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practical management science
Practical Management Science 4th Edition Wayne L. Winston, S. Christian Albright - Solutions
Then at the start of month 13, another 10% across-the-board increase in all costs occurred, and the company operated at this price level for months 13 through 18.a. Plot the data. Verify that the relationship between indirect labor expense and direct labor hours is approximately linear within each
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 given in the file P14_59.xlsx. At the start of month 7, all cost categories in the Wilhoit Company
The file P14_58.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 between R2 and correlations.a. Create a table of correlations between the individual variables.b. If you
Confederate Express is attempting to determine how its monthly shipping costs depend on the number of units shipped during a month. The file P14_57.xlsx contains the number of units shipped and total shipping costs for the past 15 months.a. Use regression to determine a relationship between units
(Based on an actual court case in Philadelphia.) In the 1994 congressional election, the Republican candidate outpolled the Democratic candidate by 400 votes(excluding absentee ballots). The Democratic candidate outpolled the Republican candidate by 500 absentee votes. The Republican candidate sued
The auditor of Kaefer Manufacturing uses regression analysis during the analytical review stage of the firm’s annual audit. The regression analysis attempts to uncover relationships that exist between various account balances. Any such relationship is subsequently used as a preliminary test of
The belief that larger majorities for an incumbent president in a presidential election help the incumbent’s party increase its representation in the House and Senate is called the coattail effect. The file P14_54.xlsx gives the percent by which each president since 1948 won the election and the
The file P14_53.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 for the next 12 months.Do it in two ways. First, fit an exponential trend to the series. Second, use
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. Specifically, the auditor suspects that the management of Kiely Manufacturing is using discretionary
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 measure of activity for the firm. Monthly data for the preceding 24 months appear in the file
Let Yt be the sales during month t (in thousands of dollars)for a photography studio, and let Pt be the price charged for portraits during month t. The data are in the file P14_50.xlsx.a. Use regression to fit the following model to these data: Yt a b1Pt b2Yt1. This says that current sales
The file P14_49.xlsx lists the average salary for each Major League Baseball team from 2004 to 2009, along with the number of team wins in each of these years.a. Rearrange the data so that there are four long columns: Team, Year, Salary, and Wins. There should be 6*30 values for each.b. Create a
Callaway Golf is trying to determine how the price of a set of clubs affects the demand for clubs. The file P14_48.xlsx contains the price of a set of clubs(in dollars) and the monthly sales (number of sets sold).a. Assume the only factor influencing monthly sales is price. Fit the following two
When potential workers apply for a job that requires extensive manual assembly of small intricate parts, they are initially given three different tests to measure their manual dexterity. The ones who are hired are then periodically given a performance rating on a 0 to 100 scale that combines their
The file P14_46.xlsx contains the amount of money spent advertising a product (in thousands of dollars)and the number of units sold (in millions) for eight months.a. Assume that the only factor influencing monthly sales is advertising. Fit the following two curves to these data: linear (Y a bX)
The beta of a stock is found by running a regression with the monthly return on a market index as the explanatory variable and the monthly return on the stock as the dependent variable. The beta of the stock is then the slope of this regression line.a. Explain why most stocks have a positive
A small computer chip manufacturer wants to forecast monthly ozperating costs as a function of the number of units produced during a month. The company has collected the 16 months of data in the file P14_44.xlsx.a. Determine an equation that can be used to predict monthly production costs from
Management of a home appliance store would like to understand the growth pattern of the monthly sales of Blu-ray disc players over the past two years.Managers have recorded the relevant data in the file P14_43.xlsx.a. Create a scatterplot for these data. Comment on the observed behavior of monthly
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 temperature (X).A random sample of 25 summer days is chosen, and the peak power load and the high
At the end of month 13, what is the forecast for month 14? For month 15? Assume 0.2.Many companies manufacture products that are at least partially produced using chemicals (e.g., paint, gasoline, and steel). In many cases, the quality of the finished product is a function of the temperature
Holt’s method assumes an additive trend. For example, a trend of 5 means that the level will increase by five units per period. Suppose there is actually a multiplicative trend. This means that if the current estimate of the level is 50, and the current estimate of the trend is 1.2, you would
A version of simple exponential smoothing can be used to predict the outcome of sporting events. To illustrate, consider pro football. We first assume that all games are played on a neutral field. Before each day of play, we assume that each team has a rating. For example, if the rating for the
The file P14_38.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 mobile home dealers).a. Is seasonality present in these data? If so, characterize the seasonality
The file P14_37.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 series with smoothing constants 0.1 and 0.3.Does the forecast series seem to track the
Consider the American Express closing price data in the file P14_22.xlsx.a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why?b. Use Holt’s exponential smoothing to forecast these
On Tuesday, October 17, 182 customers enter the bank. At the close of business on October 17, forecast the number of customers who will enter the bank on each of the next six business days.
The University Credit Union is open Monday through Saturday. Winters’ method is being used (with all smoothing constants equal to 0.5) to predict the number of customers entering the bank each day. After incorporating the arrivals on Monday, October 16, the seasonal indexes are: Monday, 0.90;
TOD Chevy is using Holt’s method to forecast weekly car sales. Currently, the level of the series is estimated to be 50 cars per week, and the trend is estimated to be six cars per week. During the current week, 30 cars are sold. After observing the current week’s sales, forecast the number of
The file P14_33.xlsx contains weekly data for the S&P 500 stock index from August 2008 to August 2010, adjusted for dividends and stock splits.a. Create a time series plot of the adjusted closing prices. Does it look like moving averages and/or simple exponential smoothing will perform well on this
The file P14_32.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 exponential smoothing models do you think will provide the best forecasting model? Why?b. Use
The file P14_31.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 smoothing models do you think will provide the best forecasting model? Why?b. Use simple exponential
The file P14_30.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 see, which of the exponential smoothing models do you think will provide the best forecasting model?
Simple exponential smoothing with 0.3 is being used to forecast sales of digital cameras at Lowland Appliance. Forecasts are made on a monthly basis.After August camera sales are observed, the forecast for September is 100 cameras.a. During September, 120 cameras are sold. After observing
You have been assigned to forecast the number of aircraft engines ordered each month by Commins Engine Company. At the end of February, the forecast is that 100 engines will be ordered during April. During March, 120 engines are ordered. Using 0.3, determine a forecast (at the end of March) for
The file P14_27.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 chosen span to forecast U.S. retail sales in the next year. Comment on the performance of your
The closing value of the AMEX Airline Index for each trading day during a one-year period is given in the file P14_26.xlsx.a. How well does the moving averages method track this series when the span is 4; when the span is 12?b. Using the more appropriate span, forecast the closing value of this
The Consumer Confidence Index (CCI) attempts to measure people’s feelings about general business conditions, employment opportunities, and their own income prospects. The file P14_25.xlsx contains the annual average values of the CCI. Use the moving averages method with a carefully chosen span to
The file P14_24.xlsx contains the daily closing prices of Walmart stock during a one-year period. Use the moving averages method with a carefully chosen span to forecast this time series for the next three trading days. Defend your choice of the span used.
The closing value of the Dow Jones Industrial Average for each trading day during a one-year period is provided in the file P14_23.xlsx.a. Using a span of 2, forecast the price of this index on the next trading day with the moving averages method.How well does the moving averages method with span 2
The file P14_22.xlsx contains the daily closing prices of American Express stock for a one-year period.a. Using a span of 3, forecast the price of this stock for the next trading day with the moving averages method. How well does this method with span 3 forecast the known observations in this
The file P14_21.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 well can this new variable be predicted from the data in columns C–F? For Distributor, relabel
Does the rate of violent crime acts vary across different regions of the United States? Answer this with the(somewhat old) 1999 data in the file P14_20.xlsx as requested below.a. Estimate an appropriate regression model to explain the variation in violent crime rate across the four given regions of
The owner of a restaurant in Bloomington, Indiana, has recorded sales data for the past 19 years. He has also recorded data on potentially relevant variables.The data are listed in the file P14_19.xlsx.a. Estimate a simple regression equation involving annual sales (the dependent variable) and the
Suppose that a regional express delivery service company wants to estimate the cost of shipping a package(Y) as a function of cargo type, where cargo type includes the following possibilities: fragile, semifragile, and durable. Costs for 15 randomly chosen packages of approximately the same weight
Consider the enrollment data for Business Week’s top U.S. graduate business programs in the file P14_17.xlsx. Use the data in the MBA Data sheet to estimate a multiple regression equation to assess whether there is a relationship between the total number of full-time students (Enrollment) and the
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 transportation network. The system manager collected data on variables thought to be possibly
Stock market analysts are continually looking for reliable predictors of stock prices. Consider the problem of modeling the price per share of electric utility stocks (Y). Two variables thought to influence this stock price are return on average equity (X1) and annual dividend rate (X2). The stock
An antique collector believes that the price received for a particular item increases with its age and with the number of bidders. The file P14_14.xlsx contains data on these three variables for 32 recently auctioned comparable items. Estimate a multiple regression equation using the given data.
A trucking company wants to predict the yearly maintenance expense (Y ) for a truck using the number of miles driven during the year (X1) and the age of the truck (X2, in years) at the beginning of the year. The company has gathered the data given in the file P14_13.xlsx. Note that each observation
Suppose you are an analyst for a company that produces four products, and you are trying to decide how much of each product to produce next month. To model this decision problem, you need the unit variable production cost for each product. After some digging, you find the historical data on
The management of a technology company is trying to determine the variable that best explains the variation of employee salaries using a sample of 52 full-time employees; see the file P14_11.xlsx. Estimate simple linear regression equations to identify which of the following has the strongest
Sometimes curvature in a scatterplot can be fit adequately (especially to the naked eye) by several trend lines. We discussed the exponential trend line, and the power trend line is discussed in the previous problem. Still another fairly simple trend line is the parabola, a polynomial of order 2
We have discussed linear and exponential trend lines.Another popular choice is a power trend line, also called a constant elasticity trend line. This trend line has the form y axb, and it has the property that when x increases by 1%, y changes by a constant percentage.In fact, this constant
The file P14_08.xlsx contains five years of monthly data on sales (number of units sold) for a particular company. The company suspects that except for random noise, its sales are growing by a constant percentage each month and will continue to do so for at least the near future.a. Explain briefly
The file P14_07.xlsx contains monthly values of the U.S. national debt (in dollars) from 1993 to early 2010. Fit an exponential growth curve to these data.Write a short report to summarize your findings. If the U.S. national debt continues to rise at the exponential rate you find, approximately
Do the sales prices of houses in a given community vary systematically with their sizes (as measured in square feet)? Answer this question by estimating a simple regression equation where the sales price of the house is the dependent variable, and the size of the house is the explanatory variable.
Management of a home appliance store wants to understand the growth pattern of the monthly sales of a new technology device over the past two years.The managers have recorded the relevant data in the file P14_05.xlsx. Have the sales of this device been growing linearly over the past 24 months? 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 company will grow each month?c. Why can’t a high rate of exponential growth continue for a long
The file P14_03.xlsx contains monthly data on production levels and production costs during a four-year period for a company that produces a single product. Use simple regression on all of the data to see how Total Cost is related to Units Produced. Use the resulting equation to predict total cost
The file P14_02.xlsx contains the daily closing prices of Walmart stock for a one-year period. Does a linear or exponential trend fit these data well? If so, estimate and interpret the best trend model for this time series.Also, interpret the R2 and se values.
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 for this time series. Also, interpret the R2 and se values.b. Provide an indication of the typical
Based on Kolesar et al. (1974). Metropolis PD Precinct 88 must determine the minimum number of police cars required to meet its needs for the next 24 hours. An average call for service requires 30 minutes.The number of calls the police department expects to receive during each hour is shown in the
Zerox has 16 service centers throughout the United States. Zerox is trying to determine how many technicians it should assign to each service center. How would you approach this problem?
Based on Quinn et al. (1991). Winter Riggers handles approximately $400 million in telephone orders per year. Winter Riggers’ system works as follows. Callers are connected to an agent if one is available.Otherwise, they are put on hold (if a trunk line is available).A customer can hang up at any
Suppose that annually an average of library patrons want to borrow a book. A patron borrows the book for an average of 1 years. Suppose we observe that the book is actually borrowed an average of R times per year. Explain how we can estimate , which is an unobservable quantity. (Hint: Let U be
Excessive delays have recently been noted on New York City’s 911 system. Discuss how you would use queueing models to improve the performance of the 911 system.
Bloomington Hospital knows that insurance companies are going to reduce the average length of stay of many types of patients. How can queueing models be used to determine how changes in insurance policies will influence the hospital?
The mail order firm of L. L. Pea receives an average of 200 calls per hour, where times between calls are exponentially distributed. It takes an L. L. Pea operator an average of three minutes to handle a call. If a caller gets a busy signal, L. L. Pea assumes that he or she will call a competing
On average, 90 patrons arrive per hour at a hotel lobby(interarrival times are exponential) waiting to check in.At present there are five clerks, and patrons wait in a single line for the first available clerk. The average time for a clerk to service a patron is three minutes(exponentially
The Newcoat Painting Company has for some time been experiencing high demand for its automobile repainting service. Because it has had to turn away business, management is concerned that the limited space available to store cars awaiting painting has cost them in lost revenue. A small vacant lot
The manager of a large group of employees must decide whether she needs another photocopying machine. The cost of a machine is $40 per eight-hour day regardless of whether the machine is in use. On average, four people need to use the copying machine per hour. Each person uses the copier for an
At the Franklin Post Office, patrons wait in a single line for the first open window. On average, 100 patrons enter the post office per hour, and each window can serve an average of 45 patrons per hour.The post office estimates a cost of $0.10 for each minute a patron waits in line and believes
On average, 40 jobs arrive per day at a factory. The time between arrivals of jobs is exponentially distributed.The factory can process an average of 42 jobs per day, and the time to process a job is exponentially distributed.a. On average, how long does it take before a job is completed (measured
A printing shop receives an average of one order per day. The average length of time required to complete an order is half a day. At any given time, the print shop can work on at most one job. Interarrival times and service times are exponentially distributed.a. On average, how many jobs are
Ships arrive at a port facility at an average rate of two ships every three days. On average, it takes a single crew one day to unload a ship. Assume that interarrival and service times are exponential. The shipping company owns the port facility as well as the ships using that facility. The
It takes an average of two minutes to serve each customer. It costs $10 per hour to keep a teller window open, and the bank estimates that it will lose $50 in future profits for each hour that a customer waits in line. How many teller windows should Bank 2 open?
On average, 300 customers arrive per hour at a huge branch of Bank
On average, 50 customers arrive per hour at a small post office. Interarrival times are exponentially distributed.Each window can serve an average of 25 customers per hour. Service times are exponentially distributed. It costs $25 per hour to open a window, and the post office values the time a
Run the simulation when station 1 is the bottleneck. Repeat when it is station 2; station 3; station 4; station 5.b. Repeat part a when there are only two buffers in front of each station after station 1.c. Suppose station 3 is the bottleneck station and you have 4 buffers to allocate to the whole
Continuing Problem 50, you might expect that the system will be only as good as the station with the smallest value of si μi (called the bottleneck station). This problem asks you to experiment with the simulation to gain some insights into bottlenecks. For each of the following parts, assume a
Repeat the previous problem, but now assume that si 3 at each station. Change the μis so that the products siμi are the same as in the previous problem.
Each processing time has mean 1μi 0.6 minute and there are three stations.b. Same as parta, except that there are 10 stations.c. Same as parta, except that each processing time has mean 0.9 minute.d. Same as partc, except that there are 10 stations.e. Repeat parts a to d but now assume there
This problem asks you to experiment with the simulation to gain some insights into congestion.For each of the following parts, assume a Poisson arrival rate of 1 per minute, and assume that processing times are exponentially distributed. Each part should be answered independently. For each, you
Referring to the multistation serial system in the Series Simulation.xlsm file, let si and 1μi be the number of machines and the mean processing time at station i. Then the mean processing rate at station i is siμi. You might expect the system to operate well only if each si μi is greater than
A company’s warehouse can store up to four units of a good. Each month, an average of 10 orders for the good are received. The times between the receipts of successive orders are exponentially distributed. When an item is used to fill an order, a replacement item is immediately ordered, and it
Consider a series system of the type in the Series Simulation.xlsm file. There are two stations. Each station has three machines, and the mean processing time for each machine is 3.1 minutes. Parts arrive to station 1 at a Poisson rate of 0.8 per minute. The processing times at one station are
US Airlines receives an average of 500 calls per hour from customers who want to make reservations, where the times between calls follow an exponential distribution.It takes an average of three minutes to handle each call. Each customer who buys a ticket contributes$100 to US Airlines profit. It
A telephone-order sales company must determine how many telephone operators are needed to staff the phones during the 9-to-5 shift. It is estimated that an average of 480 calls are received during this time period and that the average call lasts for six minutes.There is no queueing. If a customer
In Example 13.4 of section 13.5, we examined whether an MM1 system with a single fast server is better or worse than an MMs system with several slow servers. Keeping the same inputs as in the example, use simulation to see whether you obtain the same type of results as with the analytical
Make any assumptions about the warm-up time and run time you believe are appropriate. Try solving the problem with exponentially distributed copying times. Then try it with gamma-distributed copying times, where the standard deviation is 3.2 minutes. Do you get the same recommendation on which
Simulate the system in Problem
Given the model in the Multiserver Simulation.xlsm file, what unit cost parameters should be used if we are interested in “optimizing” the system? Choose representative inputs and unit costs, and then illustrate how to use the simulation outputs to estimate total system costs.
How long does it take to reach steady state? Use simulation, with the Multiserver Simulation.xlsm file, to experiment with the effect of warm-up time and run time on the key outputs. For each of the following, assume a five-server system with a Poisson arrival rate of one per minute and
Use exponentially distributed service times and a warm-up period of one hour for each.d. Why might the use of a long warm-up time bias the results toward worse system behavior than would actually be experienced? If you could ask the programmer of the simulation to provide another option concerning
The Smalltown Credit Union experiences its greatest congestion on paydays from 11:30 A.M. until 1:00 P.M.During these rush periods, customers arrive according to a Poisson process at rate 2.1 per minute. The credit union employs 10 tellers for these rush periods, and each takes 4.7 minutes to
Using the arrival rates from the lunchtime rush example, it seems sensible to vary the number of servers so that more servers work during the busy hours. In particular, suppose management wants to have an average of three servers working (in parallel) in any half-hour period, but the number working
Note that the sum of these rates is the same as the sum of the rates in the example, so that we expect the same total number of arrivals, but now they are more concentrated in the noon to 1 P.M. hour. Compare the results with these arrival rates to the results in the example. Write a short report
In the lunchtime rush example, the arrival rate changed fairly gradually throughout the period of interest. Assume now that the arrival rate first increases and then decreases in a more abrupt manner.Specifically, replace the arrival rates in the example by the following: 15, 20, 70, 85, 30, and
(You will need to run the macro for each of these.) Write a short report on your findings.
In the lunchtime rush example, we assumed that the system starts empty and idle at 11 A.M. Assume now that the restaurant opens earlier than 11 A.M., but we are still interested only in the period from 11 A.M. to 2 P.M.How does the initial number of customers present at 11 A.M. affect the results?
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