Business Finance
ACI Linear Programming Model Formulation & Computation Exam Practice

Allentown Career Institute

Question Description

I don’t understand this Statistics question and need help to study.

There is a total of 100 questions in the basic exam and 10 BONUS questions. Sounds like a lot!

Here are the tradeoffs!

a)This is “at home”, open book, open notes.

b)The 100 basic exam questions DO NOT include extensive formulation or computation!

c)The 100 basic exam questions are either “Multiple Choice”, “True or False” or “Fill-in-the-Blank questions!

d)The 10 BONUS questions are the formulation and computation questions as BONUS!

Put ALL your answers on the below Answer Sheets no exceptions!

Formulate a Linear Programming Model –

1) The poultry farmer decided to make his own chicken scratch by combining alfalfa and corn in rail car quantities. A rail car of corn costs $400 and a rail car of alfalfa costs $200. The farmer's chickens have a minimum daily requirement of vitamin K (500 milligrams) and iron (400 milligrams), but it doesn't matter whether those elements come from corn, alfalfa, or some other grain. A unit of corn contains 150 milligrams of vitamin K and 75 milligrams of iron. A unit of alfalfa contains 250 milligrams of vitamin K and 50 milligrams of iron. Formulate the linear programming model for this situation including the Optimization equation and 2 constraint equations. [10 points]

2) The international man of mystery knew the finest haberdashers the world over and constantly sought to expand his dazzling array of fine suits, ties, and cufflinks. Closet space was at a premium however, so purchases were carefully weighed. Each suit provides 23 units of dazzlement, each tie 14, and a set of cufflinks is worth an easy 8. A suit takes up 0.5 cubic feet of closet space and $900 of budget. A tie costs $135 and cufflinks cost $100 per set. Cufflinks are tiny – even in the original box, they take up only .01 cubic feet while ties occupy a lusty .25 cubic feet. He has budgeted $12,000 for clothes on this trip and has 20 cubic feet of closet space left to fill.

Formulate an objective function and 2 constraints to model this situation. [10 points]

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MGT 6050 1st Half Exam Name: There is a total of 100 questions in the basic exam and 10 BONUS questions. Sounds like a lot! Here are the tradeoffs! a) This is “at home”, open book, open notes. b) The 100 basic exam questions DO NOT include extensive formulation or computation! c) The 100 basic exam questions are either “Multiple Choice”, “True or False” or “Fill-in-the-Blank questions! d) The 10 BONUS questions are the formulation and computation questions as BONUS! Put ALL your answers on the below Answer Sheets no exceptions! Submit this entire package to the appropriate assignment in the Assignment Folder. Here is the breakdown of questions and points value; SECTION Type of question # of questions Points for each correct answer Maximum points achievable I True or False 25 5 125 II Multiple choice 50 5 250 III Fill-in-the-Blank 25 5 125 BONUS IV Formulate V Calculate TOTALS FROM Secs. I-III 500 Basis points FROM Bonus Secs IV, V 100 + BONUS points 600 Maximum available points TOTAL POSSIBLE POINTS Question # 1 2 3 Answer Question # Answer 41 42 43 1 Question # Answer 81 82 83 _______ _______ _______ MGT 6050 1st Half Exam Name: 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ BONUS 1 2 3 4 5 6 7 8 9 10 TRUE or FALSE 1) Linear programming is a model consisting of linear relationships representing a firm's decisions given an objective and resource constraints. [5 points] 2) The objective function always consists of either maximizing or minimizing some value. [5 points] 2 MGT 6050 1st Half Exam Name: 3) Both objective functions and constraints contain parameters. [5 points] 4) All linear programming models exhibit a set of constraints. [5 points] 5) When using the graphical method, only one of the four quadrants of an xy-axis needs to be drawn. [5 points] 6) Determining the production quantities of different products manufactured by a company based on resource constraints is a product mix linear programming problem. [5 points] 7) Product mix problems cannot have greater-than-or-equal-to (≥) constraints. [5 points] 8) When using a linear programming model to solve the diet problem, the objective is generally to maximize. [5 points] 9) When using a linear programming model to solve the diet problem, the objective is generally to maximize nutritional content. [5 points] 10) Diet problems usually maximize nutritional value. [5 points] 11) In most media selection decisions, the objective of the decision maker is to minimize cost. [5 points] 12) In a media selection problem, instead of having an objective of maximizing profit or minimizing cost, generally the objective is to maximize the audience exposure. [5 points] 13) A linear programming model of a media selection problem is used to determine the relative value of each advertising media. [5 points] 14) In a balanced transportation model, supply equals demand such that all constraints can be treated as equalities. [5 points] 15) The constraint x + y = z is written in standard form. [5 points] 16) In an unbalanced transportation model, supply does not equal demand, and supply constraints must have ≤ signs. [5 points] 17) Transportation problems can have solution values that are non-integer and must be rounded. [5 points] 18) In a transportation problem, the supply constraint represents the maximum amount of product available for shipment or distribution at a given source (plant, warehouse, mill). [5 points] 19) In a transportation problem, a demand constraint for a specific destination represents the amount of product demanded by a given destination (customer, retail outlet, store). [5 points] 20) A conservative approach to a balanced transportation model would be to make all constraints less-than-or-equal-to constraints. [5 points] 21) In a transportation problem, a demand constraint (the amount of product demanded at a given destination) is 3 MGT 6050 1st Half Exam Name: a less-than-or equal-to constraint (≤).[5 points] 22) Blending problems usually require algebraic manipulation in order to write the LP in "standard form."[5 points] 23) Fractional relationships among variables are considered standard form in a blending problem. [5 points] 24) Data envelopment analysis indicates which type of service unit makes the highest profit. [5 points] 25) In a classic blending problem, revenue is maximized by subtracting cost from profit. [5 points] MULTIPLE CHOICE 1) Decision variables: [5 points] A) measure the objective function. B) measure how much or how many items to produce, purchase, hire, etc. C) always exist for each constraint. D) measure the values of each constraint. 2) The region that satisfies all of the constraints in a graphical linear programming problem is called the: [5 points] A) region of optimality. B) feasible solution space. C) region of non-negativity. D) optimal solution space. 3) The theoretical limit on the number of constraints that can be handled by a linear programming problem is: [5 points] A) 2. B) 3. C) 4. D) unlimited. 4) In order for an optimization problem to have multiple optimal solutions: [5 points] A) the objective function and one constraint must have the same y-intercept. B) the objective function and one constraint must have the same slope. C) two or more of the constraints must not have intersection points. D) two or more of the constraints must have the same slope. 5) Multiple optimal solutions can occur when the objective function is ________ a constraint line. [5 points] A) unequal to B) equal to C) perpendicular to D) parallel to 6) A slack variable: [5 points] A) is the amount by which the left side of a ≥= constraint is larger than the right side. B) is the amount by which the left side of a ≤= constraint is smaller than the right side. C) is the difference between the left and right side of a constraint. D) exists for each variable in a linear programming problem. 7) The first step in solving a graphical linear programming model is to: [5 points] A) plot the model constraints as equations on the graph and indicate the feasible solution area. 4 MGT 6050 1st Half Exam Name: B) plot the objective function and move this line out from the origin to locate the optimal solution point. C) solve simultaneous equations at each corner point to find the solution values at each point. D) determine which constraints are binding. 8) The optimal solution of a minimization problem is at the extreme point ________ the origin. [5 points] A) farthest from B) closest to C) exactly at D) parallel to 9) A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a: [5 points] A) decision tree. B) payoff table. C) feasible region. D) payback matrix. 10) The ________ is the maximum amount a decision maker would pay for additional information. [5 points] A) expected opportunity loss B) expected value C) expected value of perfect information D) bid price 11) A decision tree is a diagram consisting of: [5 points] A) branch angles that vary as likelihoods increase. B) triangle probability nodes. C) branches representing decision alternatives. D) perfect information. 12) In ________ additional information is used to alter the marginal probability of the occurrence of an event. [5 points] A) Bayesian analysis B) decision analysis C) probability analysis D) decision making under certainty 13) A ________ probability is the probability that an event will occur given that another event has already occurred. [5 points] A) posterior B) conditional C) marginal D) low 14) A ________ probability is the altered marginal probability of an event based on additional information. [5 points] A) marginal B) conditional C) posterior D) none of the above 5 MGT 6050 1st Half Exam Name: 15) The efficiency of sample information is the ratio of the expected value of sample information to the: [5 points] A) expected value of perfect information. B) expected value. C) utilization rate. D) coefficient of optimism. 16) The expected value of sample information: [5 points] A) is never more than EVPI. B) can be greater or less than EVPI. C) can be positive or negative. D) is equivalent to the EVPI. 17) People who forgo a high expected value to avoid a disaster with a low probability are: [5 points] A) risk takers. B) risk averters. C) risk calculators. D) risk predictors. 18) People who take a chance on a bonanza with a very low probability of occurrence in lieu of a sure thing are: [5 points] A) risk takers. B) risk averters. C) risk calculators. D) risk predictors. 19) In order for an optimization problem to have multiple optimal solutions: [5 points] A) the objective function and one constraint must have the same y-intercept. B) the objective function and one constraint must have the same slope. C) two or more of the constraints must not have intersection points. D) two or more of the constraints must have the same slope. 20) An optimization problem that has multiple optimal solutions: [5 points] A) means that there are actually no optimal solutions. B) is reflected by the entire feasible region being optimal C) means that the surplus for a third constraint cannot be calculated. D) provides the decision-maker with increased flexibility. 21) How would multiple optimal solutions typically appear on a graphical solution? [5 points] A) a point B) a line C) a plane D) a cube 22) Which of the following statements about infeasible problems is best? [5 points] 6 MGT 6050 1st Half Exam Name: A) All of the possible solutions violate at least one constraint. B) All of the possible solutions violate all of the constraints. C) At least one of the possible solutions violates all of the constraints. D) At least one of the possible solutions violates at least one of the constraints. 23) Greg, a young entrepreneur, has developed an aggressive business plan and is presenting his profit projections on the popular show Shark Tank in hopes of securing some venture capital. He concludes his presentation with an LP model of his planned product mix, and is convinced he will seal the deal by demonstrating that his profits are limitless since his LP model is unbounded. What should the sharks tell him? [5 points] A) "Limitless profits sound fantastic, here's a blank check." B) "Limitless profits are possible only in minimization models, and we want you to maximize profits." C) "Unlimited profits aren't possible. You must have made a mistake in your LP model." D) "Limitless profits are possible only in maximization models, and we want you to minimize profits." 24) Multiple optimal solutions can occur when the objective function is ________ a constraint line. [5 points] A) unequal to B) equal to C) perpendicular to D) parallel to 25) A slack variable: [5 points] A) is the amount by which the left side of a ≥= constraint is larger than the right side. B) is the amount by which the left side of a ≤= constraint is smaller than the right side. C) is the difference between the left and right side of a constraint. D) exists for each variable in a linear programming problem. The campaign manager for a doomed candidate is considering the which states to visit during the last frenzied campaign week leading up to the nationwide election. Pennsylvania (P), Wisconsin (W), Florida (F), New York (Y), and North Carolina (C) are all aching for one last visit, but the candidate has only 80 hours and $250 million left in her campaign fund. A visit to Pennsylvania takes 10 hours and costs $15 million but earns 1% of the electorate. A visit to Wisconsin takes 15 hours and costs $20 million and earns 1.5%; a visit to Florida is only $8 million but takes 16 hours and earns 2%, and a visit to New York costs $25 million, requires 2 hours and earns 2% of the electorate. North Carolina requires 18 hours and $22 million per trip but earns 3% of the electorate. 26) The campaign manager elects to take one trip each of Pennsylvania, Florida and North Carolina, two trips to Wisconsin, and three trips to New York. Which resources will be completely used? [5 points] A) only money B) only time C) time and money D) neither time nor money Lame Example Furniture Company makes two products for its adoring public: chairs (C)and tables (T). Each chair requires 5 hours of labor (L) and 4 linear feet of rich mahogany (M), and each table requires 3 hours of labor and 20 linear feet of rich mahogany. The company has 240 labor hours available this week, and the warehouse has 700 linear feet of rich mahogany available. Profit for each chair is $300 and for each table is $1500. 27) If the furniture company produces twenty tables and thirty-six chairs, which of the two resources will be 7 MGT 6050 1st Half Exam Name: completely used? [5 points] A) labor only B) rich mahogany only C) both labor and rich mahogany D) neither labor and rich mahogany 28) The first step in solving a graphical linear programming model is to: [5 points] A) plot the model constraints as equations on the graph and indicate the feasible solution area. B) plot the objective function and move this line out from the origin to locate the optimal solution point. C) solve simultaneous equations at each corner point to find the solution values at each point. D) determine which constraints are binding. 29) The optimal solution of a minimization problem is at the extreme point ________ the origin. [5 points] A) farthest from B) closest to C) exactly at D) parallel to 30) Multiple optimal solutions provide ________ flexibility to the decision maker. [5 points] A) greater B) less C) greater or equal D) less or equal 31) The maximax criterion results in the: [5 points] A) maximum of the minimum payoffs. B) maximum of the maximum payoffs. C) minimum of the maximum payoffs. D) minimum of the minimum payoffs. 32) The maximin criterion results in the: [5 points] A) minimum of the maximum payoffs. B) maximum of the maximum payoffs. C) maximum of the minimum payoffs. D) minimum of the minimum payoffs. 33) Regret is the difference between the payoff from the: [5 points] A) best decision and all other decision payoffs. B) worst decision and all other decision payoffs. C) best decision and the worst decision payoffs. D) none of the above 34) The ________ minimizes the maximum regret. [5 points] A) maximax regret criterion B) minimax regret criterion C) minimin regret criterion D) maximin regret criterion 35) The minimax regret criterion: [5 points] 8 MGT 6050 1st Half Exam Name: A) maximizes the minimum regret. B) minimizes the minimum regret. C) minimizes the maximum regret. D) maximizes the maximum regret. 36) Determining the worst payoff for each alternative and choosing the alternative with the best worst is called: [5 points] A) maximin. B) minimin. C) maximax. D) minimax. 37) The maximin approach to decision making refers to: [5 points] A) minimizing the maximum return. B) maximizing the minimum return. C) maximizing the maximum return. D) minimizing the minimum return. 38) The term opportunity loss is most closely related to: [5 points] A) maximin regret. B) maximax regret. C) minimax regret. D) minimin regret. 39) The Hurwicz criterion is a compromise: [5 points] A) between the maximin and minimax criteria. B) between the minimax and maximax criteria. C) between the maximax and maximin criteria. D) none of the above 40) The Hurwicz criterion multiplies the: [5 points] A) best payoff by the coefficient of optimism. B) worst payoff by the coefficient of optimism. C) best payoff by the worst payoff. D) none of the above 41) The basic decision environment categories are: [5 points] A) certainty. B) risk. C) uncertainty. D) all of the above 42) The ________ is computed by multiplying each decision outcome under each state of nature by the probability of its occurrence. [5 points] A) expected value B) expected value of perfect information C) expected opportunity loss D) none of the above 9 MGT 6050 1st Half Exam Name: 43) The ________ is the expected value of the regret for each decision. [5 points] A) expected value B) expected opportunity loss C) expected value of perfect information D) none of the above A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. 44) The maximax strategy is: [5 points] A) Buy. B) Rent. C) Lease. D) Brisk. 45) The maximin strategy is: [5 points] A) Buy. B) Rent. C) Lease. D) Brisk. 46) The equal likelihood criterion strategy is: [5 points] A) Buy. B) Rent. C) Lease. D) Brisk. 47) If the probability of brisk business is .40 and for slow business is .60, the expected value of perfect information is: [5 points] A) 12. B) 55. C) 57. D) 69. Napoleon is contemplating four institutions of higher learning as options for a Masters in Business Administration. Each university has strong and weak points and the demand for MBA graduates is uncertain. The availability of jobs, student loans, and financial support will have a significant impact on Napoleon's ultimate decision. Vanderbilt and Seattle University have comparatively high tuition, which would necessitate Napoleon take out student loans resulting in possibly substantial student loan debt. In a tight market, degrees with that cachet might spell the difference between a hefty paycheck and a piddling unemployment check. Northeastern State University and Texas Tech University hold the advantage of comparatively low tuition but a 10 MGT 6050 1st Half Exam Name: more regional appeal in a tight job market. Napoleon gathers his advisory council of Kip and Pedro to assist with the decision. Together they forecast three possible scenarios for the job market and institutional success and predict annual cash flows associated with an MBA from each institution. All cash flows in the table are in thousands of dollars. School Vanderbilt Texas Tech Seattle Northeastern State Scenario 1 95 55 90 65 Scenario 2 20 60 10 50 Scenario 3 -10 60 80 60 48) Under which decision-making criterion is Vanderbilt University the optimal choice? [5 points] A) maximax B) maximin C) minimax regret D) equally likely 49) Under which decision-making criterion is Texas Tech University the optimal decision? [5 points] A) maximax B) maximin C) minimax regret D) equally likely 50) Under which criterion is Seattle University the optimal decision? [5 points] A) maximax B) maximin C) minimax regret D) equally likely Fill-in the blank – fill in the blank lines of the following 25 efficiency or productivity Blending product mix diet standard form minimize costs return on investments audience exposure media selection demand = or "equal to" Maximax Maximin Regret Hurwicz criterion 11 questions from the following list MGT 6050 1st Half Exam Name: coefficient of optimism dominant decision tree efficiency minimax regret sequential Utility risk averters -or- risk averse expected value of perfect information the expected value of sample information the expected value of sample information mutually exclusive efficiency or productivity Blending product mix diet standard form minimize costs return on investments audience exposure media selection 1) When the ________ criterion is used, the maximum of the maximum payoffs is selected. [5 points] 2) When the ________ criterion is used, the maximum of the minimum payoffs is selected. [5 points] 3) ________ is the difference between the payoff from the best decision and all other decision payoffs. [5 points] 4) The ________ is a compromise between the maximax and the ...
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Final Answer

Hey, there! I hope you're doing good. 😊 Attached is the file that contains the answers for this homework including the answers for the bonus questions. Feel free to let me know if you have any questions. Thanks!

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