Business Analytics Methods Models And Decisions 1st Edition James R. Evans - Solutions

Unlock the full potential of your studies with our comprehensive solutions for "Business Analytics: Methods, Models, and Decisions" by James R. Evans. Access our online answers key and solutions manual, featuring step-by-step answers to complex problems. Whether you're seeking solved problems, questions and answers, or chapter solutions, our resources are designed to enhance your understanding. Explore our test bank and instructor manual for in-depth insights. Enjoy the convenience of our textbook solutions in PDF format, available for free download, and empower your learning journey with ease.

Prior to the upcoming college basketball season, a college basketball coach has estimated an 80% chance of winning any particular game. Suppose the season is 30 games long and the coach believes a 20 or more win season will get the team selected for the NCAA tournament. Create a simulation of the
Gambler’s Ruin. Suppose that a gambler begins a game with balance of $20 and plays a game in which on each play she wins $1 with probability p and loses $1 with probability q = 1 − p. This problem is an illustration of a specific random walk because the gambler’s balance at any time t changes
Create a random number generator for a Uniform distribution [0, 0.999) using 10 ping-pong balls numbered 0–9. Create a random number generator for a Uniform distribution [0, 0.999) using 10-sided die (with 10 faces numbered 1 through 10, commonly known as a D-10).
Create a simulation of flipping 100 pennies.a. Show the probability distribution (histogram) for the number of heads and the number of tails.b. Describe the appearance of the distribution.c. What is the most likely outcome?d. Give the range of the number of heads that happens 2 out of 3 times. That
Create several runs of your trials to determine the optimal policy. Using the Data Table command in Excel is a good method to use 1 set of trials to create several runs; for example, a set of 10 runs is 10 sets of trials.
Once you have one trial correct, repeat the trials a sufficient number of times (usually at least 100 trials) to create a single run that will give you a good idea of how the system is operating.The number of trials required depends on the complexity of the situation. Generally speaking, if the
Construct one trial—based on a given policy. Proceed from left to right for each event in the correct time order.
How is “success” measured; how is the best policy going to be measured?
What is the timing/precedence of events? Draw a decision tree if necessary!
Which factors are uncertain (random)? What distribution does each factor look like—is it Normal, Uniform, Historical, etc.?
What factors are given (data)?
Identify the problem—what decisions are to be made?
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 win the game. The coach is wondering whether to go for an extra-point kick or a two-point conversion
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. Determine the decision that would result using the utilities instead of the payoffs. Is the
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 large facility are $8 million versus $5 million for the small facility. The profit (excluding
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 80% of the time. If S&A bids on a job, the probability that Hahn Engineering will win it is 0.30. If
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 48-month loan.3. Lease the car.Select an automobile whose leasing contract is advertised in a local
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 that the refrigerator was not working properly.Dean’s cash flow was not extensive, so he was not
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 0.8 in increments of 0.2. Plot optimal expected profit as a function of the probability of a harsh
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 next. Shovels unsold after February are sold at a discount price of $10.00. Past data indicate that
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 condition. If an appendectomy is performed immediately, the doctor runs the risk that the patient does
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 end of the day can be sold the next day for $1.00.Past data indicate that demand is distributed as
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 sells for $260. Any skis left over at the end of the winter are sold at the store’s half-price sale
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 complete. If moderate debugging were required (probability 0.7), the project would probably cost $1.4
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 accident is triangular with a minimum of $10,000, maximum of $25,000, and most likely value of $15,000.
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 probability of a fender bender is 0.16%. What is the expected value decision? Would you choose this? Why or
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 decision.
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 major customers suddenly demand ISO certification and the company does not have it. At a management
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 insurance, you would be personally liable for any damages. What should you do? Clearly, there are two
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 recently acquired another manufacturer of garage doors, Wisconsin Door, and is considering moving its
• 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 equal to the value given in the problem, a minimum value that is 20% less, and a maximum value that is
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 statement in Chapter 15. Assume that the distributions of NPV are lognormally distributed with
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 return in the example and a standard deviation equal to 10% of the mean. Use Risk Solver Platform to
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 3–7 Producer’s Circle $1,000 16–25 Gift Level Amount Number of Gifts Director’s Circle $500
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 $25,000, 15% will invest between $25,000 and $50,000, and the remainder will invest between $50,000 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 20% of prospective patients fail to show up or cancel their exam at the last minute. Determine the
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 end of the day can be sold the next for $1.00. Past data indicate that demand is distributed as
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 next. Shovels unsold after February are sold at a discount price of $10.00. Past data indicate that
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. The distribution of demand is triangular(but must involve whole numbers) with a minimum of 40,
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 distribution of profit for an order quantity of 15. Use multiple parameterized simulation to identify
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 normally distributed, with the mean values as given, and standard deviations equal to 15% of the mean.
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 uncertain and can only be estimated using uniform distributions with parameters 20% around the expected
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 return in the example and a standard deviation equal to 10% of the mean.a. For the optimal solution
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 unit cost of the item is $3.95. The company uses an annual carrying charge of 15%.a. Use 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 with parameters (9, 10, 12), and the amount of labor required for a deluxe desk is triangular with
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 Carlo simulation and compare the VaR and CVaR types of chance constraints.
• 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 18 30 6 47 4 51 10 49 0 50 11 91 38 5 49 53 18 50 0 68 62 9 6 4 25 30 11 68 0 48 94 7 12 80 6 91 62
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 24 36 48a. Sequence the projects to minimize the average lateness.b. Sequence the projects to
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 S&P 500 Small Cap Mid Cap Large Cap Emerging Market Commodity Bond 0.002%S&P 500 0.001% 0.020%Small
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 additional units ordered. Use IF statements in the spreadsheet model to incorporate the quantity
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 spreadsheet and solve with Evolutionary Solver.
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 Evolutionary Solver. Compare your solution with the optimal solution in Figure 15.23.
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 Sports and Casino Investment Plan (SCIP).The stock fund is a mutual fund investing in openly traded
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 same constraints as the example. Interpret the Solver Sensitivity report.
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 more units are produced. This is often modeled by a power curve, y = ax-b, where a and b are
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 optimization problem. Using the Home Market Value data, set up a spreadsheet model to find the values for the
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 four products that are ordered. Develop a model based on the economic order quantity to minimize 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 minimize the total cost and meet a budget constraint on the total inventory value, defined by the product
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 unit cost of the item is $3.95. The company uses an annual carrying charge of 15%. Use the Economic
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 best location, assuming that straight-line distances can be used between the locations.Retail Store
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 as follows:Neighborhood X-Coordinate Y-Coordinate Liberty 2 12 Jefferson 9 6 Adams 1 1 The population
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, and they expect to sell 20 per day to business travelers. The price elasticity of demand is estimated
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 spreadsheet model to include a constraint on the maximum price and solve the model. Interpret 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 other (in economics, we call these substitutable products, because if the price of one increases,
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 decreases, demand increases, and vice versa. One major airline has found that when the price (p) for a
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 the model D = 2,000 - 3P The accounting department estimates that the total costs can be represented
• 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 customers on file. This strategy generated additional mail-order business, while also attracting
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 number of groups based on demographics and location. These data are shown in the table.Publisher Groups
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 High Stock 7.71%5 High Stock 8.35%6 High Stock 16.38%7 Medium Blend 4.10%8 Medium Blend 12.52%9
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 requires a shutdown and cleaning of one of their manufacturing departments at a cost of $1,000. The

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Business Analytics Methods Models And Decisions 1st Edition James R. Evans - Solutions

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