers.
B) Flaw of Averages
C) Law of Inevitable Disappointment
D) Central Limit Theorem
Q2) Which of the following statements are false regarding the numbers generated by the RAND function in Excel?
A) The numbers are random between 0 and 1
B) The numbers are probabilistically dependent
C) The numbers are probabilistically independent
D) The numbers are uniformly distributed between 0 and 1
Q3) One of the primary advantages of simulation models that they enable managers to answer what-if questions about changes in systems without actually changing the systems themselves.
A)True
B)False
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Chapter 16: Simulation Models
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Sample Questions
Q1) In a bidding model,once we have the bidding strategy that maximizes the expected profit,we no longer should consider the bidders risk aversion.
A)True
B)False
Q2) 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
Q3) Cash balance models are an example of which of the following types of simulation application?
A) Operations models
B) Financial models
C) Marketing models
D) Games of chance
E) None of these options
Q4) In investment models,we typically must simulate the random investment weights
A)True
B)False
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Chapter 17: Data Mining
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Sample Questions
Q1) Which methodology is used to group products that customers purchase together?
A) Market basket analysis
B) Prediction
C) Classification analysis
D) Forecasting
Q2) Bridget has partitioned data into two subsets.The original file contains 300,000 observations.The subset she is currently working with has 60,000 observations.Which subset is she most likely to be using?
A) The training set
B) The original set
C) The testing set
D) The prediction set
Q3) A facts table has:
A) few rows and many columns
B) many rows and many columns
C) many rows and few columns
D) few rows and few columns
Q4) Clustering is considered a supervised data mining technique.
A)True
B)False
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Chapter 18: Importing Data Into Excel
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Sample Questions
Q1) Real-world datasets usually do not require any cleansing because they do not contain missing data or typographical errors.
A)True
B)False
Q2) Text files are also known as:
A) Excel spreadsheets
B) Excel workbooks
C) ASCII files
D) Notepad files
Q3) The data in the accompanying figure was imported using "Text Import Wizard." How did the first three rows of text data appear in the text file prior to importing?
Q4) If you had imported the data using 'fixed width,' how would the output have changed?
Q5) A primary key contains a unique,specific value that is not duplicated through any instances within that field.
A)True
B)False
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Chapter 19: Analysis of Variance and Experimental Design
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Sample Questions
Q1) Jeremiah is testing the impact of different fertilizers on crop yields.Six different fertilizers have been applied to one field.Suppose he uses an ANOVA to test whether or not there are differences in yields.How many treatments are in this test?
A) zero
B) one
C) five
D) six
Q2) In two-way ANOVA,a single variable is measured at various levels of a single factor.
A)True
B)False
Q3) Which p-value from a two-way ANOVA table indicates an effect that is not statistically significant?
A) 0.000
B) 0.011
C) 0.047
D) 0.110
Q4) What does the ANOVA output in the accompanying figure indicate?
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21
Chapter 20: Statistical Process Control
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Sample Questions
Q1) "Tampering" can actually make a system worse.
A)True
B)False
Q2) Michael has incorporated a vigorous cross-training program within his department.This is an example of which of Deming's 14 points?
A) Improve Every Process.
B) Institute Training.
C) Drive Out Fear.
D) Encourage Education.
Q3) Out-of control indicators may include a number of conditions.What is not one of these?
A) At least 8 upward (or downward)consecutive changes
B) At least 8 consecutive points above (or below)the centerline
C) At least 1 point beyond two standard deviations from the centerline
D) At least 4 of 5 consecutive points beyond one standard deviation from the centerline
Q4) Morgan is now using a smaller sample size,but she has forgotten to adjust the upper and lower limits to reflect the smaller sample size.What is likely to occur as she manually plots observations on the chart?
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Page 22