STAT-201-Define the problem is the first step in quantitative

ASSIGNMENT-1QUANTITATIVE METHODS(STAT-201)Student Full Name:Student ID:CRN No.:Note: 1. All the questions are compulsory.2. Due date: Oct. 21, 2016 until 11:59 P.M.3. Points: Section-I 1×6=6 Section-II 1×6=6 Section-III 6×3=18 Total 30Section-I State whether the following statements are True or False. (1×6 = 6) 1. Define the problem is the first step in quantitative analysis.a) Trueb) False2. Sensitivity analysis helps us estimate the effect of known and unknown errors in ourmodel.a) Trueb) False3. Minimum EOL will always equal EVwPI.a) Trueb) False4. When using the EOL as a decision criterion, the best decision is the alternative withthe largest EOL value.a) Trueb) False 2 5. The most common quantitative causal model is regression analysis.a) Trueb) False6. Time-series models enable the forecaster to include specific representations ofvarious qualitative and quantitative factors.a) Trueb) FalseSection-IICircle/tick the right answer from the answers given below. (1×6 = 6) 1. Which of the following is not a quantitative factor:a) Inventory levelsb) Technological breakthroughsc) Demandd) Labor cost.2. Expressing profits through the relationship among unit price, fixed costs, and variablecosts is an example ofa) a sensitivity analysis model.b) a quantitative analysis model.c) a post-optimality relationship.d) a parameter specification model.3. A pessimistic decision-making criterion isa) maximax.b) maximin.c) decision making under certainty.d) minimax regret.4. In assessing utility values,a) the worst outcome is given a utility of –1.b) the best outcome is given a utility of 0.c) the worst outcome is given a utility of 0.d) the best outcome is given a value of –1.5. Which of the following is a technique used to determine forecasting accuracy?a) moving averageb) exponential smoothingc) mean absolute percent errord) Delphi method6. Which of the following is not considered to be one of the components of a timeseries?a) Trendb) Seasonalityc) Cycles 3 d) variance Section-IIIAnswer the following Essay Type Questions (6×3=18) 1. Mug Co is a new company, which manufactures personalized imprinted mugs. Rentalcosts of its equipment and its local totaled $1800. The materials used in one mugcost $9, and the selling price is $15 each.a) How many mugs must Mug Co sell to break-even? What is the total revenuefor this?b) What would be the selling price per unit for a break-even of 200?2. The following payoff table provides profits based on various possible decisionalternatives and various levels of demand.States of NatureDemandAlternativesLowMediumHighAlternative 170110130Alternative 2808080Alternative 32560140The probability of a low demand is 0.4, while the probability of a medium and highdemand is each 0.3.a)b)c)d) What decision would an optimist make?What decision would a pessimist make?What is the highest possible expected monetary value?Calculate the expected value of perfect information for this situation. 3. The ABC Co. is considering a new consumer product. They have no idea whether ornot the XYZ Co. will come out with a competitive product. If ABC adds an assemblyline for the product and XYZ does not follow with a competitive product, theirexpected profit is $40,000; if they add an assembly line and XYZ does follow, they stillexpect a $10,000 profit. If ABC adds a new plant addition and XYZ does not producea competitive product, they expect a profit of $600,000; if XYZ does compete for thismarket, ABC expects a loss of $100,000.Calculate Hurwicz’s criterion of realism using ?’s of a. 0.7, b. 0.3, and c. 0.1.4. Mark M. Upp has just been fired as the university book store manager for settingprices too low (only 20 percent above suggested retail). He is considering opening acompeting bookstore near the campus, and he has begun an analysis of the situation. 4 There are two possible sites under consideration. One is relatively small, while theother 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 ishigh he will generate a profit of $80,000, but he will lose $30,000 if demand is low.He also has decided that he will open at one of these sites. He believes that there isa 50 percent chance that demand will be high. He assigns the following utilities tothe different profits:U ( 50000 )=? U (?10000 )=0.22U ( 80000 )=1 U (?30000 ) =0For what value of utility for $50,000, U(50000), will Mark be indifferent between thetwo alternatives? 5. For the data below:MonthJanuaryFebruaryMarchAprilMayJune AutomobileBattery Sales202115141316 MonthJulyAugustSeptemberOctoberNovemberDecember AutomobileBattery Sales171820202123 a) Develop a three-month moving average.b) Compute MAD.6. Use simple exponential smoothing with ? = 0.33 to forecast the tire sales forFebruary through May. Assume that the forecast for January was for 22 sets of tires. MonthJanuaryFebruaryMarchApril AutomobileBattery Sales28213934

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