Management Decision Analysis
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Course Introduction
Management Decision Analysis explores the quantitative and qualitative tools and methodologies used to inform and enhance decision-making in organizational contexts. The course examines frameworks such as decision trees, risk analysis, forecasting, simulation, and optimization, as well as behavioral aspects influencing managerial choices. Through practical case studies and real-world applications, students develop critical skills in identifying problems, evaluating alternatives, and implementing effective strategies. By integrating data analysis with managerial judgment, the course prepares students to make informed, evidence-based decisions in complex and uncertain business environments.
Recommended Textbook
Managerial Decision Modeling 6th International Edition by Cliff
T. Ragsdale
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Chapter 1: Introduction to Modeling and Decision Analysis
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Q1) In a decision-making framework presented in Chapter One, the term "poetic justice" refers to a situation when the following occur:
A)Good decision quality and good outcome quality.
B)Good decision quality and bad outcome quality.
C)Bad decision quality and good outcome quality.
D)Bad decision quality and bad outcome quality.
Answer: D
Q2) Variables are termed independent when they satisfy which of the following?
A)The function value depends upon their values.
B)The decision maker has no control over them.
C)The variables have no relationship to one another.
D)The variable is described as an output of the spreadsheet model.
Answer: A
Q3) The ultimate goal of the problem identification step of the problem-solving process is
A)collecting lots of information.
B)helping the decision maker realize there is a problem.
C)identifying the root problem or problems causing the mess.
D)convincing the decision maker the mess is really a problem that can be solved.
Answer: C
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Chapter 2: Introduction to Optimization and Linear Programming
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Q1) A common objective when manufacturing printed circuit boards is
A)maximizing the number of holes drilled.
B)maximizing the number of drill bit changes.
C)minimizing the number of holes drilled.
D)minimizing the total distance the drill bit must be moved.
Answer: D
Q2) The constraint for resource 1 is 5 X<sub>1</sub> + 4 X<sub>2</sub> \(\ge\) 200. If X<sub>1</sub> = 40 and X<sub>2</sub> = 20, how many additional units, if any, of resource 1 are employed above the minimum of 200?
A)0
B)20
C)40
D)80
Answer: D
Q3) Which of the following is the general format of an objective function?
A)f(X<sub>1</sub>, X<sub>2</sub>, ..., X<sub>n</sub>) \(\le\)b
B)f(X<sub>1</sub>, X<sub>2</sub>, ..., X<sub>n</sub>) \(\ge\) b
C)f(X<sub>1</sub>, X<sub>2</sub>, ..., X<sub>n</sub>) = b
D)f(X<sub>1</sub>, X<sub>2</sub>, ..., X<sub>n</sub>)
Answer: D
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Chapter 3: Modeling and Solving Lp Problems in a Spreadsheet
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Sample Questions
Q1) Numeric constants should be
A)embedded in formulas.
B)placed in individual cells
C)placed in separate workbooks.
D)entered manually every time a model is solved.
Answer: B
Q2) Refer to Exhibit 3.1. Which cells should be the constraint cells in this problem?
A)B4:C4
B)E5
C)D8:D10
D)E8:E10
Answer: C
Q3) Refer to Exhibit 3.2. What formula should be entered in cell D8 in the accompanying Excel spreadsheet to compute the amount of wiring used?
A)=B4*B5+C4*C5
B)=SUMPRODUCT(B8:C8,$B$4:$C$4)
C)=SUM(B5:C5)
D)=SUM(E8:E10)
Answer: B
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Chapter 4: Sensitivity Analysis and the Simplex Method
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Q1) The allowable increase for a constraint is
A)how many more units of resource to purchase to maximize profits.
B)the amount by which the resource can increase given shadow price.
C)how much resource to use to get the optimal solution.
D)the amount by which the constraint coefficient can increase without changing the final optimal value.
Q2) To convert \(\le\)constraints into = constraints the Simplex method adds what type of variable to the constraint?
A)slack
B)dummy
C)redundant
D)spreading
Q3) Binding constraints have
A)zero slack.
B)negative slack.
C)positive slack.
D)surplus resources.
Q4) Refer to Exhibit 4.2. Based on the Risk Solver Platform (RSP) sensitivity report information, is there anything Robert can request of his instructor to improve his final grade?
6
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Chapter 5: Network Modeling
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Q1) A network flow problem that allows gains or losses along the arcs is called a
A)non-constant network flow model.
B)non-directional, shortest path model.
C)generalized network flow model.
D)transshipment model with linear side constraints.
Q2) Decision variables in network flow problems are represented by A)nodes.
B)arcs.
C)demands.
D)supplies.
Q3) Demand quantities for demand nodes in a transshipment problem are customarily indicated by A)positive numbers.
B)negative numbers.
C)imaginary numbers.
D)either positive or negative numbers.
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Chapter 6: Integer Linear Programming
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Q1) Which of the following is not a benefit of using binary variables?
A)With only 2 values, Solver can work faster.
B)Binary variables are useful in selection problems.
C)Binary variables can replace some IF() conditions.
D)Binary variables can enforce logical conditions.
Q2) Refer to Exhibit 6.2. What formula would go into cell E14?
Q3) A manufacturing company has costs associated with production preparation and with per unit production. The per unit production costs are referred to as
A)decision variables.
B)production cost constraint coefficients.
C)variable costs.
D)marginal costs.
Q4) Refer to Exhibit 6.2. What formula would go into cells G8:G10?
Q5) A company wants to select 1 project from a set of 4 possible projects. Which of the following constraints ensures that only 1 will be selected?
A)X<sub>1</sub> + X<sub>2</sub> + X<sub>3</sub> + X<sub>4</sub> = 1
B)X<sub>1</sub> + X<sub>2</sub> + X<sub>3</sub> + X<sub>4</sub> \(\le\) 1
C)X<sub>1</sub> + X<sub>2</sub> + X<sub>3</sub> + X<sub>4</sub> \(\ge\)1
D)X<sub>1</sub> + X<sub>2</sub> + X<sub>3</sub> + X<sub>4</sub> \(\ge\) 0
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Chapter 7: Goal Programming and Multiple Objective
Optimization
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Q1) Refer to Exhibit 7.2. What formula goes in cell B11?
A)=SUMPRODUCT(B2:C2,$B$6:$C$6)/$D$7
B)=B2*C2+B3*C3
C)=SUMPRODUCT(B3:C3,$B$6:$C$6)/$D$7
D)=SUMPRODUCT(B3:C3,$B$6:$C$6)
Q2) Which of the following is false regarding a goal constraint?
A)A goal constraint allows us to determine how close a given solution comes to achieving a goal.
B)A goal constraint will always contain two deviational variables.
C)Deviation variables are non-negative.
D)If two deviation variables are used in a constraint at least one will have a value of zero.
Q3) Refer to Exhibit 7.1. Which of the following is a constraint specified to Risk Solver Platform (RSP) for this model?
A)$B$9:$E$9=$B$6:$E$6
B)$B$9:$E$9<$B$10:$E$10
C)$B$9:$E$9=$B$10:$E$10
D)$B$9:$E$9>$B$10:$E$10
Q4) Refer to Exhibit 7.4. What formulas should go in cell E26 of the spreadsheet?
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Chapter 8: Nonlinear Programming and Evolutionary Optimization
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Q1) In the GRG algorithm the initial solution is called the
A)originating point.
B)insertion point.
C)zero point.
D)starting point.
Q2) Which of the following is not an assumption of an EOQ problem.
A)Demand for a product is fairly constant.
B)Inventory depletion rates vary non-linearly.
C)Each new order is delivered in full when the inventory level reaches 0.
D)All are valid assumptions.
Q3) An office supply company is attempting to determine the order quantity for Mt. White fountain pens which are sold to local executives. Annual demand is 5,000 units and each pen costs the store $50. It costs $75 to place an order and the inventory carrying cost rate is 30% of the value of the item.
Formulate the objective function for this problem. Let Q indicate the order quantity.
Q4) Refer to Exhibit 8.2. The company wishes to have a relatively square building. Thus, they wish neither the building length nor the building width exceed the other by more than 25%. Add constraint(s) to enforce this design constraint.
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Chapter 9: Regression Analysis
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Q1) What is a clear indicator of non-constant variance in a plot of regression model residuals?
A)A non-linear trend in the residual plot.
B)An intercept standard error larger that the estimated intercept coefficient.
C)A funnel shaped trend in the residual plot.
D)The standard errors from each independent variable differ.
Q2) Refer to Exhibit 9.6. What is the MS for Residual?
Q3) R<sup>2</sup> is also referred to as
A)coefficient of determination.
B)correlation coefficient.
C)total sum of squares.
D)regression sum of squares.
Q4) Refer to Exhibit 9.2. Interpret the meaning of the "Lower 95%" and "Upper 95%" terms in cells F16:G16 of the spreadsheet.
Q5) When using the Regression tool in Excel the independent variable is entered as the A)X-range.
B)Y-range.
C)dependent-range.
D)independent-range.
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Chapter 10: Discriminant Analysis
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Q1) Refer to Exhibit 10.1. Suppose that for a given observation, the difference between Mahalanobis distances between group 1 and 2 (G1-G2) is big and negative. This means that
A)The observation is likely to be classified correctly to group 2
B)The observation is likely to be classified correctly to group 1
C)The observation is likely to be classified incorrectly to group 2
D)The observation is likely to be classified incorrectly to group 1
Q2) 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
Q3) Refer to Exhibit 10.2. Based on the analysis presented in the spreadsheet, what percentage of the observations were correctly classified?
A)80%
B)85%
C)95%
D)100%
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Chapter 11: Time Series Forecasting
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Q1) Refer to Exhibit 11.17. What formulas should go in cells E3:G16 of the spreadsheet if the additive seasonal method is used to forecast sales?
Q2) Refer to Exhibit 11.3. What is the exponential smoothing forecast for month 13?
A)79.20 \(\le\) forecast < 79.30
B)79.60 \(\le\) forecast < 79.70
C)80.10 \(\le\) forecast < 80.20
D)81.95 \(\le\) forecast < 82.05
Q3) Refer to Exhibit 11.10. What formula should be entered in cell F3 to compute the quadratic trend for year 1 Quarter 1?
A)= 263.4545 * C3 + 5.985514 * D3 + 4.922577
B)= 263.4545 + 5.985514 * D3 + 4.922577 * C3
C)= 263.4545 + 5.985514 * C2 + 4.922577 * D2
D)= 263.4545 + 5.985514 * C3 + 4.922577 * D3
Q4) Refer to Exhibit 11.4. What formula should be entered in cell E3 to compute the base level when using the additive seasonal effects method?
A)=AVERAGE($E$3:$E$6)
B)=AVERAGE(E3, E7, E11)
C)=AVERAGE($D$3:$D$6)
D)=AVERAGE(D3, D7, D11)
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Chapter 12: Introduction to Simulation Using Risk Solver Platform
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Q1) If chance or uncertainty is present in a system then there is an element of ____ in the decision-making problem.
A)danger
B)security
C)risk
D)difficulty
Q2) Which of the following distributions can be generated by Risk Solver Platform (RSP)?
A)Poisson
B)Normal
C)Weibull
D)All of these
Q3) In general there are two primary issues involved in risk. What are these two issues?
A)Validation of spreadsheet model and setting up for the simulation.
B)Uncertainty of the outcome and magnitude of the potential loss.
C)Maximum amount of profit made and the probability of a maximum profit.
D)Maximum amount of loss incurred and the likelihood of that loss.
Q4) What function should be used for generating random numbers between 1 and 12 from a continuous uniform distribution?
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Chapter 13: Queuing Theory
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Q1) Refer to Exhibit 13.2. Based on this report what percent of the time is the barber busy cutting hair?
Q2) Refer to Exhibit 13.6. Based on this report how much time do students spend getting help before they can resume work on their computers?
Q3) Which of the following is the typical operating characteristic for the probability an arriving unit has to wait for service?
A)W<sub>p</sub>
B)P<sub>0</sub>
C)P<sub>w</sub>
D)P<sub>n</sub>
Q4) A Poisson distribution shape can be described as
A)slightly skewed to the left.
B)symmetric around the parameter \(\lambda\).
C)skewed to the right.
D)discrete so it lacks any definable shape.
Q5) Refer to Exhibit 13.6. Based on this report what is the average number of students waiting to be helped?
Q6) Refer to Exhibit 13.7. What is the Kendall notation for this system?
Q7) Refer to Exhibit 13.3. What is the mean service rate per hour?
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Chapter 14: Decision Analysis
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Q1) Which of the following is a goal of decision analysis?
A)Help individuals make good decisions.
B)Ensure decisions lead to good outcomes.
C)Avoiding decisions leading to bad outcomes.
D)Reduce the role of luck in a decision.
Q2) Refer to Exhibit 14.6. What formula should go in cell C13 of the probability table?
A)=C5/$D4
B)=C5/C$6
C)=C5/$D5
D)=C4/$D4
Q3) Which of the following summarizes the final outcome for each decision alternative?
A)payoff matrix
B)outcome matrix
C)yield matrix
D)performance matrix
Q4) Refer to Exhibit 14.9. What formula should go in cell D5 and get copied to D6:D8 to implement the maximax decision rule?
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Chapter 15: Project Management Online
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Q1) A strength of Gantt charts is that they
A)clearly portray precedence relationships.
B)model uncertainty in activity duration times.
C)provide a timeline-based, graphical view of when activities can begin and end.
D)clearly identifies the critical path.
Q2) Refer to Exhibit 15.1. What array formula is placed in cell H5 to calculate the Latest Finish Time?
A)E2 + D2
B)MAX(IF(ISNUMBER(FIND($A$2:$A$8,C5)),$F$2:$F$8))
C)H2 - D2
D)MIN(IF(ISERR(FIND(A5,$C$5:$C$17)),MAX($F$5:$F$17),$G$5:$G$17))
Q3) Refer to Exhibit 15.3. Draw the CPM network for this problem. Use AON notation.
Q4) Refer to Exhibit 15.5. What formula should go in cell H3 of the Costs spreadsheet to compute Crash Cost Per Day?
Q5) The longest path through a network is comprised of the ____ activities.
A)longest
B)essential
C)mandatory
D)critical
Q6) Refer to Exhibit 15.4. Draw the CPM network for this problem. Use AON notation.
Page 17
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