AEM 805 Final Exam

Fall 2015 (105 Points)

Name___________________________________
SHORT ANSWER [2 Points Each]:
Write the word or phrase that best completes each statement or answers the question.
1.

At least one or both deviational variables in a goal constraint must

equal __________.

___________________

2.

__________ is the difference between the payoff from the best decision
and all other decision payoffs.

___________________

3.

The __________ of sample information is the ratio of the expected

value of sample information to the expected value of perfect
information.

___________________

4.

If it takes 5 minutes to serve a customer at a fast food restaurant the

service rate is _________.

___________________

5.

A system has one service facility that can service 10 customers per
hour. The customers arrive at an average rate of 6 per hour. Utilization
is __________.

___________________

6.

A situation in which a mechanic is responsible for repairing a pool of

fleet vehicles should be analyzed for a waiting line system with a
__________ calling population

___________________

7.

If = 24 per hour and = 30 per hour in a single server model, then

W is equal to __________ minutes.

___________________

8.

__________ is a technique for selecting numbers randomly from a

probability distribution.

___________________

9.

The __________ command is used in generating the random numbers

with Excel.

___________________

10.

__________ is a gradual long term upward or downward movement of

demand.

___________________

11.

Exponential smoothing forecasts are more sensitive or reactive to the

changes in demand as the value of the smoothing constant,
__________.

___________________

12.

MAPD measures __________.

___________________

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AEM 805 Final Exam

Fall 2015 (105 Points)
13.

One problem with multiple regression is __________, which is a

measure of the amount of "overlapping" information about the
dependent variable that's provided by several independent variables.

___________________

14.

A __________ occurs when customer demand cannot be met because

of insufficient inventory.

___________________

15.

__________ is inventory that is used to help protect against stockouts.

___________________

ESSAY [3 Points Each]:

Write your answer in the space provided or on a separate sheet of paper.
Given the following data on the number of pints of ice cream sold at a local ice cream store for a 6-period time
frame:

16) Compute a 3-period moving average forecast for period 6.

17) Consider the following distribution and random numbers:

If a simulation begins with the first random number, what would the first simulation value be? __________
Given the following data on hotel check-ins for a 6-month period:
July:
70 rooms
August:
105 rooms
September: 90 rooms
October:
120 rooms
November: 110 rooms
December:
115 rooms
18) With alpha = 0.2, what is the simple exponential smoothing forecast for October? Assume the forecast for July
was 70 rooms.
19) Daily highs in Sacramento for the past week (from least to most recent) were: 95, 102, 101, 96, 95, 90 and 92.
Develop a forecast for today using a weighted moving average, with a weights of .6, .3 and .1, where the highest

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AEM 805 Final Exam

Fall 2015 (105 Points)
weights are applied to the most recent data.
20) Quarterly sales figures are given for the past 3 years. Determine the seasonal factors for each quarter.

Year 1
Year 2
Year 3

Winter
4800
5700
6000

Spring
4500
3800
4600

Summer
4100
4500
4900

Fall
5500
6000
6500

Robert has the following accounts on money spent on gambling and winnings:

21) Develop a regression equation that relates the money Robert spends and the money he wins.
22) Determine the correlation coefficient and the coefficient of determination.
A graduate research assistant "moonlights" at the short order counter in the student union snack bar in the
evenings. He is considering asking for help taking orders, but needs to convince the management that they should
hire another student. Because he is taking a simulation class, he thinks it may be the perfect way to convince
management to hire more help if he can show that customers have to wait a long time. When a customer arrives,
he takes their order and their payment, prepares the food, gives it to the customer, and then takes the order from
the next person in line. If someone arrives while he's cooking an order, they have to wait until he's completed the
current order. He is working on the simulation and a portion is shown below.
23) Assume that order prep time is based on the following distribution:
Prep Time
3
4
5
6
7
8

Probability
.10
.20
.25
.20
.15
.10

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AEM 805 Final Exam

Fall 2015 (105 Points)
Complete the following table given that the random numbers for order prep time for customers 3, 4, and 5 are 62,
93 and 26, respectively.
Arrival
Number

Time of
Arrival

1
2
3
4
5

1
5
7
10
18

Time Order Order Prep

Taken
Time
1
5

4
7

Customer
Customer Cook "Idle"
Receives
Wait Time
Time
Food
5
0
1
12
0
0

What is the average customer waiting time and the graduate student's utilization?
24) A single bay car wash with a Poisson arrival rate and an exponential service time has cars arriving an average
of 15 minutes apart. It takes approximately 9 minutes to wash a car. What is the system utilization?
25) The objective function formulation for a goal programming model is as follows:

4P

+
+ 6 P4 d 2

,
, P2 d 2
MIN P1 d 1
At the priority level 4, which one of the deviational variables is more important?
A crew of mechanics at the Department of Transportation garage make minor repairs to snowplows during the
winter. The snowplows break down at an average rate of 4 vehicles per day and breakdowns are distributed
according to the Poisson distribution. The mechanic can service an average of 7 vehicles per day with a repair time
distribution that approximates a negative exponential distribution. Assume an 8 hour day.
26) On average, how long does a snow plow wait before the mechanic can begin his repair?
An investor is consider 4 different opportunities, A, B, C, or D. The payoff for each opportunity will depend on
the economic conditions, represented in the payoff table below.

Investment
A
B
C

Poor
(S1)
50
80
-100

Economic
Average
(S2)
75
15
300

Condition
Good
(S3)
20
40
-50

Excellent
(S4)
30
50
10

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AEM 805 Final Exam

Fall 2015 (105 Points)
D

25

25

25

25

27) What decision would be made under maximax?

28) Consider the following decision tree.

Which decision, A or B, is best? What is the expected value of this decision?

A company produces item Y, and uses the basic EOQ model for managing its inventory. Lead time to obtain item
Y is two weeks. Demand is normally distributed with a mean of 400 units per week and a standard deviation of 40
units per week. The desired service level is 98.5%. The ordering cost is $20, and carrying cost is 20% of the items
cost, which is $10.
29) Determine the order quantity for product Y. (Assume 52 weeks of operation per year.)
30) Determine the reorder point for product Y.
MULTIPLE CHOICE [2 Points Each]:
Choose the one alternative that best completes the statement or answers the question.
31) Deviation variables 31) ________
A) equal the difference between actual and predicted values of the decision variables
B) are limited so that only one appears per constraint.
C) represent the actual value of the function part of a goal constraint.
D) represent the difference between the target and actual values
E) must sum to one
32) Consider the following constraint: 2x1 + 3x2 =60. Assume that we convert this constraint into a goal
constraint and the value of x1 = 15 and the value of x2 = 15, then the values of d1+ and d1- are __________ and

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AEM 805 Final Exam

Fall 2015 (105 Points)
__________ respectively.
A) 15, 0

32) ________

B) 0, 20 C) 0, 15 D) 15, 15

E) 20, 0

33) One goal __________ achieved at the expense of another higher-priority goal. 33) ________
A) is always
B) is never
C) is under certain circumstances
D) can sometimes be
34) A business is trying to decide which restaurant to hold its annual awards banquet. Use the information below
to determine the best choice.
Restaurant
Criteria
Weight
A
B
C
Appearance
0.15
40
65
60
Service
0.30
75
80
70
Atmosphere
0.15
60
40
70
Location
0.10
90
100
75
Quality of food
0.30
70
80
75
Where should the restaurant be located?

34) ________

A) A
B) B
C) C
D) A and B equally preferred
E) B and C equally preferred
35) The __________ is computed by multiplying each decision outcome under each state of nature by the
probability of its occurrence.
35) ________
A) expected value of perfect information
B) expected opportunity loss
C) expected value
D) none of the above
A small entrepreneurial company is trying to decide between developing two different products that they believe
they can sell to two potential companies, one large and one small. If they develop Product A, they have a 50%
chance of selling it to the large company with annual purchases of about 15,000 units. If the large company won't
purchase it, then they think they have an 80% chance of placing it with a smaller company, with sales of 20,000
units. On the other hand if they develop Product B, they feel they have a 40% chance of selling it to the large
company, resulting in annual sales of about 17,000 units. If the large company doesn't buy it, they have a 50%
chance of selling it to the small company with sales of 20,000 units.
36) How many units of Product A can they expect to sell?
A) 20,000
B) 13,100
C) 15,500
D) 15,000
37) In a single-server queuing model, L represents

36) ________
E) 17,000

37) ________

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AEM 805 Final Exam

Fall 2015 (105 Points)
A) the size of the queue
B) the length of the line
C) the length of time a customer waits
D) the average number of customers in the queuing system
A single server waiting line system has an arrival pattern characterized by a Poisson distribution with 3 customers
per hour. The average service time is 12 minutes. The service times are distributed according to the negative
exponential distribution.
38) The average time a customer can expect to wait in line is:
A) 60 minutes
B) 36 minutes
C) 30 minutes
D) 72 minutes
E) 18 minutes

38) ________

The local grocery store consists of two cashiers. The customers arrive at the checkout according to the Poisson
distribution and the service times are based on negative exponential distribution. The average customer service
time is 5 minutes and the average time between the arrivals of successive customers is 3 minutes. Assume that
customers equally divide themselves between the two cashiers.
39) What is the probability that there are no customers in the grocery store?
A) .10909
B) .1209
C) .0909
D) .1409
E) .0809

39) ________

40) Which of the following possible values of alpha would cause exponential smoothing to respond the most
slowly to sudden changes in forecast errors?
40) ________
A) .10 B) .90

C) .01

D) .20 E) .50

41) A __________ is an up-and-down repetitive movement that repeats itself over a time span of more than 1 year.
41) ________
A) trend
B) cyclical pattern
C) seasonal pattern
D) prediction
42) __________ is the percentage of the variation in the dependent variable that results from the independent
variable.
42) ________
A) Regression B) Correlation
C) Coefficient of determination D) Linear regression
43) Given forecast errors of 6, 4, 0 and -2, what is the mean squared error?
A) 18.67
B) 14
C) 16
D) 12

43) ________

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AEM 805 Final Exam

Fall 2015 (105 Points)
E) none of the above
44) A keyboard costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order
cost is $150 per order. What is the approximate economic order quantity? 44) ________
A) 110 B) 16

C) 70

D) 183

45) A product has demand during the one-day lead time of 100 units, with a standard deviation of 25 units. What
safety stock (approximately) provides a 95% service level?
45) ________
A) 41

B) 55

C) 95

D) 140

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