Quantitative Methods for Business Final Exam
Course Introduction
Quantitative Methods for Business introduces students to the essential mathematical and statistical tools used in business decision-making. The course covers concepts such as data analysis, probability, forecasting, linear programming, and decision models, demonstrating how quantitative techniques can be applied to real-world business challenges in finance, operations, marketing, and management. Emphasis is placed on problem-solving skills, interpretation of quantitative data, and the effective use of software tools to analyze and present business scenarios. By the end of the course, students will be equipped to make informed, data-driven decisions, enhancing their ability to contribute to organizational success.
Recommended Textbook
Decision Sciences and Operations Management Coursemate 4th Edition by David A. Collier
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Chapter 1: Goods, Services, and Operations Management
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Q1) Moments of truth consist of one or more service encounters.
A)True
B)False Answer: False
Q2) A toothbrush is an example of a nondurable good.
A)True
B)False Answer: True
Q3) Time-based competition means providing new and innovative products that surprise and delight customers.
A)True
B)False Answer: False
Q4) A customer benefit package CBP) includes
A)only core offerings
B)only peripheral offerings
C)either core or peripheral offerings but not both
D)both core offerings as well as peripheral offerings
Answer: D
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Chapter 2: Value Chains
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Q1) Proportional increases or decreases in perceived benefits as well as price or cost result in no net change in value.
A)True
B)False
Answer: True
Q2) Nearly all value chains are managed from a centralized operational structure because of the inherent inefficiencies that are found in decentralized operational structures.
A)True
B)False
Answer: False
Q3) In the value chain model for a hospital, patients, drugs and staff would be considered
A)suppliers
B)inputs
C)processes
D)outputs
Answer: B
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Chapter 3: Measuring Performance in Operations
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Sample Questions
Q1) A computer manufacturer currently has a 15 percent customer defection rate. Their accounting department estimates the incremental contribution to profit and overhead as 30 percent. Customers purchase computers every four years at an average cost of $1,200.00. In an effort to reduce the defection rate, the company is improving both the quality of its computers and its post-sale service. Determine the increase in the average value of a loyal customer if the defection rate drops to 5 percent.
Answer: Current VLC = P*CM*RF*BLC VLC = 1200)0.3)1/4)1/.15) = $600 If the defection rate drops to 5%, VLC = 1200)0.3)1/4)1/.05) = $1800
The value of a loyal customer triples.
Q2) The quote "Happy employees create happy customers" best characterizes the Service-Profit Chain SPC) model.
A)True
B)False
Answer: True
Q3) Briefly discuss the seven categories of the Malcolm Baldrige National Quality Award. Answer: 11ea89ff_22ee_4e89_8b44_2961b1fd8f46_TB2054_00
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Chapter 4: Operations Strategy
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Q1) Because McDonald's and Pal's Sudden Service are both in the quick service restaurant business, we would expect their operations strategies to be nearly identical.
A)True
B)False
Q2) What do managers need to understand in order to create a sustainable competitive advantage?
Q3) The ease by which one can create original music compositions using a software package such as Band in a Box or Apples' Garage Band would be an example of an experience attribute.
A)True
B)False
Q4) Which one of the following statements is true with respect to McDonald's operations and strategy?
A)The #1 competitive priority is demand flexibility.
B)Prof. Terry Hill's strategy framework cannot be applied to services such as McDonald's.
C)There is only one standardized way process) to make French fries in over 30,000 stores worldwide.
D)McDonald's vision is to produce the world's best hamburger.
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Chapter 5: Technology and Operations Management
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Sample Questions
Q1) The dot.com company WebVan focused on
A)grooming pets in customers' driveways
B)customers ordering their groceries on-line.
C)installing/repairing residential wireless networks
D)providing door-to-door medical diagnoses
Q2) _______ involves computer control of a manufacturing process, such as determining tool movements and cutting speeds.
A)Computer-Aided Design/Computer-Aided Engineering CAD/CAE)
B)Computer-Aided Manufacturing CAM)
C)Enterprise Resource Planning ERP)
D)Flexible Manufacturing Systems FMS)
Q3) Computer integrated manufacturing systems result in
A)decreased engineering design costs
B)decreased equipment utilization
C)reduced work-in-process
D)improved quality
Q4) Technology development and adoption generally has three stages - birth, turbulence, and obsolescence.
A)True
B)False
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Chapter 6: Goods and Service Design
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Q1) Which of the following is not supported by Japan's Genichi Taguchi?
A)optimizing tolerances
B)goal post model
C)quadratic loss function
D)monetary expression of variation
Q2) The fundamental planning tool used to implement Quality Function Deployment is the
A)Voice of the customer
B)Technical requirement relationship matrix
C)House of Quality
D)Market and competitive evaluation rating matrix
Q3) A company is developing a new rocket for NASA and is concerned about the reliability of the fuel pump system. The fuel pump system has four fuel pumps none are redundant), each with a failure probability of .001 over a two-hour period.
a. What is the reliability of an individual fuel pump?
b. What is the reliability of the fuel pump system for the rocket?
Q4) Differentiate between high customer contact systems and low customer contact systems. Include examples of each.
Q5) Explain the concept of Design for Manufacturability DFM).
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Chapter 7: Process Selection, Design, and Analysis
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Q1) An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each inspector can inspect twelve (12) autos per hour. What would the service rate need to be in order to achieve 90% utilization?
Q2) The customer has no options from which to choose regarding make to stock goods and services.
A)True
B)False
Q3) Which is the correct order of hierarchy?
A)Activity, task, process, value chain
B)Value chain, process, task, activity
C)Process, value chain, activity, task
D)Value chain, process, activity, task
Q4) A bottleneck is the work activity that effectively limits throughput of a process.
A)True
B)False
Q5) The Product-Process Matrix works well for both goods and services.
A)True
B)False
Q6) Define a value stream map. How does this differ from a regular process map?
Page 9
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Chapter 8: Facility and Work Design
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Sample Questions
Q1) Which of the following is not a disadvantage of virtual teams?
A)Security
B)Working hours
C)Synchronizing calendars
D)Socialization
Q2) The determination of specific job tasks and responsibilities is called ____.
A)Job design
B)Ergonomics
C)Job enlargement
D)Job enrichment
Q3) An assembly line with 28 operations is to be balanced. The total amount of time required for all 28 operations is 39 minutes. The longest operation takes 2.2 minutes and the shortest takes 0.8 minutes. The line will operate for 450 minutes per day.
a.Determine the minimum and maximum cycle time.
b.What is the maximum output rate that this assembly line can achieve?
c.What is the output rate if the cycle time is set at 2.2 minutes?
Q4) Product layouts are less flexible than process layouts.
A)True
B)False
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Chapter 9: Supply Chain Design
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Q1) Define the concept of Vendor-Managed Inventory VMI). How does VMI improve supply chain performance?
Q2) Which of the following is not a basic function of the Supply Chain Operations Reference SCOR) model?
A)source
B)make
C)deliver
D)control
Q3) Given the retail location coordinates and the value of material movement in the following chart, find the best supply point location using the center-of-gravity method. \[\begin{array} { c c c }
\text { Retail Outlet } & \text { Lacation Coordinates } \mathbf { X } , \mathbf { Y } & \text { Materal Movement } \\ \hline 1 & 25,05 & 1,500 \\
2 & 17,20 & 3,000 \\ 3 & 12,12 & 1,000 \\
4 & 06,09 & 2,200 \end{array}\]
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Chapter 10: Capacity Management
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Q1) Which of the following is not correct relating to bottleneck resources?
A)Should be scheduled first
B)An hour lost is an hour lost for the entire process or factory output
C)Use large order sizes
D)Should plan safety capacity
Q2) When the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases, it is called ____
A)Economies of scale
B)Diseconomies of scale
C)Cost cushioning
D)A nonphysical constraint
Q3) The capacity expansion approach that provides the most safety capacity is
A)One large capacity increase
B)Small capacity increases that match demand
C)Small capacity increases that lead demand
D)Small capacity increases that lag demand
Q4) An unsold broadcast advertising space is an example of a perishable asset.
A)True
B)False
Q5) What is safety capacity? Discuss reasons for using it.
Page 12
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Chapter 11: Forecasting and Demand Planning
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Q1) Long range forecasts expressed in sales dollars are more meaningful to top managers than to managers at the operations level.
A)True
B)False
Q2) Sales of a new CD at a store for the last 4 weeks are shown below. \[\begin{array} { l c c c c }
\text { Week } & 1 & 2 & 3 & 4 \\
\text { Seles } & 112 & 105 & 125 & 118 \end{array}\]
a.Find a 3 period moving average forecast for the next week.
b.Find a 4 period moving average forecast for the next week.
c.Actual sales for week 5 were 105 units. What would be the 3- and 4-period moving average forecasts for week 6?
Q3) The forecasting error measurement that is different in that the measurement scale factor is eliminated is
A)MSE
B)MAD
C)RMSE
D)MAPE
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Chapter 12: Managing Inventories
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Sample Questions
Q1) What is inventory management and why is it important?
Q2) Discuss two types of stockouts.
Q3) Demand that is stable over time is called ____.
A)Static
B)Dynamic
C)Stochastic
D)Deterministic
Q4) Average inventory in the EOQ model is defined as
A)The order quantity divided by the number of inventory cycles per year
B)Annual usage divided by the number of inventory cycles per year
C)One-half the order quantity
D)One-half the annual usage
Q5) "C" items are the critical few that must be closely managed in an inventory system.
A)True
B)False
Q6) Provide some examples of when the single period inventory model is applicable.
Q7) Explain the ABC inventory classification.
Q8) Summarize the characteristics of the inventory environment that management considers when developing an inventory management system.
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Chapter 13: Resource Management
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Q1) A sheet metal company has developed the following six-month production schedule in thousands of square (yards):
\[\begin{array} { | l | c | c | c | c | c | c | }
\hline \text { Week } & 1 & 2 & 3 & 4 & 5 & 6 \\
\hline \text { Metal } & 150 & 100 & 175 & 200 & 160 & 160 \\
\hline \end{array}\]
In addition, their monthly labor and machine capacities in hours) available, and the production standards in hours per square yard) are: \(\begin{array}{lcc}
& \underline{\text {abor}}& \underline{\text { Machine }}\\
\text { Capacity Available } & 16,000 & 20,000 \\
\text { Prnduction Standard } & .10 & .18 \end{array}\)
a. What is the percent utilization of the labor capacity in month 4?
b. What is the percent utilization of the machine capacity in month 3?
c. In how many weeks are the labor requirements over capacity?
Q2) What is capacity requirements planning (CRP)?
Q3) Differentiate between a level production strategy and a chase demand strategy.
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Chapter 14: Operations Scheduling and Sequencing
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Q1) The sequencing rule that minimizes the maximum number of jobs that are past due from a given set of jobs is
A)Shortest processing time
B)Earliest due date
C)First come, first served
D)Least work remaining
Q2) The table below includes processing times and due dates for five jobs.
\[\begin{array} { c c c }
& \text { Processing } & \text { Days Due } \\
\text { Job } & \text { Time days) } & \text { Fram Today } \\
\hline \text { A } & 16 & 24 \\
\text { B } & 23 & 30 \\
\text { C } & 22 & 40 \\
\text { D } & 8 & 28 \\
\text { E } & 10 & 18
\end{array}\]
a. Use the Shortest Processing Time Rule (SPT) to determine the average flow time.
b. Use the Earliest Due Date Rule (EDD) to determine the average lateness.
Q3) Describe Johnson's sequencing rule for the two-resource sequencing problem.
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Chapter 15: Quality Management
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Q1) Corporate sponsors who support Six Sigma activities are typically called "black belts."
A)True
B)False
Q2) What are the 7 QC Tools and what value are they for quality improvement? Briefly explain how each tool is used.
Q3) Which of the following is not one of W. Edwards Deming's 14 points?
A)Create a vision and demonstrate commitment
B)Stop making decisions purely on the basis of cost
C)Eliminate exhortation
D)The only performance standard is Zero Defects
Q4) Over the last year, 1,100 oral medications were administered at a health clinic. Quality is measured by the proper amount of dosage and the use of the correct drug. In three 3) instances, the incorrect amount was given, and in two 2) instances, the wrong drug was selected. What is the epmo metric?
Q5) W. Edward Deming believed that productivity would improve by setting numerical quotas.
A)True
B)False
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Chapter 16: Quality Control and Spc
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Q1) A process is considered to be in control when all common and special causes have been eliminated.
A)True
B)False
Q2) In-process quality control is typically performed by the employees who run the processes.
A)True
B)False
Q3) In general, discuss how to interpret control charts.
Q4) A bottling machine fills soft drink bottles with an average of 12.000 ounces with a standard deviation of 0.002 ounces. Determine the process capability index, C<sub>p</sub>, if the design specification for the fill weight of the bottles is 12.000 ounces plus or minus 0.015 ounces.
Q5) What is the purpose of a process-capability study and what is a process capability index?
Q6) Common cause variation is
A)Controllable at the sources
B)Called assignable cause
C)Can be reduced by statistical process control methods
D)The responsibility of management
Page 18
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Chapter 17: Lean Operating Systems
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Q1) In a push system, finished goods inventory is produced in advance of customer demand using a forecast of sales.
A)True
B)False
Q2) Define a Kanban. Describe how it helps execute a pull system.
Q3) Discuss the seven major categories of waste as defined by Toyota.
Q4) Which of the following is not one of the 5Ss?
A)Synchronize
B)Standardize
C)Shine
D)Sustain
Q5) Toyota classified waste into seven major categories. Those categories include all of the following except
A)Motion
B)Ordering
C)Inventory
D)Waiting
Q6) A clean and organized work area is an important principle of lean thinking.
A)True
B)False
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Chapter 18: Project Management
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Q1) Using a beta probability distribution to characterize uncertain activity times is practical because it allows managers to use judgmental estimates to identify the distribution.
A)True
B)False
Q2) The county government has decided to redo the street you live on and plans to block the street off which causes you and your neighbor's considerable inconvenience. The project has three parallel paths defined as follows:( i) path A-B-C-H to install street lights and electrical wiring that takes 16 days, (ii) path A-D-E-H to install sidewalks with handicap capabilities that takes 22 days, and (iii) path A-F-G-H to repave the street including storm drains that takes 30 days. Which one of the following statements is true?
A)The expected duration of the project is 30 + 22 + 16 = 68 days.
B)Path A-B-C-H is the critical path.
C)Path A-D-E-H has the most slack time.
D)Path A-F-G-H is the critical path.
Q3) A statement of work would be developed in the "Organize" step of the project life cycle.
A)True
B)False
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Chapter 19: Work Measurement, Learning Curves, and Standards
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Q1) All of the following are advantages of using regression analysis to determine standard time except
A)A smaller cycle time is used
B)Avoids the assumption of additive task times
C)Statistically significant variables can be determined
D)Confidence intervals for the prediction can be developed
Q2) Work samplings
A)Are based on normal distribution
B)Are used for repetitive work activities
C)Determine the allowance factor
D)Require a systematic non-random) sample
Q3) The outputs from a work measurement study leads to development of labor and equipment standards that are used for all of the following except
A)Estimating workforce capacity
B)Fatigue and personal needs allowances
C)Determining the cost of new work procedures
D)Providing accurate information for scheduling and sequencing
Q4) Unavoidable delays should not be included in time studies.
A)True
B)False
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Chapter 20: Queuing Analysis
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Q1) By using two-servers for airport check-ins instead of one, the imputed cost of waiting goes up.
A)True
B)False
Q2) Describe seven operating characteristics of a waiting line no formulas).
Q3) Many analytical queuing models exist, each based upon unique assumptions.
A)True
B)False
Q4) The process of customers leaving one waiting line to join another in a multiple-server channel) configuration is called
A)jockeying
B)reneging
C)balking
D)preempting
Q5) Rules that determine the order in which arrivals are sequenced through the service system are called
A) queuing behavior
B) operating characteristics
C) queue discipline
D) psychology of waiting
22
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Chapter 21: Modeling Using Linear Programming
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Q1) A food processing company makes meatloaf to be sold in the frozen food section of supermarkets. Each week the recipe used changes based on the current cost of ingredients. Ingredients and current costs are as shown below:
\[\begin{array} { l c }
\text { Inpredient } & \text { Costpound } \\
\hline \text { pork } & \$ 2.87 \\
\text { hamburger } & \$ 1.63 \\
\text { wheat filler } & \$ 0.22 \\
\text { corn filler } & \$ 0.16
\end{array}\] F
or each batch made, at least 300 pounds of pork and 100 pounds of hamburger are required. No more than 200 pounds of wheat filler can be used per batch and the amount of corn filler has to range between 50 and 150 pounds. Moreover, each batch must contain at least 500 pounds of meat and no more than 200 pounds of filler.
a. What is the objective function if the company seeks to minimize costs?
b. If Xl is the amount of pork used, what are the constraints associated with it?
c. If X3 is the amount of wheat filler used, what are the constraints associated with it?
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Chapter 22: Simulation
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Q1) 'Face validity' means the programmers agree to the model's logic.
A)True
B)False
Q2) ____ trace the detailed logic or actions that occur in the system in a step-by-step fashion over time.
A)Validations
B)Verifications
C)System simulation models
D)Entities
Q3) Differentiate and explain the importance of verification and validation.
Q4) Discuss three advantages and three disadvantages of simulation models.
Q5) Explain the major differences between a fixed-time and a next-event simulation model. Include advantages and disadvantages of each.
Q6) In regard to a simulation model for inventory management, all of the following are correct except
A)Results in an optimal solution with a large simulation
B)Many days of simulation run are needed to obtain meaningful results
C)Lead-time can vary
D)Assumes that a specific reorder point and order quantity have been selected
24
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Chapter 23: Work Measurement, Learning Curves, and Standards
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Q1) Making decisions in an emergency room of a hospital is an example of a decision analysis situation.
A)True
B)False
Q2) Define the four major elements of a decision problem.
Q3) Differentiate between uncertainty and risk.
Q4) A numerical value associated with a decision coupled with some event is called a decision tree.
A)True
B)False
Q5) Given the following table, calculate the expected value of perfect information.
\(\begin{array}{c|ccc|r}
&\text { Low } & \text { Medium } & \text { High } & \text { Expected } \\ &\text { Demand } & \text { Demand } & \text { Demand } & \text { Value } \\
\hline\text { Small } \mathrm{d}_{1} & \$ 400 & \$ 400 & \$ 400 & \$ 400 \\
\text { Medium } \mathrm{d}_{2} & \$ 100 & \$ 600 & \$ 600 & \$ 500 \\
\text { Large } \mathrm{d}_{3} & -\$ 300 & \$ 300 & \$ 900 & \$ 450 \\
\hline \text { Probability } & 0.20 & 0.35 & 0.45 & \end{array}\)
Q6) Explain the structure and purpose of a decision tree. Page 25
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