Chapters 1 10 TB Answer Key

Intro to Management Science: Modeling and Case Studies, 6e (Hillier)
Chapter 1 Introduction
1) Managers need to know the mathematical theory behind the techniques of management
science so that they can lead management science teams.
Answer: FALSE
Difficulty: 2 Medium
Topic: The Nature of Management Science
Learning Objective: Describe the nature of management science
Bloom's: Understand
AACSB: Knowledge Application
2) Management scientists use mathematical techniques to make decisions, which are then
implemented by managers.
Answer: FALSE
Bloom's: Understand
3) Spreadsheets allow many managers to conduct their own analyses in management science
studies.
Answer: TRUE
Bloom's: Understand
4) Managers must rely on management science experts to create and understand managerial
problems.
Answer: FALSE
Bloom's: Understand
1
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5) Management science is a discipline that attempts to aid managerial decision making by
applying a scientific approach to managerial problems that involve quantitative factors.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
6) The discovery of the simplex method in 1947 was the beginning of management science as a
discipline.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
7) The rapid growth of computing capability and power has led to a corresponding rapid growth
of the management science discipline.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
8) Managers make decisions based solely on the quantitative factors involved in the problem.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
2
9) A management science team will try to conduct a systematic investigation of a problem that
includes careful data gathering, developing and testing hypotheses, and then applying sound
logic in the analysis.
Answer: TRUE
Difficulty: 3 Hard
Bloom's: Apply
AACSB: Reflective Thinking
10) The mathematical model of a business problem is the system of equations and related
mathematical expressions that describes the essence of the problem.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Explain what a mathematical model is
Bloom's: Remember
11) A mathematical model of a business problem allows a manager to evaluate both quantitative
and qualitative aspects of the problem.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
12) Once management makes its decisions, the management science team typically is finished
with its involvement in the problem.
Answer: FALSE
Bloom's: Understand
3
13) A cost that varies with the production volume would be a fixed cost.
Answer: FALSE
Topic: An Illustration of the Management Science Approach: Break-Even Analysis
Learning Objective: Use a mathematical model to perform a break-even analysis
Bloom's: Understand
14) A cost that varies with the production volume would be a variable cost.
Answer: TRUE
Bloom's: Understand
15) A cost that does not vary with the production volume would be a fixed cost.
Answer: TRUE
Bloom's: Understand
16) A cost that does not vary with the production volume would be a variable cost.
Answer: FALSE
Bloom's: Understand
17) At the break-even point, management is indifferent between producing a product and not
producing it.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
4
18) The best way to solve a break-even problem with a spreadsheet model is to try different
production quantities until the quantity that leads to profits of zero is found.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Use a spreadsheet model to perform a break-even analysis
Bloom's: Remember
19) A constraint is an algebraic variable that represents a quantifiable decision to be made.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
20) A decision variable is an algebraic variable that represents a quantifiable decision to be

made.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
21) A parameter in a model is a variable that represents a decision to be made.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
22) The objective function for a model is a mathematical expression of the measure of
performance for the problem in terms of the decision variables.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
5
6
23) Sensitivity analysis is used to check the effect of changes in the model.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
24) Investigating the potential outcomes when estimates turn out to be incorrect is known as
"what-if analysis."
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
25) "What-if analysis" is a process used to generate estimates for use in mathematical models.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
26) Enlightened future managers should know which of the following?

A) The power and relevance of management science.
B) When management science can and cannot be applied.
C) How to apply the major techniques of management science.
D) How to interpret the results of a management science study.
E) All of the answer choices are correct.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
7
27) The rapid development of the management science discipline can be credited in part to:
A) World War I.
B) George Dantzig.
C) the computer revolution.
D) George Dantzig and the computer revolution.
E) World War I, George Dantzig, and the computer revolution.
Answer: D
Difficulty: 1 Easy
Learning Objective: Define the term management science
Bloom's: Remember
28) Managers may base their decisions on which of the following?

A) Quantitative factors.
B) Their best judgment.
C) Opinions from other managers.
D) Past experience.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
29) Management science is based strongly on which of the following fields?

A) Mathematics.
B) Computer science.
C) Business administration.
D) Mathematics and computer science only.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
8
30) Which of the following are components of a mathematical model for decision making?
A) Decision variables.
B) An objective function.
C) Constraints.
D) Parameters.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
31) Which of the following are steps in a typical management science study?
A) Define the problem and gather data.
B) Formulate a model to represent the problem.
C) Test the model and refine it as needed.
D) Help to implement the recommendations.
Answer: E
Bloom's: Understand
32) Which of the following is a mathematical expression that gives the measure of performance
for the problem?
A) Decision variable.
B) Parameter.
C) Objective function.
D) Constraint.
E) None of the answer choices are correct.
Answer: C
Difficulty: 1 Easy
Bloom's: Remember
9
33) Which of the following is a constant in a mathematical model?
B) Parameter.
D) Constraint.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
34) Which of the following is an inequality or equation that expresses a restriction in a

mathematical model?
B) Parameter.
D) Constraint.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
35) A manager has determined that a potential new product can be sold at a price of $10.00 each.
The cost to produce the product is $5.00, but the equipment necessary for production must be
leased for $25,000 per year. What is the break-even point?
A) 2,500 units.
B) 5,000 units.
C) 7,500 units.
D) 10,000 units.
E) 25,000 units.
Answer: B
Explanation:
Bloom's: Apply
10
36) In order to produce a new product, a firm must lease equipment at a cost of $10,000 per year.
The managers feel that they can sell 5,000 units per year at a price of $7.50. What is the highest
variable cost that will allow the firm to at least break even on this project?
A) $2.50.
B) $3.50.
C) $4.50.
D) $5.50.
E) $6.50.
Answer: D
Explanation: , therefore
Difficulty: 3 Hard
Bloom's: Analyze
AACSB: Analytical Thinking
A) 2,500 units.
B) 5,000 units.
C) 7,500 units.
D) 10,000 units.
E) 25,000 units.
Answer: C
Explanation:
Difficulty: 1 Easy
Bloom's: Remember
11
38) Production has indicated that they can produce widgets at a cost of $4.00 each if they lease
new equipment at a cost of $10,000. Marketing has estimated the number of units they can sell at
a number of prices (shown below). Which price/volume option will allow the firm to avoid
losing money on this project?
A) 4,000 units at $5.00 each.
B) 3,000 units at $7.50 each.
C) 1,500 units at $10.00 each.
D) 1,000 units at $15.00 each
E) 25,000 units.
Answer: B
Explanation: Calculating the break-even for each price, it is clear that 3,000 units at $7.50 each
is the only option where the sales forecast exceeds the break-even point.
Difficulty: 3 Hard
Bloom's: Evaluate
12
A) 3,333 units.
B) 5,000 units.
C) 6,667 units.
D) 7,500 units.
E) 8,167 units.
Answer: C
Explanation:
Bloom's: Apply
40) In order to produce a new product, a firm must lease equipment at a cost of $25,000 per year.
The managers feel that they can sell 10,000 units per year at a price of $15.00. What is the
highest variable cost that will allow the firm to at least break even on this project?
A) $12.50.
B) $13.50.
C) $14.50.
D) $15.50.
E) $16.50.
Answer: A
Explanation: therefore
Difficulty: 3 Hard
Bloom's: Analyze
13
41) A manager has determined that a potential new product can be sold at a price of $100.00
each. The cost to produce the product is $75.00, but the equipment necessary for production must
be leased for $175,000 per year. What is the break-even point?
A) 3,000 units.
B) 5,000 units.
C) 7,000 units.
D) 10,000 units.
E) 25,000 units.
Answer: C
Explanation:
Difficulty: 1 Easy
Bloom's: Remember
14
42) Production has indicated that they can produce widgets at a cost of $3.00 each if they lease
new equipment at a cost of $10,000. Marketing has estimated the number of units they can sell at
a number of prices (shown below). Which price/volume option will allow the firm to avoid
losing money on this project?
A) 7,500 units at $17.50 each.
B) 4,000 units at $20.00 each.
C) 3,000 units at $22.50 each.
D) 2,500 units at $25.00 each
E) 1,500 units at $27.50 each.
Answer: D
Explanation: Calculating the break-even for each price, it is clear that 2,500 units at $25.00 each
is the only option where the sales forecast equals the break-even point.
Difficulty: 3 Hard
Bloom's: Evaluate
15
43) When evaluating a project to determine the break-even quantity, the advantage of a
spreadsheet model is?
A) Users can't see the formulas used.
B) Calculations are always rounded to the nearest integer.
C) The analyst can use Excel's "BREAKEVEN" function to perform the calculation
D) A number of different estimates can be quickly evaluated once the model is constructed.
E) There are no advantages to spreadsheet modeling of break-even analysis.
Answer: D
Difficulty: 1 Easy
Learning Objective: Use a spreadsheet model to perform a break-even analysis
Bloom's: Remember
44) Which of the following is TRUE about the break-even point?

A) When sales are equal to the break-even point, profit will be zero.
B) When sales exceed the break-even point, profits will be negative.
C) When sales are below the break-even point, profits will be positive.
D) Once sales exceed the break-even point, profits no longer change if sales increase further.
E) The total revenue and total cost are equal at the point where profits are maximized.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
45) Which of the following statements about the break-even quantity is FALSE?
A) When sales are equal to the break-even point, profit will be zero.
B) When sales exceed the break-even point, profits will be positive.
C) When sales are below the break-even point, profits will be negative.
D) Once sales exceed the break-even point, profits continue to increase as sales increase.
E) The total revenue and total cost are equal at the point where profits are maximized.
Answer: A
Difficulty: 1 Easy
Bloom's: Understand
16
46) Business analytics is a field which.
A) is the same as operations research.
B) aids managerial decision making through the use of data.
C) uses descriptive analytics to predict the future.
D) uses prescriptive analytics to analyze trends.
E) uses predictive analytics to determine the best course of action.
Answer: B
Difficulty: 1 Easy
Topic: The Relationship between Analytics and Management Science
Learning Objective: Describe the relationship between analytics and management science
Bloom's: Remember
47) Descriptive analytics is the process of using data to.

A) analyze trends.
B) predict what will happen in the future.
C) determine the break-even point.
D) solve linear programming problems.
E) determine the best course of action for the future.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
48) Predictive analytics is the process of using data to.

A) analyze trends.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
17
49) Prescriptive analytics is the process of using data to.
A) analyze trends.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
50) In order to produce a new product, a firm must lease new equipment. The managers feel that
they can sell 10,000 units per year at a price of $7.50. If the variable cost of production is $5.00
per unit, what is the most the firm can spend to lease the new equipment without losing money?
A) $10,000.
B) $15,000.
C) $20,000.
D) $25,000.
E) $30,000.
Answer: D
Explanation: therefore
If the firm has lease costs of $25,000 or less the product will not lose money.
Difficulty: 3 Hard
Bloom's: Analyze
18
51) A group is planning a conference. The cost to rent the space is $1,000. Each attendee will be
charged $50.00 to attend, but the group provides a lunch (the group will pay $10.00 for each
lunch). What is the break-even point?
A) 20 attendees.
B) 25 attendees.
C) 30 attendees.
D) 35 attendees.
E) 40 attendees.
Answer: B
Explanation:
Bloom's: Apply
52) A training firm is planning to offer a one-day class at a local facility. The class is projected to
have 50 students, each of whom will pay $25.00 to attend. The firm provides materials to each
student (materials cost the firm $10.00 per student). What is the most the firm can afford to pay
to rent the facility for one day?
A) $250.
B) $500.
C) $750.
D) $1,000.
E) $1,250.
Answer: C
Explanation: , therefore
If the firm has rental costs of $750 or less the product will not lose money.
Difficulty: 3 Hard
Bloom's: Analyze
19
53) A tour company is planning a bus trip to a local museum. The company will lease a bus from
a local bus owner for $400 and estimates that it will spend $15.00 per person for admission and
lunch. Which of the following volume/price alternatives will allow the firm to avoid losing
money on the trip?
A) 20 customers at $30.00 each.
B) 30 customers at $27.50 each.
C) 40 customers at $25.00 each.
D) 50 customers at $22.50 each
E) 60 customers at $20.00 each.
Answer: C
Explanation: Calculating the break-even for each price, it is clear that 40 customers at $25.00
each is the only option where the sales forecast meets or exceeds the break-even point.
Difficulty: 3 Hard
Bloom's: Evaluate
20
54) You have decided to start a vending machine business. A local store has space available for
your machine but wants to charge you an annual fee to use the space. You estimate that you can
sell 5,000 cans of soda each year. You sell a can of soda for $1.25, which allows you a profit of
$0.50 per can. What is the most you would spend to lease the space for one year?
A) $1,000.
B) $2,500.
C) $5,000.
D) $7,500.
E) $10,000.
Answer: B
Explanation: Since your price is $1.25 and your profit is $0.50, your cost per unit must be $1.25
– $0.50 = $0.75. , therefore
If the store will lease the space for $2,500 or less the project will not lose money.
Difficulty: 3 Hard
Bloom's: Analyze
21
Chapter 2 Linear Programming: Basic Concepts
1) Linear programming problems may have multiple goals or objectives specified.
Answer: FALSE
Difficulty: 1 Easy
Topic: The Mathematical Model in the Spreadsheet
Learning Objective: Explain what linear programming is.
Bloom's: Remember
Accessibility: Keyboard Navigation
2) Linear programming allows a manager to find the best mix of activities to pursue and at what
levels.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
3) Linear programming problems always involve either maximizing or minimizing an objective

function.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
4) All linear programming models have an objective function and at least two constraints.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
1
5) Constraints limit the alternatives available to a decision maker.
Answer: TRUE
Bloom's: Understand
6) When formulating a linear programming problem on a spreadsheet, the data cells will show
the optimal solution.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
7) When formulating a linear programming problem on a spreadsheet, objective cells will show
the levels of activities for the decisions being made.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
8) When formulating a linear programming problem on a spreadsheet, the Excel equation for
each output cell can typically be expressed as a SUMPRODUCT function.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Formulate a basic linear programming model in a spreadsheet from a
description of the problem.
Bloom's: Remember
2
9) One of the great strengths of spreadsheets is their flexibility for dealing with a wide variety of
problems.
Answer: TRUE
Bloom's: Understand
10) Linear programming problems can be formulated both algebraically and on spreadsheets.
Answer: TRUE
Bloom's: Understand
11) The parameters of a model are the numbers in the data cells of a spreadsheet.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Name and identify the purpose of the four kinds of cells used in linear
programming spreadsheet models.
Bloom's: Remember
12) An example of a decision variable in a linear programming problem is profit maximization.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
3
13) A feasible solution is one that satisfies all the constraints of a linear programming problem
simultaneously.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
14) An infeasible solution violates all of the constraints of the problem.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
15) The best feasible solution is called the optimal solution.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
16) Since all linear programming models must contain nonnegativity constraints, Solver will
automatically include them and it is not necessary to add them to a formulation.
Answer: FALSE
Bloom's: Apply
4
17) The line forming the boundary of what is permitted by a constraint is referred to as a
parameter.
Answer: FALSE
Difficulty: 1 Easy
Topic: The graphical method for solving two-variable problems
Learning Objective: Apply the graphical method to solve a two-variable linear programming
problem.
Bloom's: Remember
18) The origin satisfies any constraint with a ≥ sign and a positive right-hand side.
Answer: FALSE
problem.
Bloom's: Understand
19) The feasible region only contains points that satisfy all constraints.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
20) A circle would be an example of a feasible region for a linear programming problem.
Answer: FALSE
problem.
Bloom's: Apply
5
21) The equation 5x + 7y = 10 is linear.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Present the algebraic form of a linear programming model from its
formulation on a spreadsheet.
Bloom's: Remember
22) The equation 3xy = 9 is linear.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
23) The graphical method can handle problems that involve any number of decision variables.
Answer: FALSE
problem.
Bloom's: Apply
24) An objective function represents a family of parallel lines.
Answer: TRUE
problem.
Bloom's: Understand
6
25) When solving linear programming problems graphically, there are an infinite number of
possible objective function lines.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
26) For a graph where the horizontal axis represents the variable x and the vertical axis
represents the variable y, the slope of a line is the change in y when x is increased by 1.
Answer: TRUE
problem.
Bloom's: Analyze
27) The value of the objective function decreases as the objective function line is moved away
from the origin.
Answer: FALSE
problem.
Bloom's: Understand
28) A feasible point on the optimal objective function line is an optimal solution.
Answer: TRUE
problem.
Bloom's: Understand
7
29) A linear programming problem can have multiple optimal solutions.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
30) All constraints in a linear programming problem are either ≤ or ≥ inequalities.
Answer: FALSE
Difficulty: 1 Easy
Topic: Using excel's solver to solve linear programming problems
Bloom's: Remember
31) Linear programming models can have either ≤ or ≥ inequality constraints but not both in the
same problem.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
32) A maximization problem can generally be characterized by having all ≥ constraints.
Answer: FALSE
Bloom's: Apply
8
33) If a single optimal solution exists while using the graphical method to solve a linear
programming problem, it will exist at a corner point.
Answer: TRUE
Bloom's: Apply
34) When solving a maximization problem graphically, it is generally the goal to move the
objective function line out, away from the origin, as far as possible.
Answer: TRUE
problem.
Bloom's: Apply
35) When solving a minimization problem graphically, it is generally the goal to move the
objective function line out, away from the origin, as far as possible.
Answer: FALSE
Explanation: Multiple-Choice Questions
problem.
Bloom's: Apply
9
36) A manager should know the following things about linear programming.
A) What it is.
B) When it should be used.
C) When it should not be used.
D) How to interpret the results of a study.
Answer: E
Difficulty: 1 Easy
Topic: Formulating the Wyndor problem on a spreadsheet
Learning Objective: Identify the three key questions to be addressed in formulating any
spreadsheet model.
Bloom's: Remember
37) Which of the following is not a component of a linear programming model?

A) constraints
B) decision variables
C) parameters
D) an objective
E) a spreadsheet
Answer: E
Difficulty: 1 Easy
Topic: Formulating the Wyndor problem on a spreadsheet
Bloom's: Remember
38) In linear programming, solutions that satisfy all of the constraints simultaneously are referred
to as:
A) optimal.
B) feasible.
C) nonnegative.
D) targeted.
Answer: B
Difficulty: 1 Easy
problem.
Bloom's: Remember
10
39) When formulating a linear programming problem on a spreadsheet, which of the following is
true?
A) Parameters are called data cells.
B) Decision variables are called changing cells.
C) Nonnegativity constraints must be included.
D) The objective function is called the objective cell.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
40)
Where are the data cells located?

A) B2:C2
B) B2:C2, B5:C7, and F5:F7
C) B10:C10
D) F10
Answer: B
Bloom's: Understand
11
41)
Where are the changing cells located?

A) B2:C2
B) B2:C2, B5:C7, and F5:F7
C) B10:C10
D) F10
Answer: C
Bloom's: Understand
12
42)
Where is the objective cell located?

A) B2:C2
B) B2:C2, B5:C7, and F5:F7
C) B10:C10
D) F10
Answer: D
Bloom's: Understand
13
43)
Where are the output cells located?

A) B2:C2
B) B2:C2, B5:C7, and F5:F7
C) B10:C10
D) F10
Answer: E
Bloom's: Understand
44) Which of the following could not be a constraint for a linear programming problem?
A) 1A + 2B ≤ 3
B) 1A + 2B ≥ 3
C) 1A + 2B = 3
D) 1A + 2B
E) 1A + 2B + 3C ≤ 3
Answer: D
Explanation: A constraint requires both a left-hand side (level of activities) and right-hand side
(feasible value).
Bloom's: Apply
14
45) For the products A, B, C, and D, which of the following could be a linear programming
objective function?
A) P = 1A + 2B +3C + 4D
B) P = 1A + 2BC +3D
C) P = 1A + 2AB +3ABC + 4ABCD
D) P = 1A + 2B/C +3D
Answer: A
Explanation: A linear objective function can only include products of a changing cell and a data
cell. Only option "a" can be represented with a SUMPRODUCT function in Excel.
Bloom's: Apply
46) After the data is collected the next step to formulating a linear programming model is to:
A) identify the decision variables.
B) identify the objective function.
C) identify the constraints.
D) specify the parameters of the problem.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
15
47) When using the graphical method, the region that satisfies all of the constraints of a linear
programming problem is called the:
A) optimum solution space.
B) region of optimality.
C) profit maximization space.
D) feasible region.
E) region of nonnegativity.
Answer: D
problem.
Bloom's: Understand
48) Solving linear programming problems graphically

A) is possible with any number of decision variables.
B) provides geometric intuition about what linear programming is trying to achieve.
C) will always result in an optimal solution.
D) All of the answers choices are correct.
E) None of the answers choices are correct.
Answer: B
problem.
Bloom's: Understand
16
49) Which objective function has the same slope as this one: 4x + 2y = 20.
A) 2x + 4y = 20
B) 2x − 4y = 20
C) 4x − 2y = 20
D) 8x + 8y = 20
E) 4x + 2y = 10
Answer: E
Explanation: To determine the slope of the objective function, solve for the variable "y." y =
−2x + 10 indicates a slope of −2. Only option "e" has the same slope.
Difficulty: 3 Hard
problem.
Bloom's: Analyze
50) Given the following 2 constraints, which solution is a feasible solution for a maximization
problem?
(1) 14x1 + 6x2 ≤ 42

(2) x1 − x2 ≤ 3
A) (x1 , x2 ) = (1, 5)
B) (x1 , x2 ) = ( 5, 1)
C) (x1 , x2 ) = ( 4, 4)
D) (x1 , x2 ) = (2, 1)
E) (x1 , x2) = ( 2, 6)
Answer: D
Explanation: To determine feasibility, substitute the variable values into the constraints.
Substituting option "d" values of x1 and x2 leaves both constraints satisfied.
(1) 14x1 + 6x2 ≤ 42 ⇒ 14(2) + 6(1) = 34 ≤ 42

(2) x1x2 ≤ 3⇒ 1(2) - 1(1) = 3 ≤ 3
Difficulty: 3 Hard
problem.
Bloom's: Evaluate
17
18
51) Which of the following constitutes a simultaneous solution to the following 2 equations?
(1) 3x1 + 4x2 = 10

(2) 5x1 + 4x2 = 14
A) (x1 , x2 ) = (2, 0.5)
B) (x1 , x2 ) = ( 4, 0.5)
C) (x1 , x2 ) = (2, 1)
D) x1 = x2
E) x2 = 2x1
Answer: C
Explanation: Using subtraction to eliminate one variable (x2 ) allows solving for the other (x1 ).
Then substitution of the value for x1 i nto an original equation allows us to solve for x2 .
3x1 + 4 x2 = 10

−( 5x1 + 4x2 = 14)
−2 x1 + 0x2 = −4 ⇒ x1 = 2
Since x = 2 , 3 x1 + 4x2 = 10 ⇒ 4 x2 = 4 ⇒ x2 = 1
Difficulty: 3 Hard
problem.
Bloom's: Analyze
19
(1) 3x1 + 2x2 = 6

(2) 6x1 + 3x2 = 12
A) (x1 , x2 ) = (1, 1.5)
B) (x1 , x2 ) = ( 0.5, 2)
C) (x1 , x2 ) = ( 0, 3)
D) (x1 , x2 ) = (2, 0)
E) (x1 , x2) = ( 0, 0)
Answer: D
Then substitution of the value for x2 into an original equation allows us to solve for x1 .
2(3x1 + 2x2 = 6) {this equation is multiplied by 2 to allow elimination of x1)

-(6x1 + 3x2 = 12)
0x1 - 2x2 = 0 ⇒ x2 = 0
Since x2 = 0, 3x1 + 2x2 = 6 ⇒ 3x1 = 6 ⇒ x1 = 2
Difficulty: 3 Hard
problem.
Bloom's: Analyze
20
53) What is the optimal solution for the following problem?
Maximize P = 3x + 15y
subject to 2x + 4y ≤ 12
5x + 2y ≤ 10
and x ≥ 0, y ≥ 0.
A) (x, y) = (2, 0)
B) (x, y) = (0, 3)
C) (x, y) = (0, 0)
D) (x, y) = (1, 5)
Answer: B
Explanation: Graph the two constraints to define the feasible region. Next, find the objective
function value that just touches the edge of the feasible region (here, at point (0, 3) the objective
function is maximized with a value of 45.
Alternatively, evaluate the extreme points of the feasible region:

(0, 0) - objective function value 0
(1.2, 0) - objective function value 3.6
(0, 3) - objective function value 45 {maximum}
Difficulty: 3 Hard
problem.
Bloom's: Analyze
21
54) Given the following 2 constraints, which solution is a feasible solution for a minimization
problem?
(1) 14x1 + 6x2 ≥ 42

(2) x1 + 3x2 ≥ 6
A) (x1 , x 2) = (0.5, 5 ).
B) (x1 , x2 ) = ( 0, 4).
C) (x1 , x2 ) = ( 2, 5).
D) (x1 , x2 ) = (1, 2).
E) (x1 , x2) = ( 2, 1 ).
Answer: C
Substituting option "c" values of x1 and x2 leaves both constraints satisfied.
(1) 14x1 + 6x2 ≥ 42 ⇒ 14(2) + 6(5) = 48 ≥ 42

(2) x1 + 3x2 ≥ 6 ⇒ 1(2) + 3(5) = 17 ≥ 6
Difficulty: 3 Hard
problem.
Bloom's: Evaluate
22
55) Use the graphical method for linear programming to find the optimal solution for the
following problem.
Minimize C = 3x + 15y

subject to 2x + 4y ≥ 12
5x + 2y ≥ 10
and x ≥ 0, y ≥ 0.
A) (x, y) = (0, 0).
B) (x, y) = (0, 3).
C) (x, y) = (0, 5).
D) (x, y) = (1, 2.5).
E) (x, y) = (6, 0).
Answer: E
function is minimized with a value of 18.

(6, 0) - objective function value 18 {minimum}
(1, 2.5) - objective function value 40.5
Difficulty: 3 Hard
problem.
Bloom's: Evaluate
23
56) The production planner for Fine Coffees, Inc. produces two coffee blends: American (A) and
British (B) . He can only get 300 pounds of Colombian beans per week and 200 pounds of
Dominican beans per week. Each pound of American blend coffee requires 12 ounces of
Colombian beans and 4 ounces of Dominican beans, while a pound of British blend coffee uses 8
ounces of each type of bean. Profits for the American blend are $2.00 per pound, and profits for
the British blend are $1.00 per pound. The goal of Fine Coffees, Inc. is to maximize profits.
What is the objective function?

A) P = A + 2B.
B) P = 12A + 8B.
C) P = 2A + B.
D) P = 8A + 12B.
E) P = 4A + 8B.
Answer: C
Explanation: Since the objective is to maximize profits, the objective function should reflect the
profitability of A ($2.00 per pound) and B ($1.00 per pound).
Bloom's: Apply
24
What is the constraint for Colombian beans?

A) A + 2B ≤ 4,800.
B) 12A + 8B ≤ 4,800.
C) 2A + B ≤ 4,800.
D) 8A + 12B ≤ 4,800.
E) 4A + 8B ≤ 4,800.
Answer: B
Explanation: Since each pound of A uses 12 ounces of Colombian beans and each pound of B
uses 8 ounces of Colombian beans, it is convenient to convert the supply of Columbian beans to
ounces (300 pounds = 4,800 ounces). Then the constraint should reflect that the usages (12
ounces per pound of A, 8 ounces per pound of B) must be less than the supply.
Bloom's: Apply
25
What is the constraint for Dominican beans?

A) 12A + 8B ≤ 4,800.
B) 8A + 12B ≤ 4,800.
C) 4A + 8B ≤ 3,200.
D) 8A + 4B ≤ 3,200.
E) 4A + 8B ≤ 4,800.
Answer: C
Explanation: Since each pound of A uses 12 ounces of Dominican beans and each pound of B
uses 8 ounces of Dominican beans, it is convenient to convert the supply of Dominican beans to
ounces (200 pounds = 3,200 ounces). Then the constraint should reflect that the usages (4 ounces
per pound of A, 8 ounces per pound of B) must be less than the supply.
Bloom's: Apply
26
Which of the following is not a feasible solution?

A) (A, B) = (0, 0).
B) (A, B) = (0, 400).
C) (A, B) = (200, 300).
D) (A, B) = (400, 0).
E) (A, B) = (400, 400).
Answer: E
Substituting option "e" values of A and B violates both constraints.
(1) 12A + 8B ≤ 4,800 ⇒ 12(400) + 8(400) = 8,000 ≥ 4,800

(2) 4A + 8B ≤ 3,200 ⇒ 4(400) + 8(400) = 4,800 ≥ 3,200
Bloom's: Apply
27
What is the weekly profit when producing the optimal amounts?

A) $0.
B) $400.
C) $700.
D) $800.
E) $900.
Answer: D
Explanation: Using Excel's Solver add-in, the optimal solution of the linear program shown
below is A = 400, B = 0, with weekly profits of $800.
Maximize P = 2A + B
subject to 12A + 4B ≤ 4,800
4A + 8B ≤ 3,600
and A ≥ 0, B ≥ 0.
Difficulty: 3 Hard
Learning Objective: Use Excel to solve a linear programming spreadsheet model.
Bloom's: Analyze
AACSB: Technology
28
61) The operations manager for the Blue Moon Brewing Co. produces two beers: Lite (L) and
Dark (D) . He can only get 675 gallons of malt extract per day for brewing and his brewing hours
are limited to 8 hours per day. To produce a keg of Lite beer requires 2 minutes of time and 5
gallons of malt extract. Each keg of Dark beer needs 4 minutes of time and 3 gallons of malt
extract. Profits for Lite beer are $3.00 per keg and profits for Dark beer are $2.00 per keg. The
brewery's goal is to maximize profits.

A) P = 2L + 3D.
B) P = 2L + 4D.
C) P = 3L + 2D.
D) P = 4L + 2D.
E) P = 5L + 3D.
Answer: C
profitability of L ($3.00 per keg) and D ($2.00 per keg).
Bloom's: Apply
29
What is the time constraint?

A) 2L +3D ≤ 480.
B) 2L + 4D ≤ 480.
C) 3L + 2D ≤ 480.
D) 4L + 2D ≤ 480.
E) 5L + 3D ≤ 480.
Answer: B
Explanation: Since each keg of L requires 2 minutes and each keg of D uses 4 minutes, it is
convenient to convert the available time to minutes (8 hours = 480 minutes). Then the constraint
should reflect that the usages (2 minutes for A, 4 minutes for D) must be less than the supply.
Bloom's: Apply
30

A) (L, D) = (0, 0).
B) (L, D) = (0, 120).
C) (L, D) = (90, 75).
D) (L, D) = (135, 0).
E) (L, D) = (135, 120).
Answer: E
Substituting option "e" values of L and D v iolates both constraints.
(1) 2L + 4D ≤ 480 ⇒ 2(135) + 4(120) = 750 ≥ 480

(2) 5L + 3D ≤ 675 ⇒ 5(135) + 3(120) = 1,035 ≥ 675
Bloom's: Apply
31
What is the daily profit when producing the optimal amounts?

A) $0.
B) $240.
C) $420.
D) $405.
E) $505.
Answer: C
below is L = 90, D = 75, with weekly profits of $420.
Maximize P = 3L + 2D
subject to 2L + 3D ≤ 480
5L + 2D ≤ 675
and L ≥ 0, D ≥ 0.
Difficulty: 3 Hard
Bloom's: Analyze
AACSB: Technology
32
65) The production planner for a private label soft drink maker is planning the production of two
soft drinks: root beer (R) and sassafras soda (S) . There are at most 12 hours per day of production
time and 1,500 gallons per day of carbonated water available. A case of root beer requires 2
minutes of time and 5 gallons of water to produce, while a case of sassafras soda requires 3
minutes of time and 5 gallons of water. Profits for the root beer are $6.00 per case, and profits for
the sassafras soda are $4.00 per case. The firm's goal is to maximize profits.

A) P = 4R + 6S
B) P = 2R + 3S
C) P = 6R + 4S
D) P = 3R +2S
E) P = 5R + 5S
Answer: C
profitability of R ($6.00 per case) and S ($4.00 per case).
Bloom's: Apply
66) What is the time constraint?

A) 2R + 3S ≤ 720.
B) 2R + 5S ≤ 720.
C) 3R + 2S ≤ 720.
D) 3R + 5S ≤ 720.
E) 5R + 5S ≤ 720.
Answer: A
Explanation: Since each case of R requires 2 minutes and each case of S uses 3 minutes, it is
convenient to convert the available time to minutes (12 hours = 720 minutes). Then the
constraint should reflect that the usages (2 minutes for R, 3 minutes for S) must be less than the
supply.
Bloom's: Apply
33

A) (R, S) = (0, 0)
B) (R, S) = (0, 240)
C) (R, S) = (180, 120)
D) (R, S) = (300, 0)
E) (R, S) = (180, 240)
Answer: E
Substituting option "e" values of R and S v iolates both constraints.
(1) 2R + 3S ≤ 720 ⇒ 2(180) + 3(240) = 1,080 ≥ 720

(2) 5R + 5S ≤ 1,500 ⇒ 5(180) + 5(240) = 2,100 ≥ 1,500
Difficulty: 1 Easy
Bloom's: Remember
34

A) $960
B) $1,560
C) $1,800
D) $1,900
E) $2,520
Answer: C
below is R = 300, S = 0, with weekly profits of $1,800.
Maximize P = 6R + 4S
subject to 6R + 4S ≤ 720
5R + 5S ≤ 1,500
and R ≥ 0, S ≥ 0.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
35
69) An electronics firm produces two models of pocket calculators: the A-100 (A) and the B-200
(B) . Each model uses one circuit board, of which there are only 2,500 available for this week's
production. In addition, the company has allocated a maximum of 800 hours of assembly time
this week for producing these calculators. Each A-100 requires 15 minutes to produce while each
B-200 requires 30 minutes to produce. The firm forecasts that it could sell a maximum of 4,000
of the A-100s this week and a maximum of 1,000 B-200s. Profits for the A-100 are $1.00 each
and profits for the B-200 are $4.00 each. The firm's goal is to maximize profits.

A) P = 4A + 1B
B) P = 0.25A + 1B
C) P = 1A + 4B
D) P = 1A + 1B
E) P = 0.25A + 0.5B
Answer: C
profitability of A ($1.00 per unit) and B ($4.00 per unit).
Bloom's: Apply
36
What is the time constraint?

A) 1A + 1B ≤ 800
B) 0.25A + 0.5B ≤ 800
C) 0.5A + 0.25B ≤ 800
D) 1A + 0.5B ≤ 800
E) 0.25A + 1B ≤ 800
Answer: B
Explanation: Since each A requires 15 minutes and each B uses 30 minutes, it is convenient to
convert the required time to hours. Then the constraint should reflect that the usages (0.25 hour
for A, 0.5 hour for B) must be less than the supply.
Bloom's: Apply
37

A) (A, B) = (0, 0)
B) (A, B) = (0, 1000)
C) (A, B) = (1800, 700)
D) (A, B) = (2500, 0)
E) (A, B) = (100, 1600)
Answer: E
Substituting option "e" values of A and B violates at least one constraint.
(1) 0.25A + 0.5B ≤ 800 ⇒ 2(100) + 3(1,600) = 5,000 ≥ 800 {constraint violated}
(2) A + B ≤ 2,500 ⇒ 100 + 1,600 = 1,700 ≤ 2500
(3) A ≤ 4,000 ⇒ 100 ≥ 4,000
(4) B ≤ 1,000 ⇒ 1,600 ≥ 1,000 {constraint violated}
Bloom's: Apply
38
What is the weekly profit when producing the optimal amounts?

A) $10,000
B) $4,600
C) $2,500
D) $5,200
E) $6,400
Answer: D
below is A = 1,200, B = 1,000, with weekly profits of $5,200.
Maximize P = 1A + 4B

subject to 0.25A + 0.5B ≤ 800
A + B ≤ 2,500
A ≤ 4,000
B ≤ 1,000
and A ≥ 0, B ≥ 0.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
39
73) A local bagel shop produces bagels (B) and croissants (C) . Each bagel requires 6 ounces of
flour, 1 gram of yeast, and 2 tablespoons of sugar. A croissant requires 3 ounces of flour, 1 gram
of yeast, and 4 tablespoons of sugar. The company has 6,600 ounces of flour, 1,400 grams of
yeast, and 4,800 tablespoons of sugar available for today's baking. Bagel profits are 20 cents
each and croissant profits are 30 cents each. The shop wishes to maximize profits.

A) P = 0.3B + 0.2C.
B) P = 0.6B + 0.3C.
C) P = 0.2B + 0.3C.
D) P = 0.2B + 0.4C.
E) P = 0.1B + 0.1C.
Answer: C
profitability of B ($0.20 per unit) and C ($0.30 per unit).
Bloom's: Apply
What is the sugar constraint?

A) 6B + 3C ≤ 4,800
B) 1B + 1C ≤ 4,800
C) 2B + 4C ≤ 4,800
D) 4B + 2C ≤ 4,800
E) 2B + 3C ≤ 4,800
Answer: C
Explanation: Since each B requires 2 tablespoons of sugar and each C requires 4 tablespoons of
sugar, the constraint should reflect that the usages (2 tablespoons for each B, 4 tablespoons for
each C) must be less than the supply.
Bloom's: Apply
40

A) (B, C) = (0, 0)
B) (B, C) = (0, 1100)
C) (B, C) = (800, 600)
D) (B, C) = (1100, 0)
E) (B, C) = (0, 1400)
Answer: E
Substituting option "e" values of A and B violates at least one constraint.
(1) 2B + 4C ≤ 4,800 ⇒ 2(0) + 4(1,400) = 5,600 ≥ 4,800 {constraint violated}
(2) 6B + 3C ≤ 6,600 ⇒ 6(0) + 3(1,400) = 4,200 ≤ 6,600
(3) B + C ≤ 1,400 ⇒ 1,400 = 1,400
Bloom's: Apply
41

A) $580
B) $340
C) $220
D) $380
E) $420
Answer: D
below is B = 1,200, C = 1,000, with weekly profits of $5,200.
Maximize P = 0.2B + 0.3C

subject to 2B + 4C ≤ 4,800
6B + 3C ≤ 6,600
B + C ≤ 1,400
and B ≥ 0, C ≥ 0.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
42
77) The owner of Crackers, Inc. produces both Deluxe (D) and Classic (C) crackers. She only
has 4,800 ounces of sugar, 9,600 ounces of flour, and 2,000 ounces of salt for her next
production run. A box of Deluxe crackers requires 2 ounces of sugar, 6 ounces of flour, and 1
ounce of salt to produce. A box of Classic crackers requires 3 ounces of sugar, 8 ounces of flour,
and 2 ounces of salt to produce. Profits are 40 cents for a box of Deluxe crackers and 50 cents for
a box of Classic crackers. Cracker's, Inc. would like to maximize profits.

A) P = 0.5D + 0.4C
B) P = 0.2D + 0.3C
C) P = 0.4D + 0.5C
D) P = 0.1D + 0.2C
E) P = 0.6D + 0.8C
Answer: C
profitability of D($0.40 per box) and C ($0.50 per box).
Bloom's: Apply
43
What is the sugar constraint?

A) 2D + 3C ≤ 4,800
B) 6D + 8C ≤ 4,800
C) 1D + 2C ≤ 4,800
D) 3D + 2C ≤ 4,800
E) 4D + 5C ≤ 4,800
Answer: A
Explanation: Since each D requires 2 ounces of sugar and each C requires 3 ounces of sugar, the
constraint should reflect that the usages (2 ounces for each D, 3 ounces for each C) must be less
than the supply.
Bloom's: Apply
44

A) (D, C) = (0, 0)
B) (D, C) = (0, 1000)
C) (D, C) = (800, 600)
D) (D, C) = (1600, 0)
E) (D, C) = (0, 1,200)
Answer: E
Substituting option "e" values of D and C violates at least one constraint.
(1) 2D + 3C ≤ 4,800 ⇒ 2(0) + 3(1,200) = 3,600 ≤ 4,800

(2) 6D + 8C ≤ 9,600 ⇒ 6(0) + 8(1,200) = 9,600 = 9,600
(3) D + 2C ≤ 2,000 ⇒ 1(0) + 2(1,200) = 2,400 ≥ 1,400 {constraint violated}
Bloom's: Apply
45

A) $800
B) $500
C) $640
D) $620
E) $600
Answer: C
below is D = 1,600, C = 0, with weekly profits of $640.
Maximize P = 0.4D + 0.5C

subject to 2D + 3C ≤ 4,800
6D + 8C ≤ 9,600
D + 2C ≤ 2,000
and D ≥ 0, C ≥ 0.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
46
81) The operations manager of a mail order house purchases double (D) and twin (T) beds for
resale. Each double bed costs $500 and requires 100 cubic feet of storage space. Each twin bed
costs $300 and requires 90 cubic feet of storage space. The manager has $75,000 to invest in
beds this week, and her warehouse has 18,000 cubic feet available for storage. Profit for each
double bed is $300 and for each twin bed is $150. The manager's goal is to maximize profits.

A) P = 150D + 300T
B) P = 500D + 300T
C) P = 300D + 500T
D) P = 300D + 150T
E) P = 100D + 90T
Answer: D
profitability of D($300 per bed) and T ($150 per bed).
Bloom's: Apply
What is the storage space constraint?

A) 90D + 100T ≤ 18,000
B) 100D + 90T ≥ 18,000
C) 300D + 90T ≤ 18,000
D) 500D + 100T ≤ 18,000
E) 100D + 90T ≤ 18,000
Answer: E
Explanation: Since each D requires 100 cubic feet and each T requires 90 cubic feet, the
constraint should reflect that the usages (100 cubic feet for each D, 90 cubic feet for each C)
must be less than the supply.
Bloom's: Apply
47

A) (D, T) = (0, 0)
B) (D, T) = (0, 250)
C) (D, T) = (150, 0)
D) (D, T) = (90, 100)
E) (D, T) = (0, 200)
Answer: B
Substituting option "b" values of D and T violates at least one constraint.
(1) 100D + 90T ≤ 18,000 ⇒ 100(0) + 90(250) = 22,500 ≥18,000 {constraint violated}
(2) 500D + 300C ≤ 75,000 ⇒ 500(0) + 300(250) = 75,000 = 75,000
Bloom's: Apply
48
What is the weekly profit when ordering the optimal amounts?

A) $0
B) $30,000
C) $42,000
D) $45,000
E) $54,000
Answer: D
below is D = 150, T = 0, with weekly profits of $45,000.
Maximize P = 300D + 150T

subject to 100D + 90T ≤ 18,000
300D + 150T ≤ 75,000
and D ≥ 0, T ≥ 0.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
49
(1) 4x1 + 2x2 = 7

(2) 4x1 - 3x2 = 2
A) (x1, x 2) = ( 1, 1.25)
B) (x1 , x2 ) = (1.25, 1)
C) (x1, x2) = (0, 3)
D) (x1, x2) = (1.25, 0)
E) (x1, x2) = (0, 0)
Answer: B
Then substitution of the value for x2 into an original equation allows us to solve for x1.
4x1 + 2x2 = 7
− (4x1 −
3x2 = 2)
0x1 + 5x2 = 5 ⇒ x2 = 1
Since x2 = 1, 4x1 + 2x2 = 7 ⇒ 4x1 = 5 ⇒ x1 = 1.25
Difficulty: 3 Hard
problem.
Bloom's: Analyze
50
following problem.
Maximize P = 4x + 5 y

5x + 2y ≤ 10
and x ≥ 0, y ≥ 0.
A) (x, y) = (2, 0)
B) (x, y) = (0, 3)
C) (x, y) = (0, 0)
D) (x, y) = (1, 5)
Answer: B
function value that just touches the edge of the feasible region (here, at point (2/3, 4 2/3) the
objective function is maximized with a value of 26.
(2/3, 4 2/3) - objective function value 26 {maximum}
Difficulty: 3 Hard
problem.
Bloom's: Analyze
51
87) Using Excel's Solver add-in, find the optimal solution for the following problem?

6x + 3y ≤ 18
and x ≥ 0, y ≥ 0.
A) (x, y) = (2, 0)
B) (x, y) = (0, 3)
C) (x, y) = (0, 0)
D) (x, y) = (0, 5)
Answer: D
above is x = 0, y = 5, with an objective function value of 40.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
88) Using Excel's Solver add-in, find the optimal solution for the following problem?

6x + 3y ≤ 18
and x ≥ 0, y ≥ 0.
A) (x, y) = (3, 0)
B) (x, y) = (0, 3)
C) (x, y) = (0, 0)
D) (x, y) = (0, 5)
Answer: A
above is x = 3, y = 0, with an objective function value of 24.
Difficulty: 3 Hard
Bloom's: Evaluate
AACSB: Technology
52
following problem.

5x + 2y ≥ 10
and x ≥ 0, y ≥ 0.
A) (x, y) = (0, 0)
B) (x, y) = (0, 3)
C) (x, y) = (0, 5)
D) (x, y) = (1, 2.5)
E) (x, y) = (6, 0)
Answer: D
function value that just touches the edge of the feasible region (here, at point (1, 2.5) the
objective function is minimized with a value of 31.

(1, 2.5) - objective function value 31 {minimum}
Difficulty: 3 Hard
problem.
Bloom's: Evaluate
53
following problem.

5x + 2y ≥ 10
and x ≥ 0, y ≥ 0.
A) (x, y) = (0, 0)
B) (x, y) = (0, 3)
C) (x, y) = (0, 5)
D) (x, y) = (1, 2.5)
E) (x, y) = (6, 0)
Answer: C
function is minimized with a value of 20).

(0, 5) - objective function value 20 {minimum}
(1, 2.5) - objective function value 22
Difficulty: 3 Hard
problem.
Bloom's: Evaluate
54
55
Chapter 3 Linear Programming: Formulation and Applications
1) When formulating a linear programming model on a spreadsheet, the decisions to be made are
located in the data cells.
Answer: FALSE
Difficulty: 1 Easy
Topic: A case study: the super grain corp. advertising-mix problem
Learning Objective: Identify the four components of any linear programming model and the
kind of spreadsheet cells used for each component.
Bloom's: Remember
2) When formulating a linear programming model on a spreadsheet, the constraints are located
(in part) in the output cells.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
3) When formulating a linear programming model on a spreadsheet, the measure of performance

is located in the objective cell.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
1
4) A mathematical model will be an exact representation of the real problem.
Answer: FALSE
Learning Objective: Understand the flexibility that managers have in prescribing key
considerations that can be incorporated into a linear programming model.
Bloom's: Understand
5) Approximations and simplifying assumptions generally are required to have a workable

model.
Answer: TRUE
Bloom's: Understand
6) Linear programming does not permit fractional solutions.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
7) When formulating a linear programming problem on a spreadsheet, data cells will show the
levels of activities for the decisions being made.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
2
8) A key assumption of linear programming is that the equation for each of the output cells,
including the objective cell, can be expressed as a SUMPRODUCT (or SUM) function.
Answer: TRUE
Learning Objective: Identify the kinds of Excel functions that linear programming spreadsheet
models use for the output cells, including the objective cell.
Bloom's: Understand
9) Resource-allocation problems are linear programming problems involving the allocation of

limited resources to activities.
Answer: TRUE
Difficulty: 1 Easy
Topic: Resource-allocation problems
Learning Objective: Describe the five major categories of linear programming problems,
including their identifying features.
Bloom's: Remember
10) Strict inequalities (i.e., < or >) are not permitted in linear programming formulations.
Answer: TRUE
Learning Objective: Describe the difference between resource constraints and benefit
constraints, including the difference in how they arise.
Bloom's: Apply
11) When studying a resource-allocation problem, it is necessary to determine the contribution

per unit of each activity to the overall measure of performance.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
3
12) It is usually quite simple to obtain estimates of parameters in a linear programming problem.
Answer: FALSE
Topic: Model formulation from a broader perspective
Bloom's: Understand
13) The objective cell is a special kind of output cell.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
14) Financial planning is one of the most important areas of application for cost-benefit-tradeoff
problems.
Answer: FALSE
Difficulty: 1 Easy
Topic: Cost-benefit-trade-off problems
Bloom's: Remember
15) A resource constraint refers to any functional constraint with a ≥ sign in a linear
programming model.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
4
16) In the algebraic form of a resource constraint, the coefficient of each decision variable is the
resource usage per unit of the corresponding activity.
Answer: TRUE
Bloom's: Understand
17) Cost-benefit-tradeoff problems are linear programming problems involving the allocation of
limited resources to activities.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
18) For cost-benefit-tradeoff problems, minimum acceptable levels for each kind of benefit are
prescribed and the objective is to achieve all these benefits with minimum cost.
Answer: TRUE
Bloom's: Understand
19) A benefit constraint refers to a functional constraint with a ≥ sign in a linear programming
model.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
5
20) In most cases, the minimum acceptable level for a cost-benefit-tradeoff problem is set by
how much money is available.
Answer: FALSE
Bloom's: Understand
21) It is the nature of the application that determines the classification of the resulting linear
programming formulation.
Answer: FALSE
Bloom's: Understand
22) It is the nature of the restrictions imposed on the decisions regarding the mix of activity
levels that determines the classification of the resulting linear programming formulation.
Answer: TRUE
Bloom's: Understand
23) It is fairly common to have both resource constraints and benefit constraints in the same
formulation.
Answer: TRUE
Difficulty: 1 Easy
Topic: Mixed problems
Bloom's: Remember
6
24) Choosing the best tradeoff between cost and benefits is a managerial judgment decision.
Answer: TRUE
Bloom's: Understand
25) Having one requirement for each location is a characteristic common to all transportation
problems.
Answer: TRUE
Difficulty: 1 Easy
Topic: Transportation problems
Bloom's: Remember
26) Fixed-requirement constraints in a linear programming model are functional constraints that
use an equal sign.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Describe fixed-requirement constraints and where they arise.
Bloom's: Remember
27) The capacity row in a distribution-network formulation shows the maximum number of units
than can be shipped through the network.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
7
28) Once a linear programming problem has been formulated, it is rare to make major
adjustments to it.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
29) A mixed linear programming problem will always contain some of each of the three types of
constraints in it.
Answer: FALSE
Bloom's: Understand
30) Blending problems are a special type of mixed linear programming problems.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
31) Model formulation should precede problem formulation.
Answer: FALSE
Bloom's: Apply
8
32) When dealing with huge real problems, there is no such thing as the perfectly correct linear
programming model for the problem.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
33) Transportation problems are concerned with distributing commodities from sources to
destinations in such a way as to minimize the total distribution cost.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
34) Transportation problems always involve shipping goods from one location to another.
Answer: FALSE
Bloom's: Understand
35) The requirements assumption states that each source has a fixed supply of units, where the
entire supply must be distributed to the destinations and that each destination has a fixed demand
for units, where the entire demand must be received from the sources.
Answer: TRUE
Bloom's: Understand
9
36) A transportation problem requires a unit cost for every source-destination combination.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
37) An assignment problem is a special type of transportation problem.
Answer: TRUE
Difficulty: 1 Easy
Topic: Assignment problems
Bloom's: Remember
38) Generally, assignment problems match people to an equal number of tasks at a minimum
cost.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
39) A transportation problem will always return integer values for all decision variables.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
10
40) In an assignment problem, it is necessary to add an integer constraint to the decision
variables to ensure that they will take on a value of either 0 or 1.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
41) A linear programming problem may return fractional solutions (e.g. 4 1/3) for a resource
allocation problem.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Recognize various kinds of managerial problems to which linear
programming can be applied.
Bloom's: Remember
42) In a cost-benefit-trade-off problem, management defines the maximum amount that can be
spent and the objective is to maximize benefits within this cost target.
Answer: FALSE
Bloom's: Understand
43) Transportation and assignment problems are examples of fixed-requirement problems.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
11
44) A transportation problem with 3 factories and 4 customers will have 12 shipping lanes.
Answer: TRUE
Explanation: A transportation problem with m shipping nodes and n receiving nodes will have
m×n shipping lanes. 3 × 4 = 12.
Learning Objective: Formulate a linear programming model from a description of a problem in
any of these categories.
Bloom's: Analyze
45) A transportation problem with 3 factories and 4 customers will have 12 fixed-requirement
constraints.
Answer: FALSE
Explanation: A transportation problem with m shipping nodes and n receiving nodes will have m
+ n fixed-requirement constraints. 3 + 4 = 7.
Bloom's: Analyze
46) Which of the following are categories of linear programming problems?

A) Resource-allocation problems.
B) Cost-benefit-tradeoff problems.
C) Distribution-network problems.
D) All of the above.
E) None of the above.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
12
47) A linear programming model contains which of the following components?
A) Data.
B) Decisions.
C) Constraints.
D) Measure of performance.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
48) In linear programming formulations, it is possible to have the following types of constraints:
A) ≤.
B) >.
C) =.
D) ≤ a nd > only.
Answer: E
Learning Objective: Recognize various kinds of managerial problems to which linear
programming can be applied.
Bloom's: Understand
49) Resource-allocation problems have the following type of constraints:

A) ≥.
B) ≤.
C) =.
D) <.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
13
50) When formulating a linear programming problem on a spreadsheet, which of the following is
true?
A) Parameters are called data cells.
B) Decision variables are called changing cells.
C) Right hand sides are part of the constraints.
D) The objective function is called the objective cell.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
51)
Where are data cells located?

A) B2:D2
B) B2:D2, B4:D7, and G5:G7
C) B10:D10
D) E5:E7
E) G10
Answer: B
Bloom's: Analyze
14
52)
Where are the changing cells located?

A) B2:D2
B) B2:D2, B4:D7, and G5:G7
C) B10:D10
D) E5:E7
E) G10
Answer: C
Bloom's: Analyze
15
53)
Where is the objective cell located?

A) B2:D2
B) B2:D2, B4:D7, and G5:G7
C) B10:D10
D) E5:E7
E) G10
Answer: E
Bloom's: Analyze
16
54)
Where are the output cells located?

A) B2:D2
B) B2:D2, B4:D7, and G5:G7
C) B10:D10
D) E5:E7
E) G10
Answer: D
Bloom's: Analyze
55) Cost-benefit tradeoff problems have the following type of constraints:

A) ≥
B) ≤
C) =
D) <
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
17
56) Mixed problems may have the following type of constraints:
A) ≥.
B) ≤.
C) =.
D) All of the answer choices are correct.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
57) A linear programming problem where the objective is to find the best mix of ingredients for
a product to meet certain specifications is called:
A) a resource-allocation problem.
B) a blending problem.
C) a cost-benefit tradeoff problem.
D) a mixture problem.
Answer: B
Bloom's: Apply
18
58) Using techniques to test the initial versions of a model to identify errors and omissions is
called:
A) model validation.
B) model enrichment.
C) model enhancement.
D) model debugging.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
59) Starting with a simple version of a model and adding to it until it reflects the real problem is
called:
A) model validation.
B) model enrichment.
C) model enhancement.
D) model elaboration.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
19
60) The transportation model method for evaluating location alternatives minimizes:
A) the number of sources.
B) the number of destinations.
C) total supply.
D) total demand.
E) total shipping cost.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
61) Which of the following is not information needed to use the transportation model?
A) Capacity of the sources.
B) Demand of the destinations.
C) Unit shipping costs.
D) Unit shipping distances.
Answer: D
Bloom's: Understand
62) When formulating a transportation problem on a spreadsheet, which of the following are
necessary?
A) A table of data.
B) A network representation.
C) A table for the solution.
D) A table of data and a table for the solution only.
Answer: D
Bloom's: Understand
20
63) An assignment problem:
A) is a special transportation problem.
B) will always have an integer solution.
C) has all supplies and demands equal to 1.
D) None of the answer choices are correct.
Answer: E
Bloom's: Understand
64) Applications of assignment problems may include:

A) matching personnel to jobs.
B) assigning machines to tasks.
C) designing bussing routes.
D) matching personnel to jobs and assigning machines to tasks only.
E) matching personnel to jobs, assigning machines to tasks, and d esigning bussing routes.
Answer: E
Bloom's: Understand
21
65) A freelance writer must choose how to spend her time working on several different types of
projects.
Newspaper stories take 3 hours to write and pay a flat rate of $45 per story. Magazine
articles take much longer to write (25 hours) but pay significantly better ($400 per article).
Proofreading is often tedious, but the writer can always find proofreading jobs that pay $20 per
hour. The writer wants to maximize her income, but doesn't want to work more than 45 hours per
week. Additionally, she dislikes proofreading so she would like to spend no more than 7 hours
per week on that task. Both newspaper stories and magazine articles must be completed in the
week they are started (HINT: use an integer constraint to be sure that all newspaper and
magazine jobs are finished within a week).
The writer's problem falls within which classification?

A) Resource-allocation.
B) Cost-benefit-trade-off.
C) Mixed problems.
D) Transportation problems.
E) Assignment problems.
Answer: A
Bloom's: Apply
22
projects.
Which of the following is the objective function for the writer's problem?
A) Max R = 45N + 400M − 20P
B) Min R = 3N + 25M + P
C) Max R = 45N + 400M + 20P
D) Min R = 3N + 25M + 20P
E) Max R = 3N + 400M + 20P
Answer: C
Bloom's: Apply
23
projects.
Which of the following is the constraint that limits the amount of time the writer will work each
week?
A) 3N + 25M + P ≥ 45
B) 3N + 25M + P ≤ 45
C) 3N + 25M + P ≤ 7
D) 45N + 400M + 20P ≤ 45
E) 45N + 400M + 20P ≥ 45
Answer: B
Bloom's: Apply
24
projects.
What is the optimal mix of jobs for the writer to accept each week?
A) N = 13, M = 0, P = 6
B) N = 12, M = 0, P = 7
C) N = 6, M = 1, P = 2
D) N = 5, M = 1, P = 5
E) N = 6, M = 1, P = 0
Answer: D
Difficulty: 3 Hard
Bloom's: Analyze
AACSB: Technology
25
69) A grocery store manager must decide how to best present a limited supply of milk and
cookies to its customers. Milk can be sold by itself for a profit of $1.50 per gallon. Cookies can
likewise be sold at a profit of $2.50 per dozen. To increase appeal to customers, one gallon of
milk and a dozen cookies can be packaged together and are then sold for a profit of $3.00 per
bundle. The manager has 100 gallons of milk and 150 dozen cookies available each day. The
manager has decided to stock at least 75 gallons of milk per day and demand for cookies is
always 140 dozen per day. To maximize profits, how much of each product should the manager
stock.
The manager's problem falls within which classification?

A) Resource-allocation
B) Cost-benefit-trade-off
C) Mixed problems
D) Transportation problems
E) Assignment problems
Answer: C
Bloom's: Apply
stock.
Which of the following is the objective function for the grocer's problem?
A) Max P = 1.5M + 2.5C + 3B
B) Min P = 1.5M + 2.5C + 3B
C) Max P = 2.5M + 1.5C + 3B
D) Max P = 2.5M + 3C + 1.5B
E) Min P = 1.5M + 1.5C + 3B
Answer: A
Bloom's: Apply
26
stock.
Which of the following is the constraint that limits the amount of milk the store will use (both in
bundles and sold separately) each day?
A) M + B ≥ 100
B) M + B ≤ 100
C) M + B ≥ 75
D) M + B ≤ 75
E) M ≤ 100
Answer: B
Bloom's: Apply
stock.
What is the maximum daily profit that the grocery store can achieve?
A) $515
B) $485
C) $455
D) $425
E) $395
Answer: A
27
Bloom's: Apply
73) A firm has 4 plants that produce widgets. Plants A, B, and C can each produce 100 widgets
per day. Plant D can produce 50 widgets per day. Each day, the widgets produced in the plants
must be shipped to satisfy the demand of 3 customers. Customer 1 requires 75 units per day,
customer 2 requires 100 units per day, and customer 3 requires 175 units per day. The shipping
costs for each possible route are shown in the table below:
Shipping Costs Customer

per unit Plant 1 2 3
A $ 25 $ 35 $ 15
B $ 20 $ 30 $ 40
C $ 40 $ 35 $ 20
D $ 15 $ 20 $ 25
The firm needs to satisfy all demand each day, but would like to minimize the total costs.
The firm's problem falls within which classification?

A) Resource-allocation
B) Cost-benefit-trade-off
C) Transshipment problems
D) Transportation problems
E) Assignment problems
Answer: D
Bloom's: Apply
28

A $ 25 $ 35 $ 15
B $ 20 $ 30 $ 40
C $ 40 $ 35 $ 20
D $ 15 $ 20 $ 25
The objective function for the firm's problem will have how many terms?
A) 5
B) 7
C) 10
D) 12
E) 14
Answer: D
Bloom's: Apply
29

A $ 25 $ 35 $ 15
B $ 20 $ 30 $ 40
C $ 40 $ 35 $ 20
D $ 15 $ 20 $ 25
is the number of widgets

Which of the following constraints is unnecessary for this problem (xi,j
shipped from factory i to customer j) ?
+ xA,2
A) xA,1 + xA,3
≤ 100
+
B) xB,1 xB,2
+ xB,3
≤ 100
+ xxC,2 + xxC,3 ≤ 100
C) xC,1
+
D) xA,1 xB,1
+
xxC,1 ≤
75
E) xA,1, xA,2
, xA,3
, xB,1
, xB,2
, xB,3
, xC,1
, xC,2, xC,3 integer
Answer: E
Difficulty: 3 Hard
Bloom's: Analyze
30

A $ 25 $ 35 $ 15
B $ 20 $ 30 $ 40
C $ 40 $ 35 $ 20
D $ 15 $ 20 $ 25
What is the minimum daily shipping cost that the firm can achieve?
A) $6,725
B) $7,125
C) $7,525
D) $7,925
E) $8,325
Answer: B
Difficulty: 3 Hard
Bloom's: Analyze
31
Chapter 4 The Art of Modeling with Spreadsheets
1) If two managers are given the same business problem to analyze with a spreadsheet, their
spreadsheet models will likely be almost identical.
Answer: FALSE
Difficulty: 1 Easy
Topic: Overview of the process of modeling with spreadsheets
Learning Objective: Describe the general process for modeling in spreadsheets.
Bloom's: Remember
2) There is a systematic procedure that will lead to a single correct spreadsheet model.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Describe some guidelines for building good spreadsheet models.
Bloom's: Remember
3) The Plan-Build-Test-Analyze process should always be followed step-by-step, from beginning

to end: Plan then Build then Test then Analyze.
Answer: FALSE
Bloom's: Understand
4) When building a model, it is often a good idea to start with a small-scale version of the
problem.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
1
5) When sketching out a spreadsheet, it is important to have selected the formulas for all of the
output cells.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
6) An absolute reference does not change when it is filled or copied into other cells.
Answer: TRUE
Difficulty: 1 Easy
Topic: Some guidelines for building "good" spreadsheet models
Bloom's: Remember
7) A relative reference does not change when it is filled or copied into other cells.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
8) The data is the first thing that should be entered in a spreadsheet model.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
2
9) Once the data is entered into a spreadsheet model, it should never be moved.
Answer: FALSE
Bloom's: Understand
10) Data (for example, prices or costs) should be entered directly into every output cell as
needed.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
11) When a number is needed in an output cell, it should typically be entered there directly.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
12) It is better to use powerful functions in Excel to complete a calculation in a single cell than to
spread out a calculation over many cells using simpler formulas.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
3
13) Whenever possible, the entire model should be displayed on the spreadsheet.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
14) Colors and shading should be avoided on a spreadsheet because it distracts from the model.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
15) The toggle feature in Excel switches back and forth between viewing formulas and viewing
values in the output cells.
Answer: TRUE
Difficulty: 1 Easy
Topic: Debugging a spreadsheet model
Learning Objective: Apply a variety of techniques for debugging a spreadsheet model.
Bloom's: Remember
16) The auditing tools can be used to trace the cells that make reference to a particular cell.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
4
17) Numbers should be included directly in formulas rather than entered separately in data cells
in order to keep the spreadsheet model concise.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
18) If you add rows or columns to a spreadsheet Excel will automatically adjust named ranges to
compensate.
Answer: FALSE
Bloom's: Understand
5
19) In the example shown below, cell B4 is an input to cell B7.
Answer: TRUE
Bloom's: Apply
6
20) In the example shown below, cells B7 through B18 are inputs to cell B4.
Answer: FALSE
Bloom's: Apply
7
21) In the example shown below, cell C7 uses absolute reference.
Answer: TRUE
Bloom's: Apply
8
22) In the example shown below, cell B3 is a data cell.
Answer: TRUE
Bloom's: Apply
9
23) In the example shown below, cell B2 uses an Excel formula.
Answer: FALSE
Bloom's: Apply
10
24) In the example shown below, cell D7 uses absolute reference.
Answer: FALSE
Bloom's: Apply
25) When developing a new spreadsheet model, it is important to first get a model that works and
then to go back later and change the layout so the model is easy to read.
Answer: FALSE
Bloom's: Understand
26) The first step in spreadsheet building is to enter the formulas into their proper cells.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
11
27) An absolute reference changes when it is filled or copied into other cells.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
28) A relative reference changes when it is filled or copied into other cells.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
29) Colors and shading can be used to make a spreadsheet model much easier to read and
interpret.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
30) The auditing tools can be used to determine which user last made changes to a particular cell.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
12
31) Which of the following is not a major step in the process of modeling with spreadsheets?
A) Plan.
B) Build.
C) Test.
D) Analyze.
E) All of the answer choices are major steps.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
32) Which of the following best describes spaghetti code?

A) Code that is not logically organized and jumps all over the place.
B) Code that is well documented.
C) Code that has a clear beginning, middle, and end.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
33) Which of the following is not a part of the planning step when building a spreadsheet model?
A) Visualize where you want to finish.
B) Do some calculations by hand.
C) Sketch out a spreadsheet.
D) Test the spreadsheet model.
E) All of the answer choices are part of the planning step.
Answer: D
Bloom's: Understand
13
34) Which of the following is an appropriate first step when building a spreadsheet model?
A) Start with building a small scale model.
B) Visualize where you want to finish.
C) Test the model.
D) Expand the model to full scale.
E) Optimize the model.
Answer: B
Bloom's: Understand
35) Which of the following tips can be helpful when you can't figure out what formula needs to
be entered in an output cell?
A) Visualize where you want to finish.
B) Test the model.
C) Do some calculations by hand.
D) Optimize the model.
Answer: C
Difficulty: 1 Easy
Bloom's: Remember
36) When testing a spreadsheet model by entering values in the changing cells, which of the
following are appropriate values to enter?
A) Zeroes.
B) Values for which you know what the values of the output cells should be.
C) Large numbers.
D) Zeros, large numbers, and inputs for which you know what the values of the output cells
should be.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
14
37) Which of the following should be entered first when building a spreadsheet model?
A) The objective cell.
B) The data cells.
C) The changing cells.
D) The output cells.
E) The Solver parameters.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
38) Which of the following are valid range names in Excel?

A) Total Profit
B) TotalProfit
C) Total_Profit
E) TotalProfit and Total_Profit only.
Answer: E
Bloom's: Understand
39) Which of the following is not an advantage of using range names?

A) They make formulas easier to interpret.
B) They make the Solver entries easier to understand.
C) They make the model easier to modify.
D) They make the Solver entries easier to understand and they make the model easier to modify
are not advantages of using range names.
E) All of the answer choices are advantages of using range names.
Answer: C
Bloom's: Understand
15
40) How many cells should be used to represent each constraint?
A) 0
B) 1
C) 2
D) 3
E) 4
Answer: D
Bloom's: Understand
41) Each data value should be entered into how many cells?
A) 0
B) 1
C) 2
D) 3
E) The value should be entered into any formula in which it is needed.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
42) Which of the following can be done using the auditing tools in Excel?
A) Trace the cells that make reference to a particular cell.
B) Trace the cells that a particular cell refers to.
C) Trace the history of values for a particular cell.
D) Determine the valid entries in a particular cell.
E) Trace the cells that make reference to a particular cell and trace the cells that a particular cell
refers to only.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
16
43) Which of the following are ways to distinguish data cells, changing cells, output cells, and
the objective cell on a spreadsheet?
A) Borders.
B) Shading.
C) Color.
E) Borders and color only.
Answer: D
Bloom's: Understand
44) Which of the following actions will toggle the worksheet between viewing values and
formulas?
A) Pressing Ctrl+~ on a PC.
B) Pressing Command+~ on a Mac.
C) Selecting the auditing tools to Trace Dependents.
D) Pressing Ctrl+~ on a PC and pressing Command+~ on a Mac.
E) Pressing Ctrl+~ on a PC, pressing Command+~ on a Mac, and selecting the auditing tools to
Trace Dependents.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
17
45) In the spreadsheet shown below, changing the value in Cell B1 will cause which other cells
to change?
A) Cell B2.
B) Cell B3.
C) Cell B7.
D) Cell D18.
Answer: D
Explanation: The auditing tools show that cell B4 is dependent upon cell B1. Similarly, cell B18
depends upon B4, and D18 depends upon B18. Therefore, B1 influences D18. Cells B2, B3, and
B7 are not dependent upon B1.
Bloom's: Apply
18
46) In the spreadsheet shown below, which of the following is NOT a data cell?
A) Cell B1.
B) Cell B2.
C) Cell B3.
D) Cell B7.
E) All of the answer choices are data cells.
Answer: D
Explanation: Cell B7 calculates the interest using the data from cells B2 and B3. Therefore, it is
not a data cell but a formula cell. Cells B1, B2, and B3 are data cells.
Bloom's: Apply
19
47) Before staring work on a spreadsheet, Julie sketches a rough draft of how the finished
spreadsheet might look. Julie is performing which step of the modeling process?
A) Plan.
B) Build.
C) Test.
D) Analyze.
Answer: A
Bloom's: Understand
48) Before building a full-scale version of her spreadsheet model, Julie constructs a smaller
version of the spreadsheet. Julie is performing which step of the modeling process?
A) Plan.
B) Build.
C) Test.
D) Analyze.
Answer: B
Bloom's: Understand
49) When an analyst enters data into a model to see if the results match expectations, which step
of the modeling process is occurring?
A) Plan.
B) Build.
C) Test.
D) Analyze.
Answer: C
Bloom's: Understand
20
50) When an analyst uses Solver to find the optimal solution to a problem modeled on a
spreadsheet, which step in the modeling process is occurring?
A) Plan.
B) Build.
C) Test.
D) Analyze.
Answer: D
Bloom's: Understand
51) A college student is developing a spreadsheet model of a budget. To calculate the monthly
surplus (or deficit), the student subtracts living expenses, entertainment costs, and savings from
income. Entering which of the following formulas into cell B5 will perform the proper
calculation?
A) =Monthly Income − Expenses

B) =B1 − B2 − B3 − B4
C) =B2 + B3 + B4 − B1
D) =B1 + (B2 − B3 − B4)
E) =B1 − (B2 − B3 − B4)
Answer: B
Learning Objective: Apply both the general process for modeling in spreadsheets and the
guidelines in this chapter to develop your own spreadsheet model from a description of the
problem.
Bloom's: Apply
21
52) After pressing Ctrl+~ to toggle Excel to view formulas, an analyst reviews the spreadsheet
shown below. Which of the following is TRUE?
A) Cell B2 is a data cell.

B) Cell B3 is a formula cell.
C) Cell B6 is a data cell.
D) Cell B6 is a formula cell.
E) Only A and D are true.
Answer: E
Bloom's: Analyze
22
53) A student is using a spreadsheet model to track monthly income and expenses and also to
calculate his annual income. After pressing Ctrl+~, the formula view of the spreadsheet (shown
below) was visible. What spreadsheet construction error did the student commit?
A) Using an advanced Excel formula instead of a simpler mathematical calculation.

B) Entering data in more than one place.
C) Failure to adequately use labels to identify cells.
D) Incorrect formula.
E) There are no errors in the spreadsheet.
Answer: B
Explanation: The data "monthly income" is entered in both cell B2 and B8. It should be entered
in only one cell.
Difficulty: 3 Hard
Learning Objective: Apply both the general process for modeling in spreadsheets and the
guidelines in this chapter to develop your own spreadsheet model from a description of the
problem.
Bloom's: Evaluate
23
54) A student is using a spreadsheet to calculate her monthly surplus/deficit as well as annual
income. After pressing Ctrl+~, the formula view (shown below) appeared. What issues should be
addressed on this spreadsheet?
A) Data should be entered only once.

B) Simple formulas should be used rather than complex Excel functions.
C) Range names should be used.
D) Absolute references should be used.
E) No problems exist on this spreadsheet.
Answer: C
Explanation: Use of range names makes formulas more easily interpreted.
Difficulty: 3 Hard
Learning Objective: Identify some deficiencies in a poorly formulated spreadsheet model.
Bloom's: Evaluate
24
55) A manager prepared a spreadsheet to calculate employee wages. After pressing Ctrl+~, the
formula view (shown below) appeared. What issues should be addressed on this spreadsheet?
A) Data should be entered only once.

B) Simple formulas should be used rather than complex Excel functions.
C) Absolute references should be used.
D) Data should be entered only once and simple formulas should be used rather than complex
Excel functions only.
E) Data should be entered only once, simple formulas should be used rather than complex Excel
functions and absolute references should be used.
Answer: D
Explanation: Data (wage per hour) should be entered only once. The Excel function
"PRODUCT" is more complex than needed for this application. Simply multiplying the three
cells together (e.g. =B9*B10*B11) is sufficient and more easily understood.
Difficulty: 3 Hard
Learning Objective: Identify some deficiencies in a poorly formulated spreadsheet model.
Bloom's: Evaluate
56) A spreadsheet developer enters the formula "=B9*B10" into cell C1. If this formula is copied
and then pasted into cell C2, what will the formula in cell C2 be?
A) =B9*B10
B) =C9*C10
C) =C10*C11
D) =B9*B11
E) =B10*B11
Answer: E
Bloom's: Understand
25
57) A spreadsheet developer enters the formula "=$B$9*$B$10" into cell C1. If this formula is
copied and then pasted into cell C2, what will the formula in cell C2 be?
A) =$B$9*$B$10
B) =C9*C10
C) =C10*C11
D) =B9*B11
E) =$B$10*$B$11
Answer: A
Bloom's: Understand
58) A spreadsheet developer enters the formula "=B9*B10" into cell C1. If this formula is copied
and then pasted into cell D2, what will the formula in cell D2 be?
A) =B9*B10
B) =C9*C10
C) =C10*C11
D) =B9*B11
E) =B10*B11
Answer: C
Bloom's: Understand
59) A spreadsheet developer enters the formula "=$B$9*$B$10" into cell C1. If this formula is
copied and then pasted into cell D2, what will the formula in cell D2 be?
A) =$B$9*$B$10
B) =C9*C10
C) =C10*C11
D) =B9*B11
E) =$B$10*$B$11
Answer: A
Bloom's: Understand
26
60) A spreadsheet developer enters the formula "=B9*$B$10" into cell C1. If this formula is
A) =B9*$B$10
B) =C9*C10
C) =$C$10*$C$11
D) =B9*$B$11
E) =C10*$B$10
Answer: E
Bloom's: Understand
61) A spreadsheet developer enters the formula "=$B$9*B10" into cell C1. If this formula is
A) =$B$9*B10
B) =$B$9*C11
C) =C10*C11
D) =B9*B11
E) =$B$10*$B$11
Answer: B
Bloom's: Understand
62) Which of the following are valid range names in Excel?

A) Unit_Cost
B) Unit Cost
C) Cost per Unit
E) Unit Cost and Cost per Unit only.
Answer: A
Bloom's: Understand
27
63) In the spreadsheet shown below, which of the following is a data cell?
A) Cell B1.
B) Cell B7.
C) Cell D7.
D) Cell D18.
E) All of the answer choices are data cells.
Answer: A
Bloom's: Apply
28
64) Which of the following statements is TRUE about a good spreadsheet model?
A) A good model is easy to understand.
B) A good model is easy to debug.
C) A good model is difficult for users to modify.
D) A good model doesn't use borders and shading.
E) A good model is easy to understand and a good model is easy to debug.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
65) Which of the following statements about a good spreadsheet model is FALSE?
B) A good model is easy to debug.
C) A good model is easy to modify.
D) A good model doesn't use borders and shading.
E) A good model is easy to understand and a good model is easy to debug.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
29
66) A spreadsheet modeler is creating a spreadsheet to calculate each employee's total wages for
a time period. After entering the data below, the modeler would like to enter a formula in cell C5
that can then be copied to cells C6 through C9 without further modification. What formula
should be entered in cell C5 to make this possible?
A) =B2*B5
B) =B2*$B$5
C) =$B$2*B5
D) =$B$2*$B$5
E) =B2+B5
Answer: C
Difficulty: 3 Hard
Bloom's: Apply
30
a time period. The modeler has named cell B2 "Hourly_Wage" to make the model more
understandable. What formula should be entered into cell C5?
A) =B1*B5
B) =B1*$B$5
C) =Hourly_Wage*B5
D) =$B$2*Hourly_Wage
E) =Hourly_Wage +B5
Answer: C
Difficulty: 3 Hard
Bloom's: Apply
31
a time period. After completing the model, the analyst feels there is an error. Interpret the
auditing information shown below to determine which of the following statements is TRUE.
A) There is no error in the model.

B) The model is incorrect because it is using the wrong information for the employee hours.
C) The model is incorrect because it is using the wrong wage information.
D) The model is incorrect, but it is impossible to determine why.
E) The model is incorrect because it is using the wrong information for the employee hours and
the model is incorrect because it is using the wrong wage information are both true.
Answer: C
Difficulty: 3 Hard
Bloom's: Evaluate
32

Answer: A
Difficulty: 3 Hard
Bloom's: Evaluate
33

Answer: B
Difficulty: 3 Hard
Bloom's: Evaluate
34

Answer: C
Difficulty: 3 Hard
Bloom's: Evaluate
35

Answer: A
Difficulty: 3 Hard
Bloom's: Evaluate
36
formula information shown below to determine which of the following statements is TRUE.

Answer: B
Difficulty: 3 Hard
Bloom's: Evaluate
74) Which of the following statements about a "good" spreadsheet model is FALSE?
B) A good model will always give the correct result.
C) A good model is easy to modify.
D) A good model has data entered in only one location.
E) A good model uses range names to make formulas easier to understand.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
37
75) Which of the following statements about a "poor" spreadsheet model is FALSE?
A) A poor model is easy to understand.
B) A poor model will always give an incorrect result.
C) A poor model is easy to modify.
D) A poor model has data entered in only one location.
E) A poor model uses range names to make formulas easier to understand.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
38
Chapter 5 What-If Analysis for Linear Programming
1) An optimal solution is only optimal with respect to a particular mathematical model that
provides only a representation of the actual problem.
Answer: TRUE
Difficulty: 1 Easy
Topic: The Importance of What-if Analysis to Managers
Learning Objective: Explain what is meant by what-if analysis.
Bloom's: Remember
2) The purpose of a linear programming study is to help guide management's final decision by
providing insights.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Summarize the benefits of what-if analysis.
Bloom's: Remember
3) It is usually quite easy to find the needed data for a linear programming study.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
4) If the optimal solution will remain the same over a wide range of values for a particular
coefficient in the objective function, then management will want to take special care to narrow
this estimate down.
Answer: FALSE
Bloom's: Understand
1
5) Shadow price analysis is widely used to help management find the best trade-off between
costs and benefits for a problem.
Answer: TRUE
Difficulty: 1 Easy
Topic: The Effect of Single Changes in a Constraint
Learning Objective: Predict how the value in the objective cell would change if a small change
were to be made in the right-hand side of one or more of the functional constraints.
Bloom's: Remember
6) When certain parameters of a model represent managerial policy decisions, what-if analysis
provides information about what the impact would be of altering these policy decisions.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
7) The term "allowable range for an objective function coefficient" refers to a constraint's
right-hand side quantity.
Answer: FALSE
Difficulty: 1 Easy
Topic: The Effect of Changes in One Objective Function Coefficient
Learning Objective: Find how much any single coefficient in the objective function can change
without changing the optimal solution.
Bloom's: Remember
2
8) The allowable range for an objective function coefficient assumes that the original estimates
for all the other coefficients are completely accurate so that this is the only one whose true value
may differ from its original estimate.
Answer: TRUE
Explanation: value may differ from its original estimate.
Topic: The Effect of Simultaneous Changes in Objective Function Coefficients
Bloom's: Understand
9) A shadow price indicates how much the optimal value of the objective function will increase
per unit increase in the right-hand side of a constraint.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
10) When maximizing profit in a linear programming problem, the allowable increase and
allowable decrease columns in the sensitivity report make it possible to find the range over
which the profitability does not change.
Answer: FALSE
Bloom's: Understand
3
11) Changing the objective function coefficients may or may not change the optimal solution,
but it will always change the value of the objective function.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
12) Every change in the value of an objective function coefficient will lead to a changed optimal
solution.
Answer: FALSE
Bloom's: Understand
13) When a change in the value of an objective function coefficient remains within the allowable
range, the optimal solution will also remain the same.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
14) According to the 100% rule for simultaneous changes in objective function coefficients, if
the sum of the percentage changes exceeds 100%, the optimal solution definitely will change.
Answer: FALSE
Learning Objective: Evaluate simultaneous changes in objective function coefficients to
determine whether the changes are small enough that the original optimal solution must still be
optimal.
Bloom's: Understand
4
15) Whenever proportional changes are made to all the unit profits in a problem, the optimal
solution will remain the same.
Answer: TRUE
Difficulty: 1 Easy
optimal.
Bloom's: Remember
16) The term "allowable range for the right-hand-side" refers to coefficients of the objective
function.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Find how much the right-hand side of a single functional constraint can
change before this prediction becomes no longer valid.
Bloom's: Remember
17) If the change to a right-hand side is within the allowable range, the value of the shadow price
remains valid.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
5
18) If the change to a right-hand side is within the allowable range, the solution will remain the
same.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
19) A shadow price tells how much a decision variable can be increased or decreased without
changing the value of the solution.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
20) The allowable range gives ranges of values for the objective function coefficients within
which the values of the decision variables are optimal.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
21) When a change occurs in the right-hand side values of one of the constraints, a proportional
change will occur in one of the coefficients of the objective function.
Answer: FALSE
Bloom's: Understand
6
22) Managerial decisions regarding right-hand sides are often interrelated and so frequently are
considered simultaneously.
Answer: TRUE
Topic: The Effect of Simultaneous Changes in the Constraints
Learning Objective: Evaluate simultaneous changes in right-hand sides to determine whether the
changes are small enough that this prediction must still be valid.
Bloom's: Understand
23) If the sum of the percentage changes of the right-hand sides does not exceed 100%, then the
solution will definitely remain optimal.
Answer: FALSE
Bloom's: Understand
24) A parameter analysis report re-solves the problem for a range of values of a data cell.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Use Parameters with Analytic Solver to systematically investigate the effect
of changing either one or two data cells to various other trial values.
Bloom's: Remember
25) A parameter analysis report can only be used to investigate changes in a single data cell at a
time.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
7
26) A parameter analysis report can be used to easily investigate the changes in any number of
data cells.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
27) A shadow price reflects which of the following in a maximization problem?

A) The marginal cost of adding additional resources.
B) The marginal gain in the objective value realized by adding one unit of a resource.
C) The marginal loss in the objective value realized by adding one unit of a resource.
D) The marginal gain in the objective value realized by subtracting one unit of a resource.
E) None of the choices is correct.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
28) In linear programming, what-if analysis is associated with determining the effect of
changing:
I. objective function coefficients.

II. right-hand side values of constraints.
III. decision variable values.
A) objective function coefficients and right-hand side values of constraints.
B) right-hand side values of constraints and decision variable values.
C) objective function coefficients, right-hand side values of constraints, and decision variable
values.
D) objective function coefficients and decision variable values.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
8
29) What-if analysis can:
I. be done graphically for problems with two decision variables.

II. reduce a manager's confidence in the model that has been formulated.
III. increase a manager's confidence in the model that has been formulated.
A) I only.
B) II only.
C) III only.
D) All of the these.
E) I and III only.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
30) What-if analysis:

A) may involve changes in the objective function coefficients.
B) requires that only one parameter change while the rest are held fixed.
C) may involve changes in the right-hand side values.
D) All of the choices are correct.
Answer: D
Bloom's: Understand
9
31) If a change is made in only one of the objective function coefficients:
A) the slope of the objective function line always will change.
B) the optimal solution always will change.
C) one or more of the decision variables always will change.
Answer: A
Learning Objective: Enumerate the different kinds of changes in the model that can be
considered by what-if analysis.
Bloom's: Understand
32) If the right-hand side value of a constraint in a two variable linear programming problems is
changed, then:
A) the optimal measure of performance may change.
B) a parallel shift must be made in the graph of that constraint.
C) the optimal values for one or more of the decision variables may change.
Answer: D
Bloom's: Understand
33) Which of the following are benefits of what-if analysis?

A) It pinpoints the sensitive parameters of the model.
B) It gives the new optimal solution if conditions change.
C) It tells management what policy decisions to make.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
10
34) When even a small change in the value of a coefficient in the objective function can change
the optimal solution, the coefficient is called:
A) optimal.
B) sensitive.
C) out of the range.
D) within the range.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
35) In a problem with 4 decision variables, the 100% rule indicates that each objective
coefficient can be safely increased by what amount without invalidating the current optimal
solution?
A) 25%.
B) 25% of the allowable increase of that coefficient.
C) 100%.
D) 25% of the range of optimality.
E) It can't be determined from the information given.
Answer: B
Explanation: With 4 decision variables an increase of 25% of the allowable increase would
result in a total change of 100% (4 × 25%), which does not violate the 100% rule.
optimal.
Bloom's: Analyze
11
36) variable cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
What is the optimal objective function value for this problem?

A) It cannot be determined from the given information.
B) $7.78
C) $240
D) $90
E) $330
Answer: E
Learning Objective: Describe how the spreadsheet formulation of the problem can be used to
perform any of these kinds of what-if analysis.
Bloom's: Evaluate
12
37) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
What is the allowable range for the objective coefficient for Activity 2?
A) −10 ≤ A2 ≤ 50
B) −44 ≤ A2 ≤ 16
C) −4 ≤ A2 ≤ 56
D) 30 ≤ A2 ≤ 90
E) 20 ≤ A2 ≤ 80
Answer: D
Explanation: The objective coefficient for Activity 2 is 40. The allowable decrease is 10 and the
allowable increase is 50. Therefore, the allowable range for this objective coefficient is (40 − 10)
≤ A2 ≤ (40 + 50) → 30 ≤ A2 ≤ 90 .(40-10)≤A2≤(40+50)→30≤A2≤90
(40-10)≤A2≤(40+50)→30≤A2≤90
Bloom's: Apply
13
38) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
What is the allowable range for the right-hand-side for Resource C?

A) 18 ≤ RHSc ≤
∞
B) ∞ ≤ RHSc ≤ 62
C) −2 ≤RHSc ≤
∞
D) − ∞ ≤ RHSc ≤
40
E) 0 ≤ RHSc ≤ 22
Answer: A
Explanation: The right-hand side for Resource C is 40. The allowable decrease is 22 and the
allowable increase is ∞ (infinity). Therefore, the allowable range for this right-hand side is (40 −
22) ≤ RHSc ≤ (40 + ∞ ) → 18 ≤ RHSc ≤ ∞.
Bloom's: Understand
14
39) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the coefficient for Activity 1 in the objective function changes to $40, then the objective
function value:
A) will increase by $77.80.

B) will increase by $23.
C) will increase by $30.
D) will remain the same.
E) can only be discovered by resolving the problem.
Answer: C
Explanation: Increasing the objective function coefficient for Activity 1 to 40 is an increase of
10 (40 − 30 = 10). Since the allowable increase for this objective function coefficient is 23, this
is within the allowable range and the optimal solution will not change. The final value for
Activity 1 is 3, so increasing the objective function coefficient by 10 leads to an increase in the
objective function of 30 {(40 − 30) × 3 = 30}.
Difficulty: 3 Hard
Bloom's: Evaluate
15
40) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
function value:
A) will increase by $70.
B) is $0.
E) will increase by an unknown amount.
Answer: E
10 (30 − 20 = 10). Since the allowable increase for Activity 3 is 7, this change exceeds the
allowable increase and the impact on the optimal solution cannot be determined without
re-running the optimization.
Difficulty: 3 Hard
Bloom's: Analyze
16
41) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the coefficient of Activity 1 in the objective function changes to $10, then:

A) the original solution remains optimal.
B) the problem must be resolved to find the optimal solution.
C) the shadow price is valid.
D) the shadow price is not valid.
E) None of the above.
Answer: B
Explanation: Decreasing the objective function coefficient for Activity 1 to 10 is a decrease of
20 (30 − 10 = 20). Since the allowable decrease for Activity 1 is 17, this change exceeds the
allowable decrease and the impact on the optimal solution cannot be determined without
Difficulty: 3 Hard
Bloom's: Analyze
17
42) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the right-hand side of Resource A changes to 10, then the objective function value:
A) will decrease by $12.50.

B) will decrease by $125.
C) will decrease by $77.80.
Answer: C
Explanation: Decreasing the constraint right-hand side for Resource A to 10 is a decrease of 10
(20 − 10 = 10). Since the allowable decrease for this constraint right-hand side is 12.5, this is
within the allowable range and the shadow price still applies. A decrease of 10 in the constraint
right-hand side leads to a decrease of 77.80 in the objective function—multiply the change in the
constraint right-hand side by the shadow price {(20 − 10) × 7.78 = 77.80}.
Difficulty: 3 Hard
Bloom's: Evaluate
18
43) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the right-hand side of Resource B changes to 10, then the objective function value:
A) will decrease by $120.
B) will decrease by $60.
C) will decrease by $20.
Answer: E
Explanation: Decreasing the constraint right-hand side for Resource B to 10 is a decrease of 20
(30 − 10 = 20). Since the allowable decrease for Resource B is 10, this change exceeds the
Bloom's: Understand
19
44) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 −7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the right-hand side of Resource B changes to 10, then:

Answer: D
(30 − 10 = 20). Since the allowable decrease for Resource B is 10, this change exceeds the
Bloom's: Understand
20
45) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the coefficients of Activity 1 and Activity 2 in the objective function are both increased by
$10, then:
A) the optimal solution remains the same.

B) the optimal solution may or may not remain the same.
C) the optimal solution will change.
D) the shadow prices are valid.
Answer: A
Explanation: Applying the 100% rule, the change in Activity 1 is 43.48% of the allowable
increase . The change in Activity 2 is 20% of the allowable increase
. The total change of 6.3.48% (43.48% + 20%) does not exceed 100%, so the
optimal solution will not change.
Difficulty: 3 Hard
optimal.
Bloom's: Evaluate
21
46) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
If the right-hand side of Resource B is increased by 30, and the right-hand side of Resource C is
decreased by 10, then:
B) the optimal solution will change.
C) the shadow prices are valid.
D) the shadow prices may or may not be valid.
Answer: D
Explanation: Both changes are within the allowable range for the resources. Applying the 100%
rule, the change in Resource B is 60% of the allowable increase . The change in
Resource C is 45.5% of the allowable decrease . The total change of 105.5%
(60% + 45.5%) is greater than 100%, so the shadow prices may or may not remain valid.
Bloom's: Understand
22
47) Variable cells
$B$6 Activity 1 3 0 30 23 17
$C$6 Activity 2 6 0 40 50 10
$D$6 Activity 3 0 –7 20 7 1E+30
Constraints
$E$2 Resource A 20 7.78 20 10 12.5
$E$3 Resource B 30 6 30 50 10
$E$4 Resource C 18 0 40 1E+30 22
Which parameter is most sensitive to an increase in its value?

A) The objective coefficient of Activity 1.
B) The objective coefficient of Activity 2.
C) The objective coefficient of Activity 3.
Answer: C
Explanation: The allowable increase for Activity 3 (7 according to the sensitivity report) is
smaller than the allowable increases for both Activity 1 (allowable increase of 23) and Activity 2
(allowable increase of 50).
Bloom's: Understand
23
48) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
What is the optimal objective function value for this problem?

A) It cannot be determined from the given information.
B) 1,200
C) 975
D) 8,250
E) 500
Answer: D
Explanation: The objective function value is calculated by multiplying the final value of each
variable by the appropriate objective function coefficient. (425 × 0) + (300 × 27.5) + (400 × 0) =
8,250.
Difficulty: 3 Hard
Bloom's: Analyze
24
49) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
What is the allowable range for the objective function coefficient for Activity 3?
A) 150 ≤ A3 ≤ ∞
B) 0 ≤ A3 ≤ 650
C) 0 ≤ A3 ≤ 250
D) 400 ≤ A3 ≤ ∞
E) 300 ≤ A3 ≤ 500
Answer: A
Explanation: The objective coefficient for Activity 3 is 400. The allowable decrease is 250 and
the allowable increase is ∞ (infinity). Therefore, the allowable range for this objective coefficient
is (400 − 250) ≤ A3 ≤ (40 + ∞) → 150 ≤ A3 ∞.
Difficulty: 3 Hard
Bloom's: Analyze
25
50) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
What is the allowable range of the right-hand-side for Resource A?

A) –∞ ≤ RHSA ≤ 60
B) 0 ≤ RHSA ≤ 110
C) –∞ ≤ RHSA ≤ 110
D) 110 ≤ RHSA ≤ 1600
E) 0 ≤ RHSA ≤ 160
Answer: C
Explanation: The right-hand side for Resource A is 60. The allowable decrease is ∞ (infinity)
and the allowable increase is 50. Therefore, the allowable range for this right-hand side is (60 –
∞ ) ≤ RHSA ≤ (60 + 50 ) → −∞ ≤ RHSA ≤ 110.
Difficulty: 3 Hard
Bloom's: Analyze
26
51) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
function value:
A) will increase by $7,500.

B) will increase by $2,750.
Answer: B
100 (400 − 300 = 100). Since the allowable increase for Activity 2 is 500, this change is within
the range of optimality and the final values for the variables will not change. The new objective
function value is calculated by multiplying the final value of each variable by the appropriate
objective function coefficient. (425 × 0) + (400 × 27.5) + (400 × 0) = 11,000, which is an
increase of 2,750 over the original objective function value of 8,250.
Difficulty: 3 Hard
Bloom's: Analyze
27
52) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
function value:
B) is $0.
C) will decrease by $2750.
Answer: E
450 (500 − 50 = 450). Since the allowable decrease for Activity 1 is 425, this change exceeds the
Bloom's: Understand
28
53) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
If the coefficient of Activity 2 in the objective function changes to $100, then:

Answer: A
200 (300 − 100 = 200). Since the allowable decrease for Activity 2 is 300, this change is within
the range of optimality and the final values for the variables will not change.
Bloom's: Understand
29
54) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
If the right-hand side of Resource B changes to 80, then the objective function value:

B) will decrease by $1,500.
C) will decrease by $2,250.
Answer: C
(110 − 80 = 30). Since the allowable decrease for this constraint right-hand side is 46, this is
within the allowable range and the optimal solution remains unchanged. A decrease of 20 in the
constraint right-hand side leads to a decrease of 2,250 in the objective function—multiply the
change in the constraint right-hand side by the shadow price {(110 − 80) × 75 = 2,250}.
Difficulty: 3 Hard
Bloom's: Analyze
30
55) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
If the right-hand side of Resource C changes to 140, then the objective function value:
A) will increase by $137.50.
B) will increase by $57.50.
Answer: E
Explanation: Increasing the constraint right-hand side for Resource C to 140 is an increase of 60
(140 − 80 = 60). Since the allowable increase for Resource C is 57.5, this change exceeds the
Bloom's: Understand
31
56) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
If the right-hand side of Resource C changes to 130, then:

Answer: C
Explanation: Increasing the constraint right-hand side for Resource C to 130 is an increase of 50
(130 − 80 = 50). Since the allowable increase for Resource C is 57.5, this change is within the
allowable limits and the shadow prices remain valid.
Bloom's: Understand
32
57) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
If the objective coefficients of Activity 2 and Activity 3 are both decreased by $100, then:

B) the optimal solution may or may not remain the same.
C) the optimal solution will change.
D) the shadow prices are valid.
Answer: A
decrease . The change in Activity 3 is 40% of the allowable decrease
. The total change of 63.53% (23.53% + 40%) does not exceed 100%, so the
Difficulty: 3 Hard
optimal.
Bloom's: Analyze
33
58) Variable cells
$B$6 Activity 1 0 425 500 1E+30 425
$C$6 Activity 2 27.5 0.0 300 500 300
$D$6 Activity 3 0 250 400 1E+30 250
Constraints
$E$2 Benefit A 110 0 60 50 1E+30
$E$3 Benefit B 110 75 110 1E+30 46
$E$4 Benefit C 137.5 0 80 57.5 1E+30
If the right-hand side of Resource C is increased by 40, and the right-hand side of Resource B is
decreased by 20, then:
B) the optimal solution will change.
D) the shadow price may or may not be not valid.
Answer: D
Explanation: Both changes are within the allowable increase/decrease. Applying the 100% rule,
the change in Resource B is 43.48% of the allowable decrease . The change in
Resource C is 69.57% of the allowable increase . The total change of 113%

(43.48% + 69.57%) is greater than 100%, so the shadow prices do not necessarily remain valid.
Difficulty: 3 Hard
Bloom's: Analyze
34
59) A parameter analysis report can be used to investigate the changes in how many data cells at
a time?
A) 1
B) 2
C) 3
D) All of the these.
E) 1 or 2.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
60) The allowable range for an objective function coefficient indicates

A) The prices a firm is allowed to charge for its product.
B) The largest error in estimating objective coefficients that will not affect the optimal solution.
C) The amount of each resource available for use.
D) The shadow price of each resource.
E) The price a firm would be willing to obtain more of a resource.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
35
61) To determine if an increase in an objective function coefficient will lead to a change in final
values for decision variables, an analyst can do which of the following?
I. Compare the increase in the objective function coefficient to the allowable decrease.
II. Compare the increase in the objective function coefficient to the allowable increase.
III. Rerun the optimization to see if the final values change.
A) I only.
B) II only.
C) III only.
D) I and III only.
E) II and III only.
Answer: E
Bloom's: Understand
62) The Solver report that shows the allowable ranges for objective function coefficients,
allowable ranges for constraint right-hand sides, and shadow prices is called the
A) Range report.
B) Sensitivity report.
C) Parameter report.
D) Solution report.
E) Answer report.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
36
63) Activity 1 has an objective function coefficient allowable increase of 30. Activity 2 has an
objective function coefficient allowable increase of 60. If both activities objective function
coefficient increases by 20, what will happen to the final values in the optimal solution?
A) The optimal solution remains the same.
B) The optimal solution may or may not remain the same.
C) The optimal solution will change.
D) The shadow prices are valid.
Answer: A
decrease .The change in Activity 2 is 33.33% of the allowable decrease
. The total change of 100% (66.67% + 33.33%) does not exceed 100%, so the
Difficulty: 3 Hard
optimal.
Bloom's: Analyze
64) Resource B has right-hand side allowable decrease of 50. Resource C has right-hand side
allowable decrease of 100. If the right-hand side of Resource B decreases by 30 and the
right-hand side of Resource C decreases by 40, then
C) the shadow prices remain valid.
D) the shadow prices do not remain valid.
Answer: C
Explanation: Applying the 100% rule, the change in Resource B is 60% of the allowable
decrease .The change in Resource C is 40% of the allowable decrease
. The total change of 100% (60% + 40%) does not exceed 100%, so the shadow
prices remain valid.
Difficulty: 3 Hard
optimal.
37
Bloom's: Analyze
65) Note: This question requires access to Solver.

In the following linear programming problem, what is the allowable increase for the objective
function coefficient for variable x?

5x + 2y ≤ 10
and x ≥ 0, y ≥ 0.
A) 3
B) 4.5
C) 9
D) 15
E) ∞ (infinity)
Answer: B
Explanation: The sensitivity report (see below) shows that the allowable increase for variable x
is 4.5.
Variable cells
$B$3 x 0 –4.5 3 4.5 1E+30
$C$4 y 3 0 15 1E+30 9
Constraints
$F$9 *y = 12 3.75 12 8 12
$F$10 *y = 6 0 10 1E+30 4
Bloom's: Analyze
AACSB: Technology
38
In the following linear programming problem, what is the allowable increase in the right-hand
side of the first constraint?

5x + 2y ≤ 10
and x ≥ 0, y ≥ 0.
A) 8
B) 10
C) 12
D) 15
E) ∞ (infinity)
Answer: A
Explanation: The sensitivity report (see below) shows that the allowable increase for the
right-hand side of constraint 1 is 8.
Variable cells
$B$3 x 0 –4.5 3 4.5 1E+30
$C$4 y 3 0 15 1E+30 9
Constraints
$F$9 *y = 12 3.75 12 8 12
$F$10 *y = 6 0 10 1E+30 4
Bloom's: Analyze
AACSB: Technology
39
In the following linear programming problem, how much would the firm be willing to pay for an
additional 5 units of Resource A?

subject to 2x + 4y ≤ 12 (Resource A)
5x + 2y ≤ 10 (Resource B)
and x ≥ 0, y ≥ 0.
A) It is impossible to determine.
B) 7.50
C) 11.25
D) 15
E) 18.75
Answer: E
right-hand side of the first constraint is 8. Since the change is within this allowable increase, the
shadow price remains valid. Therefore, the firm would be willing to pay up to 18.75 {5x3.75}
for the additional 5 units of Resource A.
Variable cells
$B$3 x 0 –4.5 3 4.5 1E+30
$C$4 y 3 0 15 1E+30 9
Constraints
$F$9 *y = 12 3.75 12 8 12
$F$10 *y = 6 0 10 1E+30 4
Difficulty: 3 Hard
Bloom's: Analyze
AACSB: Technology
40
In the following linear programming problem, how much would the firm be willing to pay for an
additional 5 units of Resource B?

subject to 2x + 4y ≤ 12 (Resource A)
5x + 2y ≤ 10 (Resource B)
and x ≥ 0, y ≥ 0.
A) Nothing
B) 11.25
C) 15
D) 18.75
E) It is impossible to determine.
Answer: A
right-hand side of the second constraint is ∞ (infinity). Since the change is within this allowable
increase, the shadow price remains valid. However, the shadow price of 0 indicates that the firm
does not require any more of Resource B, so the firm will not be willing to pay anything to
obtain 5 additional units.
Variable cells
$B$3 x 0 –4.5 3 4.5 1E+30
$C$4 y 3 0 15 1E+30 9
Constraints
$F$9 *y = 12 3.75 12 8 12
$F$10 *y = 6 0 10 1E+30 4
Difficulty: 3 Hard
Bloom's: Analyze
AACSB: Technology
41
69) In robust optimization, what is meant by the term "soft constraint"?
A) A constraint that is not violated.
B) A constraint that has a shadow price of zero.
C) A constraint that can be violated slightly without serious repercussions.
D) A constraint that can be violated dramatically without serious repercussions.
E) A constraint that cannot be violated.
Answer: C
Difficulty: 1 Easy
Topic: Robust Optimization
Learning Objective: Describe the goal of robust optimization and how it is implemented with
independent parameters.
Bloom's: Remember
70) In robust optimization, what is meant by the term "hard constraint"?

A) A constraint that is not violated.
B) A constraint that has a shadow price of zero.
C) A constraint that can be violated slightly without serious repercussions.
D) A constraint that can be violated dramatically without serious repercussions.
E) A constraint that cannot be violated.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
71) One approach to robust optimization is to modify the original optimization problem by
A) Assigning average values to each uncertain parameter.
B) Assigning conservative values to each uncertain parameter.
C) Assigning optimistic values to each uncertain parameter.
D) Assigning random values to each uncertain parameter.
E) Assigning precise values to each uncertain parameter.
Answer: B
Bloom's: Understand
42
72) When conducting robust optimization
I. The right-hand side of each ≤ constraint should be replaced with the minimum value.
II. The right-hand side of each ≤ constraint should be replaced with the maximum value.
III. The right-hand side of each ≥ constraint should be replaced with the maximum value.
A) I only
B) II only
C) III only
D) I and III only
E) II and III only
Answer: D
Bloom's: Understand
73) When conducting robust optimization
I. Use the maximum value of each objective function coefficient for a maximization problem.
II. Use the minimum value of each objective function coefficient for a maximization problem.
III. Use the maximum value of each objective function coefficient for a minimization problem.
A) I only
B) II only
C) III only
D) I and III only
E) II and III only
Answer: E
Bloom's: Understand
43
74) A chance constraint
I. Replaces the right-hand side with the minimum value.

II. Allows the objective function coefficients to be replaced with random numbers.
III. Ensures that the chance constraint will never be violated.
IV. Can be used to model a soft constraint which can be violated at times.
A) I only
B) II only
C) III only
D) IV only
E) I and II only
Answer: D
Topic: Chance Constraints With Analytic Solver
Learning Objective: Use chance constraints to deal with constraints that actually can be violated
a little bit.
Bloom's: Understand
75) Chance constraints are an available option in
I. Graphical linear programming.

II. The Solver tool included with Excel.
III. Analytic Solver.
A) I only
B) II only
C) III only
D) II and III only
E) I, II, and III
Answer: C
Topic: Chance Constraints With Analytic Solver
Learning Objective: Use chance constraints to deal with constraints that actually can be violated
a little bit.
Bloom's: Understand
44
Chapter 6 Network Optimization Problems
1) Network representations can be used for financial planning.
Answer: TRUE
Difficulty: 1 Easy
Topic: Minimum-Cost Flow Problems
Learning Objective: Identify some areas of application for these types of problems.
Bloom's: Remember
2) A network representation is a very specific conceptual aid and is only used in special cases.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Formulate network models for various types of network optimization
problems.
Bloom's: Remember
3) All network optimization problems actually are special types of linear programming problems.
Answer: FALSE
Learning Objective: Describe the characteristics of minimum-cost flow problems, maximum
flow problems, and shortest path problems.
Bloom's: Understand
4) Minimum cost flow problems are the special type of linear programming problem referred to
as distribution-network problems.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
1
5) A minimum cost flow problem may be summarized by drawing a network only after writing
out the full formulation.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Understand
6) The model for any minimum cost flow problem is represented by a network with flow passing
through it.
Answer: TRUE
Difficulty: 1 Easy
problems.
Bloom's: Remember
7) Each node in a minimum cost flow problem where the net amount of flow generated is a fixed
positive number is a demand node.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Understand
8) Conservation of flow is achieved when the flow through a node is minimized.
Answer: FALSE
Bloom's: Understand
2
9) Any node where the net amount of flow generated is fixed at zero is a transshipment node.
Answer: TRUE
Difficulty: 1 Easy
problems.
Bloom's: Remember
10) The amount of flow that is eventually sent through an arc is called the capacity of that arc.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
11) In a minimum cost flow problem there can be only one supply node and only one demand
node.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
12) In a feasible minimum cost flow problem, the network has enough arcs with sufficient
capacity to enable all the flow generated at the supply nodes to reach all the demand nodes.
Answer: TRUE
Difficulty: 1 Easy
problems.
Bloom's: Remember
3
13) In a minimum cost flow problem, the cost of the flow through each arc is proportional to the
amount of that flow.
Answer: TRUE
Difficulty: 1 Easy
problems.
Bloom's: Remember
14) The objective of a minimum cost flow problem is to minimize the total cost of sending the
available supply through the network even if all demand is not satisfied.
Answer: FALSE
Bloom's: Understand
15) A minimum cost flow problem will have feasible solutions as long as there is a balance
between the total supply from the supply nodes and the total demand at the demand nodes.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
16) As long as all its supplies and demands have integer values, any minimum cost flow problem
is guaranteed to have an optimal solution with integer values.
Answer: TRUE
Bloom's: Understand
4
17) The network simplex method can be used to solve minimum cost flow problems with over a
million arcs.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
18) The network simplex method can aid managers in conducting what-if analysis.
Answer: TRUE
Topic: A Case Study: The BMZ Co. Maximum Flow Problem
Bloom's: Understand
19) A transportation problem is just a minimum cost flow problem without any transshipment
nodes and without any capacity constraints on the arcs.
Answer: TRUE
Bloom's: Understand
20) Any minimum cost flow problem where each arc can carry any desired amount of flow is a
transshipment problem.
Answer: TRUE
problems.
Bloom's: Understand
5
21) Maximum flow problems are concerned with maximizing the flow of goods through a
distribution network.
Answer: TRUE
Difficulty: 1 Easy
Topic: Maximum Flow Problems
Bloom's: Remember
22) In a true maximum flow problem there is only one source and one sink.
Answer: TRUE
Difficulty: 1 Easy
problems.
Bloom's: Remember
23) The source and sink of a maximum flow problem have conservation of flow.
Answer: FALSE
problems.
Bloom's: Understand
24) In a maximum flow problem, flow is permitted in both directions and is represented by a pair
of arcs pointing in opposite directions.
Answer: FALSE
problems.
Bloom's: Understand
6
25) The objective of a maximum flow problem is to maximize the total profit generated by
sending flow through a network.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
26) The source and sink of a maximum flow problem are analogous to the supply nodes and
demand nodes of a minimum cost flow problem.
Answer: TRUE
problems.
Bloom's: Understand
27) In a maximum flow problem, the source and sink have fixed supplies and demands.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
28) A maximum flow problem can be fit into the format of a minimum cost flow problem.
Answer: TRUE
problems.
Bloom's: Apply
7
29) A network model showing the geographical layout of the problem is the usual way to
represent a shortest path problem.
Answer: FALSE
Difficulty: 1 Easy
Topic: Shortest Path Problems
problems.
Bloom's: Remember
30) Shortest path problems are concerned with finding the shortest route through a network.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
31) In a shortest path problem, the lines connecting the nodes are referred to as arcs.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
32) In a shortest path problem there are no arcs permitted, only links.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
8
33) A shortest path problem is required to have only a single destination.
Answer: TRUE
problems.
Bloom's: Understand
34) When reformulating a shortest path problem as a minimum cost flow problem, each link
should be replaced by a pair of arcs pointing in opposite directions.
Answer: TRUE
problems.
Bloom's: Apply
35) Network representations can be used for the following problems:

A) project planning.
B) facilities location.
C) financial planning.
D) resource management.
E) All of the choices are correct.
Answer: E
Bloom's: Apply
9
36) Which of the following will have negative net flow in a minimum cost flow problem?
A) Supply nodes
B) Transshipment nodes
C) Demand nodes
D) Arc capacities
Answer: C
Bloom's: Understand
37) Which of the following is not an assumption of a minimum cost flow problem?
A) At least one of the nodes is a supply node.
B) There is an equal number of supply and demand nodes.
C) Flow through an arc is only allowed in the direction indicated by the arrowhead.
D) The cost of the flow through each arc is proportional to the amount of that flow.
E) The objective is either to minimize the total cost or to maximize the total profit.
Answer: B
problems.
Bloom's: Understand
38) Which of the following is an example of a transshipment node?

A) Storage facilities
B) Processing facilities
C) Short-term investment options
D) Warehouses
Answer: E
Learning Objective: Identify several categories of network optimization problems that are
special types of minimum-cost flow problems.
Bloom's: Understand
10
39) A minimum cost flow problem is a special type of:
A) linear programming problem.
B) transportation problem.
C) spanning tree problem.
D) transshipment problem.
E) maximum flow problem.
Answer: A
Difficulty: 1 Easy
problems.
Bloom's: Remember
40) Which of the following can be used to optimally solve minimum cost flow problems?
I. The simplex method.

II. The network simplex method.
III. A greedy algorithm.
A) I only.
B) II only.
C) III only.
D) I and II only.
E) All of these.
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
11
41) Which of the following problems are special types of minimum cost flow problems?
I. Transportation problems.
II. Assignment problems.
III. Transshipment problems.
IV. Shortest path problems.
A) I and II only
B) I, II, and III only
C) IV only
D) I, II, III, and IV
Answer: D
Difficulty: 1 Easy
Learning Objective: Identify several categories of network optimization problems that are
special types of minimum-cost flow problems.
Bloom's: Remember
42) For a minimum cost flow problem to have a feasible solution, which of the following must
be true?
A) There is the same number of supply nodes and demand nodes.
B) There is only one supply node and one demand node.
C) There is an equal amount of supply and demand.
D) The supply and demand must be integers.
E) The transshipment nodes must be able to absorb flow.
Answer: C
problems.
Bloom's: Understand
12
43) Which of the following is not an assumption of a maximum flow problem?
A) All flow through the network originates at one node, called the source.
B) If a node is not the source or the sink then it is a transshipment node.
C) Flow can move toward the sink and away from the sink.
D) The maximum amount of flow through an arc is given by the capacity of the arc.
E) The objective is to maximize the total amount of flow from the source to the sink.
Answer: C
problems.
Bloom's: Understand
44) What is the objective of a maximum flow problem?

A) Maximize the amount flowing through a network.
B) Maximize the profit of the network.
C) Maximize the routes being used.
D) Maximize the amount produced at the origin.
Answer: A
Bloom's: Understand
45) Which of the following could be the subject of a maximum flow problem?
A) Products
B) Oil
C) Vehicles
Answer: D
Bloom's: Apply
13
46) Which of the following is not an assumption of a shortest path problem?
A) The lines connecting certain pairs of nodes always allow travel in either direction.
B) Associated with each link or arc is a nonnegative number called its length.
C) A path through the network must be chosen going from the origin to the destination.
D) The objective is to find a shortest path from the origin to the destination.
Answer: A
problems.
Bloom's: Understand
47) Which of the following is an application of a shortest path problem?
I. Minimize total distance traveled.

II. Minimize total flow through a network.
III. Minimize total cost of a sequence of activities.
IV. Minimize total time of a sequence of activities
A) I and II only
B) I, II, and III only.
C) IV only
D) I, II, III, and IV
E) I, III, and IV only.
Answer: E
Bloom's: Apply
14
48) In a shortest path problem, when "real travel" through a network can end at more than one
node:
I. An arc with length 0 is inserted.

II. The problem cannot be solved.
III. A dummy destination is needed.
A) I only.
B) II only.
C) III only.
D) I and II only.
E) I and III only.
Answer: E
Learning Objective: Formulate and solve a spreadsheet model for a minimum-cost flow
problem, a maximum flow problem, or a shortest path problem from a description of the
problem.
Bloom's: Understand
49) A manufacturing firm has three plants and wants to find the most efficient means of meeting
the requirements of its four customers. The relevant information for the plants and customers,
along with shipping costs in dollars per unit, are shown in the table below:
Customer (requirement)
Customer 3 Customer 4
Factory (capacity) Customer 1 (25) Customer 2 (50) (125) (75)
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
Which type of network optimization problem is used to solve this problem?

A) Maximum-Cost Flow problem
B) Minimum-Cost Flow problem
C) Maximum Flow Problem
D) Minimum Flow Problem
E) Shortest Path Problem
Answer: B
problem.
Bloom's: Apply
15
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
How many supply nodes are present in this problem?

A) 1
B) 2
C) 3
D) 4
E) 5
Answer: C
Explanation: Each of the three factories is a supply node.
problem.
Bloom's: Understand
16
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
How many demand nodes are present in this problem?

A) 1
B) 2
C) 3
D) 4
E) 5
Answer: D
Explanation: Each of the four customers is a demand node.
problem.
Bloom's: Apply
17
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
How many arcs will the network have?

A) 3
B) 4
C) 7
D) 12
E) 15
Answer: D
Explanation: With 3 supply nodes and 4 demand nodes, there will be 12 {3x4} arcs in the
network.
problem.
Bloom's: Analyze
18
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
Note: This question requires Solver.

Formulate the problem in Solver and find the optimal solution. What is the optimal quantity to
ship from Factory A to Customer 2?
A) 25 units
B) 50 units
C) 75 units
D) 100 units
E) 125 units
Answer: B
Explanation: Using Solver, the optimal quantity to ship from source A to destination 2 is 50
units. The problem formulation is
(where i represents the destinations and j represents the source)
(capacity constraint for each source)
(demand constraint for each destination)

(quantity shipped must be non-negative)
Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
19
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14

Formulate the problem in Solver and find the optimal solution. What is the minimum total cost to
meet all customer requirements?
A) $4,475
B) $4,500
C) $4,775
D) $4,950
E) $5,150
Answer: A
Explanation: Using Solver, minimum cost to meet all customer demand is $4,475. The problem
formulation is

Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
20
55) A manufacturing firm has four plants and wants to find the most efficient means of meeting
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
D (250) $ 21 $ 15 $ 28 $ 12

Answer: B
problem.
Bloom's: Apply
21
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
D (250) $ 21 $ 15 $ 28 $ 12
How many supply nodes are present in this problem?

A) 1
B) 2
C) 3
D) 4
E) 5
Answer: D
Explanation: Each of the four factories is a supply node.
problem.
Bloom's: Understand
22
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
D (250) $ 21 $ 15 $ 28 $ 12
How many demand nodes are present in this problem?

A) 1
B) 2
C) 3
D) 4
E) 5
Answer: D
Explanation: Each of the four customers is a demand node.
problem.
Bloom's: Apply
23
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
D (250) $ 21 $ 15 $ 28 $ 12
How many arcs will the network have?

A) 3
B) 4
C) 7
D) 12
E) 16
Answer: E
Explanation: With 4 supply nodes and 4 demand nodes, there will be 16 {4 × 4} arcs in the
network.
problem.
Bloom's: Analyze
24
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
D (250) $ 21 $ 15 $ 28 $ 12

Formulate the problem in Solver and find the optimal solution. What is the optimal quantity to
ship from Factory B to Customer 3?
A) 25 units
B) 50 units
C) 75 units
D) 100 units
E) 125 units
Answer: C
Explanation: Using Solver, the optimal quantity to ship from source B to destination 3 is 75
units. The problem formulation is

Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
25
A (100) $ 15 $ 10 $ 20 $ 17
B (75) $ 20 $ 12 $ 19 $ 20
C (100) $ 22 $ 20 $ 25 $ 14
D (250) $ 21 $ 15 $ 28 $ 12

Formulate the problem in Solver and find the optimal solution. What is the minimum total cost to
meet all customer requirements?
A) $8,750
B) $8,950
C) $9,000
D) $9,100
E) $10,050
Answer: D
Explanation: Using Solver, minimum cost to meet all customer demand is $9,100. The problem
formulation is

Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
26
61) The figure below shows the nodes (A–I) and capacities (labelled on arcs in TB/s) of a
computer network. The firm would like to know how much information can flow from node A to
node I.

Answer: C
problem.
Bloom's: Apply
27
node I.
Which nodes are the sink and source for this problem?
A) Node A is the sink, Node I is the source.
B) Node A is the sink, Node B is the source.
C) Node B is the sink, Node I is the source.
D) Node B is the source, Node I is the sink.
E) Node A is the source, Node I is the sink.
Answer: E
problem.
Bloom's: Understand
28
node I.
How many transshipment nodes are present in this problem?

A) 6
B) 7
C) 8
D) 1
E) 2
Answer: B
problem.
Bloom's: Apply
29
node I.
What is the capacity of the connection between nodes F and H?

A) 3 TB/s
B) 4 TB/s
C) 10 TB/s
D) 14 TB/s
E) 15 TB/s
Answer: D
problem.
Bloom's: Analyze
30
node I.

Formulate the problem in Solver and find the optimal solution. At maximum capacity, what will
be the data flow between nodes F and H?
A) 3 TB/s
B) 4 TB/s
C) 10 TB/s
D) 14 TB/s
E) 15 TB/s
Answer: C
Explanation: Using Solver, the optimal quantity to ship from node F to node H is 10 TB/s. The
problem formulation is
(capacity constraint for each arc)

(flow into node equals flow out of node)
Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
31
node I.

Formulate the problem in Solver and find the optimal solution. What is the maximum amount of
data that can be transmitted from node A to node I?
A) 13 TB/s
B) 23 TB/s
C) 33 TB/s
D) 43 TB/s
E) 53 TB/s
Answer: C
Explanation: Using Solver, the optimal quantity to ship from node A to node I is 33 TB/s. The
problem formulation is

Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
32
67) The figure below shows the nodes (A–I) and capacities (labelled on arcs in packages/day) of
a shipping network. The firm would like to know how many packages per day can flow from
node A to node I.

Answer: C
problem.
Bloom's: Apply
33
node A to node I.
Which nodes are the sink and source for this problem?
A) Node A is the sink, Node I is the source.
B) Node A is the sink, Node B is the source.
C) Node B is the sink, Node I is the source.
D) Node B is the source, Node I is the sink.
E) Node A is the source, Node I is the sink.
Answer: E
problem.
Bloom's: Understand
34
node A to node I.
How many transshipment nodes are present in this problem?

A) 6
B) 7
C) 8
D) 1
E) 2
Answer: B
problem.
Bloom's: Apply
35
node A to node I.
What is the capacity of the connection between nodes B and E?

A) 9 packages/day
B) 11 packages/day
C) 16 packages/day
D) 21 packages/day
E) 26 packages/day
Answer: D
problem.
Bloom's: Analyze
36
node A to node I.

Formulate the problem in Solver and find the optimal solution. At maximum capacity, what will
be the flow between nodes B and E?
A) 9 packages/day
B) 11 packages/day
C) 16 packages/day
D) 21 packages/day
E) 26 packages/day
Answer: A
Explanation: Using Solver, the optimal quantity to ship from node B to node E is 9
packages/day. The problem formulation is

Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
37
72) The figure below shows the possible routes from city A to city M as well as the cost (in
dollars) of a trip between each pair of cities (note that if no arc joins two cities it is not possible
to travel non-stop between those two cities). A traveler wishes to find the lowest cost option to
travel from city A to city M.

B) Average-Cost Flow problem
Answer: E
problem.
Bloom's: Apply
38
73) The figure below shows the nodes (A – I) and capacities (labelled on arcs in packages/day)
of a shipping network. The firm would like to know how many packages per day can flow from
node A to node I.

Formulate the problem in Solver and find the optimal solution. What is the maximum amount of
data that can be transmitted from node A to node I?
A) 13 packages/day.
B) 23 packages/day.
C) 34 packages/day.
D) 43 packages/day.
E) 53 packages/day.
Answer: C
Explanation: Using Solver, the maximum quantity to ship from node A to node I is 34
packages/day. The problem formulation is

Difficulty: 3 Hard
problem.
Bloom's: Analyze
AACSB: Technology
39
Which nodes are the origin and destination for this problem?
A) Node A is the origin, Node I is the destination.
B) Node A is the origin, Node M is the destination.
C) Node B is the origin, Node I is the destination.
D) Node B is the destination, Node I is the origin.
E) Node A is the destination, Node I is the origin.
Answer: B
problem.
Bloom's: Understand
40
Which of the following paths would be infeasible?

A) A-B-D-G-J-L-M
B) A-B-E-G-J-L-M
C) A-C-F-H-K-M
D) A-B-D-G-I-M
E) A-C-F-I-G-J-L-M
Answer: C
problem.
Bloom's: Apply
41
What is the cost of the connection between nodes K and I?

A) 9
B) 11
C) 16
D) 21
E) 26
Answer: B
problem.
Bloom's: Analyze
42

Formulate the problem in Solver and find the optimal solution. Which of the following nodes are
not visited?
A) A
B) B
C) C
D) A and B
E) A and C
Answer: E
Explanation: Using Solver, the optimal solution includes visiting nodes A and C, but not node
B. The problem formulation is:
(where i and j a re the start and end of each arc)
(traveler must leave node A exactly once)

(traveler must arrive at node M exactly once)
(flow into node equals flow out of node for all nodes
except nodes A and M)
Difficulty: 3 Hard
problem.
Bloom's: Analyze
43
AACSB: Technology

Formulate the problem in Solver and find the optimal solution. What is the minimum cost for the
traveler to move from node A to node M?
A) $76
B) $86
C) $96
D) $106
E) $116
Answer: D
Explanation: Using Solver, the minimum cost is $106. The problem formulation is:
(where i and j a re the

start and end of each arc)

(traveler must arrive at node M exactly once)
(flow into node equals flow out of node for all nodes except nodes
A and M)
Difficulty: 3 Hard
44
problem.
Bloom's: Analyze
AACSB: Technology
79) The figure below shows the possible routes from city A to city J as well as the time (in
minutes) required for a trip between each pair of cities (note that if no arc joins two cities it is not
possible to travel non-stop between those two cities). A traveler wishes to find the quickest
option to travel from city A to city J.

B) Average-Cost Flow problem
Answer: E
problem.
Bloom's: Apply
45
Which nodes are the origin and destination for this problem?
A) Node A is the origin, Node J is the destination.
B) Node A is the origin, Node M is the destination.
C) Node B is the origin, Node I is the destination.
D) Node B is the destination, Node I is the origin.
E) Node A is the destination, Node I is the origin.
Answer: A
problem.
Bloom's: Understand
46
Which of the following paths would be infeasible?

A) A-B-C-E-G-I-J
B) A-B-C-F-E-G-I-J
C) A-B-D-G-I-J
D) A-C-F-J
E) A-C-F-E-G-I-J
Answer: A
problem.
Bloom's: Apply
47
What is the time to travel between nodes F and J?

A) 120
B) 140
C) 160
D) 180
E) 200
Answer: A
problem.
Bloom's: Analyze
48

Formulate the problem in Solver and find the optimal solution. Which of the following nodes are
not visited?
A) B
B) E
C) H
D) B and E
E) E and H
Answer: D
Explanation: Using Solver, the optimal solution includes visiting node H, but not nodes B and E.
The problem formulation is:

(traveler must arrive at node J exactly once)
except nodes A and J)
Difficulty: 3 Hard
problem.
Bloom's: Analyze
49
AACSB: Technology

Formulate the problem in Solver and find the optimal solution. What is the minimum cost for the
traveler to move from node A to node J?
A) 305 minutes
B) 310 minutes
C) 315 minutes
D) 320 minutes
E) 325 minutes
Answer: A
Explanation: Using Solver, the minimum time is 305 minutes. The problem formulation is:

(traveler must arrive at node J exactly once)
except nodes A and J)
Difficulty: 3 Hard
50
problem.
Bloom's: Analyze
AACSB: Technology
51
Chapter 7 Using Binary Integer Programming to Deal with Yes-or-No Decisions
1) Binary integer programming problems are those where all the decision variables restricted to
integer values are further restricted to be binary variables.
Answer: TRUE
Difficulty: 1 Easy
Topic: A Case Study: The California Manufacturing Co. Problem
Learning Objective: Describe how binary decision variables are used to represent yes-or-no
decisions.
Bloom's: Remember
2) Binary variables are variables whose only possible values are 0 or 1.
Answer: TRUE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
3) Variables whose only possible values are 0 and 1 are called integer variables.
Answer: FALSE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
4) A problems where all the variables are binary variables is called a pure BIP problem.
Answer: TRUE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
1
5) Binary variables are best suited to be the decision variables when dealing with yes-or-no
decisions.
Answer: TRUE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
6) A BIP problem considers one yes-or-no decision at a time with the objective of choosing the
best alternative.
Answer: FALSE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
7) The algorithms available for solving BIP problems are much more efficient than those for
linear programming which is one of the advantages of formulating problems this way.
Answer: FALSE
decisions.
Bloom's: Understand
8) If choosing one alternative from a group excludes choosing all of the others then these
alternatives are called mutually exclusive.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Use binary decision variables to formulate constraints for mutually
exclusive alternatives and contingent decisions.
Bloom's: Remember
2
9) The constraint x1 + x2 +
x3 ≤ 3 in a BIP represents mutually exclusive alternatives.
Answer: FALSE
Explanation: A mutually exclusive constraint allows at most one alternative to be selected (that
is, at most one variable can have a value of 1). The constraint x1 + x2 + x3 ≤ 3 allows selection of
0, 1, 2, or all 3 alternatives simultaneously.
Bloom's: Analyze
10) It is possible to have a constraint in a BIP that excludes the possibility of choosing none of
the alternatives available.
Answer: TRUE
Bloom's: Understand
11) A yes-or-no decision is a mutually exclusive decision if it can be yes only if a certain other
yes-or-no decision is yes.
Answer: FALSE
Bloom's: Understand
3
12) The constraint x1 ≤ x2 in a BIP problem means that alternative 2 cannot be selected unless
alternative 1 is also selected.
Answer: FALSE
Explanation: The constraint x1 ≤ x2 is a contingent constraint. It allows for selection of neither
alternative (x1 = x2 =
0), only the second alternative (x1 = 0, x2 = 1), or both alternatives (x1 = x2
= 1). The only action that is not allowed is selection of only the first alternative (x1 = 1, x2 =
0).
Bloom's: Analyze
13) BIP can be used in capital budgeting decisions to determine whether to invest a certain
amount.
Answer: TRUE
Difficulty: 1 Easy
Topic: Using BIP for Project Selection: The Tazer Corp. Problem
Learning Objective: Formulate a binary integer programming model for the selection of
projects.
Bloom's: Remember
14) BIP can be used to determine the timing of activities.
Answer: TRUE
Difficulty: 1 Easy
Topic: Using BIP for Crew Scheduling: The Southwestern Airways Problem
Learning Objective: Formulate a binary integer programming model for crew scheduling in the
travel industry.
Bloom's: Remember
4
15) An auxiliary binary variable is an additional binary variable that is introduced into a model to
represent additional yes-or-no decisions.
Answer: FALSE
Difficulty: 1 Easy
Topic: Using Mixed BIP to Deal with Setup Costs for Initiating Production: The Revised
Wyndor Problem
Learning Objective: Use mixed binary integer programming to deal with setup costs for
initiating the production of a product.
Bloom's: Remember
16) A linear programming formulation is not valid for a product mix problem when there are
setup costs for initiating production.
Answer: TRUE
Difficulty: 1 Easy
Wyndor Problem
Bloom's: Remember
17) The Excel sensitivity report can be used to perform sensitivity analysis for integer
programming problems.
Answer: FALSE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
5
18) A parameter analysis report can be used to perform sensitivity analysis for integer
Answer: TRUE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
19) To model a situation where a setup cost will be charged if a certain product is produced, the
best approach is to include and Excel "IF" function.
Answer: FALSE
Difficulty: 1 Easy
Wyndor Problem
Bloom's: Remember
20) In a site selection problem, a common goal is to identify the set of locations that provides
adequate service at the minimum cost.
Answer: TRUE
Difficulty: 1 Easy
Topic: Using BIP for the Selection of Sites for Emergency Services Facilities: The Caliente City
Problem
Learning Objective: Formulate a binary integer programming model for the selection of sites for
facilities.
Bloom's: Remember
6
21) In a crew scheduling problem there is no need for a set covering constraint.
Answer: FALSE
Difficulty: 1 Easy
travel industry.
Bloom's: Remember
22) If activities A and B are mutually exclusive, the constraint xA ≤ x B will enforce this
relationship in a linear program.
Answer: FALSE
Explanation: The constraint xA ≤ x B will enforce a contingent relationship between activities A
and B.
Bloom's: Understand
23) If a firm wishes to choose at most 2 of 4 possible activities (A, B, C and D), the constraint xA
+ xC + xD
+ xB ≥ 2 will enforce this relationship in a linear program.
Answer: FALSE
Explanation: The constraint xA + xB
+ xC
+ xD
≥ 2 will ensure that at least 2 of the 4 activities
are selected.
Bloom's: Understand
7

24) If a firm wishes to choose at least 2 of 4 possible activities (A, B, C and D), the constraint xA
+ xC + xD
+ xB ≥ 2 will enforce this relationship in a linear program.
Answer: FALSE
Explanation: The constraint xA + xB
+ +
xC ≥ 2 will ensure that at least 2 of the 4 activities
xD
are selected.
Bloom's: Understand
25) When binary variables are used in a linear program, the Solver Sensitivity Report is not
available.
Answer: TRUE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
26) Binary integer programming problems can answer which types of questions?
A) Should a project be undertaken?
B) Should an investment be made?
C) Should a plant be located at a particular location?
Answer: D
decisions.
Bloom's: Understand
8
27) Binary variables can have the following values:
A) 0 only.
B) 1 only.
C) any integer value less than 1.
D) 0 and 1 only.
E) any integer value greater than 1.
Answer: D
Difficulty: 1 Easy
decisions.
Bloom's: Remember
28) Binary integer programming can be used for:

A) capital budgeting.
B) site selection.
C) scheduling asset divestitures.
D) assignments of routes.
Answer: E
decisions.
Bloom's: Understand
9
29) In a BIP problem with 2 mutually exclusive alternatives, x1 and x2 , the following constraint
needs to be added to the formulation:
A) x1 + x2 ≤ 1.
B) x1 + x2 ≥ 1.
C) x1 – x2 ≤ 1.
D) x1 – x2 = 1.
Answer: A
Explanation: The constraint x1 + x2 ≤ 1 allows at most one of the two options to be selected.
Bloom's: Understand
30) In a BIP problem with 2 mutually exclusive alternatives, x1 and x2 , the following constraint
needs to be added to the formulation if one alternative must be chosen:
A) x1 + x2 ≤ 1.
B) x1 + x2 = 1.
C) x1 – x2 ≤ 1.
D) x1 – x2 = 1.
Answer: B
Explanation: The constraint x1 + x2 = 1 requires that one (and only one) of the two options be
selected.
Bloom's: Understand
10
31) In a BIP problem, 1 corresponds to a yes decision and 0 to a no decision. If project A can be
undertaken only if project B is also undertaken then the following constraint needs to be added to
the formulation:
A) A + B ≤ 1.
B) A + B = 1.
C) A ≤ B.
D) B ≤ A.
Answer: C
Explanation: The contingent constraint A ≤ B allows project B to be selected independent of A,
but requires that B is selected if A will also be selected.
Bloom's: Understand
32) In a BIP problem, 1 corresponds to a yes decision and 0 to a no decision. If there are two
projects under consideration, A and B, and either both projects will be undertaken or no project
will be undertaken, then the following constraint needs to be added to the formulation:
A) A ≤ B.
B) A + B ≤ 2.
C) A ≥ B.
D) A = B.
Answer: D
Explanation: The contingent constraint A = B requires that either both project be selected (A = B
= 1) or that neither project be selected (A = B = 0) .
projects.
Bloom's: Understand
11
33) In a BIP problem with 3 mutually exclusive alternatives, x1, x2, and x3, the following
constraint needs to be added to the formulation:
A) x1 + x2 + x3 ≤ 1.
B) x1 + x2 + x3 = 1.
C) x1 – x2 – x3 ≤ 1.
D) x1 – x2 – x3 = 1.
Answer: A
Explanation: The mutually exclusive constraint x1 + x2 +x3 ≤ 1 requires that at most one of the
projects be selected by allowing at most one of the variables to have a value of 1.
Bloom's: Understand
34) In a BIP problem, 1 corresponds to a yes decision and 0 to a no decision. If there are 4
projects under consideration (A, B, C, and D) and at most 2 can be chosen then the following
constraint needs to be added to the formulation:
A) A + B + C + D ≤ 1.
B) A + B + C + D ≤ 2.
C) A + B + C + D ≤ 4.
D) A + B + C + D = 2.
Answer: B
Explanation: The constraint A + B + C + D ≤ 2 requires that at most two of the projects be
selected by allowing at most two of the variables to have a value of 1.
projects.
Bloom's: Understand
12
35) Which of the following techniques or tools can be used to perform sensitivity analysis for an
integer programming problem?
I. The sensitivity report.

II. Trial-and-error.
III. A parameter analysis report.
A) I only
B) II only
C) III only
D) I and II only
Answer: D
decisions.
Bloom's: Understand
13
36) A firm has prepared the following binary integer program to evaluate a number of potential
locations for new warehouses. The firm's goal is to maximize the net present value of their
decision while not spending more than their currently available capital.
Max 20x1 +
30x2 + 10x3 + 15x4
s.t. 5x1 + 7x2 + 12x3 + 11x4 ≤ 21 {Constraint 1}
x1 +
x2 +
x3 + x4 ≥ 2 {Constraint 2}
x1 +
x2 ≤ 1 {Constraint 3}
x2 =
x4 {Constraint 5}
Which of the constraints enforces a mutually exclusive relationship?

A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: C
Explanation: Constraint 3 allows at most one of the two variables to have a value of 1, which is
a mutually exclusive relationship.
projects.
Bloom's: Understand
14
Max 20x1 +
30x2 + 10x3 + 15x4
x1 +
x2 +
x1 +
x2 =
x4 {Constraint 5}
Which of the constraints enforces a contingent relationship?

A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: E
Explanation: Constraint 5 requires that option 2 and option 4 will have the same decision. Each
option is contingent on the other.
projects.
Bloom's: Understand
15
Max 20x1 +
30x2 + 10x3 + 15x4
x1 +
x2 +
x1 +
x2 =
x4 {Constraint 5}
Which of the constraints ensures that at least two of the potential sites will be selected?
A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: B
Explanation: Constraint 2 requires that at least two of the variables have a value of 1.
projects.
Bloom's: Understand
16
Max 20x1 +
30x2 + 10x3 + 15x4
x1 +
x2 +
x1 +
x2 =
x4 {Constraint 5}
Which constraint ensures that the firm will not spend more capital than it has available (assume
that each potential location has a different cost)?
A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: A
Explanation: Since all locations have a different cost, constraint 1 shows each selected location
(xj = 1) will consume a limited resource (capital).
projects.
Bloom's: Understand
17
40) Note: This problem requires the use of a linear programming application such as Solver or
Analytic Solver.
A firm has prepared the following binary integer program to evaluate a number of potential
Max 20x1 +
30x2 +
10x3 + 15x4
x1 +
x2 +
x1 +
x1 + x3 ≥
1 {Constraint 4}
x2 =
x4 {Constraint 5}
Set up the problem in Excel and find the optimal solution. Which locations are selected?
A) Location 1
B) Location 2
C) Location 4
D) Locations 2 and 4
E) Locations 1 and 3
Answer: E
Explanation: The optimal solution selects locations 1 and 3 for the new warehouses.
Difficulty: 3 Hard
projects.
Bloom's: Analyze
AACSB: Technology
18
Analytic Solver.
A firm has prepared the following binary integer program to evaluate a number of potential
Max 20x1 +
30x2 +
10x3 + 15x4
x1 +
x2 +
x1 +
x1 + x3 ≥
1 {Constraint 4}
x2 =
x4 {Constraint 5}
Set up the problem in Excel and find the optimal solution. What is the expected net present value
of the optimal solution?
A) 20
B) 30
C) 35
D) 40
E) 45
Answer: B
Explanation: The optimal solution selects locations 1 and 3 for the new warehouses and has an
expected value of 30.
Difficulty: 3 Hard
projects.
Bloom's: Analyze
AACSB: Technology
19
new capital projects. The firm's goal is to maximize the net present value of their decision while
not spending more than their currently available capital.
Max 100x1 +
120x2 + 90x3 + 135x4
x1 +
x2 +
x2 +
x1 =
x4 {Constraint 5}
Which of the constraints enforces a mutually exclusive relationship?

A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: C
Explanation: Constraint 3 allows at most one of the two variables to have a value of 1, which is
a mutually exclusive relationship.
projects.
Bloom's: Understand
20
Max 100x1 +
120x2 + 90x3 + 135x4
x1 +
x2 +
x2 +
x1 =
x4 {Constraint 5}
Which of the constraints enforces a contingent relationship?

A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: E
Explanation: Constraint 5 requires that option 1 and option 4 will have the same decision. Each
option is contingent on the other.
projects.
Bloom's: Understand
21
Max 100x1 +
120x2 + 90x3 + 135x4
x1 +
x2 +
x2 +
x1 =
x4 {Constraint 5}
Which of the constraints ensures that at least two of the potential projects will be selected?
A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: B
Explanation: Constraint 2 requires that at least two of the variables have a value of 1.
projects.
Bloom's: Understand
22
Max 100x1 +
120x2 + 90x3 + 135x4
x1 + x2 +
x2 +
x1 =
x4 {Constraint 5}
Which constraint ensures that the firm will not spend more capital than it has available (assume
that each potential project has a different cost)?
A) Constraint 1
B) Constraint 2
C) Constraint 3
D) Constraint 4
E) Constraint 5
Answer: A
Explanation: Since all projects have a different cost, constraint 1 shows each selected project (xj
= 1) will consume a limited resource (capital).
projects.
Bloom's: Understand
23
Analytic Solver.
A firm has prepared the following binary integer program to evaluate a number of potential new
capital projects. The firm's goal is to maximize the net present value of their decision while not
spending more than their currently available capital.
Max 100x1 +
120x2 +
90x3 + 135x4
x1 +
x2 +
x2 +
x2 + x3 ≥
1 {Constraint 4}
x1 =
x4 {Constraint 5}
Set up the problem in Excel and find the optimal solution. Which projects are selected?
A) Project 1
B) Project 2
C) Project 4
D) Projects 2 and 3
E) Projects 1 and 3
Answer: D
Explanation: The optimal solution selects projects 2 and 3.
Difficulty: 3 Hard
projects.
Bloom's: Analyze
AACSB: Technology
24
Analytic Solver.
A firm has prepared the following binary integer program to evaluate a number of potential new
capital projects. The firm's goal is to maximize the net present value of their decision while not
spending more than their currently available capital.
Max 100x1 +
120x2 +
90x3 + 135x4
x1 +
x2 +
x2 +
x2 + x3 ≥
1 {Constraint 4}
x1 =
x4 {Constraint 5}
Set up the problem in Excel and find the optimal solution. What is the expected net present value
of the optimal solution?
A) 210
B) 220
C) 235
D) 310
E) 435
Answer: A
Explanation: The optimal solution selects projects 2 and 3 and has an expected value of 210.
Difficulty: 3 Hard
projects.
Bloom's: Analyze
AACSB: Technology
25
48) A new pizza restaurant is moving into town. The owner is considering a number of potential
sites and would like to minimize the initial investment involved with purchasing locations.
However, the owner is very concerned about delivery time and wants to make sure that every
neighborhood in the city can have a pizza delivered in 15 minutes or less. The owner has divided
the city into 10 neighborhoods (A–J) and is currently considering a total of 8 different locations.
To help with the decision, the owner formulated the following linear programming model:
Min 100x1 + 1 20x2 +

90x3 + 135x4 +75
x5 + 85x6 + 110x7 + 135x8
s.t.x1 +
x2 +
x5 + x7 ≥ 1 {Neighborhood A constraint}
x1 + x2 + x3 ≥ 1 {Neighborhood B constraint}
x5 + x6 + x8 ≥ 1 {Neighborhood C constraint}
x1 + x4 + x7 ≥ 1 {Neighborhood D constraint}
x2 + x3 + x7 ≥ 1 {Neighborhood E constraint}
x3 + x4 + x8 ≥ 1 {Neighborhood F constraint}
x2 + x5 + x7 ≥ 1 {Neighborhood G constraint}
x1 + x4 + x6 ≥ 1 {Neighborhood H constraint}
x1 + x6 + x8 ≥ 1 {Neighborhood I constraint}
x1 + x2 + x7 ≥ 1 {Neighborhood J constraint}
Which of the constraints is a set covering constraint?

A) Neighborhood A constraint
B) Neighborhood C constraint
C) Neighborhood F constraint
Answer: D
Explanation: All of the constraints (with the exception of the binary constraint) are set covering
constraints.
Problem
travel industry.
Bloom's: Understand
26
Min 100x1 + 1 20x2 +

90x3 + 135x4 +75
x5 + 85x6 + 110x7 + 135x8
s.t. x1 +
x2 +
Which of the locations is the most expensive?

A) Location 1.
B) Location 2.
C) Location 3.
D) Location 4.
E) Location 5.
Answer: D
Explanation: Because the objective is to minimize the cost of locations, the objective function
coefficient must represent the cost of each location. Therefore, location 4 (coefficient = 135) is
the most expensive of the choices.
Problem
facilities.
Bloom's: Understand
27
Min 100x1 + 1 20x2 +

90x3 + 135x4 +75
x 5 + 85x6 + 110x7 + 135x8
s.t. x1 +
x2 +
Which of the locations is within 15 minutes of neighborhoods C, H, and I?

A) Location 2
B) Location 4
C) Location 6
D) Location 8
E) None of these locations is within 15 minutes of neighborhoods C, H, and I.
Answer: C
Explanation: The variable for location 6 (x6 ) appears in the set covering constraints for
neighborhoods C, H, and I.
Problem
facilities.
Bloom's: Understand
28
Min 100x1 + 1 20x2 +

90x3 + 135x4 +75
x5 + 85x6 + 110x7 + 135x8
s.t. x1 +
x2 +
Which of the locations is NOT within 15 minutes of neighborhood A?

A) Location 1
B) Location 2
C) Location 5
D) Location 6
E) Location 7
Answer: D
Explanation: The variable for location 6 (x6 ) does not appear in the set covering constraint for
neighborhood A.
Problem
facilities.
Bloom's: Understand
29
Analytic Solver.
A new pizza restaurant is moving into town. The owner is considering a number of potential sites
and would like to minimize the initial investment involved with purchasing locations. However,
the owner is very concerned about delivery time and wants to make sure that every neighborhood
in the city can have a pizza delivered in 15 minutes or less. The owner has divided the city into
10 neighborhoods (A–J) and is currently considering a total of 8 different locations. To help with
the decision, the owner formulated the following linear programming model:
Min 100x1 + 1 20x2 +

90x3 + 135x4 +75
x5 + 85x6 + 110x7 + 135x8
s.t. x1 +
x2 +
A) Location 1
B) Location 3
C) Location 5
D) None of locations 1, 3, and 5 are selected.
E) All of locations 1, 3, and 5 are selected.
Answer: E
Explanation: The optimal solution selects locations 1, 3, and 5.
Difficulty: 3 Hard
Problem
facilities.
Bloom's: Analyze
AACSB: Technology
30
Analytic Solver.
A new pizza restaurant is moving into town. The owner is considering a number of potential sites
and would like to minimize the initial investment involved with purchasing locations. However,
the owner is very concerned about delivery time and wants to make sure that every neighborhood
in the city can have a pizza delivered in 15 minutes or less. The owner has divided the city into
10 neighborhoods (A–J) and is currently considering a total of 8 different locations. To help with
the decision, the owner formulated the following linear programming model:
Min 100x1 + 1 20x2 +

90x3 + 135x4 +75
x5 + 85x6 + 110x7 + 135x8
s.t. x1 +
x2 +
Set up the problem in Excel and find the optimal solution. What is the cost of the optimal set of
locations?
A) 210
B) 220
C) 265
D) 310
E) 435
Answer: C
Explanation: The optimal solution selects locations 1, 3, and 5 at a cost of 265.
Difficulty: 3 Hard
Problem
facilities.
Bloom's: Analyze
AACSB: Technology
31
32
54) The university administration would like to add some additional parking locations. To make
everyone happy, they would like each building to be within a 5 minute walk of one set of new
parking spaces (the spaces will be added in blocks of 10 parking spaces). The university is
considering six locations for the new parking spaces, but would like to minimize the overall cost
of the project. In addition to the walking time requirement, the university would like to add at
least 40 new parking spaces (at least 4 blocks of 10). To help with the decision, the management
science department formulated the following linear programming model:
Min 400x1 + 3 75x2 +

425x3 + 350x4 +410
x5 + 500x6
s.t. x1 +
x2 +
x5 + x6 ≥ 1 {Residence Hall A constraint}
x1 + x2 + x3 ≥ 1 {Residence Hall B constraint}
x4 + x5 + x6 ≥ 1 {Science building constraint}
x1 + x4 + x5 ≥ 1 {Music building constraint}
x2 + x3 + x4 ≥ 1 {Math building constraint}
x3 + x4 + x5 ≥ 1 {Business building constraint}
x2 + x5 + x6 ≥ 1 {Auditorium constraint}
x1 + x4 + x6 ≥ 1 {Arena constraint}
x1 + x2 + x3 + x4 + x5 +
x6 ≥ 4 {Total locations constraint}
I. Residence Hall A constraint.

II. Science building constraint.
III. Total locations constraint.
A) I only
B) II only
C) III only
D) All of these
E) I and II only
Answer: E
Explanation: All of the constraints (with the exception of the binary constraint and the Total
locations constraint) are set covering constraints.
Problem
facilities.
Bloom's: Understand
33
34
Min 400x1 + 3 75x2 +

425x3 + 350x4 +410
x5 + 500x6
s.t. x1 +
x2 +
x1 + x2 + x3 + x4 + x5 +
Which of the locations is the most expensive?

A) Location 2
B) Location 3
C) Location 4
D) Location 5
E) Location 6
Answer: E
Explanation: Because the objective is to minimize the cost of locations, the objective function
coefficient must represent the cost of each location. Therefore, location 6 (coefficient = 500) is
the most expensive of the choices.
Problem
facilities.
Bloom's: Understand
35
Min 400x1 + 3 75x2 +

425x3 + 350x4 +410
x5 + 500x6
s.t. x1 +
x2 +
x1 + x2 + x3 + x4 + x5 +
Which of the locations is within 5 minutes of the science, music, math, and business buildings?
A) Location 2
B) Location 4
C) Location 5
D) Location 6
E) None of these locations is within 5 minutes of the listed buildings.
Answer: B
Explanation: The variable for location 4 (x4 ) appears in the set covering constraints for the
science, music, math, and business buildings.
Problem
facilities.
Bloom's: Understand
36
Min 400x1 + 3 75x2 +

425x3 + 350x4 +410
x5 + 500x6
s.t. x1 +
x2 +
x1 + x2 + x3 + x4 + x5 +
Which of the locations is NOT within 5 minutes of the Arena?

A) Location 1
B) Location 2
C) Location 4
D) Location 6
E) Location 7
Answer: B
the Arena.
Problem
facilities.
Bloom's: Understand
37
Analytic Solver.
The university administration would like to add some additional parking locations. To make
Min 400x1 + 3 75x2 +

425x3 + 350x4 +410
x5 + 500x6
s.t. x1 +
x2 +
x5 + x6 ≥ 1{Residence Hall A constraint}
x1 + x2 + x3 + x4 + x5 +
A) Locations 1, 3, 4, and 5
B) Locations 1, 2, 4, and 5
C) Locations 1, 2, 3, and 5
D) Locations 2, 3, 4, and 5
E) Locations 1, 3, and 5
Answer: B
Explanation: The optimal solution selects locations 1, 2, 4, and 5.
Difficulty: 3 Hard
Problem
facilities.
Bloom's: Analyze
AACSB: Technology
38
Analytic Solver.
The university administration would like to add some additional parking locations. To make
Min 400x1 + 3 75x2 +

425x3 + 350x4 +410
x5 + 500x6
s.t. x1 +
x2 +
x1 + x2 + x3 + x4 + x5 +
locations?
A) 1,445
B) 1,535
C) 1,655
D) 1,715
E) 1,865
Answer: B
Explanation: The optimal solution selects locations 1, 2, 4, and 5 at a cost of 1,535.
Difficulty: 3 Hard
Problem
facilities.
Bloom's: Analyze
AACSB: Technology
39
40
60) The university is scheduling cleaning crews for its ten buildings. Each crew has a different
cost and is qualified to clean only certain buildings. There are eight possible crews to choose
from in this case. The goal is to minimize costs while making sure that each building is cleaned.
The management science department formulated the following linear programming model to
help with the selection process.
Min 200x1 + 2 50x2 +

225x3 + 190x4 +215
x5 + 245x6 + 235x7 + 220x8
s.t. x1 +
x2 +
x5 + x7 ≥ 1 {Building A constraint}
x1 + x2 + x3 ≥ 1 {Building B constraint}
x6 + x8 ≥ 1 {Building C constraint}
x1 + x4 + x7 ≥ 1 {Building D constraint}
x2 + x7 ≥ 1 {Building E constraint}
x3 + x8 ≥ 1 {Building F constraint}
x2 + x5 + x7 ≥ 1 {Building G constraint}
x1 + x4 + x6 ≥ 1 {Building H constraint}
x1 + x6 + x8 ≥ 1 {Building I constraint}
x1 + x2 + x7 ≥ 1 {Building J constraint}

A) Building A constraint
B) Building C constraint
C) Building F constraint
Answer: D
Explanation: All of the constraints (with the exception of the binary constraint) are set covering
constraints.
travel industry.
Bloom's: Understand
41
Min 200x1 + 2 50x2 +

225x3 + 190x4 +215
x 5 + 245x6 + 235x7 + 220x8
s.t. x1 +
x2 +
Which of the crews is the least expensive?

A) Crew 1
B) Crew 2
C) Crew 3
D) Crew 4
E) Crew 5
Answer: D
Explanation: Because the objective is to minimize the cost of crews, the objective function
coefficient must represent the cost of each location. Therefore, crew 4 (coefficient = 190) is the
least expensive of the choices.
travel industry.
Bloom's: Understand
42
Min 200x1 + 2 50x2 +

225x3 + 190x4 +215
x5 + 245x6 + 235x7 + 220x8
s.t. x1 +
x2 +
Which of the crews can be scheduled to clean buildings B and F?

A) Crew 3
B) Crew 4
C) Crew 6
D) Crew 7
E) Crew 8
Answer: A
Explanation: The variable for crew 3 (x3) appears in the set covering constraints for buildings B
and F.
travel industry.
Bloom's: Understand
43
Min200x1 + 2 50x2 +

225x3 + 190x4 +215
x5 + 245x6 + 235x7 + 220x8
s.t. x1 +
x2 +
Which of the crews can be scheduled to clean building A?

A) Crew 1
B) Crew 2
C) Crew 5
D) Crew 6
E) Crew 7
Answer: D
building A.
travel industry.
Bloom's: Understand
44
Analytic Solver.
The university is scheduling cleaning crews for its ten buildings. Each crew has a different cost
and is qualified to clean only certain buildings. There are eight possible crews to choose from in
this case. The goal is to minimize costs while making sure that each building is cleaned. The
management science department formulated the following linear programming model to help
with the selection process.
Min 200x1 + 2 50x2 +

225x3 + 190x4 +215
x5 + 245x6 + 235x7 + 220x8
s.t. x1 +
x2 +
Set up the problem in Excel and find the optimal solution. Which crews are selected?
A) Crews 1, 2, and 3
B) Crews 1, 5, and 6
C) Crews 1, 7, and 8
D) Crews 2, 3, and 5
E) Crews 3, 4, and 5.
Answer: E
Explanation: The optimal solution selects crews 1, 7, and 8.
Difficulty: 3 Hard
travel industry.
Bloom's: Analyze
AACSB: Technology
45
Analytic Solver.
The university is scheduling cleaning crews for its ten buildings. Each crew has a different cost
and is qualified to clean only certain buildings. There are eight possible crews to choose from in
this case. The goal is to minimize costs while making sure that each building is cleaned. The
management science department formulated the following linear programming model to help
with the selection process.
Min 200x1 + 2 50x2 +

225x3 + 190x4 +215
x5 + 245x6 + 235x7 + 220x8
s.t. x1 +
x2 +
x1 + x6 + x8 ≥ 1{Building I constraint}
locations?
A) 255
B) 355
C) 455
D) 555
E) 655
Answer: E
Explanation: The optimal solution selects crews 1, 7, and 8 at a cost of 655.
Difficulty: 3 Hard
Problem
facilities.
Bloom's: Analyze
AACSB: Technology
46
66) A manufacturer has the capability to produce both chairs and tables. Both products use the
same materials (wood, nails and paint) and both have a setup cost ($100 for chairs, $200 for
tables). The firm earns a profit of $20 per chair and $65 per table and can sell as many of each as
it can produce. The daily supply of wood, nails and paint is limited. To manage the
decision-making process, an analyst has formulated the following linear programming model:
Max 20x1 +
65x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 100 {Constraint 1}
20x1 +
5 0x2 ≥ 250 {Constraint 2}
1x1 +
1 .5x2 ≤ 10 {Constraint 3}
My1 ≥ x1 {Constraint 4}
Which of the constraints limit the amount of raw materials that can be consumed?
A) Constraint 1
B) Constraint 4
C) Constraint 5
D) Constraint 1 and 4 only
E) None of these
Answer: A
Explanation: Constraints 1, 2, and 3 limit the amount of raw materials that can be consumed to
the available quantities.
Wyndor Problem
Bloom's: Understand
47
67) A manufacturer has the capability to produce both chairs and tables. Both products use the
same materials (wood, nails and paint) and both have a setup cost ($100 for chairs, $200 for
tables). The firm earns a profit of $20 per chair and $65 per table and can sell as many of each as
it can produce. The daily supply of wood, nails and paint is limited. To manage the
decision-making process, an analyst has formulated the following linear programming model:
Max 20x1 +
65x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 100 {Constraint 1}
20x1 +
1x1 +
Which of the following would be a reasonable value for the variable "M"?
A) 100
B) 10
C) 1
D) 0.1
E) 0.01
Answer: A
Explanation: M is a "sufficiently" large number to ensure that Myj will exceed any reasonable
decision variable. In this case, production of chairs and tables could reasonably exceed 10, but
not 100.
Wyndor Problem
Bloom's: Understand
48
Analytic Solver.
A manufacturer has the capability to produce both chairs and tables. Both products use the same
materials (wood, nails and paint) and both have a setup cost ($100 for chairs, $200 for tables).
The firm earns a profit of $20 per chair and $65 per table and can sell as many of each as it can
produce. The daily supply of wood, nails and paint is limited. To manage the decision-making
process, an analyst has formulated the following linear programming model:
Max 20x1 +
65x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 100 {Constraint 1}
20x1 +
1x1 +
Set up the problem in Excel and find the optimal solution. What is the optimal production
schedule?
A) 10 chairs, 0 tables
B) 0 chairs, 5 tables
C) 10 chairs, 5 tables
D) 5 chairs, 10 tables
E) 15 chairs, 5 tables
Answer: B
Explanation: After solving the linear program, the optimal production schedule is 0 chairs and 5
tables.
Difficulty: 3 Hard
Wyndor Problem
Bloom's: Analyze
AACSB: Technology
49
Analytic Solver.
A manufacturer has the capability to produce both chairs and tables. Both products use the same
materials (wood, nails and paint) and both have a setup cost ($100 for chairs, $200 for tables).
The firm earns a profit of $20 per chair and $65 per table and can sell as many of each as it can
produce. The daily supply of wood, nails and paint is limited. To manage the decision-making
process, an analyst has formulated the following linear programming model:
Max 20x1 +
65x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 100 {Constraint 1}
20x1 +
1x1 +
Set up the problem in Excel and find the optimal solution. What is the maximum profit possible?
A) $25
B) $50
C) $75
D) $100
E) $125
Answer: E
Explanation: After solving the linear program, the optimal production schedule is 0 chairs and 5
tables and the profit is $125.
Difficulty: 3 Hard
Wyndor Problem
Bloom's: Analyze
AACSB: Technology
50
70) A bakery produces both pies and cakes. Both products use the same materials (flour, sugar
and eggs) and both have a setup cost ($100 for cakes, $200 for pies). The baker earns a profit of
$10 per cake and $12 per pie and can sell as many of each as it can produce. The daily supply of
flour, sugar and eggs is limited. To manage the decision-making process, an analyst has
formulated the following linear programming model (assume that it is possible to produce
fractional pies and cakes for this example):
Max 10x1 +
12x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 1000 {Constraint 1}
2x1 +
5 x2 ≥ 2500 {Constraint 2}
2x1 +
1 x2 ≤ 300 {Constraint 3}
Which of the constraints limit the amount of raw materials that can be consumed?
A) Constraint 3
B) Constraint 4
C) Constraint 5
D) Constraint 3 and 4
E) None of these.
Answer: A
Explanation: Constraints 1, 2, and 3 limit the amount of raw materials that can be consumed to
the available quantities.
Wyndor Problem
Bloom's: Understand
51
71) A bakery produces both pies and cakes. Both products use the same materials (flour, sugar
and eggs) and both have a setup cost ($100 for cakes, $200 for pies). The baker earns a profit of
$10 per cake and $12 per pie and can sell as many of each as it can produce. The daily supply of
Max 10x1 +
12x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 1000 {Constraint 1}
2x1 +
2x1 +
1 x2 ≤ 300 {Constraint 3}
Which of the following would be a reasonable value for the variable "M"?
A) 0.1
B) 1
C) 10
D) 100
E) 1,000
Answer: E
Explanation: M is a "sufficiently" large number to ensure that Myj will exceed any reasonable
decision variable. In this case, production of pies and cakes could reasonably exceed 100, but not
1,000.
Wyndor Problem
Bloom's: Understand
52
Analytic Solver.
A bakery produces both pies and cakes. Both products use the same materials (flour, sugar and
eggs) and both have a setup cost ($100 for cakes, $200 for pies). The baker earns a profit of $10
per cake and $12 per pie and can sell as many of each as it can produce. The daily supply of
Max 10x1 +
12x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 1000 {Constraint 1}
2x1 +
2x1 + 1 x2 ≤ 300 {Constraint 3}
Set up the problem in Excel and find the optimal solution. What is the optimal production
schedule?
A) 133⅓ cakes, 33⅓ pies
B) 133⅓ cakes, 0 pies
C) 0 cakes, 33⅓ pies
D) 33⅓ cakes, 133⅓ pies
E) 133⅓ cakes, 133⅓ pies
Answer: A
Explanation: After solving the linear program, the optimal production schedule is 133⅓ cakes
and 33⅓ pies.
Difficulty: 3 Hard
Wyndor Problem
Bloom's: Analyze
AACSB: Technology
53
Analytic Solver.
A bakery produces both pies and cakes. Both products use the same materials (flour, sugar and
eggs) and both have a setup cost ($100 for cakes, $200 for pies). The baker earns a profit of $10
per cake and $12 per pie and can sell as many of each as it can produce. The daily supply of
Max 10x1 +
12x2 – 100y1 – 200y2
s.t. 5x1 + 10x2 ≤ 1000 {Constraint 1}
2x1 +
2x1 + 1 x2 ≤ 300 {Constraint 3}
My2 ≥ x2 {Constraint
5}
A) $1,233.33
B) $1,333.33
C) $1,433.33
D) $1,533.33
E) $1,633.33
Answer: C
Explanation: After solving the linear program, the optimal production schedule is 133⅓ cakes
and 33⅓ pies and the profit is $1,433.33.
Difficulty: 3 Hard
Wyndor Problem
Bloom's: Analyze
AACSB: Technology
54
Analytic Solver.
Your employer is trying to select from a list of possible capital projects. The projects, along with
their cost and benefits, are listed below. The capital budget available is $1 million. In addition to
spending constraints, your employer would like to select at least two projects. If project 1 is
chosen then project 2 cannot be selected. Formulate the problem as a linear program and
determine the optimal solution.
Project Cost Net Present Value Notes

1 $ 250,000 $ 500,000 Cannot be selected if 2 is selected
2 $ 500,000 $ 750,000 Cannot be selected if 1 is selected
3 $ 290,000 $ 333,000
4 $ 650,000 $ 400,000
5 $ 750,000 $ 600,000
A) Project 1 and project 2

B) Project 1 and project 3
C) Project 1 and project 5
D) Project 2 and project 3
E) Project 3 and project 5
Answer: C
Explanation: Solving the linear program below shows that the optimal solution is to select
projects 1 and 5.
Max 500x1 +
750x2 +
333x3 + 400x4 +
600x5
s.t. 250x1 + 500x2 + 290x3 + 650x4 +750x5 ≤ 1000 {Capital}
x1 + x2 ≤ 1 {Projects 1 and 2 are mutually exclusive}
x1 +
x2 +
x3 + x4 + x5 ≥ 10200 {Select at least two projects}
Difficulty: 3 Hard
projects.
Bloom's: Create
55
Analytic Solver.
To enhance the safety of your facility, you decide to add more fire extinguishers. Your goal is to
have each area within 50 feet of a fire extinguisher, but to minimize the total number of fire
extinguishers you need to purchase. You have divided the facility into 7 zones and have
identified 8 possible locations for fire extinguishers. The following table shows the distance (in
feet) from each zone to each potential location.
Distance to location (in feet)

Zone A Zone B Zone C Zone D Zone E Zone F Zone G
Location 1 51 40 70 73 36 32 50
Location 2 75 40 65 48 52 79 55
Location 3 58 73 74 64 41 59 67
Location 4 80 51 52 30 50 64 43
Location 5 42 38 59 54 41 74 55
Location 6 53 59 51 46 61 36 47
Location 7 71 52 62 67 63 62 30
Location 8 74 68 31 77 60 32 38
How many fire extinguishers should you purchase?

A) 2
B) 3
C) 4
D) 5
E) 6
56
Answer: B
Explanation: Solving the linear program below shows that the optimal solution is to select
locations 2, 5, and 8 (although other optimal solutions may exist, 3 fire extinguishers is the
minimum required).
Difficulty: 3 Hard
Problem
facilities.
Bloom's: Create
57
76) A manufacturer produces both widgets and gadgets. Widgets generate a profit of $50 each
and gadgets have a profit margin of $35 each. To produce each item, a setup cost is incurred.
This setup cost of $500 for widgets and $400 for gadgets. Widgets consume 4 units of raw
material A and 5 units of raw material B. Gadgets consume 6 units of raw material A and 2 units
of raw material B. Each day, the manufacturer has 500 units of each raw material available.
A) $3,500
B) $4,500
C) $5,500
D) $6,500
E) $7,500
Answer: B
Explanation: After solving the linear program below, the optimal production schedule is 100
widgets and 0 gadgets, the profit is $4,500.
Max 50x1 + 35x2 – 500y1 – 400y2
s.t. 4x1 + 6x2 ≤ 500 {Raw material A}
5x1 + 2x2 ≤ 500 {Raw material B}
My1 ≥ x1 {Widget Setup Cost}
My2 ≥ x2 {Gadget Setup Cost}
Difficulty: 3 Hard
Wyndor Problem
Bloom's: Analyze
AACSB: Technology
58
Chapter 8 Nonlinear Programming
1) Linear programming assumes that the profit from each activity is proportional to the level of
that activity.
Answer: TRUE
Difficulty: 1 Easy
Topic: The Challenges of Nonlinear Programming
Learning Objective: Describe how a nonlinear programming model differs from a linear
programming model.
Bloom's: Remember
2) If the slope of a graph never increases but sometimes decreases as the level of the activity
increases, then it is said to have decreasing marginal returns.
Answer: TRUE
Difficulty: 1 Easy
Topic: Nonlinear Programming With Decreasing Marginal Returns
Learning Objective: Recognize when a nonlinear programming model is needed to represent a
problem.
Bloom's: Remember
3) In problems where the objective is to minimize the total cost of the activities, an activity is
said to have decreasing marginal returns if the slope of its cost graph never increases but
sometimes decreases as the level of the activity increases.
Answer: FALSE
Difficulty: 1 Easy
problem.
Bloom's: Remember
1
4) If C1:C6 are all changing cells, then SUMPRODUCT(C1:C3, C4:C6) is a linear function.
Answer: FALSE
problem.
Bloom's: Understand
5) If C1 is a changing cell, then ROUND(C1) is a linear function.
Answer: FALSE
Difficulty: 1 Easy
problem.
Bloom's: Remember
6) If D1 is a data cell, and C1 and C2 are changing cells, then IF(D1 >= 2, C1, C2) is a linear
function.
Answer: TRUE
problem.
Bloom's: Understand
7) Nonlinear programming problems with decreasing marginal returns are generally easier to
solve then nonlinear programming problems with increasing marginal returns.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
2
8) Sometimes the Solver can return different solutions when optimizing a nonlinear
programming problem.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
9) Excel's curve fitting method is used to graph a nonlinear equation.
Answer: FALSE
Difficulty: 1 Easy
problem.
Bloom's: Remember
10) Excel's curve fitting method is used to find the values of the parameters for an equation that
best fit data.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
11) A local maximum is always a global maximum in a nonlinear programming problem.
Answer: FALSE
problem.
Bloom's: Understand
3
12) A quadratic programming problem is a special type of linear programming problem.
Answer: FALSE
Difficulty: 1 Easy
problem.
Bloom's: Remember
13) Having activities with decreasing marginal returns is the only way that the proportionality
assumption can be violated.
Answer: FALSE
Difficulty: 1 Easy
problem.
Bloom's: Remember
14) Separable programming is applicable when there are increasing or decreasing marginal
returns.
Answer: FALSE
Difficulty: 1 Easy
Topic: Separable Programming
Learning Objective: Use the Nonlinear Solver to solve simple types of nonlinear programming
problems.
Bloom's: Remember
15) In separable programming, each activity that violates the proportionality assumption is
separated into parts with a new variable for each part.
Answer: TRUE
Learning Objective: Construct nonlinear formulas needed for nonlinear programming models.
Bloom's: Apply
4
16) In some cases of separable programming, the profit graphs will be curves rather than a series
of line segments.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
17) When the marginal return from an activity decreases on a continuous basis, the profit graphs
will consist of a series of line segments.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
18) Applying separable programming requires having profit graphs that are smooth curves.
Answer: FALSE
Bloom's: Apply
19) A nonlinear function may contain a product of two variables.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
5
20) In separable programming, if an activity violates the proportionality assumption it must have
increasing marginal returns.
Answer: FALSE
problem.
Bloom's: Understand
21) Profit = 3x1+ 2x2

+ 9x1x2
is an example of a nonlinear function.
Answer: TRUE
problem.
Bloom's: Analyze
22) The additivity assumption of linear programming states that each term in the objective
function is the sum of two or more variables.
Answer: FALSE
Difficulty: 1 Easy
programming model.
Bloom's: Remember
23) The additivity assumption can be violated by nonlinear programming because of

cross-product terms involving the product of two variables.
Answer: TRUE
Difficulty: 1 Easy
problem.
Bloom's: Remember
6
24) It now is common practice for professional managers of large stock portfolios to use
computer models based partially on separable programming.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Distinguish between nonlinear programming problems that should be easy
to solve and those that may be difficult (if not impossible) to solve.
Bloom's: Remember
25) When applying nonlinear programming to portfolio selection, a trade-off is being made
between the expected return and the risk associated with the investment.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Formulate a nonlinear programming model from a description of the
problem.
Bloom's: Remember
26) The risk for a portfolio is decreased when the particular stocks tend to move up and down
together.
Answer: FALSE
problem.
Bloom's: Understand
27) The multistart feature in Solver can be used for nonlinear programming problems to
systematically try a number of different starting points.
Answer: TRUE
Difficulty: 1 Easy
Topic: Difficult Nonlinear Programming Problems
Learning Objective: Use the multistart feature of Solver to attempt to solve some more difficult
nonlinear programming problems.
Bloom's: Remember
7
28) Trying different starting points and picking the best solution will always yield the optimal
solution to a nonlinear programming problem.
Answer: FALSE
Bloom's: Understand
29) Evolutionary Solver uses an algorithm based on genetics, evolution, and survival of the
fittest.
Answer: TRUE
Difficulty: 1 Easy
Topic: Evolutionary Solver And Genetic Algorithms
Learning Objective: Use Evolutionary Solver to attempt to solve some difficult nonlinear
Bloom's: Remember
30) Mutation is the technique used to create the next generation of solutions in the Evolutionary
Solver.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
31) The Nonlinear Solver keeps track of a large set of candidate solutions, called the population.
Answer: FALSE
Difficulty: 1 Easy
problems.
Bloom's: Remember
8
32) The members of the population used to create the next generation are picked randomly by the
Evolutionary Solver.
Answer: FALSE
Bloom's: Understand
33) Sometimes Evolutionary Solver will make a random change in a member of the population.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
34) Evolutionary Solver is often faster than the standard Solver at solving linear programming
problems.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
35) Two runs of the Evolutionary Solver on the same problem will typically yield the same
solution.
Answer: FALSE
Bloom's: Understand
9
36) If the RSPE Model Analysis indicates that the model is a NSP, then the GRG Nonlinear
search method is the best one to use.
Answer: FALSE
Topic: Using Analytic Solver To Analyze A Model And Choose A Solving Method
Learning Objective: Use Analytic Solver to analyze a model and choose the most appropriate
solving method.
Bloom's: Understand
37) If the RSPE Model Analysis indicates that the model is NLP Convex, then only the
Evolutionary Solver can be counted on to yield near optimal solutions.
Answer: FALSE
solving method.
Bloom's: Understand
38) If the data cells are in column D and the changing cells are in column C, which of the
following are linear formulas in a spreadsheet?
I. =SUMPRODUCT(D1:D6, C1:C6)
II. =SUMPRODUCT(C1:C3, C4:C6)
III. =SUM(C1:C6)
A) I only
B) II only
C) III only
D) I, II, and III
E) I and III only
Answer: E
Explanation: Choice "II only" involves the product of two or more changing cells, which is
nonlinear.
problem.
Bloom's: Apply
10
39) If the data cells are in column D and the changing cells are in column C, which of the
following are not linear formulas in a spreadsheet?
I. =IF(D1 >= 6, C1, C2)

II. =ROUND(C3)
III. =ABS(C3)
A) I only
B) II only
C) III only
D) I, II, and III
E) II and III only
Answer: E
Explanation: "IF" functions which test a data cell are linear, but the "ROUND" and "ABS"
functions are nonlinear.
problem.
Bloom's: Understand
40) When there are decreasing marginal returns:

A) the slope of the graph never increases but sometimes decreases.
B) the slope of the graph never decreases but sometimes increases.
C) the graph always consists of a smooth curve.
D) the graph always consists of a series of line segments.
E) separable programming should not be used.
Answer: A
problem.
Bloom's: Understand
11
41) Decreasing marginal returns violates which assumption of linear programming?
A) The proportionality assumption
B) The divisibility assumption
C) The additivity assumption
Answer: A
problem.
Bloom's: Understand
42) A linear function may contain which of the following?
I. A term that contains a single variable with an exponent of 1.

II. A term that contains a single variable with an exponent of 2.
III. A term that is a constant times the product of two variables.
A) I only
B) II only
C) III only
D) I, II, and III
E) II and III only
Answer: A
problem.
Bloom's: Understand
12
43) A nonlinear function may contain which of the following?
I. A term that contains a single variable with an exponent of 1.

II. A term that contains a single variable with an exponent of 2.
III. A term that is a constant times the product of two variables.
A) I only
B) II only
C) III only
D) I, II, and III
E) II and III only
Answer: D
problem.
Bloom's: Understand
44) Which of the following can be part of a nonlinear profit graph?
I. Decreasing marginal returns.

II. Increasing marginal returns.
III. Discontinuities.
A) I only
B) II only
C) III only
D) I, II, and III
E) I and II only
Answer: D
problem.
Bloom's: Understand
13
45) A nonlinear programming problem may have:
I. Activities with increasing marginal returns.

II. Activities with decreasing marginal returns.
III. Nonlinear functional constraints.
A) I only
B) II only
C) III only
D) I, II, and III
E) II and III only
Answer: D
problem.
Bloom's: Understand
46) Which of the following is an example of a nonlinear function?

2
A) Profit = 5x1+ 7x2
− 2x2

2 2
B) Profit = 8x1x2− x1 − 4x2

C) Profit = x1+ 6x2+ 3x1
x2
Answer: E
problem.
Bloom's: Apply
14
47) The requirement that each term in the objective function only contains a single variable is in
a linear program is referred to as:
A) the proportionality assumption.
B) the divisibility assumption.
C) the additivity assumption.
D) a nonlinear function.
Answer: C
problem.
Bloom's: Understand
48) The measure of risk in a portfolio selection problem is called:

A) the covariance of the return.
B) the variance of the return.
C) the expected return.
D) decreasing marginal return.
Answer: B
problems.
Bloom's: Understand
49) The measure of risk for pairs of stocks in a portfolio selection problem is called:
A) the covariance of the return.
B) the variance of the return.
C) the expected return.
D) decreasing marginal return.
Answer: A
problems.
Bloom's: Understand
15
50) Separable programming will always find the optimal solution when the following is true:
A) The profit or cost graph is piecewise linear.
B) There are decreasing marginal returns.
C) The profit or cost graph is piecewise linear and there are decreasing marginal returns must
both be true.
D) Separable programming only finds an approximate solution.
Answer: C
Bloom's: Understand
51) Which of the following techniques is appropriate when a nonlinear programming problem
has multiple local optima?
I. Running Solver many times with different starting points.

II. Using the multistart feature to try different starting points.
III. Using Evolutionary Solver.
A) I only
B) II only
C) III only
D) I, II, and III
E) II and III only
Answer: D
Bloom's: Apply
16
52) Evolutionary Solver is based on which of the following concepts?
I. Genetics.
II. Evolution.
III. Survival of the Fittest.
A) I only
B) II only
C) III only
D) I, II, and III
E) II and III only
Answer: D
Bloom's: Understand
53) Evolutionary Solver is best suited to which kinds of problems?

A) Linear programs
B) Nonlinear programs with difficult objective functions
C) Nonlinear programs with decreasing marginal returns and no discontinuities
D) Nonlinear programs with many constraints
Answer: B
Bloom's: Apply
17
54) Which of the following are advantages of the Evolutionary Solver?
A) The complexity of the objective function does not matter.
B) It will always find the optimal solution.
C) It is faster than the standard Solver.
D) It always finds the same solution.
Answer: A
Bloom's: Understand
55) Which of the following are disadvantages of the Evolutionary Solver?
I. It does not deal well with complicated objective functions.

II. It does perform well on models with many constraints.
III. It is easily trapped at local optima.
A) I only
B) II only
C) III only
D) I and II
E) None of these
Answer: B
Bloom's: Understand
18
56) If a model uses IF or ROUND functions that incorporate the changing cells, then running the
RSPE Analyze Model without Solving feature will typically say the model is of what type?
A) Linear
B) NLP Convex
C) QP Convex
D) NSP
Answer: D
solving method.
Bloom's: Understand
57) One reason that a manager may choose to use a nonlinear model to analyze a problem is
A) Nonlinear models are easier to solve than linear models.
B) Nonlinear models may provide greater precision than linear models.
C) Nonlinear techniques such as Evolutionary Solver provide optimal results.
D) Nonlinear models are easier to understand than linear models.
E) Nonlinear models take less time to solve than linear models.
Answer: B
programming model.
Bloom's: Understand
19
58) The following chart shows a relationship between advertising expenditures and sales.
Which of the following describes the chart in terms of a linear relationship?

A) The chart shows a linear relationship.
B) The chart shows decreasing marginal returns.
C) The chart shows a proportional relationship.
D) The chart shows discontinuities.
E) The chart is piecewise linear.
Answer: D
Difficulty: 3 Hard
problem.
Bloom's: Apply
20

B) The chart shows decreasing marginal returns.
D) The chart shows increasing marginal returns.
Answer: B
Difficulty: 3 Hard
problem.
Bloom's: Apply
21

B) The chart shows increasing marginal returns.
D) The chart shows discontinuities.
Answer: E
Difficulty: 3 Hard
problem.
Bloom's: Apply
22
61) Which of the following profit functions has a quadratic form?
2
I. x + 3x − 4
2
II. 3x + 4x + 6
III. 3x − 4
A) I only
B) II only
C) III only
D) I and II only
E) I, II, and III
Answer: D
2
Explanation: The quadratic form is ax + bx + c. Options I and II follow this form.
problem.
Bloom's: Understand
62) Which of the following profit functions has a logarithmic form?
2
I. x + 3x − 4
II. 4 ln x + 7
III. 3x − 4
A) I only
B) II only
C) III only
D) I and II only
E) I, II, and III
Answer: B
Explanation: The quadratic form is a In x + b. Option II follows this form.
problem.
Bloom's: Understand
23
63) After some experimentation, you have observed the following data concerning the
relationship between marketing and sales. Use Excel's curve fitting method to find the best
quadratic equation to model this relationship.
Marketing
100 110 120 130 140 150 160 170 180 190 200
($)
Sales
310 400 500 600 700 850 975 1,100 1,300 1,425 1,600
($100)
2
A) 0.11x + 1.4x + 40
2
B) 0.05x − 1.1x − 44
2
C) 0.05x + 1.1x + 44
2
D) 0.11x − 1.4x − 40
2
E) 0.05x − 1.1x + 44
Answer: B
2
Explanation: The best fit using a quadratic form is 0.0469x − 1.1416x − 43.904.
Bloom's: Apply
24
64) After some experimentation, you have observed the following data concerning the
relationship between marketing and sales. Use Excel's curve fitting method to find the best
quadratic equation to model this relationship.
Marketing
100 110 120 130 140 150 160 170 180 190 200
($)
Sales
310 500 600 690 780 850 925 1,000 1,050 1,090 1,120
($100)
2
A) −0.055x + 24x − 1516
2
B) 0.055x + 24x − 1516
2
C) −0.055x − 24x − 1516
2
D) −0.055x + 24x + 1516
2
E) −0.11x + 24x − 1516
Answer: A
2
Explanation: The best fit using a quadratic form is −0.055x + 24x − 1516.
Bloom's: Apply
25
65) The following chart shows the relationship between marketing and sales.
Which of the following statements is TRUE?
I. There is a local minimum when marketing expenditure equals $120.

II. There is a local maximum when marketing expenditure equals $120.
III. There is a global maximum when marketing expenditure equals $160.
A) I only
B) II only
C) III only
D) I and II only
E) II and III only
Answer: E
Explanation: There is a local maximum when marketing equals 120 (there is a peak but it is
lower than the peak when marketing equals 160). There is a global maximum when marketing
equals 160 because this is the highest value observed.
problem.
Bloom's: Understand
26
66) The following chart shows the relationship between marketing and sales.
Which of the following statements is TRUE?
I. There is a local maximum when marketing expenditure equals $120.

II. There is a local minimum when marketing expenditure equals $140.
III. There is a local maximum when marketing expenditure equals $160.
A) I only
B) II only
C) III only
D) Only I and II
E) I, II, and III
Answer: E
Explanation: There is a local maximum when marketing equals 120 (there is a peak but it is
lower than the peak when marketing equals 160). There is a local maximum when marketing
equals 160 because this is the highest value observed (this point is also the global maximum).
There is a local minimum when marketing equals 140.
problem.
Bloom's: Understand
27
67) Which of the following statements about solving maximization problems with Excel's
Nonlinear Solver?
I. Nonlinear Solver will always find the global maximum.

II. Nonlinear Solver will always find a local maximum but not necessarily the global maximum.
III. With diminishing returns, Nonlinear Solver will always find the global maximum.
A) I only
B) II only
C) III only
D) Only II and III
E) I, II, and III
Answer: D
Explanation: In a maximization problem, Nonlinear Solver will always find a local maximum,
but only when marginal returns are decreasing will this be guaranteed to be the global maximum.
problems.
Bloom's: Understand
68) If a problem can be modelled as a separable program with three line segments, how many
decision variables is it likely to have?
A) 1
B) 2
C) 3
D) Only 1 or 2
E) 1, 2, or 3
Answer: C
Explanation: A separable program will have one decision variable for each line segment.
Learning Objective: Recognize when the separable programming technique is applicable to
enable using linear programming with a nonlinear objective function.
Bloom's: Understand
28
69) Which of the following statements about Solver's Multistart option are TRUE?
A) A nonlinear problem will always have the solution for any starting point.
B) Multistart always uses 100 random starting points.
C) Using Multistart guarantees that Solver will find the optimal solution.
D) Multistart may not find the optimal solution.
E) Multistart works well with functions such as "IF" and "ROUND."
Answer: D
Bloom's: Understand
70) Note: This problem requires Excel.

The marketing department has determined that the relationship between marketing expenditures
2
(x) and sales can be modelled by the equation Sales = 100x − x + 20. Use a Nonlinear Solver
tool to determine the level of marketing expenditure that will maximize sales.
A) 40
B) 50
C) 60
D) 70
E) 80
Answer: B
Explanation: Since the relationship displays decreasing marginal returns, Nonlinear Solver can
be used to find the solution to the following problem:
2
Max 100x − x + 20
s.t.x ≥ 0
50.
The optimal solution is x =
problem.
Bloom's: Understand
29
You have noticed that paying higher wages attracts more productive employees. However, you
are concerned that there may be a limit to this relationship. Some experimentation has convinced
you that the relationship between wages paid (x) and profits can be modelled by the equation
2
Profit = 25x − 0.1x + 200. Use a Nonlinear Solver tool to determine the level of wages that will
maximize profits.
A) 25
B) 50
C) 75
D) 100
E) 125
Answer: E
2
Max 25x − 0.1x + 200
s.t.x ≥ 0
The optimal solution is x = 125.

problem.
Bloom's: Understand
30
You have noticed that paying higher wages attracts more productive employees. However, you
are concerned that there may be a limit to this relationship. Some experimentation has convinced
you that the relationship between daily wages paid (x) and profits can be modelled by the
2 3
equation Profit = 50x − 0.5x + .001x + 200. The range of wages you are willing to consider is
from $0 to $500 per day. Use the Evolutionary Solver tool to determine the level of wages that
will maximize profits.
A) 200
B) 300
C) 400
D) 500
E) Cannot be determined
Answer: D
2 3
Max 5 0x − 0.5x + 0.001x + 200
s.t.x ≥ 0, x ≤
500
The optimal solution is x = 500.

problem.
Bloom's: Understand
31
A firm offers three different prices on its products, depending upon the quantity purchased. Since
available resources are limited, the firm would like to prepare an optimal production plan to
maximize profits. Product 1 has the following profitability: $10 each for the first 50 units, $9
each for units 51-100, and $8 for each unit over 100. Product 2's profitability is $20 each for the
first 25 units, $19 each for units 26-50, and $18 each for each unit over 50. The products each
require 3 raw materials to produce (see table below for usages and available quantities).
Raw Product 1 usage Product 2 usage Available Quantity

Material (pounds per unit) (pounds per unit) (pounds)
A 5 12 1,000
B 4 10 2,000
C 7 6 1,500
Use separable programming to find the optimal production plan.

A) 100 units Product 1, 100 units Product 2
B) 100 units Product 1, 50 units Product 2
C) 140 units Product 1, 25 units Product 2
D) 25 units Product 1, 140 units Product 2
E) 100 units Product 1, 140 units Product 2
Answer: C
Explanation: The solution to the separable program (see below) shows that the optimal
production plan is 140 units of product 1 and 25 units of product 2.
Max 10x11
+ 9x12+ 8x13
+ 20x21+ 19x22
+18x23

s.t. 5x11+ 5x12
+ 5x13+ 12x21
+12x22+12x23
≤ 1,000
+ 4x12+ 4x13
4x11 + 10x21+ 10x22
+ 10x23≤ 2,000
+ 7x12+ 7x13
7x11 + 6x21+ 6x22
+ 6x23≤ 1,500
0 ≤ x11≤ 50
0 ≤ x12≤ 50
0 ≤ x13≤ ∞
0 ≤ x21≤ 25
0 ≤ x22≤ 25
0 ≤ x23≤ ∞
Difficulty: 3 Hard
Learning Objective: Apply the separable programming technique when applicable.
Bloom's: Evaluate
AACSB: Technology
32
33
A firm offers two different prices on its products, depending upon the quantity purchased. Since
available resources are limited, the firm would like to prepare an optimal production plan to
maximize profits. Product 1 has the following profitability: $75 each for the first 25 units and
$60 for each unit over 25. Product 2's profitability is $200 each for the first 50 units and $100
each for each unit over 50. The products each require two raw materials to produce (see table
below for usages and available quantities).
Raw Product 1 usage Product 2 usage Available Quantity

Material (gallons per unit) (gallons per unit) (gallons)
A 10 20 1,500
B 5 7 2,000
Use separable programming to find the optimal production plan.

A) 100 units Product 1, 100 units Product 2
B) 50 units Product 1, 50 units Product 2
C) 100 units Product 1, 25 units Product 2
D) 25 units Product 1, 100 units Product 2
E) 100 units Product 1, 50 units Product 2
Answer: B
Explanation: The solution to the separable program (see below) shows that the optimal
production plan is 50 units of product 1 and 50 units of product 2.
Max 75x11
+ 60x12+ 200x21
+ 100x22
s.t. 10x11+ 10x12
+ 20x21+ 20x22
≤ 1,500
+ 5x12+ 7x21
5x11 + 7x22 ≤
2,000
0 ≤ x11≤ 25
0 ≤ x12≤ ∞
0 ≤ x21≤ 50
0 ≤ x22≤ ∞
Difficulty: 3 Hard
Learning Objective: Apply the separable programming technique when applicable.
Bloom's: Evaluate
AACSB: Technology
34
75) If the RSPE Model Analysis indicates that the model is quadratic, which of the following is
TRUE?
A) The model can be solved using linear programming tools.
B) The Evolutionary Solver will always find the optimal solution.
C) Using the Nonlinear Solver will never find the optimal solution.
D) The model contains functions such as "IF" or "ROUND."
E) None of the choices is true.
Answer: E
Explanation: A quadratic model cannot be solved using linear programming tools and the
Evolutionary Solver is not guaranteed to find the optimal solution. A quadratic model cannot
contain functions such as "IF" or "ROUND," but if the model is being maximized and has
diminishing returns, the Nonlinear Solver can find the optimal solution.
solving method.
Bloom's: Understand
35
Chapter 9 Decision Analysis
1) States of nature are alternatives available to a decision maker.
Answer: FALSE
Difficulty: 1 Easy
Topic: A Case Study: The Goferbroke Company Problem
Learning Objective: Describe the logical way in which decision analysis organizes a problem.
Bloom's: Remember
2) In decision analysis, states of nature refer to possible future conditions.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
3) Prior probabilities refer to the relative likelihood of possible states of nature.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
4) Payoffs always represent profits in decision analysis problems.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
1
5) A decision tree branches out all of the possible decisions and all of the possible events.
Answer: TRUE
Difficulty: 1 Easy
Topic: Decision Trees
Learning Objective: Formulate and solve a decision tree for dealing with a sequence of
decisions.
Bloom's: Remember
6) An advantage of payoff tables compared to decision trees is that they permit us to analyze
situations involving sequential decisions.
Answer: FALSE
Difficulty: 1 Easy
Topic: Decision Criteria
Learning Objective: Formulate a payoff table from a description of the problem.
Bloom's: Remember
7) Payoff tables may include only non-negative numbers.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Formulate a payoff table from a description of the problem.
Bloom's: Remember
8) A event node in a decision tree indicates that a decision needs to be made at that point.
Answer: FALSE
Difficulty: 1 Easy
decisions.
Bloom's: Remember
2
9) The maximax approach is an optimistic strategy.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Describe and evaluate several alternative criteria for making a decision
based on a payoff table.
Bloom's: Understand
10) An example of maximax decision making is a person buying lottery tickets in hopes of a
very big payoff.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Understand
11) The maximin approach involves choosing the alternative with the highest payoff.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
12) The maximin criterion is an optimistic criterion.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Understand
3
13) The maximin approach involves choosing the alternative that has the "best worst" payoff.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
14) The maximum likelihood criterion says to focus on the largest payoff.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
15) The maximum likelihood criterion ignores the payoffs for states of nature other than the most
likely one.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
16) The equally likely criterion assigns a probability of 0.5 to each state of nature.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
4
17) Bayes' decision rule says to choose the alternative with the largest expected payoff.
Answer: TRUE
Difficulty: 1 Easy
Learning Objective: Apply Bayes' decision rule to solve a decision analysis problem.
Bloom's: Remember
18) Using Bayes' decision rule will always lead to larger payoffs.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Apply Bayes' decision rule to solve a decision analysis problem.
Bloom's: Understand
19) Sensitivity analysis may be useful in decision analysis since prior probabilities may be
inaccurate.
Answer: TRUE
Difficulty: 1 Easy
Topic: Sensitivity Analysis With Decision Trees
Learning Objective: Perform sensitivity analysis with Bayes' decision rule.
Bloom's: Remember
20) Graphical analysis can only be used in sensitivity analysis for those problems that have two
decision alternatives.
Answer: FALSE
Difficulty: 1 Easy
decisions.
Bloom's: Understand
5
21) The EVPI indicates an upper limit in the amount a decision-maker should be willing to spend
to obtain information.
Answer: TRUE
Difficulty: 1 Easy
Topic: Checking Whether To Obtain More Information
Learning Objective: Determine whether it is worthwhile to obtain more information before
making a decision.
Bloom's: Remember
22) A posterior probability is a revised probability of a state of nature after doing a test or survey
to refine the prior probability.
Answer: TRUE
Difficulty: 1 Easy
Topic: Using New Information To Update The Probabilities
Learning Objective: Use new information to update the probabilities of the states of nature.
Bloom's: Remember
23) Bayes' theorem is a formula for determining prior probabilities of a state of nature.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Understand
24) A risk seeker has a decreasing marginal utility for money.
Answer: FALSE
Difficulty: 1 Easy
Topic: Using Utilities To Better Reflect The Values Of Payoffs
Learning Objective: Use utilities to better reflect the values of payoffs.
Bloom's: Remember
6
25) Utilities can be useful when monetary values do not accurately reflect the true values of an
outcome.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
26) Most people occupy a middle ground and are classified as risk neutral.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Understand
27) A utility function for money can be constructed by applying a lottery procedure.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
28) The exponential utility function assumes a constant aversion to risk.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Understand
7
29) Two people who face the same problem and use the same decision-making methodology
must always arrive at the same decision.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Understand
30) Which of the following is not a criterion for decision making?

A) EVPI.
B) Maximin
C) Maximax
D) Bayes' decision rule
E) Maximum likelihood
Answer: A
Bloom's: Understand
31) Which one of the following statements is not correct when making decisions?
A) The sum of the state of nature probabilities must be 1.
B) Every probability must be greater than or equal to 0.
C) All probabilities are assumed to be equal.
D) Probabilities are used to compute expected values.
E) Perfect information assumes that the state of nature that will actually occur is known.
Answer: C
Bloom's: Understand
8
32) Testing how a problem solution reacts to changes in one or more of the model parameters is
called:
A) analysis of tradeoffs.
B) sensitivity analysis.
C) priority recognition.
D) analysis of variance.
E) decision analysis.
Answer: B
Bloom's: Understand
33) Determining the worst payoff for each alternative and choosing the alternative with the "best
worst" is the criterion called:
A) minimin.
B) maximin.
C) maximax.
D) maximum likelihood.
E) Bayes decision rule.
Answer: B
Bloom's: Understand
34) The maximin criterion refers to:

A) minimizing the maximum return.
B) maximizing the minimum return.
C) choosing the alternative with the highest payoff.
D) choosing the alternative with the minimum payoff.
E) None of the answer choices is correct.
Answer: B
Bloom's: Understand
9
35) Based on the following payoff table, answer the following:
Alternative High Low

Buy 90 −10
Rent 70 40
Lease 60 55
Prior Probability 0.4 0.6
The maximax strategy is:

A) Buy.
B) Rent.
C) Lease.
D) High.
E) Low.
Answer: A
Explanation: The maximax strategy chooses the alternative that has the highest maximum
payoff. In this case, "Buy" has a maximum payoff of 90, which is the highest payoff in the table.
Bloom's: Understand
10

Buy 90 −10
Rent 70 40
Lease 60 55
The maximin strategy is:

A) Buy.
B) Rent.
C) Lease.
D) High.
E) Low.
Answer: C
Explanation: The maximin strategy chooses the alternative that has the highest minimum payoff.
In this case, "Lease" has a minimum payoff of 55.
Bloom's: Understand
11

Buy 90 −10
Rent 70 40
Lease 60 55
The maximum likelihood strategy is:

A) Buy.
B) Rent.
C) Lease.
D) High.
E) Low.
Answer: C
Explanation: The maximum likelihood strategy starts by identifying the most likely state of
nature. In this case, the state of nature "Low" has the highest probability. Next, the strategy
chooses the alternative that has the highest payoff for this state of nature. In this case, "Lease"
has the highest payoff of 55 for the state of nature "Low."
Bloom's: Understand
12

Buy 90 −10
Rent 70 40
Lease 60 55
The Bayes' decision rule strategy is:

A) Buy.
B) Rent.
C) Lease.
D) High.
E) Low.
Answer: C
Explanation: The Bayes' decision rule strategy begins with a calculation of the expected payoff
for each alternative. The strategy then chooses the alternative with the highest expected payoff.
Alternative Expected Payoff

Buy 30
Rent 52
Least 57
Bloom's: Understand
13

Buy 90 −10
Rent 70 40
Lease 60 55
The expected value of perfect information is:

A) 12.
B) 55.
C) 57.
D) 69.
E) 90.
Answer: A
Explanation: EVPI = EP(with perfect info) – EP(without more info). With perfect information,
the payoff would be 90(0.4) + 55(0.6) = 69. Without more information, EP is determined using
Bayes' decision rule (EP = 57). Therefore, EVPI = 69 − 57 = 12.
Bloom's: Understand
14
Alternative Yes No
Small 10 30
Medium 20 40
Medium Large 30 45
Large 40 35
Extra Large 60 20

A) small.
B) medium.
C) medium large.
D) large.
E) extra large.
Answer: E
payoff. In this case, "Extra Large" has a maximum payoff of 90, which is the highest payoff in
the table.
Bloom's: Understand
15
Alternative Yes No
Small 10 30
Medium 20 40
Medium Large 30 45
Large 40 35
Extra Large 60 20

A) small.
B) medium.
C) medium large.
D) large.
E) extra large.
Answer: D
In this case, "Large" has a minimum payoff of 35.
Bloom's: Understand
16
Alternative Yes No
Small 10 30
Medium 20 40
Medium Large 30 45
Large 40 35
Extra Large 60 20

A) small.
B) medium.
C) medium large.
D) large.
E) extra large.
Answer: C
nature. In this case, the state of nature "No" has the highest probability. Next, the strategy
chooses the alternative that has the highest payoff for this state of nature. In this case, "Medium
Large" has the highest payoff of 45 for the state of nature "No."
Bloom's: Understand
17
Alternative Yes No
Small 10 30
Medium 20 40
Medium Large 30 45
Large 40 35
Extra Large 60 20

A) small.
B) medium.
C) medium large.
D) large.
E) extra large.
Answer: C

Small 24
Medium 34
Medium Large 40.5
Large 36.5
Extra Large 32
Bloom's: Analyze
18
Alternative Yes No
Small 10 30
Medium 20 40
Medium Large 30 45
Large 40 35
Extra Large 60 20

A) 4.5.
B) 9.
C) 40.5.
D) 49.5.
E) 60.
Answer: B
Explanation: EVPI = EP (with perfect info) − EP (without more info). With perfect information,
the payoff would be 60(0.3) + 45(0.7) = 49.5. Without more information, EP is determined using
Bayes' decision rule (EP = 40.5). Therefore, EVPI = 49.5 − 40.5 = 9.
Difficulty: 3 Hard
Bloom's: Evaluate
19
Alternative High Medium Low

A 20 20 5
B 25 30 11
C 30 12 13
D 10 12 12
E 50 40 −28
Prior Probability 0.3 0.2 0.5

A) A.
B) B.
C) C.
D) D.
E) E.
Answer: E
payoff. In this case, "E" has a maximum payoff of 50, which is the highest payoff in the table.
Bloom's: Analyze
20

A 20 20 5
B 25 30 11
C 30 12 13
D 10 12 12
E 50 40 −28

A) A.
B) B.
C) C.
D) D.
E) E.
Answer: C
In this case, "C" has a minimum payoff of 13.
Bloom's: Analyze
21

A 20 20 5
B 25 30 11
C 30 12 13
D 10 12 12
E 50 40 −28

A) A.
B) B.
C) C.
D) D.
E) E.
Answer: C
nature. In this case, the state of nature "Low" has the highest probability. Next, the strategy
chooses the alternative that has the highest payoff for this state of nature. In this case, "C" has the
highest payoff of 13 for the state of nature "Low."
Bloom's: Analyze
22

A 20 20 5
B 25 30 11
C 30 12 13
D 10 12 12
E 50 40 −28

A) A.
B) B.
C) C.
D) D.
E) E.
Answer: B

A 12.5
B 19
C 17.9
D 11.4
E 9
Difficulty: 3 Hard
Bloom's: Evaluate
23

A 20 20 5
B 25 30 11
C 30 12 13
D 10 12 12
E 50 40 −28

A) −28.
B) 0.
C) 10.5.
D) 19.
E) 23.
Answer: C
Explanation: EVPI = EP(with perfect info) − EP(without more info). With perfect information,
the payoff would be 50(0.3) + 40(0.2) + 13(0.5) = 29.5. Without more information, EP is
determined using Bayes' decision rule (EP = 19). Therefore, EVPI = 29.5 − 19 = 10.5.
Difficulty: 3 Hard
Bloom's: Evaluate
24
50) The operations manager for a local bus company wants to decide whether he should purchase
a small, medium, or large new bus for his company. He estimates that the annual profits (in
$000) will vary depending upon whether passenger demand is low, moderate, or high, as follows.
Demand
Bus Low Medium High
Small 50 60 70
Medium 40 80 90
Large 20 50 120
If he uses the maximum likelihood criterion, which size bus will he decide to purchase?
A) Small
B) Medium
C) Large
D) Either small or medium
E) Either medium or large
Answer: C
nature. In this case, the state of nature "High" has the highest probability. Next, the strategy
chooses the alternative that has the highest payoff for this state of nature. In this case, "Large"
has the highest payoff of 120 for the state of nature "High."
Bloom's: Analyze
25
Demand
Bus Low Medium High
Small 50 60 70
Medium 40 80 90
Large 20 50 120
If he uses Bayes' decision rule, which size bus will he decide to purchase?
A) Small
B) Medium
C) Large
D) Either small or medium
E) Either medium or large
Answer: B

Small 61,000
Medium 72,000*
Large 69,000
Difficulty: 3 Hard
Bloom's: Evaluate
26
Demand
Bus Low Medium High
Small 50 60 70
Medium 40 80 90
Large 20 50 120
What is the expected annual profit for the bus that he will decide to purchase using Bayes'
decision rule?
A) $15,000
B) $61,000
C) $69,000
D) $72,000
E) $87,000
Answer: D

Small 61,000
Medium 72,000
Large 69,000
Difficulty: 3 Hard
Bloom's: Evaluate
27
Demand
Bus Low Medium High
Small 50 60 70
Medium 40 80 90
Large 20 50 120
What is his expected value of perfect information?

A) $15,000
B) $61,000
C) $69,000
D) $72,000
E) $87,000
Answer: A
the payoff would be 50,000(0.3) + 80,000(0.3) + 120,000(0.4) = 87,000. Without more
information, EP is determined using Bayes' decision rule (EP = 72,000). Therefore, EVPI =
87,000 − 72,000 = 15,000.
Difficulty: 3 Hard
Bloom's: Evaluate
28
54) The construction manager for ABC Construction must decide whether to build single family
homes, apartments, or condominiums. He estimates annual profits (in $000) will vary with the
population trend as follows:
Population Trend
Type Declining Stable Growing
Single Family 200 90 70
Apartments 70 170 90
Condos −20 100 220
If he uses the maximum likelihood criterion, which kind of dwellings will he decide to build?
A) Single family
B) Apartments
C) Condos
D) Either single family or apartments
E) Either apartments or condos
Answer: B
nature. In this case, the state of nature "Stable" has the highest probability. Next, the strategy
chooses the alternative that has the highest payoff for this state of nature. In this case,
"Apartments" has the highest payoff of 170 for the state of nature "Stable."
Bloom's: Analyze
29
Population Trend
Condos −20 100 220
If he uses Bayes' decision rule, which kind of dwellings will he decide to build?
A) Single family
B) Apartments
C) Condos
D) Either single family or apartments
E) Either apartments or condos
Answer: A

Single Family 132,000
Apartments 122,000
Condos 64,000
Difficulty: 3 Hard
Bloom's: Evaluate
30
Population Trend
Condos −20 100 220
What is the expected annual profit for the dwellings that he will decide to build using Bayes'
decision rule?
A) $187,000
B) $132,000
C) $123,000
D) $65,000
E) $55,000
Answer: B

Single Family 132,000
Apartments 122,000
Condos 64,000
Difficulty: 3 Hard
Bloom's: Evaluate
31
Population Trend
Condos −20 100 220
What is his expected value of perfect information?

A) $187,000
B) $132,000
C) $123,000
D) $65,000
E) $55,000
Answer: E
the payoff would be 200,000(0.4) + 170,000(0.5) + 220,000(0.1) = 187,000. Without more
information, EP is determined using Bayes' decision rule (EP = 132,000). Therefore, EVPI =
187,000 − 132,000 = 55,000.
Difficulty: 3 Hard
Bloom's: Evaluate
32
58) The head of operations for a movie studio wants to determine which of two new scripts they
should select for their next major production. She feels that script #1 has a 70% chance of
earning $100 million over the long run, but a 30% chance of losing $20 million. If this movie is
successful, then a sequel could also be produced, with an 80% chance of earning $50 million, but
a 20% chance of losing $10 million. On the other hand, she feels that script #2 has a 60 % chance
of earning $120 million, but a 40% chance of losing $30 million. If successful, its sequel would
have a 50% chance of earning $80 million and a 50% chance of losing $40 million. As with the
first script, if the original movie is a "flop," then no sequel would be produced.
What would be the total payoff is script #1 were a success, but its sequel were not?
A) $150 million
B) $100 million
C) $90 million
D) $50 million
E) $−10 million
Answer: C
Explanation: The total payoff is the sum of the individual payoffs. Success of script 1 ($100) +
Failure of sequel (−$10) = $90 million.
decisions.
Bloom's: Analyze
33
What is the probability that script #1 will be a success, but its sequel will not?
A) 0.8
B) 0.7
C) 0.56
D) 0.2
E) 0.14
Answer: E
Explanation: The probability of a sequence of events is the product of the individual
probabilities. Success of script #1 (0.7) × Failure of sequel (0.2) = 0.14.
decisions.
Bloom's: Analyze
34
What is the expected payoff from selecting script #1?

A) $150 million
B) $90.6 million
C) $84 million
D) $72 million
E) $60 million
Answer: B
Explanation: The expected payoff is the weighted average of the individual payoffs. This
problem is best analyzed with a decision tree (shown below). The expected payoff is $90.6
million.
Difficulty: 3 Hard
decisions.
Bloom's: Evaluate
35
What is the expected payoff from selecting script #2?

A) $150 million
B) $90.6 million
C) $84 million
D) $72 million
E) $60 million
Answer: D
problem is best analyzed with a decision tree (shown below). The expected payoff is $72 million.
Difficulty: 3 Hard
decisions.
Bloom's: Evaluate
36
What is the expected payoff for the optimum decision alternative?

A) $150 million
B) $90.6 million
C) $84 million
D) $72 million
E) $60 million
Answer: B
problem is best analyzed with a decision tree (shown below). The optimal decision is to pursue
script #1 and the expected payoff is $90.6 million.
Difficulty: 3 Hard
decisions.
Bloom's: Evaluate
37
63) Two professors at a nearby university want to co-author a new textbook in either economics
or statistics. They feel that if they write an economics book they have a 50% chance of placing it
with a major publisher where it should ultimately sell about 40,000 copies. If they can't get a
major publisher to take it, then they feel they have an 80% chance of placing it with a smaller
publisher, with sales of 30,000 copies. On the other hand if they write a statistics book, they feel
they have a 40% chance of placing it with a major publisher, and it should result in ultimate sales
of about 50,000 copies. If they can't get a major publisher to take it, they feel they have a 50%
chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies.
What is the probability that the economics book would wind up being placed with a smaller
publisher?
A) 0.8
B) 0.5
C) 0.4
D) 0.2
E) 0.1
Answer: C
Explanation: Being placed with a small publisher requires two events to occur. First, the book
must be rejected by the large publisher (probability 0.5) and then the book must be accepted by
the small publisher (probability 0.8). The probability of these two events occurring is the product
of their individual probabilities (0.5 × 0.8 = 0.4).
decisions.
Bloom's: Understand
38
What is the probability that the statistics book would wind up being placed with a smaller
publisher?
A) 0.6
B) 0.5
C) 0.4
D) 0.3
E) 0
Answer: D
Explanation: Being placed with a small publisher requires two events to occur. First, the book
must be rejected by the large publisher (probability 0.6) and then the book must be accepted by
the small publisher (probability 0.5). The probability of these two events occurring is the product
of their individual probabilities (0.6 × 0.5 = 0.3).
decisions.
Bloom's: Understand
39
What is the expected payoff for the decision to write the economics book?
A) 50,000 copies
B) 40,000 copies
C) 32,000 copies
D) 30,500 copies
E) 10,500 copies
Answer: C
problem is best analyzed with a decision tree (shown below). The expected payoff is 32,000
copies.
Difficulty: 3 Hard
decisions.
Bloom's: Evaluate
40
What is the expected payoff for the decision to write the statistics book?
A) 50,000 copies
B) 40,000 copies
C) 32,000 copies
D) 30,500 copies
E) 10,500 copies
Answer: D
problem is best analyzed with a decision tree (shown below). The expected payoff is 30,500
copies.
Difficulty: 3 Hard
decisions.
Bloom's: Evaluate
41
What is the expected payoff for the optimum decision alternative?

A) 50,000 copies
B) 40,000 copies
C) 32,000 copies
D) 30,500 copies
E) 10,500 copies
Answer: C
problem is best analyzed with a decision tree (shown below). The optimal decision is to pursue
the economics text and the expected payoff is 32,000 copies.
Difficulty: 3 Hard
decisions.
Bloom's: Evaluate
42
68) Refer to the following payoff table:
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
There is an option of paying $100 to have research done to better predict which state of nature
will occur. When the true state of nature is S1, the research will accurately predict S1 60% of the
time. When the true state of nature is S2, the research will accurately predict S2 80% of the time.
Given that the research is not done, what is the expected payoff using Bayes' decision rule?
A) 0
B) 29
C) 40
D) 75
E) 100
Answer: C

A1 29
A2 40
Difficulty: 3 Hard
Bloom's: Evaluate
43
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
What is the expected value of perfect information?

A) 40
B) 45
C) 75
D) 85
E) 100
Answer: B
the payoff would be 75(0.6) + 100(0.4) = 85. Without more information, EP is determined using
Bayes' decision rule (EP = 40). Therefore, EVPI = 85 − 40 = 45.
Difficulty: 3 Hard
Bloom's: Evaluate
44
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
Given that the research is done, what is the joint probability that the state of nature is S1 and the
research predicts S1?
A) 0.08
B) 0.16
C) 0.24
D) 0.32
E) 0.36
Answer: E
Explanation: The prior probability of state S1 is 0.6. Since the probability that the research will
predict S1 when S1 is the true case is also 0.6, the joint probability is the product of the two
individual probabilities (0.6 × 0.6 = 0.36).
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
45
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
A) 0.08
B) 0.16
C) 0.24
D) 0.32
E) 0.36
Answer: C
predict S1 when S1 is the true case is 0.6, the probability that the research will predict S2 is 1 −
0.6 = 0.4. The joint probability is the product of the two individual probabilities (0.6 × 0.4 =
0.24).
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
46
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
A) 0.08
B) 0.16
C) 0.24
D) 0.32
E) 0.36
Answer: A
predict S2 when S2 is the true case is 0.8, the probability that the research will predict S1 is 1 −
0.8 = 0.2. The joint probability is the product of the two individual probabilities (0.4 × 0.2 =
0.08).
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
47
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
A) 0.08
B) 0.16
C) 0.24
D) 0.32
E) 0.36
Answer: D
predict S2 when S2 is the true case is 0.8, the joint probability is the product of the two
individual probabilities (0.4 × 0.8 = 0.32).
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
48
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
What is the unconditional probability that the research predicts S1?

A) 0.32
B) 0.4
C) 0.44
D) 0.56
E) 0.6
Answer: C
predict S1 when S1 is the true case is also 0.6, the joint probability of correctly predicting S1 is
the product of the two individual probabilities (0.6 × 0.6 = 0.36).
The prior probability of state S2 is 0.4. Since the probability that the research will predict S2
when S2 is the true case is 0.8, the probability that the research will predict S1 is 1 − 0.8 = 0.2.
The joint probability or incorrectly predicting S1 is the product of the two individual
probabilities (0.4 × 0.2 = 0.08).
The unconditional probability of predicting S1 is the sum of the two joint probabilities (0.36 +
0.08 = 0.44).
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
49
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
What is the unconditional probability that the research predicts S2?

A) 0.32
B) 0.4
C) 0.44
D) 0.56
E) 0.6
Answer: D
predict S2 when S1 is the true case is 0.4, the joint probability of incorrectly predicting S2 is the
product of the two individual probabilities (0.6 × 0.4 = 0.24).
The prior probability of state S2 is 0.4. Since the probability that the research will predict S2
when S2 is the true case is 0.8, the joint probability or correctly predicting S2 is the product of
the two individual probabilities (0.4 × 0.8 = 0.32).
The unconditional probability of predicting S1 is the sum of the two joint probabilities (0.24 +
0.32 = 0.56).
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
50
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
What is the posterior probability of S1 given that the research predicts S1?
A) 0.18
B) 0.44
C) 0.57
D) 0.65
E) 0.82
Answer: E
Explanation: The prior probability of state S1 is 0.6. The probability of the research predicting
S1 is the probability of correctly predicting S1 (0.6 × 0.6 = 0.36) plus the probability of
incorrectly predicting S1 (0.2 × 0.4 = 0.08) for a total of 0.44. Thus, the posterior probability that
the true state is S1 given a prediction of S1 is
.
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
51
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
What is the posterior probability of S2 given that the research predicts S2?
A) 0.18
B) 0.44
C) 0.57
D) 0.65
E) 0.82
Answer: C
Explanation: The prior probability of state S2 is 0.4. The probability of the research predicting
S2 is the probability of correctly predicting S2 (0.4 × 0.8 = 0.32) plus the probability of
incorrectly predicting S2 (0.6 × 0.4 = 0.24) for a total of 0.56. Thus, the posterior probability that
the true state is S2 given a prediction of S2 is
Difficulty: 3 Hard
making a decision.
Bloom's: Evaluate
52
State of Nature
Alternative S1 S2
A1 75 −40
A2 0 100
Given that the research is done, what is the expected payoff using Bayes' decision rule?
A) −82
B) −44
C) 0
D) 29
E) 40
53
Answer: B
Explanation: This problem is best analyzed with a decision tree. The expected payoff when the
research is done is −44.
Difficulty: 3 Hard
Learning Objective: Use new information to update the probabilities of the states of nature.
Bloom's: Evaluate
54
79) A risk-averse decision maker is trying to decide which alternative to choose. The payoff
table for the alternatives, given two possible states of nature, is shown below. Assuming that the
decision makers risk tolerance (R) is 5, which decision should she choose based on the utility of
each outcome? Assume the exponential utility function is applicable.

A 20 5
B 25 11
C 30 13
D 10 12
E 50 −28
A) Alternative A
B) Alternative B
C) Alternative C
D) Alternative D
E) Alternative E
Answer: C
Explanation: First, convert the monetary payoffs to utilities using the exponential utility function
, then calculate uses Bayes' decision rule to choose the alternative with
the highest expected utility (Alternative C). The utility table and expected utilities are shown
below:
Alternative Utility High Utility Low Expected Utility

A 0.982 0.632 0.737
B 0.993 0.889 0.920
C 0.998 0.926 0.947*
D 0.865 0.909 0.896
E 1.000 −269.426 −188.298
Prior Probabilities 0.3 0.7
Difficulty: 3 Hard
Bloom's: Evaluate
55
80) What is the role of the group facilitator in decision conferencing?
A) Lead the group to the desired outcome.
B) Structure and focus discussions.
C) Provide mathematical support for decision analysis.
D) Determine the states of nature.
E) Determine the payoffs for each alternative.
Answer: B
Difficulty: 1 Easy
Topic: The Practical Application Of Decision Analysis
Learning Objective: Describe some common features in the practical application of decision
analysis.
Bloom's: Remember
56
Chapter 10 Forecasting
1) Forecasts are rarely perfect.
Answer: TRUE
Difficulty: 1 Easy
Topic: An Overview of Forecasting Techniques
Learning Objective: Describe some important types of forecasting applications.
Bloom's: Remember
2) Once accepted by managers, forecasts should not be overridden.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
3) When no historical sales data is available, it is best to use statistical forecasting methods.
Answer: FALSE
Bloom's: Understand
4) The difference between a forecast and what turns out to be the true value is called the mean
absolute deviation.
Answer: FALSE
Difficulty: 1 Easy
Learning Objective: Identify two common measures of the accuracy of forecasting methods.
Bloom's: Remember
1
5) The mean absolute deviation is the sum of the absolute value of forecasting errors divided by
the number of forecasts.
Answer: TRUE
Difficulty: 1 Easy
Topic: A Case Study: The Computer Club Warehouse (CCW) Problem
Bloom's: Remember
6) The mean square error is the square of the mean of the absolute deviations.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
7) The mean absolute deviation is more sensitive to large deviations than the mean square error.
Answer: FALSE
Bloom's: Understand
8) The seasonal factor for any period of a year measures how that period compares to the same
period last year.
Answer: FALSE
Difficulty: 1 Easy
Topic: Applying Time-Series Forecasting Methods to the Case Study
Learning Objective: Adjust forecasting data to consider seasonal patterns.
Bloom's: Remember
2
9) Removing the seasonal component from a time-series can be accomplished by dividing each
value by its appropriate seasonal factor.
Answer: TRUE
Bloom's: Apply
10) The last-value forecasting method requires a linear trend line.
Answer: FALSE
Learning Objective: Describe several forecasting methods that use the pattern of historical data
to forecast a future value.
Bloom's: Understand
11) The last-value forecasting method is most useful when conditions are stable over time.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
12) The averaging method uses all the data points in the time-series.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
3
13) A moving-average forecast tends to be more responsive to changes in the time-series data
when more values are included in the average.
Answer: FALSE
Bloom's: Understand
14) The moving-average forecasting method assigns equal weights to each value that is
represented by the average.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
15) The moving-average forecasting method is a very good one when conditions remain pretty
much the same over the time period being considered.
Answer: TRUE
Bloom's: Understand
16) An advantage of the exponential smoothing forecasting method is that more recent
experience is given more weight than less recent experience.
Answer: TRUE
Bloom's: Understand
4
17) A smoothing constant of 0.1 will cause an exponential smoothing forecast to react more
quickly to a sudden change than a value of 0.3 will.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
18) If significant changes in conditions are occurring relatively frequently, then a smaller
smoothing constant is needed.
Answer: FALSE
Bloom's: Understand
19) Exponential smoothing with trend requires selection of two smoothing constants.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
20) Exponential smoothing with trend was designed for time-series that have great variability
both up and down.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
5
21) Forecasting techniques such as moving-average, exponential smoothing, and the last-value
method all represent averaged values of time-series data.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
22) In exponential smoothing, an α o f 0.3 will cause a forecast to react more quickly to a large
error than will an α of 0.2.
Answer: TRUE
Bloom's: Understand
23) The goal of time-series forecasting methods is to estimate the mean of the underlying
probability distribution of the next value of the time-series as closely as possible.
Answer: TRUE
Topic: The Time-Series Forecasting Methods in Perspective
Learning Objective: Compare these methods to identify the conditions when each is particularly
suitable.
Bloom's: Understand
24) If a time-series has exactly the same distribution for each and every time period, then the
averaging forecasting method provides the best estimate of the mean.
Answer: TRUE
suitable.
Bloom's: Understand
6
25) A time-series is said to be smooth if its underlying probability distribution usually remains
the same from one period to the next.
Answer: FALSE
Difficulty: 1 Easy
suitable.
Bloom's: Remember
26) Causal forecasting obtains a forecast for a dependent variable by relating it directly to one or
more independent variables.
Answer: TRUE
Difficulty: 1 Easy
Topic: Causal Forecasting With Linear Regression
Learning Objective: Describe and apply an approach to forecasting that relates the quantity of
interest to one or more other quantities.
Bloom's: Remember
27) Linear regression can be used to approximate the relationship between independent and
dependent variables.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
28) Judgmental forecasting methods have been developed to interpret statistical data.
Answer: FALSE
Difficulty: 1 Easy
Topic: Judgmental Forecasting Methods
Learning Objective: Describe several forecasting methods that use expert judgment.
Bloom's: Remember
7
29) The sales force composite method is a top-down approach to forecasting.
Answer: FALSE
Bloom's: Understand
30) The Delphi method involves the use of a series of questionnaires to achieve a consensus
forecast.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
31) When statistical forecasting methods are used, it is no longer necessary to use judgmental
methods as well.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Remember
32) Forecasts can help a manager to:

A) anticipate the future.
B) develop strategies.
C) make staffing decisions.
Answer: D
Bloom's: Understand
8
33) In business, forecasts are the basis for:
A) sales planning.
B) inventory planning.
C) production planning.
D) budgeting.
E) All of the answers choices are correct.
Answer: E
Bloom's: Understand
34) Which of the following are costs of an inaccurate forecast?

A) Lost sales
B) Inventory
C) An understaffed office
D) Lower profits
Answer: D
Bloom's: Understand
35) Time-series data may exhibit which of the following behaviors?

A) Trend
B) Seasonality
C) Cycles
D) Irregularities
E) All of the answers choices are correct
Answer: E
Bloom's: Understand
9
36) Gradual, long-term movement in time-series values is called:
A) seasonal variation.
B) trend.
C) cycles.
D) irregular variation.
E) random variation.
Answer: B
Bloom's: Understand
37) The last-value forecasting method:

A) is quick and easy to prepare.
B) is easy for users to understand.
C) ignores all values except one.
Answer: D
Bloom's: Understand
38) Using the latest value in a sequence of data to forecast the next period is:
A) a moving-average forecast.
B) a last-value forecast.
C) an exponentially smoothed forecast.
D) a causal forecast.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
10
39) Refer to the following data:
Period Demand
1 58
2 59
3 60
4 61
What is the last-value forecast for the next period?

A) 58
B) 62
C) 60
D) 61
Answer: D
Explanation: The last value method assumes that the next data point will be the same as the last.
In this case, the last value was 61 so that becomes the forecast for the next period.
Bloom's: Apply
11
40) Refer to the following data:
Period Demand
1 58
2 59
3 60
4 61
What is the moving-average forecast for the next period based on the last three periods?
A) 58
B) 62
C) 60
D) 61
Answer: C
Explanation:
Bloom's: Apply
41) In order to increase the responsiveness of a forecast made using the moving-average method,
the number of values in the average should be:
A) decreased.
B) increased.
C) multiplied by a larger α.
D) multiplied by a smaller α.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
12
42) Which of the following smoothing constants would make an exponential smoothing forecast
equivalent to a last-value forecast?
A) 0
B) 0.01
C) 0.1
D) 0.5
E) 1
Answer: E
Explanation: The exponential smoothing formula with α = 1 reduces to the last-value formula.
Forecast = α(Last Value) + (1 − α)(Last Forecast)

= 1(Last Value) + (1 − 1)(Last Forecast) = Last Value.
Bloom's: Understand
43) Given an actual latest demand of 59, a previous forecast of 64, and α = 0.3, what would be
the forecast for the next period using the exponential smoothing method?
A) 36.9
B) 57.5
C) 60.5
D) 62.5
E) 65.5
Answer: D
Explanation: Forecast = α(Last Value) + (1 − α)(Last Forecast) = 0.3(59) + (1 − 0.3)64 = 62.5.
Learning Objective: Apply these methods either by hand or with the software provided.
Bloom's: Apply
13
44) Given an actual latest demand of 105, a previous forecast of 97, and α = 0.4, what would be
the forecast for the next period using the exponential smoothing method?
A) 80.8
B) 93.8
C) 100.2
D) 101.8
E) 108.2
Answer: C
Explanation: Forecast = α(Last Value) + (1 - α)(Last Forecast) = 0.4(105) + (1 - 0.4)97 = 100.2.
Bloom's: Apply
45) Which of the following possible values of α would cause exponential smoothing to respond
the most quickly to forecast errors?
A) 0
B) 0.01
C) 0.05
D) 0.1
E) 0.15
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
14
46) In exponential smoothing with trend, the forecast consists of:
A) an exponentially smoothed forecast and a smoothed trend factor.
B) the old forecast adjusted by a trend factor.
C) the old forecast and a smoothed trend factor.
D) a moving-average and a trend factor.
Answer: A
Difficulty: 1 Easy
Bloom's: Remember
47) The mean absolute deviation is used to:

A) estimate the trend line.
B) eliminate forecast errors.
C) measure forecast accuracy.
D) seasonally adjust the forecast.
Answer: C
Bloom's: Understand
15
48) Given forecast errors of 4, 8, and −3, what is the mean absolute deviation?
A) 3
B) 4
C) 5
D) 6
E) 9
Answer: C
Explanation: Mean absolute deviation is the average of the absolute values of the forecasting
errors.
Bloom's: Apply
49) Given forecast errors of 4, 8, and −3, what is the mean square error?
A) 5
B) 9
C) 25
D) 29.67
E) 89
Answer: D
Explanation: Mean squared error is the average of the squares of the forecasting errors.
Bloom's: Apply
16
50) Given forecast errors of 5, 0, −4, and 3, what is the mean absolute deviation?
A) 1
B) 2
C) 2.5
D) 3
E) 12
Answer: D
errors.
Bloom's: Apply
51) Given forecast errors of 5, 0, −4, and 3, what is the mean square error?
A) 3
B) 4
C) 12
D) 12.5
E) 50
Answer: D
Explanation: Mean squared error is the average of the squares of the forecasting errors.
Bloom's: Apply
17
52) Given the following historical data, what is the moving-average forecast for period 6 based
on the last three periods?
Period Value
1 73
2 68
3 65
4 72
5 67
A) 67
B) 68
C) 69
D) 100
E) 115
Answer: B
Explanation:
Bloom's: Apply
18
53) Given the following historical data, what is the moving-average forecast for period 6 based
on the last three periods?
Period Value
1 19
2 20
3 18
4 19
5 17
A) 17
B) 18
C) 19
D) 20
E) 18.5
Answer: B
Explanation:
Bloom's: Apply
54) Given forecast errors of −5, -10, and 15, what is the mean absolute deviation?
A) 0
B) 5
C) 10
D) 30
Answer: C
errors.
Bloom's: Apply
19
55) The president of State University wants to forecast student enrollment for this academic year
based on the following historical data:
Year Enrollments
5 years ago 15,000
4 years ago 16,000
3 years ago 18,000
2 years ago 20,000
Last year 21,000
What is the forecast for this year using the last-value forecasting method?
A) 18,750
B) 19,500
C) 21,000
D) 22,650
E) 22,800
Answer: C
Explanation: The last-value forecast assumes that the next period will be the same as the
previous. In this case, the forecast for this year is the same as last year, 21,000.
Bloom's: Apply
20
Year Enrollments
5 years ago 15,000
4 years ago 16,000
3 years ago 18,000
2 years ago 20,000
Last year 21,000
What is the forecast for this year using a moving-average forecast based on the last four years?
A) 18,750
B) 19,500
C) 21,000
D) 22,650
E) 22,800
Answer: A
Explanation:
Bloom's: Apply
21
Year Enrollments
5 years ago 15,000
4 years ago 16,000
3 years ago 18,000
2 years ago 20,000
Last year 21,000
What is the forecast for this year using exponential smoothing with α = 0.5, if the forecast for
two years ago was 16,000?
A) 18,750
B) 19,500
C) 21,000
D) 22,650
E) 22,800
Answer: B
Explanation: Alpha (α) = 0.5
Year Enrollments Forecast New Forecast

5 years ago 15,000
4 years ago 16,000
3 years ago 18,000
2 years ago 20,000 16,000
0.5(20,000)+(1-0.5)(16,000) =
Last year 21,000 18,000
18,000
0.5(21,000)+(1-0.5)(18,000) =
This year 19,500
19,500
Difficulty: 3 Hard
Bloom's: Evaluate
22
Year Enrollments
5 years ago 15,000
4 years ago 16,000
3 years ago 18,000
2 years ago 20,000
Last year 21,000
What is the forecast for this year using exponential smoothing with trend if α = 0.5 and β = 0.3?
Assume the forecast for last year was 21,000 and the forecast for two years ago was 19,000, and
that the trend estimate for last year's forecast was 1,500.
A) 18,750
B) 19,500
C) 21,000
D) 22,500
E) 22,800
Answer: D
Explanation: Latest trend = α(Last value − Next-to-last value) + (1 − α)(Last forecast −
Next-to-last forecast) = 0.5(21,000 − 20,000) + (1 − 0.5)(21,000 − 19,000) = 1,500
Estimated trend = β(Latest trend) + (1 − β)(Last estimate of trend) = 0.3(1,500) + 0.7(1,500) =

1,500
Forecast = α(Last value) + (1 − α)(Last forecast) + Estimated trend = 0.5(21,000) + (1 −

0.5)(21,000) + 1,500 = 22,500
Difficulty: 3 Hard
Bloom's: Evaluate
23
59) The business analyst for Ace Business Machines, Inc. wants to forecast this year's demand
for manual typewriters based on the following historical data:
Time Period Demand

5 years ago 900
4 years ago 700
3 years ago 600
2 years ago 500
Last year 300
A) 163
B) 180
C) 300
D) 467
E) 510
Answer: C
previous. In this case, the forecast for this year is the same as last year, 300.
Bloom's: Apply
24
Time Period Demand

5 years ago 900
4 years ago 700
3 years ago 600
2 years ago 500
Last year 300
What is the forecast for this year using a moving-average forecast based on the last three years?
A) 163
B) 180
C) 300
D) 467
E) 510
Answer: D
Explanation:
Bloom's: Apply
25
Time Period Demand

5 years ago 900
4 years ago 700
3 years ago 600
2 years ago 500
Last year 300
two years ago was 750?
A) 163
B) 180
C) 300
D) 467
E) 510
Answer: E
Year Demand Forecast New Forecast

5 years ago 900
4 years ago 700
3 years ago 600
2 years ago 500 700
Last year 300 650 0.4(500) + (1−0.4)(750) = 650
This year 510 0.4(300) + (1−0.4)(650) = 510
Difficulty: 3 Hard
Bloom's: Evaluate
26
62) Professor Z needs to allocate time among several tasks next week to include time for
students' appointments. Thus, he needs to forecast the number of students who will seek
appointments. He has gathered the following data:
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50
A) 49
B) 50
C) 52
D) 65
E) 78
Answer: B
previous. In this case, the forecast for this week is the same as last week, 50.
Bloom's: Apply
27
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50
What is the forecast for this year using a moving-average forecast based on the last three weeks?
A) 49
B) 50
C) 52
D) 65
E) 78
Answer: D
Explanation:
Bloom's: Apply
28
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50
two weeks ago was 90?
A) 49
B) 50
C) 52
D) 65
E) 78
Answer: E
Period Students Forecast New Forecast

6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65 90
Last week 50 85 0.2(65) + (1-0.2)(90) = 85
This week 78 0.2(50) + (1-0.2)(85) = 78
Difficulty: 3 Hard
Bloom's: Evaluate
29
Week # of students
6 weeks ago 83
5 weeks ago 110
4 weeks ago 95
3 weeks ago 80
2 weeks ago 65
Last week 50
What is the forecast for this week using exponential smoothing with trend if α = 0.5 and β = 0.1?
Assume the forecast for last week was 65 and the forecast for two weeks ago was 75, and that the
trend estimate for last week's forecast was −5.
A) 49
B) 50
C) 52
D) 65
E) 78
Answer: C
Explanation: Latest trend = α(Last value − Next-to-last value) + (1 − α)(Last forecast −
Next-to-last forecast) = 0.5(50 − 65) + (1 − 0.5)(65 − 75) = −12.5
Estimated trend = β(Latest trend) + (1 − β)(Last estimate of trend)

= 0.1(−12.5) + 0.9(−5) = −5.75
Forecast = α(Last value) + (1 − α)(Last forecast) + Estimated trend = 0.5(50) + (1 − 0.5)(65) +

(−5.75) = 51.75 ≅ 52
Difficulty: 3 Hard
Bloom's: Evaluate
30
66) An operation analyst is forecasting this year's demand for one of his company's products
Year # Sold
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
Last year 20,000
A) 22,000
B) 20,000
C) 18,000
D) 15,000
E) 12,000
Answer: B
previous. In this case, the forecast for this year is the same as last year, 20,000.
Bloom's: Apply
31
Year # Sold
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
Last year 20,000
What is the forecast for this year using a moving-average forecast based on the last four years?
A) 22,000
B) 20,000
C) 18,000
D) 15,000
E) 12,000
Answer: D
Explanation:
Bloom's: Apply
32
Year # Sold
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
Last year 20,000
last year was 15,000?
A) 20,000
B) 19,000
C) 17,500
D) 16,000
E) 15,000
Answer: D
period # Sold Forecast New Forecast

4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
0.2(20,000)+(1−0.2)(15,000) =
Last year 20,000 15,000
16,000
This year 16,000
Difficulty: 3 Hard
Bloom's: Evaluate
33
Year # Sold
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000
Last year 20,000
The previous trend line has predicted 18,500 for two years ago, and 19,700 for last year. What
was the mean absolute deviation for these forecasts?
A) 100
B) 200
C) 400
D) 500
E) 800
Answer: C
Explanation:
Year # Sold Forecast Absolute Value of Error
4 years ago 10,000
3 years ago 12,000
2 years ago 18,000 18,500 500
Last year 20,000 19,700 300
Bloom's: Apply
34
70) A manager uses the equation y = 40,000 + 150x to predict monthly receipts. What is the
forecast for July if x = 0 in April?
A) 40,450
B) 40,600
C) 42,100
D) 42,250
E) 42,400
Answer: A
Explanation: If x = 0 in April, x = 3 in July and the equation for July receipts becomes
y = 40,000 + 150x = 40,000 + 150(3) = 40,450
Bloom's: Apply
71) The equation y = 350 − 2.5x is used to predict quarterly demand where x = 0 in the second
quarter of last year. Quarterly seasonal factors are Q1 = 1.5, Q2 = 0.8, Q3 = 1.1, and Q4 = 0.6.
What is the forecast for the last quarter of this year?
A) 199.5
B) 201
C) 266
D) 268
E) 335
Answer: B
Explanation: For the last quarter of this year, x = 6. Therefore, unadjusted sales for Q4 of this
year are given by
350 − 2.5x = 350 − 2.5(6) = 335.
y=
The seasonal factor for Q4 is 0.6, so seasonally adjusted receipts are given by
Seasonally adjusted receipts = unadjusted sales × seasonal factor =
335 × 0.6 = 201.
Difficulty: 3 Hard
Bloom's: Evaluate
35
72) The primary method for causal forecasting is:
A) sensitivity analysis.
B) linear regression.
C) moving-average.
D) exponential smoothing.
E) the Delphi method.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
73) Which of the following is not a type of judgmental forecasting?

A) Managerial opinion
B) Sales force composite
C) Time-series analysis
D) The Delphi method
E) Consumer market survey
Answer: C
Bloom's: Understand
74) Which of the following would be considered a possible drawback of using executive
opinions to develop a forecast?
A) It is difficult to interpret the results.
B) Responsibility is diffused for the forecast.
C) Extensive use of computers is needed.
D) It brings together the knowledge of top managers.
E) Forecasters are sometimes overly influenced by recent events.
Answer: B
Bloom's: Understand
36
75) Which of the following would be an advantage of using a sales force composite to develop a
demand forecast?
A) The sales staff is least affected by changing customer needs.
B) The sales force can easily distinguish between customer desires and probable actions.
C) The sales staff is often aware of customer's future plans.
D) Salespeople are least likely to be biased by sales quotas.
Answer: C
Bloom's: Understand
76) The forecasting method which uses anonymous questionnaires to achieve a consensus
forecast is:
A) sales force composites.
B) consumer surveys.
C) the Delphi method.
D) time-series analysis.
E) executive opinions.
Answer: C
Difficulty: 1 Easy
Bloom's: Remember
37
77) The following table shows the quarterly sales of widgets over the past two years. Calculate
the seasonal factor for Quarter 2.
Quarter Sales
Q1 last year 10,000
Q2 last year 11,000
Q3 last year 7,500
Q4 last year 8,000
Q1 this year 15,000
Q2 this year 17,000
Q3 this year 10,500
Q4 this year 11,500
A) 0.74
B) 0.99
C) 1.14
D) 1.24
E) 1.29
Answer: D
Explanation: Seasonal Factor = =
= ≅ 1.24
Bloom's: Apply
38

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Chapters 1 10 TB Answer Key

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Intro to Management Science: Modeling and Case Studies, 6e​ (Hillier)

19) A constraint is an algebraic variable that represents a quantifiable decision to be made.

20) A decision variable is an algebraic variable that represents a quantifiable decision to be

21) A parameter in a model is a variable that represents a decision to be made.

26) Enlightened future managers should know which of the following?

28) Managers may base their decisions on which of the following?

29) Management science is based strongly on which of the following fields?

34) Which of the following is an inequality or equation that expresses a restriction in a

44) Which of the following is TRUE about the break-even point?

47) Descriptive analytics is the process of using data to.

48) Predictive analytics is the process of using data to.

– $0.50 = $0.75. , therefore

1) Linear programming problems may have multiple goals or objectives specified.

3) Linear programming problems always involve either maximizing or minimizing an objective

12) An example of a decision variable in a linear programming problem is profit maximization.

14) An infeasible solution violates all of the constraints of the problem.

15) The best feasible solution is called the optimal solution.

22) The equation 3​xy​ = 9 is linear.

24) An objective function represents a family of parallel lines.

30) All constraints in a linear programming problem are either ≤ or ≥ inequalities.

32) A maximization problem can generally be characterized by having all ≥ constraints.

37) Which of the following is not a component of a linear programming model?

Where are the data cells located?

Where are the changing cells located?

Where is the objective cell located?

Where are the output cells located?

48) Solving linear programming problems graphically

(1) 14x​1​ + 6x​2​ ≤ 42

(1) 14x​1​ + 6x​2​ ≤ 42 ​⇒​ 14(2) + 6(1) = 34 ≤ 42

(1) 3x​1​ + 4x​2​ = 10

3​x1​​ + 4​ ​x​2​ = ​10

(1) 3x​1​ + 2x​2​ = 6

2(3​x1​​ + 2​x​2​ = 6) {this equation is multiplied by 2 to allow elimination of ​x​1​)

Alternatively, evaluate the extreme points of the feasible region:

(1) 14x​1​ + 6x​2​ ≥ 42

(1) 14x​1​ + 6x​2​ ≥ 42 ​⇒​ 14(2) + 6(5) = 48 ≥ 42

Minimize ​C​ = 3​x​ + 15​y

Alternatively, evaluate the extreme points of the feasible region:

What is the objective function?

What is the constraint for Colombian beans?

What is the constraint for Dominican beans?

Which of the following is not a feasible solution?

(1) 12​A​ + 8​B​ ≤ 4,800 ​⇒​ 12(400) + 8(400) = 8,000 ≥ 4,800

What is the weekly profit when producing the optimal amounts?

What is the objective function?

What is the time constraint?

Which of the following is not a feasible solution?

(1) 2​L​ + 4​D​ ≤ 480 ​⇒​ 2(135) + 4(120) = 750 ≥ 480

What is the daily profit when producing the optimal amounts?

What is the objective function?

66) What is the time constraint?

Which of the following is not a feasible solution?

(1) 2​R​ + 3​S​ ≤ 720 ​⇒​ 2(180) + 3(240) = 1,080 ≥ 720

What is the daily profit when producing the optimal amounts?

What is the objective function?

What is the time constraint?

Which of the following is not a feasible solution?

What is the weekly profit when producing the optimal amounts?

Maximize P = 1​A​ + 4​B

What is the objective function?

What is the sugar constraint?

Which of the following is not a feasible solution?

What is the daily profit when producing the optimal amounts?

Intro to Management Science: Modeling and Case Studies, 6e (Hillier)

22) The equation 3xy = 9 is linear.

(1) 14x1 + 6x2 ≤ 42

(1) 14x1 + 6x2 ≤ 42 ⇒ 14(2) + 6(1) = 34 ≤ 42

(1) 3x1 + 4x2 = 10

3x1 + 4 x2 = 10

(1) 3x1 + 2x2 = 6

2(3x1 + 2x2 = 6) {this equation is multiplied by 2 to allow elimination of x1)

(1) 14x1 + 6x2 ≥ 42

(1) 14x1 + 6x2 ≥ 42 ⇒ 14(2) + 6(5) = 48 ≥ 42

Minimize C = 3x + 15y

(1) 12A + 8B ≤ 4,800 ⇒ 12(400) + 8(400) = 8,000 ≥ 4,800

(1) 2L + 4D ≤ 480 ⇒ 2(135) + 4(120) = 750 ≥ 480

(1) 2R + 3S ≤ 720 ⇒ 2(180) + 3(240) = 1,080 ≥ 720

Maximize P = 1A + 4B

(1) 2D + 3C ≤ 4,800 ⇒ 2(0) + 3(1,200) = 3,600 ≤ 4,800

(1) 4x1 + 2x2 = 7

Maximize P = 4x + 5 y

Maximize P = 3x + 8y

Maximize P = 8x + 3y

Minimize C = 6x + 10y

Minimize C = 12x + 4y

is the number of widgets

32) Which of the following best describes spaghetti code?

39) Which of the following is not an advantage of using range names?