Faculty of Management

Midterm exam–SU2 2020-21

Course Code: QBA-341 Lec.101 Course Name: Quantitative Approaches to Decision-Making
Date: 2/8/2021 Instructor: Dr. Raed Said
Location: Online Time of the exam: 14:00-16:00
Number of Students: 12 Pages: 11
NAME OF STUDENT: ________________ID #:___________________
INSTRUCTIONS – READ CAREFULLY
 The Midterm exam consists of five solving problems, which will be uploaded in the Moodle of
your regular class.
 Before you start the Exam, join the WebEx meeting in Moodle Turn On your cameras and leave it
on during the whole exam. (This is for the purpose of verifying the student's ID).
 You have 60 minutes assigned to complete the Exam. You need to finish in the time frame
allocated or before.
 Using Excel is not allowed for solving the questions in our theory class.
 Solve each question manually using your own words, picture it, and then insert it in the Midterm
exam’s paper.
 After inserting your handwritten solutions to all of the exam’s questions, save them in a word
format document (the same exam’s paper) and upload it to the “Midterm Exam Folder” as per the
assignment style you did for your lab projects.
 Questions will not be allowed during the exam, so please make sure you read the questions
carefully and don’t rush in solving the questions.
 Please keep in mind that I won’t tolerate students copying answers. If I find out there was any
form of similarity between two students, I will give both of them a zero.

Course Learning Outcomes PLOs Questions

CLO1: Apply the most widely used quantitative techniques in Q1
5
decision making.
CLO2: Demonstrate an understanding of the mathematical Q2
5
reasoning and statistical concepts in solving business problems
CLO3: Solve business problems using regression, forecasting, Q3, Q4
and linear programming techniques. 5

CLO4: Recognize the limitations of statistical methods in data- Q5

5, 8
based decisions making when assumptions are violated.
CLO5: Apply Linear Programming, transportation and
assignment models, to solve a variety of real life business 5, 8
problems.

BREAKDOWN OF GRADE
Q1/ Q2/3 Q3/5 Q4/5 Q5/5 Total /20
2

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Question 1:
A simple random sample of 7 students is selected from the College of Management at CUD. For the 7
students, the number of days each was absent during the Fall semester was to be
13, 10, 11, 15, 9, 12, 15

a. Find a point estimate for  , the mean number of absent days for the college’s students.
b. Construct and interpret a 95% confidence interval for  .

2
Question 2:
A study was done on 81 female patients following a new treatment for cardio-vascular disease (CVD).
Doctors measured the increase in exercise capacity (in minutes) over a 6-week period. The conventional
treatment had produced an average increase of =3 minutes. Researchers wish to claim that the new
treatment will increase the mean exercise capacity more than the conventional treatment. The data
yielded an average of 3.25 and a standard deviation of 1.5. Let =0.10.
a. State and conduct a 5-step test of hypotheses for the claim.

b. Find and interpret a 90% confidence interval for the population mean 

3
Question 3:
PM computer services assembles customized personal computers from generic parts. Formed and operated by
part-time UMass Lowell students Paulette Tyler and Maureen Becker, the company has steady growth since it
started. The company assembles computers mostly at night, using part time students. Paulette and Maureen
purchase generic computer parts in volume at a discount from a variety of sources whenever they see a good deal.
Thus, they need a Month Demand good forecast of
demand for their January 42 computers so that
they will know how 45 many parts to
February
purchase and stock. they have complied
47
demand data for the March last 12 months as
reported below. April 45

May 52

June 57

July 59
a. Make forecasts
August for the sales using 3-period moving52average method.
b. Use theSeptember
exponential smoothing method with α=0.463as a smoothing constant to forecast
the sales. Assume that the initial forecast for January
October 58 is 40.
c. Calculate the error and the absolute error for 62
November each forecast and summarize your
computations in
December the table below. 65
d. Compute the MAD as an accuracy measure for evaluating the performance of
forecasting method then decide which forecasting method provides a better forecast?
Explain
e. Use the better of the two methods to forecast sales for January.
  Month Sales 3-Month Error Absolute Square Exponential Error Absolute Square
Moving error error Smoothing with error error
Average α=0.4
(Y) (F) (F)

January
February
March
April
May
June
July
August
September
October
November
December
Question 4:
A company sets different prices for a particular stereo system in eight different regions of the country.
The accompanying table shows the numbers of units sold and the corresponding prices (in hundreds of
dollars).
Sales Prices

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 Y X x.y y2 x2
73 9.5
68 10.0
65 9.5
72 8.5
74 7.0
68 10.5
75 7.5
70 7.0

a. Set up a scatter diagram for the given data.

b. Write down the estimated regression line of the sales on prices
c. Calculate the coefficient of correlation between x and y.
d. Describe the strength, the type and the direction of the relationship between x and y
e. Predict the numbers of units to be sold when the price of the stereo system is 7.5, then calculate
the error in estimation for this value.

Question 5:
For an investigation of the price of one-bedroom apartments in Dubai. We collected data
for y=price of one-bedroom apartment ($1000), x1=its associated distance from downtown (in
Kilometers) , and x2=the size of the apartment (in square feet), as shown in the following table

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y x1 x2

60 2.5 56

62 5.5 65

73 3.75 50

75 2 66

66 2.1 58

58 1.5 41

75 3.5 58

73.
3.5 82
5

64 5 55

55 5.5 52

85 1.5 62

75 4 48

The multiple regression analysis produced the following excel output

SUMMARY OUTPUT

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 Regression Statistics
Multiple R 0.528466
R Square 0.279276
Adjusted R
Square 0.119115
Standard Error 8.38385
Observations 12

ANOVA
Significanc
  df SS MS F eF
122.564 1.74372
Regression 2 245.1286 3 1 0.002291
70.2889
Residual 9 632.6005 5
Total 11 877.7292      

Coefficient Standard Lower Upper

  s Error t Stat P-value 95% 95%
3.78944 0.00428 91.4543
Intercept 57.26765 15.11242 3 6 23.08098 1
- 0.00215 1.60961
x1 -2.30145 1.728908 1.33116 9 -6.21251 1
1.35698 0.87420
x2 0.32778 0.241551 4 0.20784 -0.21865 6

Use the above Excel results to answer the following questions.

a. What are the dependent and independent variables (in words)?
b. Draw a scatter plot to present the relationship between the price of apartments and the
size of the apartment. Describe the relationship based on the plot.
c. Use the above Excel outputs to estimate the multiple linear regression equation.
d. Interpret each one of the estimated regression coefficients β0, β1 and β2.
e. What is the value of the linear correlation coefficient? Use this value to comment on
whether you think a linear relationship exists between the dependent and independent
variables.
f. Identify and interpret the coefficient of determination
g. Test the significance of the regression model at the 5% level.
h. Does each one of the explanatory variables do a good job of explaining changes in price
of apartments? Explain why or why not.
i. Predict the price of an apartment within 14 kms as a distance from downtown and its
size is 30 square feet.

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 Formula Sheet

x=
∑ xi
n

μ x=
∑ xi
N
IQR=Q3 −Q1
n
12
σ =
N
∑ ( x i −μ)2
i =1
1 n
2
S  
(n  1) i 1
( xi  x ) 2
n
∑ X 2i −n X 2
i=1
s2=
n−1
s
CV = () x̄
×100 %
Range = Max. – Min.

median=X
( n+1
2 )

Qi= X
i. (n +14 ) , where i=1, 2, 3
x−μ
z=
The z-score: the version of x is σ

Z test Statistic ( Known)

X 
Z

n

If σ known, the 100 (1   ) % confidence interval for  is

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 X  z / 2   / n Where

σ σ σ
x̄± z α
2 √n
= x̄− z α
[2 √n
, x̄+ z α
2 √n ]
Simple Linear Regression Model
y=β 0 + β1 x + ε
Estimated Simple Linear Regression Equation
^y =b 0 +b 1 x
Estimation/prediction equation
ŷ  b  b x
0 1
Least squares point estimate of the slope β
1
SSxy
b 
1 SSxx


SSxy   x  x y  y   x y      xi   yi 
i i i i n

SSxx   x  x   2 2
 x 
x
i
 2
i i n
Least squares point estimate of the y - intercept β
0
y x
b  y  b x where y  i and x  i
0 1 n n
S S xy
Pearson’s Correlation Coefficient r =
√ SS xx . SS yy
2
Where SS yy =∑ y −¿ ¿ ¿ ¿

Exponental Smoothing Forecasting

Ft =Y^ T =Y^ T-1+ α (Y T-1−Y^ T-1 )
Moving Avarage Forecasting
Sum of actual values in previous n periods
Ft =Y^ t =
n
T−n

Y t−1+Y t−2 +⋯+Y t −n i=T−1

∑
Ft =Y^ t = =
n n

BIAS =
∑ ( Actual - Forecast ) = ∑ Error
n n

9
 MAD =
∑| Actual - Forecast|= ∑|Error|
n n

MSE =
∑ ( Actual - Forecast ) = ∑ ( Error )2
2

n n

Tables

The five critical values of z are summarized in the following table.

α = tail area central area = 1 – 2α zα

0.10 0.80 z.10 = 1.28
0.05 0.90 z.05 = 1.645
0.025 0.95 z.025 = 1.96
0.01 0.98 z.01 = 2.33
0.005 0.99 z.005 = 2.58

Table of the Student's t-distribution

t
The table gives the values of  ;  where
Pr(T > t ;  ) =  , with  degrees of freedom

t ; 
10
  0.1 0.05 0.025 0.01 0.005 0.001 0.0005


11
 1 3.078 6.314 12.076 31.821 63.657 318.310 636.620
2 1.886 2.920 4.303 6.965 9.925 22.326 31.598
3 1.638 2.353 3.182 4.541 5.841 10.213 12.924
4 1.533 2.132 2.776 3.747 4.604 7.173 8.610
5 1.476 2.015 2.571 3.365 4.032 5.893 6.869

6 1.440 1.943 2.447 3.143 3.707 5.208 5.959

7 1.415 1.895 2.365 2.998 3.499 4.785 5.408
8 1.397 1.860 2.306 2.896 3.355 4.501 5.041
9 1.383 1.833 2.262 2.821 3.250 4.297 4.781
10 1.372 1.812 2.228 2.764 3.169 4.144 4.587

11 1.363 1.796 2.201 2.718 3.106 4.025 4.437

12 1.356 1.782 2.179 2.681 3.055 3.930 4.318
13 1.350 1.771 2.160 2.650 3.012 3.852 4.221
14 1.345 1.761 2.145 2.624 2.977 3.787 4.140
15 1.341 1.753 2.131 2.602 2.947 3.733 4.073

16 1.337 1.746 2.120 2.583 2.921 3.686 4.015

17 1.333 1.740 2.110 2.567 2.898 3.646 3.965
18 1.330 1.734 2.101 2.552 2.878 3.610 3.922
19 1.328 1.729 2.093 2.539 2.861 3.579 3.883
20 1.325 1.725 2.086 2.528 2.845 3.552 3.850

21 1.323 1.721 2.080 2.518 2.831 3.527 3.819

22 1.321 1.717 2.074 2.508 2.819 3.505 3.792
23 1.319 1.714 2.069 2.500 2.807 3.485 3.767
24 1.318 1.711 2.064 2.492 2.797 3.467 3.745
25 1.316 1.708 2.060 2.485 2.787 3.450 3.725

26 1.315 1.706 2.056 2.479 2.779 3.435 3.707

27 1.314 1.703 2.052 2.473 2.771 3.421 3.690
28 1.313 1.701 2.048 2.467 2.763 3.408 3.674
29 1.311 1.699 2.045 2.462 2.756 3.396 3.659
30 1.310 1.697 2.042 2.457 2.750 3.385 3.646

40 1.303 1.684 2.021 2.423 2.704 3.307 3.551

60 1.296 1.671 2.000 2.390 2.660 3.232 3.460
120 1.289 1.658 1.980 2.358 2.617 3.160 3.373
 1.282 1.645 1.960 2.326 2.576 3.090 3.291

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