Chapter 1 Introduction to Business Analytics

1) Descriptive analytics:
A) can predict risk and find relationships in data not readily apparent with traditional analyses.
B) helps companies classify their customers into segments to develop specific marketing
campaigns.
C) helps detect hidden patterns in large quantities of data to group data into sets to predict
behavior.
D) can use mathematical techniques with optimization to make decisions that take into account
the uncertainty in the data.
2) A manager at Gampco Inc. wishes to know the company's revenue and profit in its
previous quarter. Which of the following business analytics will help the manager?
A) prescriptive analytics (đề xuất)
B) normative analytics (quy chuẩn)
C) descriptive analytics (mô tả)
D) predictive analytics (dự báo)
3) Predictive analytics:
A) summarizes data into meaningful charts and reports that can be standardized or customized.
B) identifies the best alternatives to minimize or maximize an objective.
C) uses data to determine a course of action to be executed in a given situation.
D) detects patterns in historical data and extrapolates them forward in time.
4) A trader who wants to predict short-term movements in stock prices is likely to use
________analytics.
A) predictive
B) descriptive
C) normative
D) prescriptive
5) Which of the following questions will prescriptive analytics help a company address?
A) How many and what types of complaints did they resolve?
B) What is the best way of shipping goods from their factories to minimize costs?
C) What do they expect to pay for fuel over the next several months?
D) What will happen if demand falls by 10% or if supplier prices go up 5%?
6) What is a database?
A) a structured collection of related files and data
B) simply a collection of data
C) a data file holding a single file
D) flat files used to store data
7) In a database, information is stored and maintained in ________.
A) fields
B) measurements
C) entities
D) attributes
8) Which of the following is an example of a measure of continuous metrics?
A) four errors revealed in an invoice
B) a delivery delayed by seven days
C) weight and volume of a sheet of steel
D) three incomplete orders on a day
9) Nominal data:
A) are ranked according to some relationship to one another.
B) have constant differences between observations.
C) are continuous and have a natural zero.
D) are sorted into categories according to specified characteristics.
10) Which of the following is a disadvantage of ordinal data?
A) They bear no relationship to one another.
B) They have no fixed units of measurement.
C) They have no natural zero.
D) They are not comparable with each other.
11) Which of the following allow meaningful comparison of ranges, averages and other
statistics?
A) interval data
B) categorical data
C) ratio data
D) ordinal data
12) Following are the components of a data set containing purchase details of a shoe
manufacturing company. Identify the ratio data.
A) Item Number
B) Rank of suppliers
C) Item cost
D) Arrival Date
13) When data are classified by the type of measurement scale, which is the strongest form
of measurement?
A) nominal
B) interval
C) ordinal
D) ratio
14) The demand for coffee beans over a period of three months has been represented in the
form of an L-shaped curve. Which form of model was used here?
A) mathematical model
B) visual model
C) kinesthetic (tactile) model
D) verbal model
15) Decision variables:
A) cannot be directly controlled by the decision maker.
B) are assumed to be constant.
C) are always uncertain.
D) can be selected at the discretion of the decision maker.
16) Identify the uncontrollable variable from the following inputs of a decision model.
A) investment returns
B) machine capacities
C) staffing levels
D) intercity distances
17) Which of the following inputs of a decision model is an example of data?
A) estimated consumer demand
B) inflation rates
C) costs
D) investment allocations
18) Descriptive decision models:
A) aim to predict what will happen in the future.
B) describe relationships but do not tell a manager what to do.
C) help analyze the risks associated with various decisions.
D) do not facilitate evaluation of different decisions.
19) The total cost of reaching consumers (C) depends upon the number of consumers (N),
advertising costs (A), and transportation costs (T). The linear cost prediction model is
represented as:
C = c - nN + aA + tT
where c, n, a, and t are constants and c estimates the total cost when the remaining
variables are
zero. Which of the following interpretations is true about this model?
A) Change in variables N, A, and T will cause n, a, and t to change.
B) As n decreases, c will increase.
C) When variables N, A, and T are zero, C = c - n + a + t.
D) Change in variables N, A, and T will not reflect any changes in c.
20) Which of the following is the mathematical model for deriving total cost of only
manufacturing?
A) TC = VC + (C × Q)
B) TC = F + (C × Q)
C) TC = F + C
D) TC = F + (V × Q)
21) Which of the following is the mathematical model for deriving total cost of only
outsourcing?
A) TC = Q x C
B) TC = F + (C x Q)
C) TC = (V + C) x Q
D) TC = (VC + F) x Q
22) Which of the following is the mathematical model for deriving the break-even volume?
A) Q = (C - VC) + F
B) Q = F / (C -V)
C) Q = (V + C) / F
D) Q = F / (VC - C)
23) When will a company use a predictive decision model?
A) when it wishes to determine the best product pricing to maximize revenue
B) when it wishes to know how best to use advertising strategies to influence sales
C) when it wishes to know sales patterns to plan inventory levels
D) when it wishes to ensure that a specified level of customer service is achieved
24) If D is demand, P is the unit price, and c and d are constants (where d > 0 is the price
elasticity), which of the following is a nonlinear demand prediction model?

25) Which decision model incorporates the uncertainty element?

A) predictive
B) normative
C) prescriptive
D) descriptive
Use the chart below to answer the following two questions:
26) What is the slope of the sales function D = a - bP?
A) 4
B) 9
C) 12
D) 17
y=ax+b, với a là độ dốc => Lập hệ pt => Tính b
27) How many gallons will be sold if the price is increased to $4.75?
A) 833.26
B) 843
C) 798.72
D) 818
28) Prescriptive decision models help:
A) make predictions of how demand is influenced by price.
B) make trade-offs between greater rewards and risks of potential losses.
C) decision makers identify the best solution to decision problems.
D) describe relationships and influence of various elements in the model.
29) The manager at Soul Walk Inc., a shoe manufacturing company, wants to set a new price
(P) for a shoe model to maximize total profit. The demand (D) as a function of price is
represented as:
D = 1,500 - 2.5P
The total cost (C) as a function of demand is represented as:
C = 3,200 + 3.5D
Which of the following is a model for total profit as a function of price?

30) Which decision model incorporates the process of optimization?

A) predictive
B) prescriptive
C) descriptive
D) normative
31) Which of the following is the first phase in problem solving?
A) defining the problem
B) analyzing the problem
C) recognizing the problem
D) structuring the problem
32) Middle managers in operations:
A) develop staffing plans.
B) determine product mix.
C) develop advertising plans.
D) make pricing decisions.
33) The product mix is determined by the:
A) accounting staff.
B) middle managers.
C) finance managers.
D) top managers.
34) During which phase in problem solving is a formal model often developed?
A) analyzing the problem
B) structuring the problem
C) defining the problem
D) implementing the solution
35) Which of the following is true about problem solving?
A) Recognizing problems involves stating goals and objectives.
B) Analyzing the problem involves characterizing the possible decisions.
C) Decision making involves translating the results of the model in the organization.
D) Structuring the problem involves identifying constraints.
41) Decision support systems evolved from efforts to improve military operations prior to
and during World War II. Answer: FALSE
42) In a database file, which is organized in a two-dimensional table, the rows represent
records of related data elements. Answer: TRUE
43) Measure is the act of obtaining data associated with a metric. Measurements are the
numerical values associated with a metric. Answer: FALSE
44) A deterministic model is one in which all model input information is either known or
assumed to be known with certainty. Answer: TRUE
45) The complexity of a problem increases when the problem belongs to an individual
rather than a group. Answer: FALSE

Chapter 4 Descriptive Statistical Measures

1) Which of the following is an example of a subset?
A) The number of individuals who have a Ford car
B) The number of IT employees out of all employees working in an office of Google
C) The number of members in the Democratic Party
D) The population of Canada
2) The purpose of sampling is to ________.
A) enumerate (liệt kê) all the values in the population
B) measure all items of interest for a particular interest or investigation
C) obtain sufficient information to draw a valid inference about a population
D) calculate all variables and observations within a population
3) In statistical notation, the elements of a data set are typically labeled as ________.
A) summation operators
B) letters in capitals
C) Greek letters
D) subscripted variables
4) According to statistical notations, what does Σ stand for?
A) to act as a summation operator
B) to represent sample statistics
C) to represent population measures
D) to represent the number of items in a population

5) Which of the following measures of location is calculated using the formula ,

where n is the number of observations?
A) midrange
B) sample mean
C) mode
D) median
6) Which of the following is true from the equation: , where is the mean of the
sample?
A) The sum of the deviations above the mean are the same as the sum of the deviations below the
mean
B) Half the data lie above the mean of the values
C) The specific set of values does not have any outliers affecting the mean
D) Half the data lie below the mean of the values
Use the table below to answer the following question(s).
Below is a table showing the costs per order of items bought by a computer hardware store.

7) Calculate the mean cost per order.

A) $220.54
B) $174.70
C) $159
D) $88
8) Calculate the mode for the cost per order data.
A) $174.17
B) $325
C) $88
D) $206.5
9) Calculate the median for the cost per order data.
A) $325
B) $154
C) $174.17
D) $88
10) One of the measures of location is calculated as 88. Which of the following measures of
location corresponds to this value?
A) mean
B) mode
C) median
D) midrange
11) The measure of location that specifies the middle value when the data are arranged from
least to greatest is the ________.
A) outlier
B) mean
C) median
D) mode
12) Which of the following is true for a median?
A) A median is only meaningful for interval or ordinal data and not for ratio data.
B) Medians can be calculated no matter how the data is arranged.
C) Medians are affected by outliers.
D) For an even number of observations, the median is the mean of the two middle numbers.
13) Which of the following is a difference between a mean and a median?
A) A mean divides the data half above it and half below it; a median does not.
B) A median is not affected by outliers; a mean is affected by outliers.
C) A mean is an observation that occurs most frequently; a median is the average of all
observations.
D) A median is not meaningful for ratio data; a mean is meaningful to ratio data.
14) The ________ is the observation that occurs most frequently.
A) mode
B) mean
C) outlier
D) median
15) Which of the following is true for a mode?
A) Modes are the mid values of data arranged from least to greatest.
B) Modes are affected by outliers.
C) Modes cannot be used in data having repetitious values.
D) The highest bar in a histogram is its mode.
16) The ________ is the average of the greatest and least values in the data set.
A) mean
B) median
C) midrange
D) mode
Answer: C
17) Which of the following types of conditions is most likely to render a midrange value
useless?
A) having repetitious values in the data set
B) having the data arranged from least to greatest in value
C) having a small sample size
D) having extreme values in a data
18) Which of the following is a similarity between a midrange and a mean?
A) Both measures are calculated using all the values in a data set.
B) Both measures are affected by outliers.
C) Both measures divide the data into two equal halves.
D) Both measures can only be used for small sample sizes.
19) Which of the following is an example of a measure of dispersion?
A) median
B) mode
C) variance
D) midrange
20) Which of the following describes dispersion in statistics?
A) the degree of variation in the data
B) the central value in the data
C) the frequency of values in the data
D) the measure of outliers in the data
21) The difference between the first and third quartiles is referred to as the ________.
A) standard deviation
B) variance
C) interquartile range
D) midrange
22) Which of the following is true of midspread?
A) It is an example of a measure of location.
B) It is calculated by finding the difference between the highest and lowest values in the data set.
C) It is affected by extreme values.
D) It is calculated using only the middle 50% of the data.
23) Which of the following describes variance?
A) It is the difference between the maximum value and the minimum value in the data set.
B) It is the difference between the first and third quartiles of a data set.
C) It is the average of the squared deviations of the observations from the mean.
D) It is the average of the greatest and least values in the data set.
24) Which of the following is true of variance?
A) The formula to calculate variance of a population is not the same as the formula to calculate
variance of a sample.
B) Its value is inversely proportional to the degree to which the data is spread from the mean.
C) It only requires the middle 50% of data to be calculated.
D) It is the square root of standard deviation.
25) Which of the following describes standard deviation?
A) It is the average of the greatest and least values in the data set.
B) It is the square root of the variance.
C) It is the difference between the first and third quartiles of a data set.
D) It is the average of the squared deviations of the observations from the mean.
26) ________ states that for any set of data, the proportion of values that lie within k
standard deviations (k > 1) of the mean is at least 1 - 1/k^2
A) Prime number theorem
B) Bertrand's postulate
C) Oppermann's conjecture
D) Chebyshev's theorem
27) Using Chebyshev's theorem for standard deviation, calculate the percentage of data that
lie within five standard deviations of the mean. (Thay 5 vào công thức => đ/a)
A) 89%
B) 75%
C) 96%
D) 50%
28) In the equation Cp = (upper specification - lower specification)/total variation, what does
Cp denote?
A) capacity variation index
B) capability pattern
C) process capability index
D) capability push
29) Which of the following is the z-score equation for the ith observation?

30) In the z-score formula, which of the following is true if the value in the numerator is a
negative value?
A) that the xi value lies to the left of the mean
B) that the mean is of lesser value than the xi value
C) that the mean is of negative value
D) that the numerator value cannot be divided by the standard deviation
31) A z-score of 1.0 means that ________.
A) the observation is -1.0 standard deviation to the right of the mean
B) the observation is -1.0 standard deviation to the left of the mean
C) the observation has no deviation from the mean
D) the observation is 1.0 standard deviation to the right of the mean
32) Which of the following is the equation for calculating the coefficient of variation (CV)?
A) CV = standard deviation/mean
B) CV = standard deviation - z-score/mean (total variation)
C) CV = value of observation's distance from mean/standard deviation
D) CV = mean/(standard deviation)2
33) How is the return to risk described in financial statistics?
A) as the relative measure of the distance an observation is from the mean
B) as the reciprocal of coefficient of variation
C) as the square root of variance
D) as the ratio of excess returns to its standard deviation
34) In finance, the ________ is the ratio of a fund's excess returns (annualized total returns
minus Treasury bill returns) to its standard deviation.
A) field ratio
B) Sortino ratio
C) Calmar ratio
D) Sharpe ratio
35) Calculate the coefficient of variation from the following data: (0.173/4.7)
z-score = 1.32; standard deviation = 0.173; mean = 4.7; total variation = 0.6
A) 27.16
B) 156.66
C) 0.04
D) -0.5
36) Which of the following values of the coefficients of variation of stocks represents the
least risky stock? (chọn <0.05)
A) 1.0
B) 0.005
C) 0.5
D) 0.045
37) Which of the following describes a positively skewed histogram?
A) a histogram that tails off toward the right
B) a histogram that has no fluctuation in mass
C) a histogram where more mass tails off toward the left
D) a histogram where mass is only concentrated in the middle
38) The ________ measures the degree of asymmetry of observations around the mean.
A) coefficient of variation
B) return to risk factor
C) coefficient of skewness
D) coefficient of kurtosis
39) The coefficient of skewness is computed as ________.

40) Which of the following is true of the coefficient of skewness (CS)?

A) If the CS is positive, the distribution of values tails off to the left.
B) If the CS value is between 0.5 and 1, the skewness is considered to be moderate.
C) If the CS is closer to zero, the degree of skewness is considered to be high.
D) If the CS value is between -0.5 and -1, the skewness is considered negligible (ko đáng kể).
41) In statistics, ________ refers to the peakedness or flatness of a histogram.
A) Sharpe ratio
B) entropy rate
C) Markov chain
D) kurtosis
42) Which of the following cases require the mean of a sample to be calculated using the formula

, where N represents the sample size?

A) the sample has no mode value
B) there is direct access to the raw data
C) sample data are grouped in a frequency distribution
D) the coefficient of skewness is 1 or less than -1
43) The ________ is a formal statistical measure for categorical data, such as defects or
errors in quality control applications or consumer preferences in market research.
A) variance
B) proportion
C) mean
D) skewness
44) ________ is a measure of the linear association between two variables, X and Y.
A) Kurtosis
B) Proportion
C) Skewness
D) Covariance
45) Which of the following formula is used to compute covariance between two variables X
and Y?

46) Which of the following is true of covariance, between two variables, when one of the
deviations from the mean is positive and the other is negative?
A) the degree of linear association is high between the two variables
B) there is no covariance between the two variables
C) the covariance will be negative
D) the covariance will be positive
47) ________ is a measure of the linear relationship between two variables, X and Y, which
does not depend on the units of measurement.
A) Kurtosis
B) Proportion
C) Skewness
D) Correlation
48) Which of the following is the equation used for computing the sample correlation
coefficient?
49) For two variables, a positive correlation coefficient indicates ________.
A) a linear relationship exists for which one variable increases as the other also increases
B) a linear relationship exists for one variable that increases while the other decreases
C) that the two variables have no linear relationship with each other
D) a nonlinear relationship with no linear correlation between the two variables

Chapter 6 Sampling and Estimation

1) A ________ is a description of the approach that is used to obtain samples from a
population prior to any data collection activity.
A) population frame
B) sampling weight
C) sampling plan
D) probability interval
2) Which of the following is true of judgment sampling?
A) It selects samples based on expert opinion.
B) It selects samples based on ease of data collection.
C) It selects samples based on random procedures.
D) It selects samples based on full representation of all subsets in a population.
3) Which of the following types of sampling involves using random procedures to select a
sample?
A) judgment sampling
B) probabilistic sampling
C) subjective sampling
D) convenience sampling
4) ________ involves selecting items from a population so that every subset of a given size
has
an equal chance of being selected.
A) Convenience sampling
B) Subjective sampling
C) Judgment sampling
D) Simple random sampling
5) Which of the following sampling methods bases its selection of samples on the ease of
data collection?
A) probabilistic sampling
B) judgment sampling
C) simple random sampling
D) convenience sampling
6) Which of the following describes periodic sampling?
A) It is a sampling method based solely on expert opinion.
B) It is a sampling method based on selecting a time and then sampling the products after that
time.
C) It is a sampling method based on selecting every nth item from a population.
D) It is a sampling method exclusively used for population that is divided into subsets.
7) ________ sampling applies to populations that are divided into natural subsets and
allocates the appropriate proportion of samples to each subset.
A) Systematic
B) Stratified
C) Cluster
D) Continuous process
8) ________ is based on dividing a population into subgroups, sampling a set of subgroups,
and
conducting a complete census within the subgroups sampled.
A) Cluster sampling
B) Continuous process sampling
C) Judgment sampling
D) Systematic sampling
9) In sampling, ________ involves assessing the value of an unknown population
parameter–such as a population mean, population proportion, or population variance–using
sample data.
A) distribution
B) randomization
C) estimation
D) substitution

10) From the standard deviation formula, , identify the estimator.

11) A(n) ________ is a single number derived from sample data that is used to estimate the
value of a population parameter.
A) confidence interval
B) frequentist interference
C) interval estimate
D) point estimate
12) For which of the following is the value of the estimator said to be biased?
A) if the expected value of the estimator does not equal the population parameter
B) if the expected value of the estimator equals the population parameter
C) only if the expected value of the estimator is zero
D) only if the expected value of the estimator goes below zero
13) Which of the following is true of an unbiased estimator value?
A) The expected value will align perfectly with the population mean.
B) The expected value will not equal the population's parameters.
C) The expected value will not be greater than zero.
D) The expected value will equal the population's parameter.
14) Which of the following accurately describes a sampling distribution of the mean?
A) It is the mean of any one sample from a group of related populations of different sizes.
B) It is the mean distribution of any one sample from a group of samples of varying sizes from a
population.
C) It is the mean of half the samples from a related group of populations.
D) It is the distribution of the means of all possible samples of fixed size n from a population.
15) Which of the following is the inherent reason why sampling errors occur?
A) because samples represent the whole population
B) because samples are only a subset of the population
C) because samples never provide enough data to estimate standard deviation
D) because the means cannot be accurately estimated using samples
16) ________ are statistical errors that are due to the sample not representing the target
population adequately.
A) Parallax errors
B) Sampling errors
C) Nonsampling errors
D) Quantization errors
17) The means of all possible samples of a fixed size n from some population will form a
distribution which is known as the ________.
A) corollary of the mean
B) sampling distribution of the mean
C) standard error of the mean
D) point estimate
18) Which of the following is the equation for calculating the standard error of the mean?

19) Which of the following is implied from the standard error of the mean formula?
A) that true means of populations can be found easier than those of samples
B) that standard deviation increases with increase in sample size
C) that larger sample sizes provide greater accuracy in estimating the true population mean
D) that the true mean of the population can only be calculated using smaller sample sizes
20) The Ransin Sports Company has noted that the size of individual customer orders is
normally distributed with a mean of $112 and a standard deviation of $9. Which of the
following is the answer for the probability that the next individual who buys a product will
make a purchase of more than $116?
A) 71%
B) 48%
C) 33%
D) 42%
21) The Ransin Sports Company has noted that the size of individual customer orders is
normally distributed with a mean of $112 and a standard deviation of $9. If a soccer team of
11 players were to make the next batch of orders, what would be the standard error of the
mean? 9 chia căn 11
A) 1.64
B) 2.71
C) 3.67
D) 0.82
22) The Ransin Sports Company has noted that the size of individual customer orders is
normally distributed with a mean of $112 and a standard deviation of $9. If a soccer team of
11 players were to make the next batch of orders, what is the probability that the mean
purchase would exceed $116?
A) 11%
B) 3%
C) 33%
D) 7%
23) ________ states that if the sample size is large enough, the sampling distribution of the
mean is approximately normally distributed, regardless of the distribution of the population
and that the mean of the sampling distribution will be the same as that of the population.
A) Chebyshev's theorem
B) Central limit theorem
C) Prime number theorem
D) Oppermann's conjecture
24) The central limit theorem states that if the population is normally distributed, then the
________.
A) mean of the population can be calculated without using samples
B) standard error of the mean will not vary from the population mean
C) sampling distribution of the mean will vary from sample to sample
D) sampling distribution of the mean will also be normal for any sample size
25) Which of the following is a difference between interval estimates and point estimates?
A) Point estimates cannot be used to calculate statistical error, while interval estimate is used to
calculate statistical error.
B) Point estimates provide only a single value for a sample, while interval estimates provide a
range of values.
C) Point estimates indicate the magnitude of potential error in the estimate, while interval estimates
don't.
D) Point estimates on an average provide more information than interval estimates.
26) A ________ is a range of values between which the value of the population parameter is
believed to be, along with a probability that the interval correctly estimates the true
population parameter.
A) point estimate
B) frequentist interference
C) confidence interval
D) fiducial inference
27) A 100(1-α)% confidence interval for the population mean μ based on a sample of size n
with a sample mean ̅‫ ݔ‬and a known population standard deviation σ is given by ________.

28) For the formula for calculating the confidence level with known standard deviation, the
value ________ represents the value of a standard normal random variable with a
cumulative probability of 1 - α / 2.

29) The ________ is a family of probability distributions with a shape similar to the standard
normal distribution.
A) log-normal distribution
B) Gaussian q-distribution
C) frequentist interference
D) t-distribution
30) Which of the following is a difference between the t-distribution and the standard normal
distribution?
A) The t-distribution cannot be calculated without a known standard deviation, while the
standard normal distributions can be.
B) The standard normal distribution's confidence levels are wider than those of the t-distribution.
C) The t-distribution has a larger variance than the standard normal distribution.
D) The standard normal distribution is dependent on parameters like degrees of freedom, while t-
distribution is not.
31) Which of the following is true of the t-distribution?
A) It has narrower confidence intervals than the standard normal distribution.
B) It is only used to calculate confidence intervals where there is no known population standard
deviation.
C) It converges to the standard normal distribution as degrees of freedom increase.
D) It does not require parameters such as degrees of freedom.
32) Which of the following is true of calculating confidence intervals for larger samples?
A) For larger samples, the t-distribution is indistinguishable from the standard normal distribution.
B) For larger samples, both the t-distribution and the standard normal distribution require
standard deviation values to be calculated.
C) For larger samples, the degrees of freedom cannot be calculated accurately.
D) For larger samples, only z-values provide a true sampling distribution of the mean.
33) Which of the following types of distributions use z-values to establish confidence
intervals?
A) Gaussian q-distribution
B) t-distribution
C) log-normal distribution
D) standard normal distribution
38) The formula for a 100(1 - α)% confidence interval for the mean μ when the population
standard deviation is unknown is ________.

39) In which of the following cases is a proportion of the observations of a sample used in
estimating the confidence interval?
A) when the degrees of freedom are too large
B) when a true sampling distribution cannot be estimated
C) when the population standard deviation is known
D) when variables have only two possible outcomes
40) In the equation for calculating a confidence interval for a proportion, ,

what does represent?

A) the mean for the sampling distribution of the proportion
B) the degree of freedom for the sampling distribution of the proportion
C) the standard error for the sampling distribution of the proportion
D) the estimator for sampling distribution of the proportion
41) A ________ is one that provides a range for anticipating the value of a new observation
from the same population.
A) prediction interval
B) confidence interval
C) t-distribution
D) standard normal distribution
42) Which of the following is true of prediction intervals?
A) It provides estimates for variables that can have only two possible outcomes.
B) It is associated with the distribution of a random variable.
C) It provides an interval estimate of a population parameter.
D) It is associated with the sampling distribution of a statistic.

43) Which of the following is true of the equation for computing the
sample size required to achieve a desired confidence interval half-width for a proportion?
A) The sample size calculated will only be an approximation.
B) The standard deviation need not be calculated first in order to compute the sample size.
C) The value for π is always set at 1.
D) The most conservative estimate for π is 0.5.

Chapter 7 Statistical Inference

1) Which of the following propositions describes an existing theory or belief?
A) standard deviation
B) null hypothesis
C) proportion
D) alternative hypothesis
2) Which of the following is the initial step in conducting a hypothesis test?
A) collecting data and calculating a test statistic
B) selecting a level of significance
C) identifying the population parameter of interest
D) determining a decision rule
3) Which of the following is a valid one-sample hypothesis test?
A) H0: population parameter ≠ constant vs. H1: population parameter = constant
B) H0: population parameter > constant vs. H1: population parameter ≤ constant
C) H0: population parameter < constant vs. H1: population parameter ≥ constant
D) H0: population parameter = constant vs. H1: population parameter ≠ constant
4) A manufacturer wishes to determine if the average profit from the sale of his product
exceeds $6,710. Which of the following is the appropriate hypothesis test?
A) H0: population mean profit from sale > $6,710 vs. H1: population mean profit from sale ≤
$6,710
B) H0: population mean profit from sale ≤ $6,710 vs. H1: population mean profit from sale >
$6,710
C) H0: population mean profit from sale < $6,710 vs. H1: population mean profit from sale ≥
$6,710
D) H0: population mean profit from sale ≥ $6,710 vs. H1: population mean profit from sale <
$6,710
5) Which of the following is true about determining the proper form of the hypotheses?
A) H0 is statistically proved true while testing
B) failure to reject H0 proves H1 wrong
C) H0 is always assumed to be true in testing
D) H1 is always assumed to be true in testing
6) Which of the following is a Type I error?
A) the null hypothesis is actually true, and the hypothesis test correctly fails to reject it
B) the null hypothesis is actually false, but the test incorrectly fails to reject it
C) the null hypothesis is actually false, and the test correctly rejects it
D) the null hypothesis is actually true, but the hypothesis test incorrectly rejects it
7) Robin Inc. feared that the average company loss is running beyond $34,000. It initially
conducted a hypothesis test on a sample extracted from its database. The hypothesis was
formulated as H0: average company loss $34,000 vs. H1: average company loss > $34,000.
The test resulted in favor of Robin Inc.'s loss not exceeding $34,000. Detailed study of
company accounts later revealed that the average company loss had run up to $37,896.
Which of the following errors were made during the hypothesis test?
A) Type III error
B) Type II error
C) Type I error
D) Type IV error
8) Type II error occurs when the test:
A) correctly fails to reject an actually true null hypothesis.
B) incorrectly fails to reject an actually false null hypothesis.
C) correctly rejects an actually false null hypothesis.
D) incorrectly rejects an actually true null hypothesis.
9) Level of significance is the probability of:
A) incorrectly rejecting an actually true null hypothesis.
B) correctly failing to reject an actually true null hypothesis.
C) incorrectly failing to reject an actually false null hypothesis.
D) correctly rejecting an actually false null hypothesis.
10) The confidence coefficient is denoted by:
A) α
B) 1 - β
C) β
D) 1 - α
11) What is the confidence coefficient when the level of significance is 0.03?
A) 0.9700
B) 0.0376
C) 0.7924
D) 0.7776
12) Which of the following denotes the power of the test?
A) α
B) 1 - β
C) β
D) 1 - α
13) Which of the following probabilities gives the confidence coefficient?
A) P(rejecting H0 | H0 is true)
B) P(not rejecting H0 | H0 is false)
C) P(rejecting H0 | H0 is false)
D) P(not rejecting H0 | H0 is true)
14) Identify the power of the test from the following probabilities.
A) P(rejecting H0 | H0 is true)
B) P(not rejecting H0 | H0 is false)
C) P(rejecting H0 | H0 is false)
D) P(not rejecting H0 | H0 is true)
15) Which of the following is true about the value of the power of the test?
A) low value will enable valid conclusions to be made
B) small sample sizes generate a low value of the power of the test
C) low value will help in detecting small differences in sample statistics
D) small sample sizes incur higher costs than large sample sizes
16) Which of the following is the test statistic for a one-sample test for mean when the
population standard deviation is unknown?

17) The average cost for the sample of 5 sales of a product is x = $230 and the sample
standard deviation is s = $17.50. The hypothesized mean is μ0 = $250. Compute the value of
the test statistic.
A) -2.56
B) -4.00
C) -1.67
D) -3.87
Áp vào đ/a trên là ra
18) For a one-tailed test, the critical value:
A) divides the sampling distribution into three parts.
B) is the number of standard errors away from the sample mean.
C) helps determine if the test statistic falls in the rejection region or not.
D) fails to reject the null hypothesis if the test statistic exceeds the critical value.
19) Which of the following is true about the rejection region?
A) The rejection region is chosen to determine the probability of a Type I error.
B) With a true null hypothesis, the test statistic falls into the rejection region.
C) If the test statistic is in the nonrejection region, the null hypothesis is rejected.
D) The rejection region occurs in the tails of the sampling distribution of the test statistic.
20) Which of the following is true about one-tailed and two-tailed tests?
A) For standard normal and t-distributions, which have a mean of zero, lower-tail critical values are
negative and upper-tail critical values are positive.
B) For an upper one-tailed test, if the test statistic is greater than the critical value, the decision
would be to fail to reject the null hypothesis.
C) For a lower one-tailed test, if the test statistic is less than the critical value, the decision would
be to fail to reject the null hypothesis.
D) For a two-tailed test, if the test statistic is either greater than the upper critical value or less than
the lower critical value, the decision would be to fail to reject the null hypothesis.
Use the data given below to answer the following question(s).
In a lower one-tailed hypothesis test, chosen level of significance = 0.10, sample size = 55,
and t-test statistic = -1.76.
21) What is the observed level of significance?
A) 0.4605
B) 0.4191
C) 0.0379
D) 0.0420
22) Which of the following is the conclusion?
A) This is a high probability and the conclusion is difficult.
B) The null hypothesis is rejected.
C) There are many sampling errors.
D) The null hypothesis cannot be rejected.
23) Which of the following computes the test statistic for a one-sample test for proportions?

24) For a two-sample hypothesis which tests for differences in population parameters (1)
and (2), a two-tailed test seeks evidence that population parameter:
A) seeks evidence that population parameter (2) is larger than parameter (1).
B) seeks evidence that population parameter (2) is the same as parameter (1).
C) seeks evidence that population parameter (2) is smaller than parameter (1).
D) seeks evidence that population parameters (1) and (2) do not belong to the same data.
25) For a two-sample hypothesis test for differences in population parameters (1) and (2),
which of the following is the correct form of an upper-tailed test?
A) H0: population parameter (1) - population parameter (2) ≥ 0 vs. H1: population parameter (1)
- population parameter (2) < 0
B) H0: population parameter (1) - population parameter (2) > 0 vs. H1: population parameter (1)
- population parameter (2) ≤ 0
C) H0: population parameter (1) - population parameter (2) < 0 vs. H1: population parameter (1)
- population parameter (2) > 0
D) H0: population parameter (1) - population parameter (2) ≤ 0 vs. H1: population parameter (1)
- population parameter (2) > 0
26) In a two-sample test for differences in means, the hypotheses are of the form:
27) For a lower-tail test, the p-value in the output from an Excel tool:
A) is correct if the test-statistic is negative.
B) is the difference from 1.0 if the test-statistic is negative.
C) is correct if the test-statistic is zero.
D) is correct if the test-statistic is positive.
28) Which of the following Excel tools is used for a two-sample test for equality of
variances?
A) Excel F-test Two-sample for variances
B) Excel z-test: Two-sample for means
C) Excel t-test: Two-sample assuming unequal variances
D) Excel t-test: Two-sample assuming equal variances
29) While testing for equality of variances, which of the following formulae gives the F-test
statistic?

30) In statistical terminology, the variable of interest is called a ________.

A) critical value
B) p-value
C) factor
D) test-statistic
31) Which of the following is true while applying the Excel ANOVA tool?
A) The specified input range of data must be separated.
B) The sample size for each factor level must be the same.
C) The input range must be a rectangular region that contains all data.
D) Level of significance need not be specified.
32) In order to reject the null hypothesis, the F-test statistic must be greater than the
________.
A) p-value
B) variance
C) df
D) F crit
33) Which of the following tests is used to determine if two categorical variables are
independent?
A) Chi-square test
B) t-test
C) z-test
D) ANOVA
34) Which of the following is true about chi-square distribution?
A) It is a special distribution and is denoted by (C2).
B) It is characterized by degrees of freedom.
C) It is computed using the Excel function CHISQ.INV.TEST.
D) It has a left-tail area equal to the expected value of the sample.
35) Which of the following 2010 Excel functions computes the p-value for the chi-square
test?
A) CHISQ.INV.RT
B) CHIDIST
C) CHI.SQ
D) CHISQ.TEST
41) In conducting a hypothesis test, what is usually to be proven statistically is identified as
the null hypothesis.
Answer: FALSE
42) If the alternative hypothesis includes the symbol <, the rejection region is in the upper
tail.
Answer: FALSE
43) For a two-sample test for means with the population variance being known, the Excel
procedure used is the Excel z-test.
Answer: TRUE
50) Why is testing for independence important for businesses?
Answer: A common problem in business is to determine whether two categorical variables are
independent. With sample data, sampling error can make it difficult to properly assess
independence of categorical variables. The joint probabilities would never be expected to be
exactly the same as the product of the marginal probabilities because of sampling error even if
the two variables are statistically independent. Testing for independence is important in
marketing applications.

Chapter 8 Trendlines and Regression Analysis

1. A regression model that involves a single independent variable is called________.

A) single regression
B) unit regression
C) simple regression
D) individual regression
Answer: C

2. Regression models of ________ data focus on predicting the future.

A) missing
B) time-series
C) panel
D) cross-sectional
Answer: B
Identify the components of simple linear regression models and discuss their applications
The following table exhibits the age of antique furniture and the corresponding prices. Use
the table to answer the following question(s). (Hint: Use scatter diagram and the Excel
Trendline tool where necessary).

3. What is the relationship between the age of the furniture and their values?
A) Nonlinear
B) Linear
C) Curvilinear
D) No relationship
Answer: B

4. Which of the following is true of linear functions used in predictive analytical models?
A) It is used when the rate of change in a variable decreases or increases quickly and then
levels out.
B) It is used when there is a steady decrease or increase over a range of a variable.
C) It is used when there is increase at a specific rate.
D) It is used when there is a rise or fall at a constantly increasing rate.
Answer: B

5. Which of the following mathematical functions, used in predictive analytical models, is

represented by the formula

A) exponential functions
B) power functions
C) logarithmic functions
D) polynomial functions
Answer: D

6. In _________ functions, represented by y=a bx, y rises or falls at constantly increasing

rates.
A) logarithmic
B) power
C) exponential
D) polynomial
Answer: C
7. In Excel's Trendline tool, the value of the _______ gives the measure of fit of the line to
the data.
A) linear function
B) R-squared
C) moving average
D) set intercept
Answer: B

8. Which of the following is true of the R-squared ( R2 ) value in Excel's Trendline function?
A) A value of 1.0 for R2 indicates maximum deviation of the data from the line.
B) If the value of R2 is above 1.0, the line will be at a perfect fit for the data.
C) The value of R2 will always be between -1 and 1.
D) As the value of R2 gets higher, the line will be a better fit for the data.
Answer: D

9. Which of the following equations correctly expresses the relationship between the two
variables?
A) Value = (-181.16) + 13.493 × Number of years
B) Number of years = Value / 12.537
C) Value = (459.34 / Number of years) × 4.536
D) Number of years = (17.538 × Value) / (-157.49)
Answer: A

The following table exhibits the age of antique furniture and the corresponding prices.
Use the table to answer questions 1, and 2. (Hint: Use scatter chart and the Excel Trendline
.(tool where necessary

?What is the relationship between the age of the furniture and their values (10
A) Linear
B) Nonlinear
C) Collinear
D) No relationship
Answer: A

11) What is the expected value for a 90 year-old piece of furniture?

A) $1002.45
B) $997.98
C) $934.56
D) $1033.21
Answer: D

12) In a linear relationship, which of the following accounts for the many possible values of
the dependent variable that vary around the mean?
A) the coefficient of the dependent variable X
B) the value of the intercept ß0
C) the random error term ε
D) the standard error SYX
Answer: C

13) Which of the following is true about the observed errors associated with estimating the
value of the dependent variable using the regression line?
A) They are the horizontal distances between slopes and y-intercepts.
B) The errors are also referred to as critical values.
C) They are always maximized by the regression lines.
D) The errors can be negative or positive.
Answer: D

14) For an independent variable Y, the error associated with the ith observation is:

Use the data given below to answer the following question(s).

Following is an extract from the database of a construction company. The table shows the
height of walls in feet and the cost of raising them. The estimated simple linear regression
equation is given as Ŷ = b0 + b1X. (Hint: Use Excel functions).

15. What is the value of the coefficient b0?

A) -2.25321
B) 0.010697
C) 254.8371
D) 86.81704
Answer: C

16. What is the value of the coefficient b1?

A) 86.81704
B) 254.8371
C) 0.010697
D) -2.14625
Answer: A

17. What is the estimated cost of raising a 10-inch wall?

A) 1505.786
B) 1103.578
C) 968.6109
D) 1123.008
Answer: D

18. Which of the following statements is true when using the Excel Regression tool?
A) The range for the independent variable values must be specified in the box for the Input Y
Range.
B) Checking the option Constant is Zero forces the intercept to zero.
C) The Regression tool can be found in the Tools tab under Insert group.
D) Adding an intercept term reduces the analysis' fit to the data.
Answer: B

19. Which of the following generates a scatter chart in Excel with the values predicted by
the regression model included?
A) Trendline
B) Residual Plots
C) R Square
D) Line Fit Plots
Answer: D

20. The R2 value:

A) is the variability of the observed Y-values from the predicted values.
B) indicates that as the independent variable increases, the intercept term does too.
C) gives the proportion of variation in the dependent variable that is explained by the independent
variable.
D) transforms the cumulative probability scale (vertical axis) so that the graph of the cumulative
normal distribution is a straight line.
Answer: C

21. For a simple linear regression model, significance of regression is:

A) a measure of how well the regression line fits the data.
B) a hypothesis test of whether the true regression coefficient ß1 is zero.
C) a statistic that modifies the value of R2 by incorporating the sample size and the number
of explanatory variables in the model.
D) the variability of the observed Y-values from the predicted values.
Answer: B

22. Which of the following Excel functions is applied to test for significance of regression?
A) COVAR
B) ANOVA
C) SINH
D) TREND
Answer: B

23. While testing hypotheses for regression coefficients, the t-test for the slope is
expressed as:

24. _________ provide information about the unknown values of the true regression
coefficients, accounting for sampling error.
A) Standard errors
B) Confidence intervals
C) Adjusted R Squares
D) P-values
Answer: B

25. Standard residuals:

A) help detect outliers that may bias the results of a regression analysis.
B) cause differences in the regression equation by changing the slope and intercept.
C) point out the ranges for the population intercept and slope at a 95% confidence level.
D) provide information for testing hypothesis associated with the intercept and slope.
Answer: A

26. A(n) __________ is an extreme value that is different from the rest of the data.
A) critical value
B) standard error
C) expected value
D) outlier
Answer: D

27. While checking for linearity by examining the residual plot, the residuals must:
A) exhibit a linear trend.
B) form a parabolic shape.
C) be randomly scattered.
D) be below the x-axis.
Answer: C

28. Which of the following is true when testing for normality of errors?
A) Normality is verified by inspecting for a bell-shaped distribution.
B) It is easier to evaluate normality with small sample sizes.
C) A scatter diagram of the whole data is always used to verify normality.
D) Errors are normally distributed when the scatter diagram shows a straight-line
distribution.
Answer: A

29. _________ means that the variation about the regression line is constant for all values of
the independent variable.
A) Autocorrelation
B) Normality of errors
C) Homoscedasticity
D) Linearity.
Answer: C

30. Which of the following helps in evaluation of autocorrelation?

A) Breusch-Pagan test
B) Durbin-Watson statistic
C) Hosmer-Lemeshow test
D) Cochran-Mantel-Haenszel statistics
Answer: B

31) In multiple regression, R Square is referred to as the:

A) multiple correlation coefficient.
B) coefficient of autocorrelation.
C) coefficient of multiple determination.
D) multiple significance coefficient.
Answer: C

32. Which of the following is true about multiple linear regression?

A) It is a linear regression model with more than one dependent variable.
B) The regression coefficients are called fractional regression coefficients.
C) It uses least squares to estimate the intercept and slope coefficients.
D) The ANOVA tests for the significance of each variable separately.
Answer: C

33. When using the t-statistic in multiple regression to determine if a variable should be
removed:
A) R2 will increase if the variable is removed.
B) if |t| > 1, the standard error will decrease.
C) a large number of independent variables is convenient.
D) if |t| < 1, the standard error will increase.
Answer: A

34. When two or more independent variables in the same regression model can predict each
other better than the dependent variable, the condition is referred to as____________ .
A) autocorrelation
B) heteroscedasticity
C) multicollinearity
D) homoscedasticity.
Answer: C
35. Which of the following is true about multicollinearity?
A) The effect of a dependent variable on another becomes difficult to isolate.
B) Regression coefficients become clearer and are easier to interpret.
C) P-values reduce significantly leading to rejection of null hypothesis.
D) It is best measured using the statistic variance inflation factor (VIF).
Answer: D

36. Categorical variables that have been coded are called __________.
A) limited dependent variables
B) dummy variables
C) instrumental variables
D) observable variables.
Answer: B

37. Interaction is:

A) the principle of having a model with maximum explanatory variables.
B) the process of coding categorical variables.
C) a measure to determine the correlation between dependent variables.
D) the dependence between two independent variables.
Answer:

38. How many additional dummy variables are required if a categorical variable has 4
levels?
A) 2
B) 3
C) 1
D) 4
Answer: B

39. When a scatter chart of data shows a nonlinear relationship, the nonlinear model can be
expressed as:

40. In a curvilinear regression model, the ________ represents the curvilinear effect.
A) intercept
B) error term
C) slope
D) R Square
Answer: C

41) In predictive analysis models, a second-order polynomial has only one hill or valley.
Answer: True
42) Excel's Trendline feature cannot be used in modeling trends which include time
variables.
Answer: False
43) The best-fitting line maximizes the residuals.
Answer: False

44) Creating a scatter chart with an added trendline is visually superior to the scatter chart
generated by line fit plots.
Answer: True
45) The standard error may be assumed to be large if the data are clustered close to the
regression line.
Answer: False
46) An increase in adjusted R2 indicates that the regression model has improved.
Answer: True
47) A good regression model has the fewest number of explanatory variables providing an
adequate interpretation of the dependent variable.
Answer: True

Chapter 13 Linear Optimization

1) Which of the following best defines decision variables in an optimization model?
A) They are limitations, requirements, or other restrictions that are imposed on any solution.
B) They are the quantities that the model seeks to maximize or minimize.
C) They are quantities for which no feasible solutions exist.
D) They are unknown values that the model seeks to determine.
Answer: D

2) Which of the following best defines objective functions?

A) They are limitations, requirements, or other restrictions that are imposed on any solution in an
optimization model.
B) They are quantities that an optimization model seeks to maximize or minimize.
C) They are quantities for which no feasible solutions exist in an optimization model.
D) They are unknown values that an optimization model seeks to determine.
Answer: B

3) Which of the following best defines constraints in an optimization problem?

A) They are limitations, requirements, or other restrictions that are imposed on any solution.
B) They are quantities that an optimization model seeks to maximize or minimize.
C) They are quantities for which no feasible solutions exist.
D) They are unknown values that the model seeks to determine.
Answer: A

Use the following information to answer the following question(s), using the SUMPRODUCT
function. Stone Age Surfboards is a small manufacturer of two types of popular high-tide
surfboards, the Rockwell and the Limestone models. The manufacturing process consists
of two departments: fabrication and finishing. The fabrication department has 15 skilled
workers, each of whom works 5 hours per day. The finishing department has 5 workers,
who also work a 5-hour shift. Each pair of Rockwell surfboards requires 3 labor hours in the
fabrication department and 1.5 labor hours in finishing. The Limestone model requires 4.5
labor-hours in fabrication and 2 labor-hours in finishing. The company operates 6 days a
week. It makes a per-unit profit of $60 on the Rockwell model and $75 on the Limestone
model. Approximately 4.1 Rockwell models and 8.4 Limestone models are produced per
day.
4) What is the total number of hours used for fabrication?
A) 42.58
B) 50.10
C) 35.64
D) 22.95
Answer: B
5) What is the total number of hours used for the finishing operation?
A) 42.58
B) 50.10
C) 35.64
D) 22.95
Answer: D
6) What is the total profit generated?
A) $ 876.00
B) $ 675.50
C) $ 480.50
D) $ 965.00
Answer: A
Consider the spreadsheet for Stone Age Surfboards provided below. Use this data to
answer the following question(s), using the Standard Solver.
Stone Age Surfboards is a small manufacturer of two types of popular low-tide surfboards,
the Graystone and the Lava models. The manufacturing process consists of two
departments: fabrication and finishing. The fabrication department has 8 skilled workers,
each of whom works 9.25 hours per day. The finishing department has 5 workers, each of
whom works a 6-hour shift per day. Each pair of Graystone surfboards requires 2.5 labor
hours in the fabrication department and 2 labor hours in finishing. The Lava model requires
4.2 labor-hours in fabrication and 3.6 labor-hours in finishing. The company operates 6 days
a week. It makes a per unit profit of $40 on the Graystone model and $60 on the Lava model.
The company anticipates selling at least twice as many Lava models as Graystone models.
7) What is the total number of hours used for fabrication?
A) 54.5
B) 30.0
C) 35.5
D) 43.8
Answer: C
8) What is the total number of hours used for the finishing operation?
A) 18.7
B) 30.0
C) 35.5
D) 24.2
Answer: B
9) What is the total profit generated?
A) $ 675.68
B) $ 920.57
C) $ 521.74
D) $ 788.32
Answer: C
10) What is the value of slack obtained from the answer report?
A) 46.78
B) 38.46
C) 59.24
D) 23.85
Answer: B
11) What is the Allowable Increase for Lava surfboards produced?
A) 30
B) 24
C) 12
D) 18
Answer: C
12) What is the Allowable Decrease for Graystone surfboards produced?
A) 30.74
B) 80.00
C) 12.33
D) 6.67
Answer: D
13) What is the shadow price for the finishing hours used?
A) 32.46
B) 17.39
C) 8.33
D) 6.67
Answer: B
14) What is the Allowable Increase in the finishing hours used?
A) 32.46
B) 8.33
C) 26.84
D) 16.67
Answer: A
15) What is the Allowable Decrease in the fabrication hours used?
A) 26.84
B) 16.67
C) 8.33
D) 38.46
Answer: D
16) What will be the total profit contribution from Lava surfboards?
A) $ 391.30
B) $ 521.74
C) $ 130.43
D) $ 276.65
Answer: A
17) What will be the total profit contribution from Graystone surfboards?
A) $ 391.30
B) $ 521.74
C) $ 130.43
D) $ 276.65
Answer: C
18) If the unit profit on Graystone surfboards is increased by $10, what is the total profit
generated?
A) $ 489.13
B) $ 521.74
C) $ 423.91
D) $ 554.35
Answer: D
19) If the unit profit on Graystone surfboards is increased by $10, what is the Allowable
Increase for Lava surfboards?
A) 30.00
B) 85.00
C) 16.67
D) 58.75
Answer: A
20) If the unit profit on Graystone surfboards is increased by $10, what is the Allowable
Decrease for Lava surfboards?
A) 30.00
B) 85.00
C) 16.67
D) 58.75
Answer: B
21) If the unit profit on Graystone surfboards is increased by $10, what is the shadow price
for the finishing hours used?
A) $ 18.48
B) $ 17.39
C) $ 15.42
D) $ 14.15
Answer: A
22) If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the
total profit generated?
A) $ 521.74
B) $ 505.43
C) $ 423.91
D) $ 619.57
Answer: D
23) If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the
Allowable Decrease for Lava surfboards?
A) 95.00
B) 38.46
C) 20.00
D) 11.11
Answer: A
24) If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the
shadow price for the finishing hours used?
A) -4.35
B) 8.33
C) 20.65
D) 32.46
Answer: C
25) Due to decreasing profits, if the production of Graystone surfboards is stopped,
compute the total profit the firm can earn.
A) $ 521.74
B) $ 489.13
C) $ 423.91
D) $ 500.00
Answer: D
26) Which of the following solving methods is selected in the Solver dialog for linear and
linear integer optimization problems?
A) GRG Nonlinear
B) Simplex LP
C) SOCP Barrier Engine
D) Evolutionary
Answer: B
Use the following information to answer the question(s) below.
Cerebro Manufacturing produces four types of structural support fittings-plugs, rails, rivets,
and clips-which are machined on two CNC machining centers. The machining centers have
a capacity of 250,000 minutes per year. The gross margin per unit and machining
requirements are shown in the spreadsheet below.

27) What is the gross margin per minute of plugs manufactured?

A) $ 0.60
B) $ 0.73
C) $ 0.40
D) $ 0.27
Answer: C
28) What is the gross margin per minute of rivets manufactured?
A) $ 0.60
B) $ 0.73
C) $ 0.40
D) $ 0.27
Answer: D
29) What is the maximum possible production of rails based on the machine capacity?
A) 250,000.00
B) 83,333.33
C) 166,666.67
D) 125,000.00
Answer: D
30) What is the maximum production of clips based on the machine capacity?
A) 250,000.00
B) 83,333.33
C) 166,666.67
D) 125,000.00
Answer: C
31) What is the total profit generated from the manufacture of only plugs?
A) $ 66,666.67
B) $ 100,000.00
C) $ 183,333.33
D) $ 150,000.00
Answer: B
32) What is the total profit generated from the manufacture of rivets?
A) $ 66,666.67
B) $ 100,000.00
C) $ 183,333.33
D) $ 150,000.00
Answer: A
33) Which of the following options is used if Solver gives an error message that linearity is
not satisfied?
A) Ignore Integer Constraints
B) Show Iteration Results
C) Use Automatic Scaling
D) Use Multistart
Answer: C
34) When a model has a unique optimal solution, it means that ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the Allowable Increase or Allowable Decrease values for changing cells are zero
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: D
35) If a model has alternative optimal solutions, ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the objective can be increased or decreased to infinity or negative infinity
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: A
36) Alternate optimal solutions exist when the ________.
A) reduced cost is equal to the shadow price
B) ratio of the objective coefficient to the constraint coefficient is one
C) Allowable Increase values for changing cells are zero
D) final value of the changing cells is greater than that of the constraints
Answer: C
37) An unbounded problem is one for which ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the objective can be increased or decreased to infinity or negative infinity while the solution
remains feasible
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: C
38) An infeasible problem is one for which ________.
A) the objective is maximized or minimized by more than one combination of decision variables
B) there is no solution that simultaneously satisfies all the constraints
C) the objective can be increased or decreased to infinity or negative infinity
D) there is exactly one solution that will result in the maximum or minimum objective
Answer: B
39) The ________ indicates how much the value of the objective function will change as the
right-hand side of a constraint is increased by 1.
A) objective coefficient
B) shadow price
C) binding constraint
D) reduced cost
Answer: B
40) Which of the following approaches provided by the Analytic Solver Platform can
automatically run multiple optimizations while varying model parameters within a
predefined range?
A) sensitivity analysis
B) breakdown analysis
C) parameter analysis
D) uncertainty analysis
Answer: C
41) A constraint function is a function of the decision variables in the problem.
Answer: TRUE
42) Any solution that satisfies all constraints of a problem is called a feasible solution.
Answer: TRUE
43) A binding constraint is one for which the Cell Value is greater than the right-hand side of
the value of the constraint.
Answer: FALSE
44) Infeasible problems can occur when the demand requirement is higher than the
available capacity.
Answer: TRUE
45) Whenever a constraint has positive slack, the shadow price is equal to one.
Answer: FALSE
46) What are the two basic properties of a linear optimization model?
Answer: A linear optimization model has two basic properties: (1) The objective function and
all constraints are linear functions of the decision variables. This means that each function is
simply a sum of terms, each of which is some constant multiplied by a decision variable. (2) All
variables are continuous, meaning that they may assume any real value. This assumption may not
be realistic for a practical business problem, but it simplifies the solution method.
47) What are the Excel functions to avoid in linear optimization?
Answer: Several common functions in Excel can cause difficulties when attempting to solve
linear programs using Solver because they are discontinuous and no longer satisfy the conditions
of a linear model. Common Excel functions to avoid are ABS, MIN, MAX, INT, ROUND, IF,
and COUNT.
49) What are the four possible outcomes that can be obtained by solving a linear
optimization model?
Answer:
●​ When a model has a unique optimal solution, it means that there is exactly one solution that
will result in the maximum (or minimum) objective.
●​ If a model has alternative optimal solutions, the objective is maximized (or minimized) by
more than one combination of decision variables.
●​ An unbounded problem is one for which the objective can be increased or decreased
without bound.
●​ An infeasible problem is one for which no feasible solution exists.
50) What is the importance of Shadow Price in the Sensitivity Report?
Answer: The Constraints section of the Sensitivity Report lists the final value of the constraint
function (the left-hand side), a number called the shadow price, the original right-hand side value
of the constraint, and an Allowable Increase and Allowable Decrease. The Shadow Price tells
how much the value of the objective function will change as the right-hand side of a constraint is
increased by 1. Whenever a constraint has positive slack, the shadow price is zero. When a
constraint involves a limited resource, the shadow price represents the economic value of having
an additional unit of that resource.