Mgtop 340 Spring 2009Quiz 1 Introduction and Decision Making Tools (42Pts Total)

MgtOp 340 Spring 2009Quiz 1 ______Many fast food restaurants share Introduction and Decision Making characteristics of both production and service Tools (42pts total) companies.

______Which of the following factors contributes Name______most to the US productivity increase in the past 100 years? ID ______a. Education b. Capital I. Multiple Choices and True/False (22pts, 2pts each) c. Management d. Technology ______Jobs related to operations constitute about e. They contributes equally what percentage of all jobs in US? a. 15% b. 25% c. 40% d. 60% ______According to my lecture notes or the textbook, which of the following is NOTof the three ______There are more service oriented jobs than major functional areas of any organization? manufacturing oriented jobs in the US. a. Finance/Accounting b. Operations ______If the EVPI equals $20, how much are you c. Marketing willing to pay for a consultant to obtain the d. Business administration information? (Most likely, s/he will not be able to provide you with the perfect information) ______Which of the following is NOT a reason to a. less than $20 b. $20 c. greater than $20 use models (instead of real life experiment)? a. They are less expensive ______Which of the following events is NOT b. They are more accurate considered as an important milestone for production c. They allow managers to answer “what-if” type and operations management (POM)? of questions a. Industrial revolution d. They reduce decision making time b. Scientific management c. Human relation movement II. Calculations (20pts): d. Management science e. War logistics planning  CARRY TO 2 DECIMAL POINTS FOR ALL f. Japanese production system CALCULATIONS! g. They are all important events for POM  SHOW DETAILED CALCULATION WORK! Problem 1 (20pts) Olive Branch is a writer of ______Which of the following decision criterion is romance novels. A movie company and a TV used for decision making under RISK? network both want exclusive rights to one of her most a. maximax popular works. If she signs with the network she will b. maximin receive a single lump sum, but if she signs with the c. equally likely movie company the amount she will receive depends d. maximize EMV on the market response to the movie. Olive’s payoffs e. maximize EVPI (in $1000) are summarized below:

______Which of the following decision criterion is Box most conservative (pessimistic)? Office a. maximax Decision: Small Medium Large b. maximin Sign with c. equally likely Movie 200 1,000 3,000 d. maximize EMV Company e. maximize EVPI TV 1100 1,100 1,100 network ______Our standard of living will continue to improve as long as the US productivity continues to Show your calculations of questions (a) and (b) in the increase. above table. a. ______(2pts) What is the maximax g. ______(3pts) Calculate the probability of a DECISION for Olive? Show your calculation. medium box office given that the survey is NEUTRAL.

b. ______(2pts) What is the minimax regret DECISION? Show your calculation.

If in addition, we obtain the following probability information about the market:

Box Office Small Medium Large Probabilities 0.5 0.3 0.2

c. ______(2pts) Find the decision for Olive that maximizes the EMV. Show your calculations here:

d. ______(3pts) What is the maximum Olive should be willing to pay to learn what the size of the box office would be before she decides with whom to sign? Show your calculations here:

Before making the final decision, Olive may hire a market research firm to conduct a survey on the box office at a cost of 100 thousand dollars. The result of the survey would be either favorable (F), or neutral (N), or unfavorable (U). The firm’s ability to assess the market as measured by conditional probability is

P(F/Small)=.2 P(F/Medium)=.4 P(F/Large)=.7 P(N/Small)=.4 P(N/Medium)=.3 P(N/Large)=.2 P(U/Small)=.4 P(U/Medium)=.3 P(U/Large)=.1

e. (4pts) Draw a decision tree (use the space on the right) to represent the problem. You need to take into consideration of the survey option. Write down all the payoffs at the end of the tree. (You are NOT required to evaluate the probabilities and EMV).

f. ______(3pts) Calculate the probability that the survey will be NEUTRAL. Show your calculation.