Quantitative Decision-Making Tools – Chapter 4B | Full Test Bank 11th

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Fundamentals of Management, 11e (Robbins)

Chapter 4B Quantitative Module: Quantitative Decision-Making Tools

1) Which role does uncertainty typically play in how managers function?

A) Uncertainty limits the amount of information that is available.

B) Uncertainty increases the amount of information that is available.

C) Uncertainty improves the quality of information that is available.

D) Uncertainty enhances the information that is available.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

2) Which psychological orientation would be typical of a manager who is optimistic about her business environment?

A) a maximin orientation

B) a minimin orientation

C) a maximax orientation

D) a minimax orientation

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

3) A manager is worried that if he chooses the wrong investment strategy, his company could lose out on a great deal of money. Which strategy should he follow?

A) a maximax orientation

B) a minimin orientation

C) a maximin orientation

D) a minimax orientation

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

4) Which psychological orientation would be typical of a manager who is pessimistic about her business environment?

A) a maximin orientation

B) a minimin orientation

C) a maximax orientation

D) a minimax orientation

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

5) This payoff matrix gives potential dollar gain values in millions for strategies S1, S2, S3, and S4 for the Bent Fork National Bank and competitive strategies CA1, CA2, and CA3 for the Straight Spoon Bank. If Bent Fork is optimistic, which strategy will it choose?

A) S1

B) S2

C) S3

D) S4

Diff: 2

AACSB: Application of knowledge

Question Category: Application

6) This payoff matrix gives potential dollar gain values in millions for strategies S1, S2, S3, and S4 for the Bent Fork National Bank and competitive strategies CA1, CA2, and CA3 for the Straight Spoon Bank. If Bent Fork is pessimistic, which strategy will it choose?

A) S1

B) S2

C) S3

D) S4

Diff: 2

AACSB: Application of knowledge

Question Category: Application

7) This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sergio's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. If Sergio chooses S4, how is he feeling about the business climate?

A) Sergio is feeling optimistic because he has chosen a maximax strategy.

B) Sergio is feeling pessimistic because he has chosen a maximin strategy.

C) Sergio is feeling optimistic because he has chosen a maximin strategy.

D) Sergio is feeling pessimistic because he has chosen a maximax strategy.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

8) This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sergio's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. If Sergio chooses S3, how is he feeling about the business climate?

A) Sergio is feeling pessimistic because he has chosen a maximax strategy.

B) Sergio is feeling pessimistic because he has chosen a minimax strategy.

C) Sergio is feeling optimistic because he has chosen a maximax strategy.

D) Sergio is feeling optimistic because he has chosen a maximin strategy.

Diff: 2

AACSB: Analytical thinking

Question Category: Application

9) Which one of the following best defines regret in a payoff matrix?

A) Regret refers to the difference of the sum of the values in a chosen strategy and the sum of the best strategy.

B) Regret refers to the difference of the sum of the values in a chosen strategy and the sum of the worst strategy.

C) Regret refers to the sum total of the sum of the values in a chosen strategy and the sum of the best strategy.

D) Regret refers to the extra amount of money that could have been made had the person chosen a different strategy.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

10) This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sergio's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. If Sergio chooses S1, how is he feeling about the business climate?

A) Sergio is feeling pessimistic because he has chosen a maximax strategy.

B) Sergio is feeling optimistic because he has chosen a maximin strategy.

C) Sergio is feeling neither pessimistic nor optimistic because he has chosen neither a maximin nor a maximax strategy.

D) Sergio is feeling both pessimistic and optimistic because he has chosen both a maximin and a maximax strategy.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

11) This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sergio's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. What is the maximum regret value for S1?

A) 18

B) 15

C) 14

D) 12

Diff: 2

AACSB: Application of knowledge

Question Category: Application

12) This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sergio's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. What is the maximum regret value for S4?

A) 13

B) 7

C) 2

D) 17

Diff: 2

AACSB: Application of knowledge

Question Category: Application

13) This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sergio's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza. What is the maximum regret value for S2?

A) 24

B) 15

C) 5

D) 0

Diff: 2

AACSB: Application of knowledge

Question Category: Application

14) Which one of the following would a manager who wants to minimize her maximum regret choose?

A) the smallest maximum regret value

B) the smallest minimum regret value

C) the smallest difference maximum regret value and the minimum regret value

D) the greatest difference maximum regret value and the minimum regret value

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

15) This regret matrix gives potential dollar values in thousands for strategies S1, S2, S3, and S4 for Ahmed's Fish Fry and competitive strategies CA1, CA2, and CA3 for Sol's Fish Bake. If Ahmed wants to minimize his maximum regret, which strategy should he choose?

A) S4

B) S3

C) S2

D) S1

Diff: 2

AACSB: Application of knowledge

Question Category: Application

16) This regret matrix gives potential dollar values in thousands for strategies S1, S2, S3, and S4 for Ahmed's Fish Fry and competitive strategies CA1, CA2, and CA3 for Sol's Fish Bake. If Ahmed chooses S3, what kind of strategy is he using?

A) minimax

B) maximin

C) maximax

D) minimin

Diff: 2

AACSB: Application of knowledge

Question Category: Application

17) In a decision tree, each possible outcome ________.

A) gets assigned a probability value between 0 and 1.0

B) gets assigned a probability value of 50 percent

C) gets assigned a probability value between 0 and 50 percent

D) gets assigned a probability value between 0.5 and 1.0

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

18) In a decision tree, which one of the following is true?

A) The probabilities of all of the outcomes must be equal.

B) The sum of the probabilities of all of the outcomes must equal 1.0.

C) No outcome can have a probability that is less to 1.0.

D) The sum of the probabilities of all of the outcomes must be greater than 1.0.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

19) The decision tree shows the profit outcomes for a coffee shop in a strong and a weak economy for next year. What is the probability that the economy will be weak in the coming year?

A) 0.73

B) 27 percent

C) 50 percent

D) 7.3

Diff: 2

AACSB: Application of knowledge

Question Category: Application

20) The decision tree shows the profit outcomes for a coffee shop in a strong and a weak economy for next year. Suppose a third outcome is considered in which a moderate economy is 33 percent likely to occur. With this added outcome, how does the probability of a weak economy change?

A) A weak economy is now 73 percent likely.

B) A weak economy is also 33 percent likely.

C) A weak economy is now 40 percent likely.

D) A weak economy is now 0 percent likely.

Diff: 3

AACSB: Application of knowledge

Question Category: Application

21) The decision tree shows the profit outcomes for a toy store in a strong and a weak economy for next year. What is the expected value of the store's profit in a strong economy?

A) $10,500

B) $15,000

C) $16,000

D) $30,000

Diff: 2

AACSB: Application of knowledge

Question Category: Application

22) The decision tree shows the profit outcomes for a toy store in a strong and a weak economy for next year. If the economy turns out to be weak, how much profit is the store likely to lose out?

A) $14,000

B) $16,000

C) $30,000

D) $15,000

Diff: 2

AACSB: Application of knowledge

Question Category: Application

23) The decision tree shows the profit outcomes for a toy store in a strong and a weak economy for next year. What is the expected value of profit for the store for the year?

A) $10,500

B) $20,900

C) $29,000

D) $10,400

Diff: 2

AACSB: Application of knowledge

Question Category: Application

24) Decision trees show the profit outcomes for the plans for two doughnut stores in a strong and a weak economy for the future. Which store is expected to have the greater expected profit?

A) Store 1 has a $27,900 greater profit.

B) Store 1 has a $1,200 greater profit.

C) Store 2 has a $26,700 greater profit.

D) Store 2 has a $1,200 greater profit.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

25) Decision trees show the profit outcomes for the plans for two doughnut stores in two different locations in a strong and a weak economy for the future. If the investor interested in building a store is optimistic, in which location should she build?

A) She should build Store 1, because it has a lower minimum profit.

B) She should build Store 2, because it has a greater maximum profit.

C) She should build Store 1, because it has a greater maximum profit.

D) She should build Store 2, because it has a greater minimum profit.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

26) Decision trees show the profit outcomes for the plans for two doughnut stores in two different locations in a strong and a weak economy for the future. If the investor interested in building a store is pessimistic, in which location should she build?

A) She should build Store 2, because it has a greater minimum profit.

B) She should build Store 2, because it has a greater maximum profit.

C) She should build Store 1, because it has a greater maximum profit.

D) She should build Store 1, because it has a greater minimum profit.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

27) For break-even analysis, which one of the following is a fixed cost for a doughnut shop?

A) costs for purchasing flour and sugar

B) energy costs for ovens and heating

C) interest payments on loans

D) advertising costs

Diff: 2

AACSB: Application of knowledge

Question Category: Application

28) A manager does a break-even analysis and finds that his value for BE, the break-even point, has increased over time. Which one of the following could be responsible for this event?

A) TFC has decreased.

B) P has increased.

C) VC has decreased.

D) P has decreased.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

29) Fixed costs for a product are $50,000. The product itself sells for $5.00 and it costs $3.00 to make each product. What is the break-even point for the product?

A) 100,000

B) 10,000

C) 50,000

D) 25,000

Diff: 2

AACSB: Application of knowledge

Question Category: Application

30) Fixed costs for a product are $60,000. The product itself sells for $4.00 and it costs $1.00 to make each product. How will the break-even point for the product change if the variable cost per unit goes up to $1.50?

A) The break-even point will increase by 4000.

B) The break-even point will increase by 24,000.

C) The break-even point will decrease by 4000.

D) The break-even point will increase by 20,000.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

31) Fixed costs for a product are $30,000. The product itself sells for $3.00 and it costs $1.50 to make each product. How can the plant decrease the break-even point by 5000 units?

A) Increase P, the price of the item, by $0.50.

B) Increase TFC, the fixed costs for item, by $5000.

C) Decrease P, the price of the item, by $0.50.

D) Decrease TFC, the fixed costs for item, by $5000.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

32) Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. What is the maximum number of units that the factory can make of either type of phone component?

Monthly Product

A) 2500

B) 2000

C) 500

D) 1000

Diff: 2

AACSB: Application of knowledge

Question Category: Application

33) Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. What is the maximum number of iPhone units that the factory can make?

Monthly Product

A) 625

B) 1000

C) 5000

D) 800

Diff: 2

AACSB: Application of knowledge

Question Category: Application

34) Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. What is the maximum number of Droid units that the factory can make?

Monthly Product

A) 625

B) 1000

C) 5000

D) 800

Diff: 2

AACSB: Application of knowledge

Question Category: Application

35) Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. Suppose the plant decides to make the maximum number of iPhone components possible and reach the rest of its capacity by making Droid phones. How many of each type of phone will it make?

Monthly Product

A) 375 iPhone units and 625 Droid units

B) 500 iPhone units and 500 Droid units

C) 1000 iPhone units and 1000 Droid units

D) 625 iPhone units and 375 Droid units

Diff: 2

AACSB: Application of knowledge

Question Category: Application

36) Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. Suppose the plant decides to make the maximum number of iPhone components possible and reach the rest of its capacity by making Droid phones. How much profit will it make?

Monthly Product

A) $3750

B) $1500

C) $5250

D) $4000

Diff: 2

AACSB: Application of knowledge

Question Category: Application

37) Production data for the number of hours required per unit for making the Droid and iPhone versions of cell phone components by Bizzer, a high-tech manufacturing firm, is given below. Suppose the plant decides exclusively to make either the maximum number of iPhone components or the maximum number of Droid phones. Which choice will result in the greater profit?

Monthly Product

A) Making Droid units will result in $4000 more profit.

B) Making iPhone units will result in $250 more profit.

C) Making Droid units will result in $250 more profit.

D) Making iPhone units will result in $3750 more profit.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

38) A queuing theory analysis for the Department of Motor Vehicles determines that customers typically wait for 8 minutes and that the agency should strive never to exceed more than 5 customers in a single line. What is the maximum amount of time that customers should be expected to wait?

A) 8 minutes

B) 40 minutes

C) 20 minutes

D) 24 minutes

Diff: 2

AACSB: Application of knowledge

Question Category: Application

39) A queuing theory analysis for the Department of Motor Vehicles determines that customers typically wait for 8 minutes and that the agency should strive never to exceed more than 5 customers in a single line. An analysis comes up with a value for P of 0.125. What does this P value mean?

A) that customers will wait an average of 12.5 minutes

B) that the chances that a customer will need to wait for more than 5 people in line are 1 in 8

C) that customers will wait an average of 0.125 minutes

D) that the chances that a customer will need to wait for more than 5 people in line are 1 in 12.5

Diff: 2

AACSB: Application of knowledge

Question Category: Application

40) How does a fixed-point reordering system work?

A) When inventory level reaches 50 percent of maximum, the system orders new inventory.

B) When inventory level reaches 33 percent of maximum, the system orders new inventory.

C) At some preestablished inventory level, the system automatically orders new inventory.

D) At some random inventory level, the system automatically orders new inventory.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

41) Jose, a manager at the Flux Soap Store, notices that the store regularly runs out of Jasmine-Berry soap. Currently, the reorder point is fixed when inventory reaches 40 percent of maximum. Which adjustment should Jose make in a fixed-point reordering system?

A) Jose should lower the reorder level to a point where inventory of Jasmine-Berry soap is at 30 percent of maximum.

B) Jose should lower the reorder level to a point where inventory of Jasmine-Berry soap is at 10 percent of maximum.

C) Jose should raise the reorder level to a point where inventory of Jasmine-Berry soap is at 50 percent of maximum.

D) Jose should lower the reorder level to a point where inventory of Jasmine-Berry soap is at half of the previous level.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

42) Jose, a manager at the Flux Soap Store, lowered the reorder point for Butterscotch-Lemon soap from 33 percent of maximum to 20 percent of maximum. What is Jose likely to observe?

A) The level of Butterscotch-Lemon soap in stock should increase.

B) Sales of Butterscotch-Lemon soap should decrease.

C) Sales of Butterscotch-Lemon soap should increase.

D) The level of Butterscotch-Lemon soap in stock should drop.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

43) Which one of the following identifies the goal of managers who use the economic order quantity (EOQ) model?

A) minimizing carrying costs and ordering costs

B) maximizing carrying costs and ordering costs

C) maximizing carrying costs and minimizing ordering costs

D) maximizing carrying costs and total costs

Diff: 1

AACSB: Analytical thinking

Question Category: Analytical

44) Mia, a manager at Best Buy, increases the order size for a product that the company sells, which will ________.

A) increase both ordering costs and carrying costs

B) increase ordering costs and decrease carrying costs

C) decrease both ordering costs and carrying costs

D) decrease ordering costs and increase carrying costs

Diff: 2

AACSB: Application of knowledge

Question Category: Application

45) Mia, a manager at Best Buy, should be able to find Q, the most economic order size for a product, by ________.

A) locating where the carrying costs curve and the total costs curve intersect

B) locating where the carrying costs curve and the ordering costs curve intersect

C) locating where the carrying costs curve and the ordering costs curve are parallel

D) locating where the total costs curve and the ordering costs curve are parallel

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

46) A new upgrade for a product is expected to increase demand by a factor of 4. If all other factors remain equal, how is EOQ likely to change?

A) EOQ will double.

B) EOQ will increase by 50 percent.

C) EOQ will decrease by 50 percent.

D) EOQ will not change.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

47) An optimistic manager will typically follow a maximax choice.

Diff: 1

AACSB: Analytical thinking

Question Category: Concept

48) A pessimistic manager will typically follow a minimin choice.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

49) With choice S1, a manager sees gains of $10 million and $6 million. With choice S2, a manager sees gains of $12 million and $3 million. The manager chooses S2, so she must be optimistic.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

50) With choice S1, a manager sees gains of $10 million and $6 million. With choice S2, a manager sees gains of $12 million and $8 million. S2 might be the choice of a pessimistic manager.

Diff: 3

AACSB: Analytical thinking

Question Category: Analytical

51) With choice S1, a manager sees gains of $10 million and $6 million. With choice S2, a manager sees gains of $12 million and $8 million. Only a pessimistic manager would choose S1.

Diff: 3

AACSB: Analytical thinking

Question Category: Analytical

52) Regret is computed by subtracting the value of a possible strategy from the greatest value in the entire matrix.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

53) This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S1 maximum regret for CA1 is 8.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

54) This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S1 maximum regret for CA2 is 8.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

55) This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S2 maximum regret is 9.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

56) This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S3 maximum regret is 1.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

57) This regret matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. A minimax Bigg manager would choose S2 because it has the smallest maximum regret of 1.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

58) This regret matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. The maximum regrets for this table are S1 = 5, S2 = 9, S3 = 10.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

59) This regret matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. A minimax Bigg manager choosing S3 would have a greatest possible regret of 2.

Diff: 1

AACSB: Application of knowledge

Question Category: Application

60) Decision trees are unreliable for making pricing decisions.

Diff: 1

AACSB: Analytical thinking

Question Category: Concept

61) The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. If the economy is strong, the shop is likely to make an $80,000 profit.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

62) The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. If the economy is weak, the shop is likely to make 60 percent of a $25,000 profit, or $15,000.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

63) The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. Overall, the shop is expected to make $32,000.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

64) The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. The shop is likely to make $105,000, the sum of both projections.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

65) A manager uses break-even analysis to find out how many units of a product he needs to sell to make a profit of zero.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

66) The break-even point is computed by the formula BE = [TFC/(P - VC)].

Diff: 1

AACSB: Analytical thinking

Question Category: Concept

67) A higher ratio of TFC to (P - VC) means that the business needs to sell fewer units to make a profit.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

68) Reducing the value of VC in a break-even analysis means that the business needs to sell fewer units to turn a profit.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

69) Production data is shown for the number of hours required per unit for the Running and Soccer versions of Streaks, custom made athletic shoes. Using linear programming, if running shoes are represented by R and soccer shoes by S, the expression $16R + $20S is equal to the maximum profit that can be made.

Monthly Product

Diff: 2

AACSB: Application of knowledge

Question Category: Application

70) Production data for Streaks is shown. Using linear programming, if running shoes are represented by R and soccer shoes by S, 5R + 3S < 750 is the correct constraint equation for design.

Monthly Product

Diff: 2

AACSB: Application of knowledge

Question Category: Application

71) Production data for Streaks is shown. Using linear programming, the maximum number of soccer shoes that the plant can make is 250.

Monthly Product

Diff: 1

AACSB: Application of knowledge

Question Category: Application

72) Production data for Streaks is shown. Using linear programming, the maximum number of running shoes that the plant can make is 250.

Monthly Product

Diff: 2

AACSB: Application of knowledge

Question Category: Application

73) Production data for Streaks is shown. Using linear programming, if the plant makes 100 pairs of running shoes and 100 pairs of soccer shoes, it ends up with $3600 in profit.

Monthly Product

Diff: 2

AACSB: Application of knowledge

Question Category: Application

74) Another term for queuing theory is "waiting line" theory.

Diff: 1

AACSB: Analytical thinking

Question Category: Concept

75) A queuing theory analysis for bank teller windows comes up with a value of 0.10 for P, indicating that customers are likely to wait about 10 minutes for each transaction.

Diff: 2

AACSB: Application of knowledge

Question Category: Application

76) Using a fixed-point reordering system, a business might order new inventory when it is down to about one-third of its maximum stock.

Diff: 2

AACSB: Analytical thinking

Question Category: Analytical

77) In the economic order quantity (EOQ) model, one of the costs that gets considered for analysis is the carrying costs of tying up money with inventory.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

78) The goal of the economic order quantity (EOQ) model is to maximize the total costs that are categorized as carrying costs and ordering costs.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

79) In the economic order quantity (EOQ) model, the optimum order quantity is obtained by identifying the quantity at which the total cost curve and the ordering costs curve intersect.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

80) In the economic order quantity (EOQ) model, increasing the order size will decrease ordering costs.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

81) In the economic order quantity (EOQ) model, decreasing the order size will increase carrying costs.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

82) The purchase price of a product has no influence on calculating EOQ.

Diff: 2

AACSB: Analytical thinking

Question Category: Concept

83) In a short essay, explain the type of strategy that an optimistic manager would select for her company.

Diff: 3

AACSB: Analytical thinking

Question Category: Concept

84) In a short essay, explain the type of strategy that a pessimistic manager would take for his company.

Diff: 3

AACSB: Analytical thinking

Question Category: Concept

85) A payoff matrix features strategies S1, S2, S3, and S4 and competitive strategies CA1, CA2, and CA3. In a short essay, explain how maximum regret can be calculated for an S1 strategy.

Diff: 3

AACSB: Analytical thinking

Question Category: Concept

86) In a short essay, explain how the break-even point (BE) changes with variables TFC (total fixed costs), P (unit price), and VC (variable cost per unit).

Diff: 3

AACSB: Analytical thinking

Question Category: Concept

87) In a short essay, explain what the value of P in queuing theory provides for a manager.

Diff: 3

AACSB: Analytical thinking

Question Category: Concept

88) In a short essay, explain how carrying costs and ordering costs change with order size in EOQ (economic order quantity) analysis.

Diff: 3

AACSB: Analytical thinking

Question Category: Concept