Create an Excel workbook. Put your answers for each problem in a different worksheet and name the worksheets with problem numbers. For question 3, you can either use Excel or write your answers on paper and submit a picture of it on Blackboard.

1) The Excel file Closing Stock Prices provides data for four stocks and the Dow Jones Industrial Average over a one-month period.

a) Develop a simple four-period moving average model for forecasting the IBM stock.

b) Compute MAD, MSE, and MAPE.

2) A brand manager for ColPal Products must determine how much time to allocate between radio and television advertising during the next month. Market research has provided estimates of the audience exposure for each minute of advertising in each medium, which it would like to maximize. Costs per minute of advertising are also known, and the manager has a limited budget of $40,000. The manager has decided that because television ads have been found to be much more effective than radio ads, at least 60% of the time would be allocated to television.

Suppose that we have the following data:

Type of Ad. Exposure/Minute Cost/Minute

Radio $400 $800

TV $900 $2,400

a. Mathematically formulate a linear optimization model.

b. Implement the linear optimization model on a spreadsheet and use Solver to find an optimal solution. Interpret the Solver Answer Report, identify the binding constraints, and verify the values of the slack variables.

3) Todays electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Phylis Wienberger, who is responsible for advising the president of Todays Electronics on electronic manufacturing equipment, has developed the following table concerning a proposed facility:

PROFIT ($)

STRONG MARKET FAIR MARKET POOR MARKET

Large facility 430,000 105,000 -160,000

Medium-sized facility 300,000 129,000 -100,000

Small facility 200,000 100,000 -32,000

Probabilities 0.25 0.4 0.35

a. What is the aggressive (optimistic) strategy decision?

b. What is the conservative (pessimistic) strategy decision?

c. What is the opportunity loss strategy decision?

d. What is the expected value strategy decision?

e. What is the expected value of perfect information (EVPI)?

Closing Stock Prices Closing Stock Prices