**1.**Suppose that the demand forecast indicate that 1800 units of the product can be sold.

The fixed cost is $3,000, the variable cost is $2 for each unit product and selling price $10 per unit. The decision to produce and sell 1800 units results in a projected profit of?

**2.**By solving the break- even point analysis in problem 4 and you substitute the following: fixed cost is $5,000; variable cost is 1. What is the selling price?

**3.**The ABC Company is considering the sale of a new product. There is $1,750 of fixed costs associated with the undertaking of this project. The product will sell for $4 a unit, and the variable costs are $1.50.

**a)**What is the break-even point?

**b)**What is the expected profit?

**4.**Chrysler has developed a new minivan that has a star up cost of $200,000. Each new van’s variable costs are $25,000 to make. If Chrysler plans to sell the minivan for $30,000, how many do they have to sell to break-even?

**5.**If fixed cost is $10,000, variable cost is $4 and BEP units are 1,000. What is the selling cost?

**6.**

Sales | Number of Days |

1 unit | 10 |

2 units | 20 |

3 units | 30 |

4 units | 40 |

5 units | 50 |

10 units | 60 |

15 units | 70 |

**a)**What is the probability of 15 units?

**b)**What is the probability of 4 units?

**7.**Given the following distribution:

The expected value is 3.

True or False?

**8.**A new young executive is perplexed at the number of interruptions that occur due to employee relation. She has decided to track the number of interruptions that occur during each hour of her day. Over the last month, she has determined that between 0 and 3 interruptions occur during any given hour of her day.

The data is shown below.

Over average, she should expect 0.8 interruptions per hour. True or False?

**9.**A __________________ is a numerical statement about the likelihood that an even will occur.

**a.**Mutually exclusive construct

**b.**Collectively exhaustive construct

**c.**Variance

**d.**Probability

**e.**Standard deviation

**10.****a.**What is the probability of non-skill female workers?

**b.**What is the probability of male workers?

**c.**What is the probability of union workers?

**d.**What is the probability of male skill workers?

**11.**The follow table is the result of 100 students in a statistics class. They have just finish their first quiz after second week in the class. The quiz consisted of five difficult problems. The grades range from 1 to 5. The random variable X is defined to be the grade on this quiz, and the grades are summarized in the table below. This discrete probability distribution was developed using the relatively frequency approach.

Random Variable (X) -Score | Number | Probability |

5 | 10 | – |

4 | 20 | – |

3 | 30 | – |

2 | 30 | – |

1 | 10 | – |

Total | 100 | – |

**a)**What is the Expected Value of the discrete probability distribution?

**b)**What is the variance?

**c)**What is the standard deviation?

**12**.In decision theory, those outcomes over which the decision maker has little or no control are

called________________.

**13.**Suppose a grocer face the question of whether to act now or delay action and seek more information. a) However, using expect monetary value (EMV) model, we have a way of qualifying the value addition information. a. Compute EMV. b. What is the best EMV?

Milk | Brand A | Brand B | Brand C | Brand D |

Alternatives | Stock | Stock | Stock | Stock |

25 cases | 25 | 26 | 27 | 25 |

26 cases | 50 | 42 | 34 | 26 |

27 cases | 50 | 52 | 44 | 36 |

Probability | .10 | .30 | .50 | .10 |

**14.**Looking at problem 14:

**a.**Determine the equally likely.

**b.**Compute the criterion realism when the α = .80

**c.**Compute EOL.

**15.**Mary Sue is considering opening a small clothing shop on Virginia Beach Blvd. in Virginia Beach. She has located a good mall that attracts teens. Her options are to open a small shop, a medium-sized shop, or no shop at all. The market for the clothing shop can be good, average, or bad. The probabilities for these possibilities are 0.15 for a good market, 0.60 the average market and 0.25 the bad market.

Good | Average | Bad | |

Alternative | Market | Market | Market |

Small shop | 200,000 | 45,000 | -15,000 |

Medium-sized shop | 180,000 | 75,000 | -20,000 |

No shop | 0 | 0 | 0 |

Probabilities | 0.15 | 0.60 | 0.25 |

**a.**Calculate the EMV and of the best EMV payoff is the best payoff?

**b.**What is the pessimistic (maximin) criterion?

**16.**Profit ($)

Alternatives | Strong Market | Fair Market | Poor Market |

Large facility | 55,000 | 110,000 | -310,000 |

Medium-sized facility | 300,000 | 129,000 | -100,000 |

Small facility | 200,000 | 100,000 | -32,000 |

No facility | 0 | 0 | 0 |

Probability | .30 | .20 | .50 |

**a.**What is the opportunity loss or regret (minimax regret)?

**b.**Compute the weighted average (Hurvwicz criterion) with α = .80.

**17.**Look at problem 20:

**a.**Compute Equally Likely.

**b.**Compute EOL.

**18.**Look at problem 20:

**a.**Compute EMV.

**b.**Compute EVwPI.

**c.**Compute EVPI = EVwPI – Best EMV.

**19.**Suppose that the demand forecast indicate that 1800 units of the product can be sold. The fixed cost is $3,000, the variable cost is $2 for each unit product and selling price $10 per unit. The decision to produce and sell 1800 units results in a projected profit of?

**20.**By solving the break- even point analysis in problem 23 and you substitute the following: fixedcost is $5,000; variable cost is 1. What is the selling price?

**21.**If fixed cost is $10,000, variable cost is $4 and BEP units are 1,000. What is the selling cost?

**22.**XYZ Corporation has calculated that it has fixed costs that consist of its lease, depreciation of its assets, executive salaries, and property taxes. Those fixed costs add up to $60,000. Their product is the widget. Their variable costs associated with producing the widget are raw material,factory labor, and sales commissions. Variable costs have been calculated to be $.80 per unit.The widget is priced at $2.00 each. Given this information, we can calculate the break-even point for XYZ Corporation’s product, the widget. Fixed Cost/Selling price – Variable costs =$60,000/ $2.00 – $0.80 = 50,000 units.

What Happens to the Breakeven Point if Sales Change? (Give a verbal and Mathematical explanation)

What if your sales change? For example, if the economy is in a recession, your sales might drop.If sales drop, then you won’t sell enough to make your breakeven point. In the example of XYZ Corporation, you might not sell the 50,000 units necessary to breakeven. In that case,you would not be able to pay all your expenses. What can you do in this situation?

**23.**The Quantitative Analysis Approach consists of six steps.

True or False

**24.**Sensitivity analysis helps us estimate the effect of known and unknown errors in our model.

True or False

**25.**A decision table is sometimes called a_________ _________.

**26.**Steve Goodman production foreman for the Florida Gold Fruit Company, estimates that the average sale of oranges is 4,700 and the standard deviation is 500 oranges. Sales follow a normal distribution.

**a.**What is the probability that sales will be greater than 5,500?

**b.**What is the probability that sales will be less 4,900?

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