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    BA3352: Midterm On 29 October 2002 - VERSION B

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    A construction company, A, is preparing a bid to build a classroom building for a university. Company A knows the bid amounts and probabilities of another bidding company, B. For A to make a profit, it should bid between the project budget of $20 million and B's lowest possible bid of $16 million. A calculates its potential profits for different bid amounts against B's possible bids. The optimal bid is determined using decision criteria like MiniMax, MiniMin and MinAverage that consider A's worst, best and average outcomes.

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    BA3352: Midterm On 29 October 2002 - VERSION B

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    lightknow
    45 views10 pages
    A construction company, A, is preparing a bid to build a classroom building for a university. Company A knows the bid amounts and probabilities of another bidding company, B. For A to make a profit, it should bid between the project budget of $20 million and B's lowest possible bid of $16 million. A calculates its potential profits for different bid amounts against B's possible bids. The optimal bid is determined using decision criteria like MiniMax, MiniMin and MinAverage that consider A's worst, best and average outcomes.

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    A construction company, A, is preparing a bid to build a classroom building for a university. Company A knows the bid amounts and probabilities of another bidding company, B. For A to make a profit, it should bid between the project budget of $20 million and B's lowest possible bid of $16 million. A calculates its potential profits for different bid amounts against B's possible bids. The optimal bid is determined using decision criteria like MiniMax, MiniMin and MinAverage that consider A's worst, best and average outcomes.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    45 views10 pages

    BA3352: Midterm On 29 October 2002 - VERSION B

    Uploaded by

    lightknow
    A construction company, A, is preparing a bid to build a classroom building for a university. Company A knows the bid amounts and probabilities of another bidding company, B. For A to make a profit, it should bid between the project budget of $20 million and B's lowest possible bid of $16 million. A calculates its potential profits for different bid amounts against B's possible bids. The optimal bid is determined using decision criteria like MiniMax, MiniMin and MinAverage that consider A's worst, best and average outcomes.

    Copyright:

    © All Rights Reserved
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    of 10

    BA3352 : Midterm on 29 October 2002 - VERSION B

    This is a closed textbook and lecture notes exam. You can use a calculator but also can leave quantities
    as fractions, additions or products. Do not forget to define any variables you introduce. Write your
    exam version on your scantron paper. Good luck.
    I declare that my conduct during the exam is entirely within the limits of the UTD regulations governing
    scholastic honesty -detailed in the handbook of operating procedures Title V Chapter 49.
    NAME (please print):
    Question
    Q1
    Q2
    Q3
    Total

    Total possible
    72
    13
    15
    100

    Actual

    Formulae:
    Forecasting: Exponential Smoothing. Ft = At1 + (1 )Ft1
    Double Exponential Smoothing. Ft = At1 +(1)Ft1 +Tt1 where Tt1 = (Ft1 Ft2 )+(1)Tt2
    Variance Formula for random variable X: V ar(X) =

    N
    i=1 (Xi

    2
    X)

    Linear regression: yn = a + bxn for N data points where


    b=

    N xy x y
    N x2 ( x)2

    and a =

    yb
    N

    also r =

    N
    N

    x2 (

    xy

    x)2 N

    y
    y2 (

    Exponential lifetime random variable X with rate has density eT at point T .


    Also P (Lif etime T ) = 1 eT and P (Lif etime T ) = eT .
    Minumum number of stations=
    Control charts:

    t/CT

    U CL = Average of Sample Means + z StDev of Sample Means


    where we choose z so that Type I probability, denoted by .
    For p-chart with sample size n StDev of Sample Mean = {

    p(1 p) 0.5
    }
    n

    For c-chart StDev of Sample Mean = {Average of Sample Means}0.5


    Let r be the number of runs in K samples:
    Expected value(r) =

    2K 1
    3

    StDev(r) = {

    16K 29 0.5
    }
    90

    y)2

    Q1: Choose the most appropriate answer and mark your answer on the scantron paper.
    1. The type of processing system that is used for complex jobs with unique sets of activities is:
    (a) continuous
    (b) intermittent
    (c) project
    (d) batch
    (e) mass
    C
    2. In which type of operations are you likely to see minor variations in the product or service being
    produced using the same process and the same equipment?
    (a) a project
    (b) a job shop
    (c) repetitive production
    (d) batch processing
    (e) none of the above
    D
    3. At the break-even point:
    (a) total cost is minimized
    (b) output equals capacity
    (c) total cost equals total revenue
    (d) total cost equals profit
    (e) total profit is maximized
    C
    4. The type of layout which is used to achieve a smooth and rapid flow of large volumes of output is:
    (a) process
    (b) product
    (c) fixed-position
    (d) batch
    (e) unit
    B
    5. Remanufacturing is
    (a) Reusing the components of old products
    (b) Using reverse engineering to manufacture parts

    (c) Using reverse logistics to manufacture parts


    (d) Replacing the defective components with properly functioning components
    (e) Manufacturing components after redesigning them
    A

    6. Which of the following possible values of alpha would cause exponential smoothing to respond most
    (or fastest) to forecast errors
    (a)
    (b)
    (c)
    (d)
    (e)

    -1
    0.1
    0
    1
    0.5

    D
    7. Which one of the following is not a reason for model building?
    (a)
    (b)
    (c)
    (d)
    (e)

    Improved understanding
    Improved communication
    Higher abstraction
    Experimentation
    Standardization for analysis

    C
    8. Which of the following quality control sample statistics indicates a quality characteristic which is an
    attribute?
    (a)
    (b)
    (c)
    (d)
    (e)

    Mean
    Variance
    Standard deviation
    Range
    Proportion

    E
    9. A point which is outside of the lower control limit on an R-chart:
    (a)
    (b)
    (c)
    (d)
    (e)

    is an indication that no cause of variation is present


    should be ignored because it signifies better than average quality
    should be investigated because an assignable cause of variation might be present
    should be ignored unless two more points are outside that limit
    is impossible since the lower control limit is always zero

    C
    10. A shift in the process variance for a measured characteristic would most likely be detected by a:
    (a)
    (b)
    (c)
    (d)
    (e)
    D

    p-chart
    x-bar chart
    c-chart
    R-chart
    a combined use of x-bar and R-chart

    11. The purpose of control charts is to:


    (a) estimate the proportion of output that is acceptable
    (b) reject lots with too many defectives
    (c) determine if the output is within specifications
    (d) distinguish between random variation and assignable variation in the process
    (e) identify the causes of poor quality
    D
    12. The action of a professor asking his students to prepare exam questions is an example of:
    (a) continuous improvement
    (b) being a champion of exam preparation
    (c) benchmarking
    (d) worker empowerment
    (e) worker involvement
    E
    13. A fishbone diagram would be used to:
    (a) show the work flow
    (b) list potential causes of an effect
    (c) diagram the skeleton of a fish
    (d) show the structure of a quality circle
    (e) do Pareto analysis
    B
    14. Focusing attention on the most important problem areas is referred to as:
    (a) Continuous improvement
    (b) Quality assurance
    (c) Brainstorming
    (d) Pareto analysis
    (e) Cause-and-effect analysis
    D
    15. The cost of the preparation of quality control charts is an example of :
    (a) Internal failure costs
    (b) External failure costs
    (c) Appraisal costs
    (d) Prevention costs
    (e) Replacement costs
    C

    16. Which of the following is not an inspection point in manufacturing?


    (a)
    (b)
    (c)
    (d)
    (e)

    Raw materials and purchased parts


    Finished products
    Before a costly operation
    Before a covering process
    All of the above are inspection points.

    E
    17. A control chart used to monitor the process mean is the:
    (a)
    (b)
    (c)
    (d)
    (e)

    p-chart
    R-chart
    x-bar chart
    c-chart
    Ishikawa diagram

    C
    18. If the GMAT scores of graduate students at UTD is Normally distributed with mean 600 and variance
    100, what percentage of students have scores below 500:
    (a)
    (b)
    (c)
    (d)
    (e)

    normdist(500,600,100,0)
    normdist(500,600,100,1)
    normdist(500,600,10,0)
    normdist(500,600,10,1)
    1-normdist(500,600,100,1)

    D
    19. If the GMAT scores of graduate students at UTD is Normally distributed with mean 600 and variance
    100, what percentage of students have scores between 500 and 550:
    (a)
    (b)
    (c)
    (d)
    (e)

    normdist(550,600,100,0)-normdist(500,600,100,0)
    normdist(550,600,10,1)- normdist(500,600,10,1)
    normdist(550,600,10,0)-normdist(500,600,10,0)
    50*normdist(525,600,100,0)
    normdist(550,600,100,1)-normdist(500,600,100,1)

    B
    20. How many up-down runs should we expect from 14 samples?
    (a)
    (b)
    (c)
    (d)
    (e)
    C

    7
    8
    9
    10
    11

    21. In a control chart, if we increase LCL and decrease UCL:


    (a) Type II error increases
    (b) Type I error increases
    (c) Type I and Type II errors both increase
    (d) Only Type III error increases
    (e) Type I, Type II and Type III errors all increase
    B
    22. If a cookie type has 100 chocolate chips on the average, what would be UCL and LCL of a 3- control
    chart for the number of chocolate chips:
    (a) 97-103
    (b) 88-112
    (c) 82-118
    (d) 76-124
    (e) 70-130
    E
    23. Which of the following is not a factor commonly considered in the make-or-buy decision process?
    (a) available capacity
    (b) expertise
    (c) nature of demand
    (d) cost
    (e) revenue
    E
    24. The type of processing system which is used for highly standardized products is:
    (a) continuous
    (b) intermittent
    (c) project
    (d) batch
    (e) unit
    A

    Q2. Suppose that a shop produces flower baskets at a rate of 240 per week by working 40 hours per
    week, and the operation sequences and durations (in minutes) are as given below:
    3
    6

    3
    2

    5
    5

    7
    7

    a) Compute the cycle time (in minutes) and the minimum number of workstations required.
    In order to produce 240 per week, produce 6 per hour or 1 unit every 10 minutes. Cycle time is 10
    minutes. No formula is necessary to reason this out.
    Every 10 minutes one basket must be produced, each basket takes 30 minutes to process. Then at least 3
    (=30/10) stations are necssary. No formula is necessary to reason this out.
    b) Assign operations to work stations giving priority to those with more successors (break ties by giving
    priority to operations with larger operation times). How many work stations are required?
    Workstation
    1

    Time
    Eligible
    Remaining
    10
    8
    5
    0
    10
    5
    2
    10
    3
    0
    10
    8

    Assign
    1
    2,3
    3,4

    Task
    1
    2
    4

    Station
    Idle Time

    0
    3,5,6
    3,6

    5
    3

    6,7
    6

    7
    6

    0
    8
    10

    Q3. Two construction companies, A and B, are preparing bids to construct a new classroom building for
    UTD: UTD has a very specific design and companies bid to construct the design at the lowest cost. Neither
    of these companies knows how much the other one bids. UTD will chose the lowest bidding company and
    will pay the amount in the lowest bid as long as the amount is within the UTDs construction budget of
    20 million dollars. When two companies bid the same amount, A is chosen as the winner. UTD works
    only with whole numbers in million dollars so all the bids must be made in millions and no fractions are
    allowed. For example, 17.5 million dollar cannot be a bid amount. If a company bids too much, it risks
    the chances of winning the bid. If a company bids too low, it risks the opportunity of making more money.
    We will study how much A should bid for the construction. A knows the following about Bs bid
    amounts and associated probabilities (M=million):
    B
    No bid Bid $16M Bid $18M
    Probability
    0.2
    0.4
    0.4
    A spends $3M to prepare for the bid and $12 to construct the building. Unlike bidding costs, A incurs
    construction costs only if it wins the bid.
    a) Explain why A should bid between 16 and 20 million dollars.

    Below 15 million no profit is made, above 20 million UTD does not pay.
    b) What are the alternative bidding amounts (A can make) and the possible scenarios (A can face)?
    Compute As profit for each alternative and scenario pair. Put these numbers into a payoff table.
    A B
    No bid Bid $16M Bid $18M
    No bid
    0
    0
    0
    Bid 16
    1
    1
    1
    Bid 17
    2
    -3
    2
    Bid 18
    3
    -3
    3
    Bid 19
    4
    -3
    -3
    Bid 20
    5
    -3
    -3

    c) This part is independent of a or b. Compute MiniMax, MiniMin and MinAverage amounts for the
    following payoff table and find the corresponding alternatives (A,B,C or D). Suppose all the scenarios
    (1,2,3 and 4) are equally likely.
    1 2 3 4
    A -1 0 -2 1
    B 4 3 2 1
    C -1 -2 -3 5
    D -2 2 -4 3
    MiniMax=0 with A, MiniMin=-4 with D, MinAverage=-0.5 with A.

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