Total $=100$ Points

Problem $1.[$Ref: Lecture $1\mathrm{.}6]$

Suppose that a manufacturer can produce a part for $$20\mathrm{.}00$ with a fixed cost of $$3,000.$ The manufacturer can contract with a supplier in Asia to purchase the part at a cost of $$25\mathrm{.}00,$ which includes transportation. $[$Feel free to use Excel$]$

a$)$ If the anticipated production volume is $1,500$ units, compute the total cost of manufacturing and the total cost of outsourcing. What is the best decision?

$15$ Points

b$)$ Find the break$-$even volume and characterize the range of volumes for which it is more economical to produce or to outsource.

$10$ Points

Problem $2$: $[$Ref: Lecture $1\mathrm{.}4$ through $1\mathrm{.}6]$ A bank developed a model for predicting the average checking and savings account balance as: $[$Feel free to use Excel$]$

Balance $=-10,000+200$ age $+1,400$ years $of$ education $+0\mathrm{.}2$ household wealth

a$.$ Explain how to interpret the numbers in this model. $-10$ Points

b$.$ Suppose that a customer is $32$ years old, holds an undergraduate degree $($years education $=22),$ and has a household wealth of $$50,000.$ What is the predicted bank balance? $-10$ Points

Problem $3$:

$25$ Points

"A supermarket has been experiencing long lines during peak periods of the day. The problem is noticeably worse on certain days of the week, and the peak periods sometimes differ according to the day of the week. There are usually enough workers on the job to open all cash registers. The problem the supermarket faces is knowing when to call some of the workers who are stocking shelves up to the front to work the checkout counters.

a$)$ How might business analytics help the supermarket?

b$)$ What data would be needed to facilitate good decisions?

Problem $4$:

$30$ Points

What potential types of bias should you be aware of in each of the following scenarios, and what is the likely effect on the results?

a$)$ A university reports the average annual salary of its graduates as $$120,000,$ based on responses to a survey of contributors to the alumni fund.

Page $1$ of $2$

b$)$ A program intended to improve scholastic achievement in high school students reports success because the $40$ students who completed the year$-$long program $($of the $100$ who began it$)$ all showed significant improvement in their grades and scores on standardized tests of achievement.

c$)$ A manager is concerned about the health of his employees, so he institutes a series of lunchtime lectures on topics such as healthy eating, the importance of exercise, and the deleterious health effects of smoking and drinking. He conducts an anonymous survey $($using a paper$-$and$-$pencil questionnaire$)$ of employees before and after the lecture series and finds that the series has been effective in increasing healthy behavior and decreasing unhealthy behaviors.