Quiz Prob.01 Assume that each of you put 1000 VND into a pig bank; Next, each of you pick one number between 1 and 100. The average of all the numbers (you and your classmates picked) is calculated, and multiple it by 60% and get number X; Whoever picks the number that is closest to this number X will get all the money and will have full score for this prob. The number of student in this class is: Hint: It is important for you to guess which number other students are likely to choose. Ex: Class has 4 students A, B, C, D. Student A chose 20, B chose 50, C chose 70, D chose 100. The Avg. Value is: (20+50+70+100)/4= 60 60*60%= 36 So, B is the winner.
Quiz Prob. 02 (Bottled Water game) Set up Payoff table and determine saddle point for the following problem. Players: Evian, Perrier Each company has a fixed cost of $5000 per period, regardless of sales They are competing for the same market, and each must chose
a high price ($2/bottle), and a low price ($1/bottle) At $2, 5000 bottles can be sold for $10,000 At $1, 10000 bottles can be sold for $10,000 If both companies charge the same price, they split the sales evenly between them If one company charges a higher price, the company with the lower price sells the whole amount and the higher price sells nothing Payoffs are profits – revenue minus the $5000 fixed cost
Quiz 03 Prob.01 An investor is going to purchase one of three types of real estate: an apartment building, an office building, or a warehouse. The two future states of nature that will determine how much profit the investor will make are either good economic conditions or bad economic conditions. The profits that will result from each decision given these two states of nature are summarized below:
Purchase Decision Apt Bldg Office Bldg Warehouse
Good Economy
Poor Economy
$ 50,000 90,000 40,000
$ 30,000 -40,000 10,000
Determine the best alternative for each of 5 criteria. Prob. 2: Determine EMV, EVwPI, EVPI and EOL for Prob. 01 when the probabilities of good and bad economy are 0.6 and 0.4 respectively
Quiz 04 Find the best alternative
Quiz (25 mins) Mark M. Upp has just been fired as the university bookstore manager for
setting prices too low (only 20 percent above suggested retail). He is considering opening a competing bookstore near the campus, and he has begun an analysis of the situation. There are two possible sites under consideration. One is relatively small, while the other is large. If he opens at Site 1 and demand is good, he will generate a profit of $50,000. If demand is low, he will lose $10,000. If he opens at Site 2 and demand is high, he will generate a profit of $80,000, but he will lose $30,000 if demand is low. He also has the option of not opening either. He believes that there is a 50 percent chance that demand will be high. Mark can purchase a market research study. The probability of a good demand given a favorable study is 0.8. The probability of a good demand given an unfavorable study is 0.1. There is a 60 percent chance that the study will be favorable. a. Construct the decision tree for Mark. Should Mark use the study? Why? b. What is the maximum amount Mark should be willing to pay for this study?
Quiz 05 Exponential smoothing is used to forecast automobile battery sales. Two values
of alpha are examined, alpha = 0.8 and alpha = 0.5. Evaluate the accuracy of each smoothing constant by computing absolute deviation and MAD. Assume that the forecast for January was 22 batteries
Quiz 05 Solution Exponential smoothing is used to forecast automobile battery sales. Two values
of alpha are examined, alpha = 0.8 and alpha = 0.5. Evaluate the accuracy of each smoothing constant by computing absolute deviation and MAD. Assume that the forecast for January was 22 batteries
On the basis of this analysis, a smoothing constant of alpha = 0.8 is
preferred to alpha = 0.5 because it has a smaller MAD
Quiz (25 mins) Upon retirement, Mr. Klaws started to make two types of
children's wooden toys in his shop, Wuns and Toos. Wuns yield a variable profit of $9 each and Toos have a contribution margin of $8 each. Even though his electric saw overheats, he can make 7 Wuns or 14 Toos each day. Since he doesn't have equipment for drying the lacquer finish he puts on the toys, the drying operation limits him to 16 Wuns or 8 Toos per day. Solve this problem.
Quiz 06 Hot dog mixture in 1000-pound batches. Two ingredients, chicken ($3/lb) and beef ($5/lb).
Recipe requirements: at least 500 pounds of chicken at least 200 pounds of beef
Ratio of chicken to beef must be at least 2 to 1. Determine optimal mixture of ingredients that will minimize costs.
Hint.: You are required to set up the Linear Programing model. You don’t need to solve it.
Solution Example Problem No. 1 (2 of 3) Step 1: Identify decision variables. x1 = lb of chicken in mixture (1000 lb.)
x2 = lb of beef in mixture (1000 lb.) Step 2: Formulate the objective function.
Minimize Z = $3x1 + $5x2 where Z = cost per 1,000-lb batch $3x1 = cost of chicken $5x2 = cost of beef
Solution Example Problem No. 1 (3 of 3) Step 3: Establish Model Constraints x1 + x2 = 1,000 lb x1 500 lb of chicken x2 200 lb of beef x1/x2 2/1 or x1 - 2x2 0 x1, x2 0 The Model: Minimize Z = $3x1 + 5x2 subject to: x1 + x2 = 1,000 lb x1 50 x2 200 x1 - 2x2 0 x1,x2 0
