Introduction to Management Science, 10e (Taylor) Chapter 1 Management Science




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Introduction to Management Science, 10e (Taylor)

Chapter 1 Management Science


1) Management science involves the philosophy of approaching a problem in a subjective manner.

Answer: FALSE

Diff: 1 Page Ref: 2

Main Heading: The Management Science Approach to Problem Solving

Key words: scientific approach


2) Management science techniques can be applied only to business and military organizations.

Answer: FALSE

Diff: 1 Page Ref: 2

Main Heading: The Management Science Approach to Problem Solving

Key words: scientific approach, problem solving


3) Once management scientist makes his or her decision and recommendation to management, then typically, his or her involvement with the problem is finished.

Answer: FALSE

Diff: 2 Page Ref: 6

Main Heading: The Management Science Approach to Problem Solving

Key words: management science, management scientist


4) A variable is a value that is usually a coefficient of a parameter in an equation.

Answer: FALSE

Diff: 1 Page Ref: 3

Main Heading: The Management Science Approach to Problem Solving

Key words: variable


5) Parameters are known, constant values that are usually coefficients of variables in equations.

Answer: TRUE

Diff: 1 Page Ref: 4

Main Heading: The Management Science Approach to Problem Solving

Key words: parameter


6) Data are pieces of information from the problem environment.

Answer: TRUE

Diff: 1 Page Ref: 4

Main Heading: The Management Science Approach to Problem Solving

Key words: data


7) A model is a mathematical representation of a problem situation including variables, parameters, and equations.

Answer: TRUE

Diff: 1 Page Ref: 3

Main Heading: The Management Science Approach to Problem Solving

Key words: model, management science techniques


8) A management science technique usually applies to a specific model type.

Answer: TRUE

Diff: 1 Page Ref: 3

Main Heading: The Management Science Approach to Problem Solving

Key words: models, management science techniques

9) The first step of the management science process is to define the problem.

Answer: FALSE

Diff: 2 Page Ref: 2

Main Heading: The Management Science Approach to Problem Solving

Key words: management science process


10) Management science modeling techniques provide results that are known with certainty.

Answer: FALSE

Diff: 2 Page Ref: 5

Main Heading: The Management Science Approach to Problem Solving

Key words: management science modeling techniques, certainty


11) The term sensitivity analysis refers to testing how a problem solution reacts to changes in one or more of the model parameters.

Answer: TRUE

Diff: 1 Page Ref: 10

Main Heading: Model Building: Break-Even Analysis

Key words: sensitivity analysis, parameter changes


12) Fixed costs depend on the number of items produced.

Answer: FALSE

Diff: 1 Page Ref: 7

Main Heading: Model Building: Break-Even Analysis

Key words: fixed cost, break-even analysis


13) Variable costs depend on the number of items produced.

Answer: TRUE

Diff: 1 Page Ref: 7

Main Heading: Model Building: Break-Even Analysis

Key words: variable cost, break-even analysis


14) Fixed cost is the difference between total cost and total variable cost.

Answer: TRUE

Diff: 1 Page Ref: 7

Main Heading: Model Building: Break-Even Analysis

Key words: total cost, break-even analysis


15) The break-even point is the volume that equates total revenue with total cost.

Answer: TRUE

Diff: 1 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


16) In general, an increase in price increases the break even point if all costs are held constant.

Answer: FALSE

Diff: 1 Page Ref: 10

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis

17) If variable costs increase, but price and fixed costs are held constant, the break even point will decrease.

Answer: FALSE

Diff: 2 Page Ref: 11

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


18) Managers utilize spreadsheets to conduct their own analyses in management science studies.

Answer: TRUE

Diff: 2 Page Ref: 12

Main Heading: Computer Solution

Key words: spreadsheets


19) Management science techniques focus primarily on observation, model construction and implementation to find an appropriate solution to a problem.

Answer: FALSE

Diff: 2 Page Ref: 2

Main Heading: Management Science Modeling Techniques

Key words: mgt sci modeling techniques, steps of the scientific method


20) Management science modeling techniques focus on model construction and problem solution.

Answer: TRUE

Diff: 2 Page Ref: 2

Main Heading: Management Science Modeling Techniques

Key words: mgt science model techniques, model constr, prob solution


21) Decision Support Systems (DSS) use computers to help decision makers address complex problems.

Answer: TRUE

Diff: 1 Page Ref: 20

Main Heading: Management Science Models in Decision Support Systems

Key words: decision making, management science


22) Enterprise Resource Planning (ERP) system is a data oriented decision support system that utilizes specific management science solution procedures to solve individual problems such as cost-volume analysis.

Answer: FALSE

Diff: 1 Page Ref: 21

Main Heading: Management Science Models in Decision Support Systems

Key words: decision support systems


23) A __________ is a symbol used to represent an item that can take on any value.

Answer: variable

Diff: 1 Page Ref: 3

Main Heading: The Management Science Approach to Problem Solving

Key words: variable, management science process


24) __________ are known, constant values that are coefficients of variables in equations.

Answer: Parameters

Diff: 1 Page Ref: 4

Main Heading: The Management Science Approach to Problem Solving

Key words: model, parameters

25) __________ are pieces of information from the problem environment.

Answer: Data

Diff: 1 Page Ref: 4

Main Heading: The Management Science Approach to Problem Solving

Key words: data


26) A __________ is a functional relationship including variables, parameters, and equations.

Answer: model

Diff: 1 Page Ref: 4

Main Heading: The Management Science Approach to Problem Solving

Key words: model


27) Management science techniques include __________ techniques, models that are represented as diagrams, presenting a pictorial representation of the system being analyzed.

Answer: Network

Diff: 1 Page Ref: 17

Main Heading: The Management Science Approach to Problem Solving

Key words: management science, networks


28) __________ techniques provide results that contain uncertainty, unlike mathematical programming techniques which are deterministic.

Answer: Probabilistic

Diff: 1 Page Ref: 17

Main Heading: The Management Science Approach to Problem Solving

Key words: management science techniques, probabilistic techniques


29) __________ costs are independent of the volume of goods produced and remain constant.

Answer: Fixed

Diff: 1 Page Ref: 7

Main Heading: Model Building: Break-Even Analysis

Key words: fixed cost, break-even analysis


30) __________ depend on the number of items produced.

Answer: Variable costs

Diff: 1 Page Ref: 7

Main Heading: Model Building: Break-Even Analysis

Key words: variable cost, break-even analysis


31) Total revenue minus total cost equals __________ .

Answer: profit

Diff: 1 Page Ref: 8

Main Heading: Model Building: Break-Even Analysis

Key words: profit, break-even analysis


32) The __________ is the volume that equates total revenue with total cost.

Answer: break-even point

Diff: 1 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis

33) A __________ represents a limitation to achieving maximum profits due to limited resources.

Answer: constraint

Diff: 1 Page Ref: 4

Main Heading: Management Science Modeling Techniques

Key words: constraint, model development


34) A __________ programming technique refers to a predetermined set of mathematical steps used to solve a problem.

Answer: linear

Diff: 1 Page Ref: 16

Main Heading: Management Science Modeling Techniques

Key words: linear programming formulation


35) A __________ is a computer-based system that helps decision-makers address complex problems that involve different parts of an organization and operations.

Answer: decision support system

Diff: 1 Page Ref: 20

Main Heading: Management Science Models in Decision Support Systems

Key words: decision support systems


36) The relationship d = 5000 - 25p describes what happens to demand (d) as price (p) varies. Price can vary between $10 and $50. How many units can be sold when the price is $10?

Answer: 4750

Diff: 1 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


37) The supplier of cans for Coors Brewery, Valley Metal Container, uses a __________ to determine the weekly production schedule for cans in order to meet brewery demand.

Answer: decision support system

Diff: 2 Page Ref: 20

Main Heading: Management Science Models in Decision Support Systems

Key words: decision support systems


38) A production process requires a fixed cost of $50,000. The variable cost per unit is $25 and the revenue per unit is projected to be $45. Write a mathematical expression for total cost.

Answer: C(x) = 50000 + 25x

Diff: 1 Page Ref: 8

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


39) A production process requires a fixed cost of $50,000. The variable cost per unit is $25 and the revenue per unit is projected to be $45. Write a mathematical expression for total revenue.

Answer: R(x) = 45x

Diff: 1 Page Ref: 8

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis

40) A production process requires a fixed cost of $50,000. The variable cost per unit is $25 and the revenue per unit is projected to be $45. Write a mathematical expression for total profit.

Answer: P(x) = 45x - (50000 + 25x)

Diff: 1 Page Ref: 8

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


41) A production process requires a fixed cost of $50,000. The variable cost per unit is $25 and the revenue per unit is projected to be $45. Find the break-even point.

Answer: X = 2500

Diff: 2 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


42) A production process requires a fixed cost of $50,000 and the variable cost per unit is $25. The revenue per unit was projected to be $45 but a recent marketing study shows that because of an emerging competitor, the revenue will be about 12% lower. How does this affect the break even point?

Answer: The break even point will be higher, at 3424 units, which is a 37% increase

Diff: 3 Page Ref: 10

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


43) Administrators at a university will charge students $150 to attend a seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. How many students would have to register for the seminar for the university to break even?

Answer: 24

Diff: 2 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


44) Administrators at a university are planning to offer a summer seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. If we know that 20 people will attend, what price should be charged per person to break even?

Answer: $175

Diff: 2 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


45) Administrators at a university are planning to offer a summer seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. If 30 students attend the seminar, how much of a profit (or loss) will be incurred?

Answer: $750

Diff: 2 Page Ref: 9

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis

46) A newly opened bed-and-breakfast projects the following:

Monthly fixed costs $8000

Variable cost per occupied room per night $40

Revenue per occupied room per night $165

Write the expression for total cost per month.

Answer: C(x) = 8000 + 40x

Diff: 2 Page Ref: 8

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


47) A newly opened bed-and-breakfast projects the following:

Monthly fixed costs $8000

Variable cost per occupied room per night $40

Revenue per occupied room per night $165

Write the expression for total revenue per month.

Answer: R(x) = 165x

Diff: 2 Page Ref: 8

Main Heading: Model Building: Break-Even Analysis

Key words: break-even analysis


48) A newly opened bed-and-breakfast projects the following:

Monthly fixed costs $8000

Variable cost per occupied room per night $40

Revenue per occupied room per night $165

How many rooms would have to be occupied per month in order to break even?
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