Test Bank for Spreadsheet Modeling and Decision Analysis

9th Edition by Ragsdale

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Test Bank
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Chapter 01 Introduction to Modeling and Decision Analysis

1. The essence of decision analysis is
a. breaking down complex situations into manageable elements.
b. choosing the best course of action among alternatives.
c. finding the root cause of why something has gone wrong.
d. thinking ahead to avoid negative consequences.
ANSWER: b

2. All of the following are reasons why someone would wish to use a spreadsheet model except
a. to implement a computer model.
b. because spreadsheets are convenient.
c. to analyze decision alternatives.
d. because spreadsheets lead to increased opportunities.
ANSWER: d

3. Which of the following fields of study uses computers, statistics, and mathematics to solve business problems?
a. Accounting
b. Information systems
c. Business analytics
d. Scientific management
ANSWER: c

4. Anchoring effects occur in decision-making problems when

a. decision makers are tied too closely to previous decisions.
b. organizations refuse to consider new alternatives.
c. a seemingly trivial factor serves as a starting point for estimations.
d. a person in a position of authority exerts his or her opinion very forcefully.
ANSWER: c

5. Virtually everyone who uses a spreadsheet today for model building and decision making
a. is a practitioner of business analytics.
b. possesses an advanced knowledge of mathematics and computer programming languages.
c. is a CPA.
d. is in a position to influence decision makers.
ANSWER: a

6. Which of the following statements is true of using models in problem solving and decision analysis?
a. It is a fairly new idea.
b. It is required in order to find good solutions.
c. It is something virtually everyone has done before.
d. It is tied to the use of computers.
ANSWER: c

7. A road map is an example of a

a. mathematical model.
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Chapter 01 Introduction to Modeling and Decision Analysis

b. mental model.
c. physical model.
d. visual model.
ANSWER: d

8. The textbook figure shown below of the problem-solving process is an example of a

a. mental model.
b. prescriptive model.
c. graphical model.
d. visual model.
ANSWER: d

9. Which of the following is most likely to be used when faced with the decision of how to arrange furniture in a room?
a. Mathematical model
b. Mental model
c. Physical model
d. Visual model
ANSWER: b

10. To illustrate how a complex system will be built, an engineer will likely use a
a. mathematical model.
b. mental model.
c. physical model.
d. visual model.
ANSWER: d

11. Which of the following is the type of model used throughout this textbook?
a. Mathematical model
b. Mental model
c. Physical model
d. Visual model
ANSWER: a

12. The best models

a. accurately reflect relevant characteristics of the real-world object or decision.
b. are mathematical models.
c. replicate all aspects of the real-world object or decision.

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Chapter 01 Introduction to Modeling and Decision Analysis

d. replicate the characteristics of a component in isolation from the rest of the system.
ANSWER: a

13. A mathematical model is considered to be valid when

a. it accurately represents the relevant characteristics of the object or decision.
b. it has passed a validation test.
c. it replicates all aspects of the object or decision.
d. the left- and right-hand sides of expressions are equal.
ANSWER: a

14. All of the following are benefits of modeling except that

a. modeling delivers needed information on a more timely basis.
b. modeling finds the right answers to incorrect or flawed problem statements.
c. modeling is helpful in examining things that would be impossible to do in reality.
d. modeling is less expensive than implementing several alternative solutions.
ANSWER: b

15. Better decision making using a modeling process is achieved due to the
a. interaction with the spreadsheet.
b. visualization of the system being studied.
c. insight gained through the process.
d. timeliness of the results obtained.
ANSWER: c

16. The term "mathematics" is used to encompass not only the most familiar elements of math, such as algebra, but also
a. profit and revenue calculations.
b. calculus
c. logic.
d. expense calculations.
ANSWER: c

17. The specification or description of the relationship between the dependent and independent variables is generally
called a
a. constraint.
b. declaration.
c. function.
d. mathematical model.
ANSWER: c

18. Variables are termed independent when they satisfy which of the following?
a. The function value depends upon their values.
b. The decision maker has no control over them.
c. The variables have no relationship to one another.
d. The variable is described as an output of the spreadsheet model.
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ANSWER: a

19. In the following expression, what is the dependent variable?

a. Profit
b. Revenue
c. Expenses
d. Loss
ANSWER: a

20. In a spreadsheet, input cells correspond conceptually to

a. dependent variables.
b. functions.
c. independent variables.
d. output cells.
ANSWER: c

21. The categories of modeling techniques include all of the following except
a. descriptive models.
b. predictive models.
c. prescriptive models.
d. preventive models.
ANSWER: d

22. The following spreadsheet model is an example of a

A B C
1
2
3 Purchase price $32,500
4 less:
5 Down payment $ 6,500
6 Trade-in $ 4,000
7 Amount financed $22,000
8
9 Term of loan 5 years
10
11 Annual interest rate 11.25%
12
13 Monthly payment $481.08

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14
a. descriptive model.
b. predictive model.
c. prescriptive model.
d. preventive model.
ANSWER: c

23. Solutions to which of the following categories of modeling techniques indicate a course of action to the decision
maker?
a. Descriptive models
b. Predictive models
c. Prescriptive models
d. Preventive models
ANSWER: c

24. In which of the following categories of modeling techniques do the independent variables have unknown or uncertain
values or coefficients?
a. Descriptive models
b. Predictive models
c. Prescriptive models
d. Probabilistic models
ANSWER: a

25. In which of the following categories of modeling techniques are the specifications of the relationships between
dependent and independent variables unknown or poorly defined?
a. Descriptive models
b. Open models
c. Predictive models
d. Prescriptive models
ANSWER: c

26. Which of the following categories of modeling techniques includes optimization techniques?
a. Capitalistic models
b. Descriptive models
c. Predictive models
d. Prescriptive models
ANSWER: d

27. Which of the following categories of modeling techniques addresses uncertainty in the values of the independent
variables?
a. Descriptive models
b. Predictive models
c. Prescriptive models
d. Scale models
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ANSWER: a

28. Which of the following categories of modeling techniques involves determining the value of a dependent variable
based on specific values of independent variables?
a. Biased models.
b. Descriptive models.
c. Predictive models.
d. Prescriptive models.
ANSWER: c

29. To be effective, a modeler must

a. be an effective presenter of results.
b. collect the proper input data for the model.
c. understand how modeling fits into the entire problem-solving process.
d. apply the correct modeling technique.
ANSWER: c

30. Identifying the real problems faced by the decision maker

a. is not important since the decision maker has already defined the problem.
b. requires insight, some imagination, time and a good bit of detective work.
c. first requires a well-defined problem statement.
d. will lead to developing the best model.
ANSWER: b

31. The ultimate goal of the problem identification step of the problem-solving process is
a. collecting lots of information.
b. helping the decision maker realize there is a problem.
c. identifying the root problem(s) causing the mess.
d. convincing the decision maker the mess is really a problem that can be solved.
ANSWER: c

32. Which step of the problem-solving process is considered the most important?
a. Identify problem
b. Analyze model
c. Test results
d. Implement solution
ANSWER: a

33. Which of the following steps in the problem-solving process is most likely to incur resistance from people affected by
the proposed solution?
a. Formulate model
b. Use model to analyze problem
c. Test results
d. Implement solution
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ANSWER: d

34. Which of the following statements is true about different modeling techniques that are available to solve managerial
decision problems?
a. The wrong choice of modeling technique is a common source of implementation difficulties.
b. Managers should develop a strong preference and expertise in one technique to use when faced with problems.
c. The fundamental characteristics of the problem guide the selection of an appropriate modeling technique.
d. Most problems faced by managers are fundamentally the same.
ANSWER: c

35. In which step of the problem-solving process is the main focus to generate and evaluate alternatives?
a. Identify problem
b. Formulate model
c. Use model to analyze problem
d. Test results
ANSWER: c

36. Which of the following is true of "What if?" analysis?

a. A well-designed spreadsheet facilitates "What if?" analysis.
b. It is not very useful when working with non-mathematical models.
c. "What if?" analysis is an efficient optimization technique.
d. "What if?" analysis is useful in creating a well-defined problem statement.
ANSWER: a

37. Beneficial uses of the testing process include all of the following except:
a. double checking the validity of the model.
b. finding that some important assumption has been left out of the model.
c. giving no new insights into the nature of the problem.
d. improving solutions after the implementation step.
ANSWER: d

38. Implementing solutions to problems involves people and change. Which of the following is a suggested approach to
effectively implement solutions?
a. Centralizing decision-making authority to those who have specialized training in decision making
b. Involving anyone affected by the decision in all steps of the problem-solving process
c. Making decisions according to majority vote
d. More skillfully communicating management decisions
ANSWER: b

39. Which of the following problem-solving steps is often considered the most difficult?
a. Identify the problem.
b. Analyze the model.
c. Test results.
d. Implement the solution.
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ANSWER: d

40. If the correct problem is not identified, the best that can be hoped for is
a. wasted time and effort.
b. useful experience in problem definition efforts.
c. a descriptive model.
d. the right answer to the wrong question.
ANSWER: d

41. Chapter 1 discussed all of the following except

a. how models of decision problems differ in a number of important characteristics.
b. how spreadsheet modeling and analysis fit into the problem-solving process.
c. how spreadsheet models of decision problems can be used to analyze the consequences of possible courses of
action.
d. how to implement a problem formulation as a spreadsheet model.
ANSWER: d

42. All of the following are CEO alternatives to start the OR/MS collaboration process except
a. require the OR/MS group to save their yearly salary in every study.
b. use OR/MS personnel as consultants.
c. hire some OR/MS professionals and give them a problem to work.
d. institute more participation from OR analysts.
ANSWER: a

43. The main point brought forward in the Chapter 1 "The World of Business Analytics" case reading is that
a. at a cocktail party, it is more efficient to divide the dip into several bowls and place them around the room.
b. competitive rivalry between IS and OR/MS groups can be turned to advantage when tackling business process
re-engineering projects.
c. information system analysts trained in management science can help turn ordinary information systems into
money-saving decision-support systems.
d. OR/MS professionals lack communication skills and tend to focus on "rigor without relevance".
ANSWER: c

44. Which of the following statements is not true about the relationship between OR/MS and IS professionals?
a. OR/MS analysts need IS professionals' data for their models.
b. OR/MS analysts need to take many of the IS customers.
c. The IS professional cannot use OR/MS tools in their applications.
d. The IS tools can start to recommend solutions using OR/MS skills.
ANSWER: d

45. The goal of the modeling approach to problem solving is to

a. help individuals make good decisions.
b. ensure optimality of decisions.
c. determine a set of optimal decisions.

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d. determine feasibility of decisions.
ANSWER: a

46. A situation when decision quality is good and the resulting outcome quality is good is referred to as
a. pure luck.
b. deserved success.
c. dumb luck.
d. poetic justice.
ANSWER: b

47. A factor that plays a role in determining whether a good or bad outcome occurs is called
a. luck.
b. intuition.
c. certainty.
d. predictability.
ANSWER: a

48. Consistently using a structured, model-based process to make decisions

a. should produce good outcomes more frequently.
b. is less effective than making decisions in a haphazard manner.
c. is evidence that luck plays an important role in decision making.
d. always leads to well-deserved success in managerial decision making.
ANSWER: a

49. A purely rational decision maker should

a. always select optimal action.
b. disregard the consequences of his or her choices.
c. consistently select the same alternative, regardless of how the problem is framed.
d. allow emotions to influence the decision.
ANSWER: c

50. Two of the effects associated with decision problems are

a. anchoring and framing.
b. anchoring and loading.
c. framing and complacency.
d. anchoring and luck.
ANSWER: a

51. Anchoring occurs when

a. a trivial factor is used as a starting point for estimations in a decision-making problem.
b. a difficult factor is incorporated in a problem.
c. an easy solution is obtained to a difficult problem.
d. obtaining a solution is trivial.
ANSWER: a
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52. Framing effects refer to

a. how difficult a decision is.
b. how a decision maker views the alternatives in a decision problem.
c. whether a software program can be used to obtain an optimal solution to a decision problem.
d. how structured the decision problem is.
ANSWER: b

53. In the model Y = f(X1, X2), Y is called a(n)

a. dependent variable.
b. independent variable.
c. confounded variable.
d. convoluted variable.
ANSWER: a

54. In the model Y = f(X1, X2), X1 is called a(n)

a. independent variable.
b. dependent variable.
c. confounded variable.
d. convoluted variable.
ANSWER: a

55. A valid model

a. accurately represents a decision problem being studied.
b. produces an optimal solution.
c. produces a good solution.
d. produces a feasible solution.
ANSWER: a

56. In a decision-making framework, poetic justice refers to a situation when which of the following occur?
a. Good decision quality and good outcome quality
b. Good decision quality and bad outcome quality
c. Bad decision quality and good outcome quality
d. Bad decision quality and bad outcome quality
ANSWER: d

57. A situation when decision quality is good and the resulting outcome quality is bad is referred to as
a. pure luck.
b. deserved success.
c. bad luck.
d. poetic justice.
ANSWER: c

58. A situation when decision quality is bad and the resulting outcome quality is bad is referred to as
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a. pure luck.
b. deserved success.
c. bad luck.
d. poetic justice.
ANSWER: d

59. A situation when decision quality is bad and the resulting outcome quality is good is referred to as
a. dumb luck.
b. deserved success.
c. bad luck.
d. poetic justice.
ANSWER: a

60. In a decision-making framework, dumb luck refers to a situation when which of these occur?
a. Good decision quality and good outcome quality
b. Good decision quality and bad outcome quality
c. Bad decision quality and good outcome quality
d. Bad decision quality and bad outcome quality
ANSWER: c

61. In a decision-making framework, deserved success refers to a situation when which of the following occur?
a. Good decision quality and good outcome quality
b. Good decision quality and bad outcome quality
c. Bad decision quality and good outcome quality
d. Bad decision quality and bad outcome quality
ANSWER: a

62. In a decision-making framework, bad luck refers to a situation when which of the following occur?
a. Good decision quality and good outcome quality
b. Good decision quality and bad outcome quality
c. Bad decision quality and good outcome quality
d. Bad decision quality and bad outcome quality
ANSWER: b

63. In which step of the problem-solving process is the concept of "probortunity" introduced?
a. Identify problem
b. Formulate model
c. Use model to analyze problem
d. Test results
ANSWER: a

64. In order to be useful to a decision maker, decision problems need to be

a. valid.
b. analyzed.
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c. complicated.
d. tested.
ANSWER: a

65. Business analytics focuses on

a. testing and implementing results.
b. formulating analytical models.
c. using models to analyze problems.
d. identifying and leveraging business opportunities.
ANSWER: d

66. Business opportunities can be viewed and formulated as

a. decision problems.
b. analytical models.
c. empirical models.
d. testing tools.
ANSWER: a

67. The notion that every problem is also an opportunity is reflected in the term
a. probortunity.
b. formulation.
c. simulation.
d. business opportunity.
ANSWER: a

68. The words "opportunity" and "problem" are

a. disjoint.
b. used interchangeably.
c. mutually exclusive.
d. complementary.
ANSWER: b

69. Mathematical modeling approaches

a. are a subset of the total problem-solving process.
b. cover the entire spectrum of decision support approaches.
c. are exhaustive.
d. are complementary.
ANSWER: a

70. "Probortunity" is
a. the first step in the problem-solving process.
b. a decision support method.
c. part of testing results.
d. part of solution implementation.
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ANSWER: a

71. If results testing produces unsatisfactory results,

a. the problem-solving process requires new formulation and implementation.
b. minor adjustments should be made to the existing model.
c. the solution algorithm should be checked.
d. testing should be repeated.
ANSWER: a

72. Which of the following provide the most convenient, flexible, and useful way for businesspeople to implement and
analyze computer models?
a. Smartboards
b. 3D printers
c. Graphing calculators
d. Electronic spreadsheets
ANSWER: d

73. A mathematical model uses mathematical relationships to represent

a. a visual solution.
b. the rate of change between two variables.
c. a decision problem.
d. predictions for the future.
ANSWER: c

74. Because they simplify reality, models are generally helpful in examining things that would be
a. inexpensive to do in reality.
b. impossible to do in reality.
c. easily done in reality.
d. quickly done in reality.
ANSWER: b

75. In spreadsheet modeling of a problem,

a. there is no relation between a mathematical equation and the spreadsheet.
b. there is no direct correspondence between a mathematical equation and the spreadsheet.
c. there is a direct correspondence between a mathematical equation and the spreadsheet.
d. there is very little correspondence between a mathematical equation and the spreadsheet.
ANSWER: c

76. The end result of the problem-identification step is a(n)

a. well-defined statement of the problem.
b. feasible solution to enact.
c. prediction for the related outcome.
d. implementation plan.
ANSWER: a
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Chapter 01 Introduction to Modeling and Decision Analysis

77. Errors in human judgment often arise because of what type of effects associated with decision problems?
a. Bolstering and basing
b. Tying and building
c. Overestimation and underestimation
d. Anchoring and framing
ANSWER: d

78. Which of the following types of effects relates to how a decision maker views or perceives the alternatives in a
decision problem?
a. Anchoring
b. Framing
c. Underestimating
d. Modeling
ANSWER: b

79. Which of the following types of effects arises when a seemingly trivial factor serves as a starting point for estimations
in a decision-making problem?
a. Anchoring
b. Framing
c. Underestimating
d. Modeling
ANSWER: a

80. When building a model, it is often _____________ to analyze decision problems using a model than carrying out the
decision in reality.
a. a longer process
b. more expensive
c. less expensive
d. more difficult
ANSWER: c

81. Independent variables are represented as which type of cells in a spreadsheet model?
a. Dependent cells
b. Formula cells
c. Input cells
d. Output cells
ANSWER: c

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