- 24. A college football team is trailing 14–0 late in the game. The team is getting close to making a touchdown. If they can score now, hold the opponent, and score one more time, they can tie or
- 23. Consider the car-rental insurance scenario in Problems 2 and 8. Use the approach described in this chapter to develop your personal utility function for the payoffs associated with this decision.
- 22. MJ Logistics has decided to build a new warehouse to support its supply chain activities. They have the option of building either a large warehouse or a small one. Construction costs for the
- 21. Hahn Engineering is planning on bidding on a job and often competes against a major competitor, Sweigart and Associates (S&A), as well as other firms. Historically, S&A has bid for the same jobs
- 19. Many automobile dealers advertise lease options for new cars. Suppose that you are considering three alternatives:1. Purchase the car outright with cash.2. Purchase the car with 20% down and a
- 18. Dean Kuroff started a business of rehabbing old homes. He recently purchased a circa-1800 Victorian mansion and converted it into a three-family residence. Recently, one of his tenants complained
- 17. Perform a sensitivity analysis of the Midwestern Hardware scenario (Problem 16).Find the optimal order quantity and optimal expected profit for probabilities of a harsh winter ranging from 0.2 to
- 16. Midwestern Hardware must decide how many snow shovels to order for the coming snow season. Each shovel costs $15.00 and is sold for $29.95. No inventory is carried from one snow season to the
- 15. A patient arrives at an emergency room complaining of abdominal pain. The ER physician must decide on whether to operate or to place the patient under observation for a non-appendix-related
- 14. Bev’s Bakery specializes in sourdough bread. Early each morning, Bev must decide how many loaves to bake for the day. Each loaf costs $0.75 to make and sells for $2.85. Bread left over at the
- 13. Mountain Ski Sports, a chain of ski-equipment shops in Colorado, purchases skis from a manufacturer each summer for the coming winter season. The most popular intermediate model costs $150 and
- 12. An information system consultant is bidding on a project that involves some uncertainty.Based on past experience, if all went well (probability 0.1), the project would cost $1.2 million to
- 11. For the car-rental decision in Problems 2 and 8, suppose that the cost of a minor accident is normally distributed with a mean of $1,500 and standard deviation of$100, and the cost of a major
- 10. For the car-rental decision in Problems 2 and 8, construct a decision tree and compute the rollback values to find the best expected value decision.
- 9. For the DoorCo Corporation decision in Problems 1 and 7, construct a decision tree and compute the rollback values to find the best expected value decision.
- 8. For the car-rental situation described in Problem 2, assume that you researched insurance industry statistics and found out that the probability of a major accident is 0.05% and that the
- 7. For the DoorCo Corporation decision in Problem 1, suppose that the probabilities of the three scenarios are estimated to be 0.15, 0.40, and 0.45, respectively. Find the best expected value
- 6. For Slaggert Systems decision in Problem 3, compute the standard deviation of the payoffs for each decision. What does this tell you about the risk in making the decision?
- 5. For the car-rental situation in Problem 2, compute the standard deviation of the payoffs for each decision. What does this tell you about the risk in making the decision?
- 4. For the DoorCo Corporation decision in Problem 1, compute the standard deviation of the payoffs for each decision. What does this tell you about the risk in making the decision?
- 3. Slaggert Systems is considering becoming certified to the ISO 9000 series of quality standards. Becoming certified is expensive, but the company could lose a substantial amount of business if its
- 2. Suppose that a car-rental agency offers insurance for a week that costs $10 per day. A minor fender bender will cost $1,500, whereas a major accident might cost $15,000 in repairs. Without the
- 1. The DoorCo Corporation is a leading manufacturer of garage doors. All doors are manufactured in their plant in Carmel, Indiana, and shipped to distribution centers or major customers. DoorCo
- • State the properties of different types of utility functions.
- • Construct a utility function and use it to make a decision.
- • Incorporate sample information in decision trees and apply Bayes’s rule to compute conditional probabilities.
- • Compute the expected value of perfect information.
- • Find the risk profile for a decision strategy.
- • Incorporate Monte Carlo simulation in decision trees.
- • Use Risk Solver Platform to construct decision trees.
- • Apply expected values to a decision problem when probabilities of events are known.
- • Assess risk in choosing a decision.
- • Apply average, aggressive, conservative, and opportunity-loss decision strategies for problems involving minimization and maximization objectives.
- • Construct a payoff table for a decision situation.
- • List the three elements needed to characterize decisions with uncertain consequences.
- 17. For the software-support-project problem (Problem 10 in Chapter 15), suppose that the transfer prices are uncertain. Assume that each has a triangular distribution with the most likely value
- 16. For the medical device company problem (Problem 9 in Chapter 15), suppose that the net present values of the projects are uncertain. The best estimates of the mean values are given in the problem
- 15. For the Innis Investments example in Chapter 14, suppose that the investment returns are uncertain. Assume that each can be modeled as a lognormal distribution with a mean equal to the expected
- 14. For the nonprofit ballet company in Problem 8 of Chapter 8, assume following percentages of donors and gift levels:Gift Level Amount Number of Gifts Benefactor $10,000 1–3 Philanthropist $5,000
- 13. For the stock broker problem described in Problem 7 in Chapter 8, assume that among the qualified clients, half will invest between $2,000 and $10,000, 25% will invest between $10,000 and
- 12. Develop and analyze a simulation model for Koehler Vision Associates (KVA)in Problem 10 of Chapter 8 with the following assumptions. The weekly demand averages 175, but anywhere between 10% and
- 11. Bev’s Bakery specializes in sourdough bread. Early each morning, Bev must decide how many loaves to bake for the day. Each loaf costs $0.75 to make and sells for $2.85. Bread left over at the
- 10. Midwestern Hardware must decide how many snow shovels to order for the coming snow season. Each shovel costs $15.00 and is sold for $29.95. No inventory is carried from one snow season to the
- 9. A sporting goods store orders ski jackets in the summer before the winter season.Each jacket costs $80 and sells for $200. Any not sold by March are discounted 75%. Demand depends on the weather.
- 8. Develop a Monte Carlo simulation model for the pharmacy situation described in Problem 9 of Chapter 8. Use the IntUniform distribution in Risk Solver Platform to model the demand and find the
- 7. For the Rosenberg Land Development problem (Problem 2 in Chapter 14), suppose that the construction costs are uncertain. Specifically, assume that the distribution of construction costs is
- 6. For the situation described in Problem 4 in Chapter 13, in which a business student wants to invest his summer earnings (which you solved in Problem 8), suppose that the returns per share are
- 5. For the Innis Investments example in Chapter 14, suppose that the investment returns are uncertain. Assume that each can be modeled as a lognormal distribution with a mean equal to the expected
- 4. The annual demand for the bolt-nut package for the aircraft manufacturer Excel database Purchase Orders (see Example 1.3 in Chapter 1) is 60,000. The fixed cost of placing an order is $50, and the
- 3. In the economic order quantity model discussed in this chapter, find the reorder point to support service levels of 90%, 80%, and 75%.
- 2. In Problem 3 of Chapter 13 (Burger Office Equipment), suppose that the amount of labor required per desk is uncertain. Assume that the amount of labor required for a standard desk is triangular
- 1. In the Sklenka Skis model, find a solution that provides a probability that overtime will be needed no more than 20% of the time. Verify your solution by examining the frequency chart from a Monte
- • Incorporate uncertainty into optimization models such as project selection.
- • Use Risk Solver Platform to combine simulation modeling and optimization to maximize or minimize the expected value of a model output.
- • Use multiple parameterized simulations in Risk Solver Platform to find optimal solutions in simulation models with decision variables.
- • Solve optimization models with chance constraints.
- • Evaluate risk in solutions to optimization models using Monte-Carlo simulation.
- 20. Suppose the distances that a pharmaceutical representative, Tracy Ross, travels between medical offices are To From 1 2 3 4 5 6 7 8 1 0 19 57 51 49 4 12 92 2 19 0 51 10 53 25 80 53 3 57 51 0 49
- 19. An IT support group at Thomson State College has seven projects to complete.The time in days and project deadlines are shown next.Project 1 2 3 4 5 6 7 Time 4 9 12 16 9 15 8 Deadline 12 24 60 28
- 18. Stout Investments wishes to design a minimum variance portfolio of index funds.The funds selected for consideration and their variance-covariance matrix and average returns are given next:Bond
- 17. Modify the economic order quantity problem in this chapter (Example 16.5) to include discounts. Assume that the unit cost is $22 for the first 1,000 units in an order but drops to $19 for any
- 16. Formulate Chris Corry’s investment problem (Problem 18 in Chapter 15) on a spreadsheet without using linking constraints for the binary variables but using IF statements instead. Modify the
- 15. Modify the plant location model in Chapter 15 (Example 15.10) to use IF statements to express the linking constraints in the mixed-integer model formulation.Modify the spreadsheet and solve with
- 14. The Hal Chase Investment Planning Agency is in business to help investors optimize their return from investment. Hal deals with three investment mediums: a stock fund, a bond fund, and his own
- 13. For the DTP Corporation data in Example 16.6, fit a second-order polynomial function to model the profit for each product. Use these functions to find the optimal advertising allocation with the
- 12. Many manufacturing situations, for example, the production of such large and complex items as aircraft or machines, exhibit a learning effect in which the production time per unit decreases as
- 11. In Chapter 9 we noted that the least squares coefficients in a regression model are found by minimizing the sums of squares of the errors as given in equation(9.4). This is a nonlinear
- 10. A manufacturer stocks four items, each requiring a certain amount of floor space in the warehouse. A limited number of square feet of floor space is available to store the total quantity of the
- 9. The Economic Order Quantity (EOQ) model is based on ordering only a single item. Suppose we allow for multiple items that are independent except for a budget restriction. Develop a model to
- 8. The annual demand for the bolt-nut package for the aircraft manufacturer Excel database Purchase Orders (see Example 1.3 in Chapter 1) is 60,000. The fixed cost of placing an order is $50 and the
- 7. ElectroMart wants to identify a location for a warehouse that will ship to five retail stores. The coordinates and annual number of truckloads are given here.Develop and solve a model to find the
- 6. A franchise of a chain of Mexican restaurants wants to determine the best location to attract customers from three suburban neighborhoods. The coordinates of the three suburban neighborhoods are
- 5. In the Marquis Hotel problem in Example 16.2, suppose that the hotel is considering adding suites to its room mix. Based on an analysis of local competitors, suites can sell for a rate of $180,
- 4. For the pricing decision model in Example 16.1, suppose that the company wants to keep the price at a maximum of $500. Note that the solution in Figure 16.1 will no longer be feasible. Modify the
- 3. Problem 5 in Chapter 8 posed the following situation: The Radio Shop sells two popular models of portable sport radios, model A and model B. The sales of these products are not independent of each
- 2. Problem 14 in Chapter 1 posed the following situation: The demand for airline travel is quite sensitive to price. Typically there is an inverse relationship between demand and price; when price
- 1. Problem 13 in Chapter 1 posed the following situation: A manufacturer of mp3 players is preparing to set the price on a new model. Demand is thought to depend on the price and is represented by
- • Formulate and solve sequencing and scheduling models using Solver’s alldifferent constraint.
- • Identify non-smooth optimization models and when to use Evolutionary Solver.
- • Recognize a quadratic optimization model.
- • Use empirical data and line-fitting techniques in nonlinear optimization.
- • Interpret Solver reports for nonlinear optimization.
- • Develop and solve nonlinear optimization models for different applications.
- • Recognize when to use nonlinear optimization models.
- 20. Tindall Bookstores is a major national retail chain with stores located principally in shopping malls.3 For many years, the company has published a Christmas catalog that was sent to current
- 19. The Spurling Group is considering using magazine outlets to advertise their online Web site. The company has identified seven publishers. Each publisher breaks down its subscriber base into a
- 18. Chris Corry has a company-sponsored retirement plan at a major brokerage firm.He has the following funds available:Fund Risk Type Return 1 High Stock 11.98%2 High Stock 13.18%3 High Stock 9.40%4
- 17. Premier Paints supplies to major contractors. One of their contracts for a specialty paint requires them to supply 750, 500, 400, and 950 gallons over the next 4 months.To produce this paint
- 16. For the Shafer Office Supplies problem (Problem 13 in Chapter 14), suppose that the company wants to enforce a single sourcing constraint that each retail store be served only from one
- 15. For the General Appliance Corporation transportation model discussed in Chapter 14, suppose that the company wants to enforce a single sourcing constraint that each retail store be served from
- 14. Soapbox is a local band that plays classic and contemporary rock. The band members charge $600 for a 3-hour gig. They would like to play at least 30 gigs per year but need to determine the best
- 13. Josh Steele manages a professional choir in a major city. His marketing plan is focused on generating additional local demand for concerts and increasing ticket revenue and also gaining attention
- 12. Anya is a part-time business student who works full time and is constantly on the run.She recognized the challenge of eating a balanced diet and wants to minimize cost while meeting some basic
- 11. Dannenfelser Design works with clients in three major project categories: architecture, interior design, and combined. Each type of project requires an estimated number of hours for different
- 10. A software-support division of Blain Information Services has eight projects that can be performed. Each project requires different amounts of development time and testing time. In the coming
- 9. Riesemberg Medical Devices is allocating next year’s budget among its divisions.As a result, the R&D Division needs to determine which R&D projects to fund.Each project requires various software
- 8. The personnel director of Hatch Financial. which recently absorbed another firm, is now downsizing and must relocate five information systems analysts from recently closed locations.
- 7. Gales Products manufactures ribbon for thermal transfer printing, which transfers ink from a ribbon onto paper through a combination of heat and pressure. Different types of printers use different
- 6. Van Nostrand Hospital must schedule nurses so that the hospital’s patients are provided with adequate care. At the same time, in the face of tighter competition in the health care industry,
- 5. For the Brewer Services scenario described in this chapter, suppose that 11 permanent employees are hired. Find an optimal solution to minimize the number of part-time employees he needs to hire.