Questions and Answers of Practical Management Science

A cosmetics company has identified a set of activities that must be performed to bring a new product to market. The activities, their precedence relations, and time estimates to complete each
Refer to the previous question. Create a spreadsheet model to simulate the completion times for Koene’s move. Assume that activity times follow a triangular distribution and perform 500
Refer to the previous question. Create a spreadsheet model to simulate the completion times for servicing cars. Assume that activity times follow a triangular distribution, and perform 500
Consider the following set of activities: a. Draw the CPM network for this problem.b.
Consider the following set of activities: a. Draw the CPM network for this
Refer to the data in the file on your data disk named QtrlySales.xls containing quarterly sales data for a Norwegian export company from 1993 through 2005. Prepare a line graph of these data. Do
Prepare a line graph of these data. Do the data appear to be stationary or non-stationary?
Benjamin Franklin once said, “In this world nothing is certain but death and taxes.” Although that might be true, there is often great uncertainty involved in when one will encounter death and
Martin manufacturing company uses a piece of machinery that has three different bushings that periodically fail in service. The probability distribution of the life of each bushing is identical and
Representatives from the American Heart Association are planning to go door-to-door throughout a community, soliciting contributions. From past experience, they know that when someone answers the
Use regression analysis to answer the following questions.a. Fit a linear trend model to the data set. What is the estimated regression function?b. Interpret the R2 value for your model.c. Prepare a
Use regression analysis to answer the following questions.a. Fit a linear trend model to the data set. What is the estimated regression function?b. Interpret the R2 value for your model.c. Prepare a
Refer to the data in the file on your data disk named LaborForce.xls containing monthly data on the number of workers in the U.S. civilian labor force (in 1000s) from January 1998 through October
Refer to the data in the file on your data disk named CalfPrices.xls representing the selling price of three-month-old calves at a livestock auction during the past 22 weeks.Prepare a line graph of
Use the multiplicative seasonal technique for stationary data to model the data. Use Solver to determine the optimal values of α and β.a. What are the optimal values of α and β?b. Prepare a line
Use Holt’s method to create a model that minimizes the MSE for the data set. Use Solver to determine the optimal values of α and β.a. What are the optimal values of α and β?b. Prepare a line
Prepare a line graph of these data. Do the data appear to be stationary or nonstationary?
The Royalty Gold Corporation prospects for undiscovered gold deposits around the world. The company is currently investigating a possible site on the island of Milos off the coast of Greece in the
This chapter noted that the R2 statistic cannot be relied upon as a goodness-of-fit measure in the regression approach to two-group DA. What was the value of the R2 statistic for the two-group DA
Suppose that you are interested in creating a prediction interval for Y at a particular value of X1 (denoted by X1h ) using a simple linear regression model, and that data has not yet been collected.
Show how R2a and Se are related algebraically (identify the function f(.) such that R2a = f(Se)).
Fidelity Savings & Loans (FS&L) operates several banking facilities throughout the Southeastern United States. The officers of FS&L want to analyze the efficiency of the various branch
The Ryder Cup is a three-day golf tournament played every other year with 12 of the best U.S. golfers against 12 of the best European golfers. They play 16 team matches (each match has two U.S.
In most of the Walton Bookstore examples in Chapter 10, we assumed that there was a single product. Suppose instead that a company sells two competing products. Sales of either product tend to take
A chemical manufacturer uses chemicals 1 and 2 to produce two drugs. Drug 1 must be at least 80% chemical 1, and drug 2 must be at least 50% chemical 2. Up to 70,000 ounces of drug 1 can be sold at
Many Wall Street firms use LP models to select a desirable bond portfolio. The following is a simplified version of such a model. Solodrex is considering investing in four bonds; $1 million is
A furniture company manufactures tables and chairs. A table requires 45 board-feet of wood, and a chair requires 20 board-feet of wood. Wood can be purchased at a cost of $1.90 per board-foot, and
Capsule Drugs manufactures two drugs. The drugs are produced by blending two chemicals. By weight, drug 1 must contain at least 75% chemical 1, and drug 2 must contain at least 45% chemical 1. Drug 1
An automobile manufacturing company has a $500,000 advertising budget. To increase its automobile sales, the company is considering advertising in newspapers and on television. The more the company
The government is auctioning off oil leases at two sites. At each site, 150,000 acres of land are to be auctioned. Cliff Ewing, Blake Barnes, and Alexis Pickens are bidding for the oil. Government
Suppose it costs $30,000 to purchase a new car. The annual operating cost and resale value of a used car are shown in the file P05_60.xlsx. Assume that you presently have a new car. Determine a
Based on Bean et al. (1988). Simon’s Mall has 9000 square feet of space to rent and wants to determine the types of stores that should occupy the mall. The minimum number and maximum number of each
On Monday morning, you have $5000 in cash on hand. For the next seven days, the following cash requirements must be met: Monday, $5000; Tuesday, $6000; Wednesday, $9000; Thursday, $2000; Friday,
The file P07_28.xlsx lists the scores of all NFL games played during the 2014 season. Use this data set to rank the NFL teams from best to worst.
Carry out the suggestion in Modeling Issue 2 for the 2015 NFL season. That is, use a weighted sum of squared prediction errors, where the weight on any game played k weeks ago is 0.95k. You can
By the time you are reading this, the 2016 NFL season will have finished, and the results should be available at www.pro-football-reference.com/years/2016/games.htm. Do whatever it takes to get the
Suppose the current exchange rate is 115 yen per dollar. We currently have a demand for 50 units of our product when the unit price is 800 yen. The cost of producing and shipping the product to Japan
Suppose you are tested to see if you have a rare disease. Assume that if you have the disease, your test will always come back positive, but if you do not have the disease, there is still a 0.001
Consider a population of 3000 people, 1400 of whom are men. Assume that 700 of the women in this population earn at least $60,000 per year, and 500 of the men earn less than $60,000 per year.a. What
You now have $5000. You will toss a fair coin four times. Before each toss you can bet any amount of your money (including none) on the outcome of the toss. If heads comes up, you win the amount you
Play Things is developing a new Lady Gaga doll. The company has made the following assumptions: ■ The doll will sell for a random number of years from 1 to 10. Each of these 10 possibilities
It costs a pharmaceutical company $75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be
The file P14_07.xlsx contains data on 74 companies that have either gone bankrupt or haven’t. The data set also contains data on five frequently quoted accounting ratios.a. Create a pivot table
The Indiana University Credit Union Eastland Plaza branch was having trouble getting the correct staffing levels to match customer arrival patterns. On some days, the number of tellers was too high
The file P14_50.xlsx contains five years of monthly data for a company. The first variable is Time (1–60). The second variable, Sales1, has data on sales of a product. Note that Sales1 increases
Pernavik Dairy produces and sells a wide range of dairy products. Because a government regulatory board sets most of the dairy’s costs and prices, most of the competition between the dairy and its
The Wilhoit Company has observed that there is a linear relationship between indirect labor expense and direct labor hours. Data for direct labor hours and indirect labor expense for 18 months are
The file P14_47.xlsx contains monthly cost accounting data on overhead costs, machine hours, and direct material costs. This problem will help you explore the meaning of R2 and the relationship
The file P14_42.xlsx contains monthly data on consumer revolving credit (in millions of dollars) through credit unions.a. Use these data to forecast consumer revolving credit through credit unions
The auditor of Kiely Manufacturing is concerned about the number and magnitude of year-end adjustments that are made annually when the financial statements of Kiely Manufacturing are prepared.
The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels. Management is trying to decide whether direct labor hours (DLH) or units produced is the better
A power company located in southern Alabama wants to predict the peak power load (i.e., the maximum amount of power that must be generated each day to meet demand) as a function of the daily high
The file P14_29.xlsx contains monthly time series data for total U.S. retail sales of building materials (which includes retail sales of building materials, hardware and garden supply stores, and
The file P14_28.xlsx contains monthly retail sales of U.S. liquor stores.a. Is seasonality present in these data? If so, characterize the seasonality pattern.b. Use Winters’ method to forecast this
The file P14_27.xlsx contains yearly data on the proportion of Americans under the age of 18 living below the poverty level.a. Create a time series chart of the data. Based on what you see, which of
The file P14_26.xlsx contains the monthly number of airline tickets sold by the CareFree Travel Agency.a. Create a time series chart of the data. Based on what you see, which of the exponential
The file P14_25.xlsx contains the quarterly numbers of applications for home mortgage loans at a branch office of Northern Central Bank.a. Create a time series chart of the data. Based on what you
The file P14_22.xlsx contains total monthly U.S. retail sales data. While holding out the final six months of observations for validation purposes, use the method of moving averages with a carefully
The file P14_21.xlsx contains the weekly sales of rakes at a hardware store for a two-year period. Use the moving averages method, with spans of your choice, to forecast sales for the next 30 weeks.
The file P14_20.xlsx contains the monthly sales of iPod cases at an electronics store for a two-year period. Use the moving averages method, with spans of your choice, to forecast sales for the next
The file P14_18.xlsx contains data on over 200 movies that came out in 2006 and 2007. Create a new variable Total Revenue that is the sum of Total US Gross, International Gross, and US DVD Sales. How
The manager of a commuter rail transportation system was recently asked by her governing board to determine which factors have a significant impact on the demand for rides in the large city served by
The file P14_04.xlsx lists the monthly sales for a company (in millions of dollars) for a 10-year period.a. Fit an exponential trend line to these data.b. By what percentage do you estimate that the
The file P14_01.xlsx contains the monthly number of airline tickets sold by a travel agency.a. Does a linear trend appear to fit these data well? If so, estimate and interpret the linear trend model
Do exponentially distributed random numbers have the memoryless property? Here is one way to find out. Generate many exponentially distributed random numbers with mean 3, using the formula in the
A company currently has two warehouses. Each warehouse services half the company’s demand, and the annual demand serviced by each warehouse is normally distributed with mean 10,000 and standard
A highly perishable drug spoils after three days. A hospital estimates that it is equally likely to need between one and nine units of the drug daily. Each time an order for the drug is placed, a
Computco sells high-end computer workstations. The demand for its workstations during a month follows a normal distribution, with a mean of 400 and standard deviation of 100. Each time an order is
Lowland Appliance replenishes its stock of 52-inch flat-screen TVs three times a year. Each order takes 1/9 of a year to arrive. Annual demand for these TVs follows a normal distribution with a mean
Every four years, Blockbuster Publishers revises its textbooks. It has been three years since the best-selling book The Joy of Excel has been revised. At present, 2000 copies of the book are in
Change the ordering simulation so that emergency orders are never made. Instead, assume that all excess demand is backlogged, so the emergency cost should be replaced by a unit penalty cost for
Change the ordering simulation so that emergency orders are never made. If demand in any week is greater than supply, the excess demand is simply lost. Simulate the same (s, S) policies as in the
Change the ordering simulation in Example 12.7 so that the lead time can be 1, 2, 3, or 4 weeks with probabilities 0.5, 0.2, 0.2, and 0.1, respectively. Also, assume that based on previous orders,
Modify the synchronized ordering model in Example 12.5 slightly so that you can use a two-way SolverTable on the fixed costs. Specifically, enter a formula in cell B9 so that the fixed cost of
In the basic EOQ model in Example 12.1, suppose that the fixed cost of ordering is $500. Use Solver to find the new optimal order quantity. How does it compare to the optimal order quantity in the
solution
The Jogger Shoe Company is trying to decide whether to make a change in its most popular brand of running shoes. T he new style would cost the same to produce and be priced the same, but it would
1. Starting with the spreadsheet model from Case 2.1 (or starting over, if you like), develop a spreadsheet model that lets Ewing see the implications of any set of approved projects. You should
1. Suppose that the yields of the five zero-coupon bonds are all 8.5% one year from today. What are the returns of each bond over the period?2. Using a simulation with 1000 iterations, estimate the
Suppose you are using an underwater probe to search for a sunken ship. At any time in the search, your probe is located at some point (x,y) in a grid, where the distance between lines in the grid is
Nucleon is trying to determine whether to produce a new drug that makes pigs healthier. The product will be sold in years 1 to 5. The following information is relevant:■ A fixed cost is incurred on
It is January 1 of year 0, and Merck is trying to determine whether to continue development of a new drug. The following information is relevant. You can assume that all cash flows occur at the ends
It is January 1 of year 0, and Lilly is considering developing a new drug called Dialis. We are given the following information■ On March 15 of year 0, Lilly incurs a fixed cost that is assumed to
It is now May 1 of year 0, and GM is deciding whether to produce a new car. The following information is relevant.■ The fixed cost of developing the car is incurred on January 1 of year 1 and is
In this version of “dice blackjack,” you toss a single die repeatedly and add up the sum of your dice tosses. Your goal is to come as close as possible to a total of 7 without going over. You may
Based on Bukiet et al. (1997). Many Major League teams (including Oakland, Boston, LA Dodgers, and Toronto) use mathematical models to evaluate baseball players. A common measure of a player’s
You are unemployed, 21 years old, and searching for a job. Until you accept a job offer, the following situation occurs. At the beginning of each year, you receive a job offer. The annual salary
Based on Hoppensteadt and Peskin (1992). The following model (the Reed–Frost model) is often used to model the spread of an infectious disease. Suppose that at the beginning of period 1, the
Mary Higgins is a freelance writer with enough spare time on her hands to play the stock market fairly seriously. Each morning she observes the change in stock price of a particular stock and decides
Consider a drill press containing three drill bits. The current policy (called individual replacement) is to replace a drill bit when it fails. The firm is considering changing to a block replacement
Consider a drill press containing three drill bits. The current policy (called individual replacement) is to replace a drill bit when it fails. The firm is considering changing to a block replacement
Consider the following card game. The player and dealer each receive a card from a 52-card deck. At the end of the game the player with the highest card wins; a tie goes to the dealer. (You can
We are all aware of the fierce competition by mobile phone service companies to get our business. For example, AT&T is always trying to attract Verizon’s customers, and vice versa. Some even
The customer loyalty model in Example 11.9 assumes that once a customer leaves (becomes disloyal), that customer never becomes loyal again. Assume instead that there are two probabilities that drive
Suppose an investor has the opportunity to buy the following contract (a stock call option) on March 1. The contract allows him to buy 100 shares of ABC stock at the end of March, April, or May at a
A knockout call option loses all value at the instant the price of the stock drops below a given “knockout level.” Determine a fair price for a knockout call option when the current stock price
A stock currently sells for $69. The annual growth rate of the stock is 15%, and the stock’s annual volatility is 35%. The risk-free rate is currently 5%. You have bought a six-month European put
For the data in the previous problem, the following is an example of a butterfly spread: sell two calls with an exercise price of $50, buy one call with an exercise price of $40, and buy one call
If you own a stock, buying a put option on the stock will greatly reduce your risk. This is the idea behind portfolio insurance. To illustrate, consider a stock that currently sells for $56 and has
Suppose you currently have a portfolio of three stocks, A, B, and C. You own 500 shares of A, 300 of B, and 1000 of C. The current share prices are $42.76, $81.33, and $58.22, respectively. You plan

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