OPN 501.

1, Summer 2021
Quiz #1 
 

Name:………………………………………………………………………………………………………..

Please show your work; in case you use Excel functions, write the Excel function WITH the
values used.

#1. It is given that y=5x1+2x2+x3, where x1, x2, and x3 are normally distributed
independent random variables. x1~N(20,5), x2~N(40,8), and x3~N(60,15). Answer the
following:

(a) What is the distribution of y? Name the distribution and give its signature values, that is give
its mean and standard deviation. (15 pts)

(b) If w~N78, 20, Determine P69<w<88 (Draw a graph to illustrate your area of interest) (10
pts)

#2. (a) The beginning of the year and end of the year inventories are respectively $42,000 and 
$48,000; annual revenue with 25% markup is $236,250. What is the inventory turnover ratio
and DSI (assume 360 days of operations annually) (10 + 5 = 15 pts)
(b) Given that DSI = 30, DSO = 40 and DPO = 20, what is the rate of return on operational
capital? Assume the following: 360 days of operations annually, markup of 12% and interest
rate of 45%. All capital is borrowed money. (15 pts)