A manufacturer makes two products doors and windows

____ 1. Identification and definition of a problem A. cannot be done until alternatives are proposed. B. is the first step of decision making.

C. is the final step of decision making.

D. requires consideration of multiple criteria.

____ 2. The quantitative analysis approach requires A. the manager’s prior experience with a similar problem.

B. a relatively uncomplicated problem.

C. mathematical expressions for the relationships.

D. each of the above is true.

____ 3. A decision tree A. presents all decision alternatives first and follows them with all states of nature.

B. presents all states of nature first and follows them with all decision alternatives. C. alternates the decision alternatives and states of nature. D. arranges decision alternatives and states of nature in their natural chronological order.

____ 4. Which of the methods for decision making without probabilities best protects the decision maker from

undesirable results? A. the optimistic approach

B. the conservative approach C. minimum regret D. minimax regret ____ 5. Decision variables A. tell how much or how many of something to produce, invest, purchase, hire, etc.

B. represent the values of the constraints. C. measure the objective function.

D. must exist for each constraint.

BSC400 MIDTERM EXAM

Page 2 SECTION II: MATCHING (10 possible points) Please match the numbered terms with their definitions by placing the letter that identifies the best definition in the blank space next to the term. The value of each correct answer is 1 point. ____ 1. Breakeven Point ____ 2. Constraints ____ 3. Decision Strategy ____ 4. Linear Program ____ 5. Moving Averages ____ 6. Objective Function ____ 7. Regression Analysis ____ 8. Risk Analysis

____ 9. Time Series

____ 10. Trend

A. A mathematical model with a linear objective function, a set of constraints, and nonnegative variables. B. The mathematical expression that defines the quantity to be maximized or minimized.

C. A set of observations measured at successive points in time or over successive periods of time.

D. The gradual shift or movement of the time series to relatively higher or lower values over a long period of time.

E. A statistical technique used to develop a mathematical equation showing how variables are related.

F. Restrictions or limitations imposed on a problem.

G. The study of the possible payoffs and probabilities associated with a decision alternative or a decision strategy.

H. A smoothing method that uses the average of the most recent n data values in the time series as the forecast for

the next period. I. The volume at which total revenue equals total cost. J. A strategy involving a sequence of decisions and chance outcomes to provide the optimal solution to a decision

problem.

BSC400 MIDTERM EXAM

Page 3

SECTION III. ESSAY/SHORT ANSWER QUESTIONS (35 possible points)

Please answer each of the following questions.

1. INTRODUCTION (10 Possible Points)

Explain the difference between quantitative and qualitative analysis from the manager’s point of view.

2. DECISION ANALYSIS (10 possible points)

Give an example from your own work experience, or make up an example, of how Decision Analysis could be used to

determine an optimal strategy. Briefly describe several decision alternatives you, as the decision maker, would be faced with